Remember how Japan was supposed to eat our lunch?
Remember how China was to take over the world?
Guess what? Both nations have hit the proverbial WALL. China has completely exhausted itself and fears having to accommodate Western Capitalist mores to jump-start its dead economy. Make no mistake, the economic implosion of the Great Satan in 2008 has cut the legs out from underneath the Han in Beijing.
Japan needs new ideas. If Abe succeeds, he’ll do it on the last arrow, namely political and social reform of the entire Japanese political economy.
What does Japan need to do, to jump-start its economy?
It needs new ideas. It needs the protestant ethic that animates Western Capitalism. It needs to dump its love affair with overt centralization and free its citizenry to pursue its own dreams.
Why will both nations fail. They will fail because to implement the polices given above is to embrace political suicide.
Other than an American invasion, how does a nation throughout Asia actually rise.
First, reform agricultural land ownership to encourage small-plot, high yield farming. (Read Hernando de Soto from Lima, Peru).
Secondly, implement industrial policies to nurture infant industries and impose discipline on exporters to up their competitive games by requiring companies to export to foreign markets where they will face more intense competition.
Finally, deploy the financial system in support of numbers 1 & 2 steering capital to exporters.
Japan chartered that course undermining American business since 1979. The wheels came off the Japanese cart by the mid-1990’s.
Japan has a very long, effective history of following the pattern laid out above, beginning in 1860 when the government pensioned off the class of powerful landlords known as the daimyo in order to redistribute their lands to other tenant farmers.
South Korea followed suit in 1950’s, Taiwan did the same afterwards. China did the same, although with much violence given the propensities of Mao and his failed policies of collectivization.
Asia followed the above noted pattern even with manufacturing. All Asian (Tiger) economies sought national protection while forcing them to be competitive abroad.
Because exporting provided a source of capital and exposed companies to cutting-edge technologies in developed markets, instead of permitting themselves to retreat into uncompetitive, high-profit domestic markets. (Read America.)
Asian companies that boosted market share abroad were given exclusive access to rare capital from Asian governments. This was an exclusive policy throughout Malaysia.
China does the same today to its own citizens. Beijing represses citizens ability to procure capital/equity formation, its central bank sterilizes all capital inflows preventing a rise in either wages or domestic consumption.
Asian countries since 1900 have depressed domestic interest rates of savers giving (special-reserved) capital to domestic exporters that have increased market share. All others simply died.
Political leaders throughout Southeast Asia never possessed the political clout to impose such draconian rewards based system. There are historical reasons for this animating both Southeast Asian geography along with the propensity for smaller nations to resist hegemony that characterizes the Han in Beijing.
We should note that these small, Southeast Asian nation states are far more amendable to the politics underwriting western mores of our own political economy. This, despite opaque property rights and archaic agricultural taxes.
HOW DID THIS ALL END??
Well, for starters, the nature of power changed with the emergence of digital life.
The Asian combination of import-protectionism tied to financial repression, engineered a sustained wealth transfer from households to exporting companies, in order to facilitate investment. This leads to undeniably large rates of GDP growth while it lasts.
It is fair to confiscate poor citizens capital and sovereignty today for some optimal level of growth tomorrow?? Why not just open up imports allowing citizens to benefit from competition?
This very line of thinking is expressing itself today in Japan, Korea and China.
Make no mistake, free trade has opened up Asia, but the Americans need to compete. First fracking, then marginal tax reform.
Nations like India, the Philippines and Indonesia aren’t waiting. They’re already liberalizing with sustainable growth trends surpassing B.R.I.C. nation states.
The best path for America is monetary, fiscal reform while we anticipate the liberal awakening of Asia.