Barack Obama could learn a lesson from Japan. There’s a very good article in the New York Times today, on the mistakes made by the country of Japan in the 1990’s to fix their failing economy:
The Hamada Marine Bridge soars majestically over this small fishing harbor, so much larger than the squid boats anchored below that it seems out of place.
And it is not just the bridge. Two decades of generous public works spending have showered this city of 61,000 mostly graying residents with a highway, a two-lane bypass, a university, a prison, a children’s art museum, the Sun Village Hamada sports center, a bright red welcome center, a ski resort and an aquarium featuring three ring-blowing Beluga whales.
Nor is this remote port in western Japan unusual. Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.
Now, as the Obama administration embarks on a similar path, proposing to spend more than $820 billion to stimulate the sagging American economy, many economists are taking a fresh look at Japan’s troubled experience. While Japan is not exactly comparable to the United States — especially as a late developer with a history of heavy state investment in infrastructure — economists say it can still offer important lessons about the pitfalls, and chances for success, of a stimulus package in an advanced economy.
The Lesson to be learned here is:
“It is not enough just to hire workers to dig holes and then fill them in again,” said Toshihiro Ihori, an economics professor at the University of Tokyo. “One lesson from Japan is that public works get the best results when they create something useful for the future.
But the real lesson to be learned here is the follow and pay special close attention to what is said here:
In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade. This has led many to conclude that spending did little more than sink Japan deeply into debt, leaving an enormous tax burden for future generations.
Gee, is that not what Ron Paul said ALL ALONG, while he was running for President of the United States? For Ron Paul’s troubles and hard work he was slandered, maligned and marginalized by the Neo-Conservatives who hated him and the Liberal Democrats who were sacred to death of him.
I highly suggest that you read the rest of this article. The United States could learn much from this lesson that Japan had to learn. We could very well end up causing more harm than good to our economy.
Others: Glenn Thrush’s Blogs, Hot Air, A Blog For All, Cafe Hayek, Weekly Standard and QandO