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PeakTrader said...

Japan's population was 123 million in 1990. Today, it's 127 million, because the rate of population growth decreased and then went into decline.

The population is projected to be 100 million in 2050 and then 67 million in 2100. So, Japan could have zero growth for a hundred years and real per capita GDP will almost double.

In contrast, U.S. population was a little less than 250 million in 1990. Today, it's 310 million.

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jeremy h. said...

The "lost decades" in Japan usually refers to the post-1989 period, I believe. So using the same ERS data, 1990-2010 growth rates look much different: 20% increase for Japan vs. 32% for the US. That's 1% per year for Japan. Seems reasonable to me to call that "stagnation."

In PPP terms, the stagnation is even more apparent. Using World Bank data for 1990-2009, Japan increases by just 13.6% (26,129 to 29,692), while the US increased by 30.8% (31,926 to 41,761).

In other words, by 1990 Japan was very close to "catching" the US in real terms, but by 2009 they were still below the US level of 1990!

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Johnster said...

I need some clarification. How can Japan's large current account surplus and America's large current account deficit both be a sign of both country's wealth?

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PeakTrader said...

Johnster, the balance of payments between the U.S. and Japan represent two main factors:

1. Japan has to sell goods to the U.S. for dollars to buy commodities on the world market that are priced in dollars.

2. Japan has more trade barriers than the U.S. to protect employment.

So, this results in U.S. capital account surpluses and current account deficits, while Japan has capital account deficits and current account surpluses.

Both countries benefit from trade. However, U.S. gains-in-trade are larger than Japan's gains-in-trade.

Also, I may add, China's gains are less and U.S. gains are more, because China sells its goods too cheaply and lends its dollars too cheaply, which creates a virtuous U.S. cycle of consumption-investment.

Basically, China has become the world's low-cost producer, because of low labor costs, which takes market share from other poor countries.

U.S. multinationals and the Chinese elites, along with other foreigners, make huge profits between low prices and even lower labor costs.

The combination of low prices and high volume is why China's GDP growth rate is high, and why U.S. profit soared to all time-highs.

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PeakTrader said...

The hidden downside of Santa's little helpers
December 21, 2002

"The Chinese toy factory workers are more exploited than before," said May Wong of the Asia Monitor Resource Centre.

"Wages have actually gone down, there is so much surplus labour," agrees Monina Wong, a researcher with the HK Coalition.

An investigation into the price of a Mattel Barbie doll, half of which is made in China, found that of the $10 retail price, $8 goes to transportation, marketing, retailing, wholesale and profit for Mattel.

Of the remaining $2, $1 is shared by the management and transportation in Hong Kong, and 65 cents is shared by the raw materials from Taiwan, Japan, the U.S. and Saudi Arabia.

The remaining 35 cents is earned by producers in China for providing factory sites, labour and electricity.

"We are not even sure the factory-owners are getting rich. Some complain that the unit price of the production order by big-name buyers is too low for them even to provide the basic wages and benefits for the workers they hire," said May Wong.

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