If Japan's economic bubble had never burst...

BUMP ;)

I would be VERY interested in hearing all your esteemed theories and speculations regarding my query :D

C'mon, get your heads out of WW2 for a second :p
 
I think a big question would be how to prevent it. The problem with bubbles is they seem to be destined to burst.

That being said, I think the Japanese had some within the nation loan deal going on when the bubble burst that kept things stable or something after that. Someone else probably knows what I'm talking about or trying to talk about, so they could probably help more than me. But maybe that could keep things stable.
 
The main problem is that they stopped having families. As China will find out in the coming years, it's hard to have double digit economic growth when you have more people collecting Social Security than entering the workforce.
 

gridlocked

Banned
I assume you mean what if the Japanese economy did not stall out after the bubble burst and kept its 80s growth rate, rather than what laws could Japan pass to keep its real estate prices sky high and prevent a rational revaluation.

If the real estate bubble popped just 18 months to 2 years before it did in real life then the damage would have been small enough that Japan might have had a normal recession. Not paralyzed with an economic disaster, Japan makes a move to reform the Banking system.

There are two ways that Japan could have grown. It could have reformed its inefficient domestic market or it could have had more industrial policy winners. The path of least political resistance is that domestic markets rationalize gradually, but the really growth coming from new Industrial champions.

So imagine a Lexus strategy of Japan having more high end manufacturing which displaces high end German manufactures trading on Japanese price and reliability rather than German craftsmanship.

Japan would also have to get a big piece of the computer, cell phone, software, and telecommunication boom. In real life MITI (the bureaucracy that picked winners and losers) was blind sided by the pace of change in the 90s, but Japan could have conceivably had many more winners than in OTL.

Finally, Japan is the leader in commercial and hobby robotics. This field, like bio-tech is still more promise and expensive investment than big payoff, but lets suppose while America was crashing in 2008 a robotic revolution was starting to take hold in Japan.


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So how would a confident Japan be different with a super-sized economy? It would be more assertive, especially regarding threats such as North Korea. One can imagine a joint US-Japanese anti-missile shield. Japan would balance China rather than being overshadowed by it.

Japan would still be known for (to Westerners) strange fads, but the hobbies would be more expensive and flamboyant. Japan would be, with the United States, a world taste-maker.

A robotics revolution would turn Japan's greatest weakness into its strength. Robots would solve Japan's labor problems, help care for the old, and also help pay for the old through labor saving productivity. Although foreigners would be fascinated by the robotic future already taking clear shape in the Japan of 2011, most countries lacking Japan's social consensus and tight labor markets would feel that in their case that the obsoleting of nearly a third of their national workforce will lead to a social disaster rather than Japanese style balance and progress. China specifically has warned about the threat of a "Terminator Future" after being alarmed by the new Japanese economic model which threatens to swamp China's hard won old style economic gains.

Of course Japan continues to have many problems but no one has doubted since the 1980s that Japan is the nation best positioned to prosper in the future. As both former Japanese Ambassadors Walter Mondale and Colin Powell have stated. "U.S.-Japan relationship is the most important in the world, bar none."
 
Bump.

I remember a really detailed timeline about this on the internet, years ago. Does anyone remember that? The world looks like how we saw it from 1989, Japan has the largest economy, etc.
 
To avoid the bubble's burst, you likely have to avoid the bubble itself. Less rapid economic growth, combined with more demand-inducing economic policies would probably prevent the growth of the bubble in the first place, which might produce slower growth (but still above the average for the West, at any rate) into the late 1990s, with a slower cooldown and a better economic climate than the twenty year Depression Japan has faced now.
 
The reason it's called a bubble is that it WILL burst.

Exactly. If you want a stronger Japanese economy (which is what I think the OP is going for) then what you really need is for the bubble to not form to begin with and for Japan to have a slower steadier maintainable growth rate. Or alternatively for Japan to recover quicker after the bubble bursts. Not sure how to do either of those things, but I'm sure they are possible. The idea of a bubble not bursting is impossible. Bubbles burst. That's why they're called bubbles.
 
Not possible, there's simply the physical fact that an average Japanese person cannot possibly be twice a effective as an average American given the same tools. Japan will hit the limits of an economy for the size of its population and demographics, but its consumer confidence will's reponse would be much delayed . Now I'm surprised that its not in constant decay considering its population decline.

The main reason the bubble burst was due to bad investment. Japan had a high savings rate from the 50's-80's, and they invested those savings into capital formation furthering growth. But, the problem was that by the mid-80's Japan simply couldn't invest profitably in its existing industries (the amount of automation is some of the Toyota factories at the time was ridiculous and inefficient) as much as real-estate and stocks (which are only indicators of consumer confidence, not economic health).

So it's not the growth rate that killed it, it was the shifting of investments to stocks and real-estate instead of factories and offices.

Plus I don't see why the population of Japan would become larger or younger.
 
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People here have hit most of the important points. Ideally, the best solution is to never have the bubble grow in the first place, and as people have pointed out here, Japanese manufacturers are helped by MITI (or hindered, as the case may be) and Japan's domestic market was, and still is to an extent, heavily regulated in favor of domestic manufacturers.

Beating the bubble and joining the US and South Korea in the technology lead in the 1990s would make the country fly as the US' technology fields did in the 1990s. Toss in their expertise in robotics and electronics industries, and you could conceivably begin moving away from humans in industrial jobs as much as the population begins to fall.
 
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