There’s a nice, brief primer in Slate today about the likelihood that the US’s current economic difficulties will turn into a prolonged period of stagnation like Japan’s “lost decade” of the ’90s.
Two brief thoughts:
- Another example of why social science is hard–it’s possible to draw a variety of conclusions from studying past events. One of my favorite quotes is from the great international economist and historian Charles Kindleberger: “The answer to every question in the social sciences is “it depends.”
- The author of the Slate piece writes: “So if the Japan analogy is so flawed, then why does it keep popping up? Fear is part of the explanation; Japan’s lost decade is close enough in Americans’ memories that it can be used as alarmist shorthand more readily than other historic economic meltdowns (even more readily than the Great Depression, about which one hears relatively little these days).” (emphasis added.) Is this right? I doubt most Americans are even aware that Japan suffered a lost decade. Perhaps I am overly pessimistic.
As to the substance of the piece, I think Paul Krugman is more often right than wrong (on economics, not necessarily politics) so I am less willing to write off his predictions than the author, but the Slate guy makes some good points.