Yes, the start of assent inflation in the 1980s led to the “bubble economy,” with anyone owning land becoming richer by the minute. At one point the land value of the imperial Palace in Tokyo was thought to be worth more than the entire real-estate value of Canada. With astonishing sums of money sloshing around the economy and Japanese products considered would- beaters everywhere, it seemed to the Japanese that the nation had finally achieved its rightful place in the world.
Everyone expected the double-digit growth rates to continue indefinitely. However, crashing real estate prices had a domino effect on the rest of the economy, and in the early 1990s Japan slipped quickly into stagnation the then recession. Seemingly endemic corruption was compounded by a remarkable dearth of political leadership and decisive action.
Indeed, in Japan’s consensus-based management system, the response of politicians, bureaucrats, and business leaders seemed to be to look the other way and hope bad news would disappear.
The government’s gradual and reluctant admission that, despite previous assurances, banks were sitting on staggering – and long concealed-amounts of unrecoverable loans (originally secured against land values) caused an unprecedented crisis of confidence.
Growing economic decline brought record corporate bankruptcies and the end of lifetime employment, as companies were forced to improve efficiency in order to survive.
The irony is that although Japan has continually triumphed over externally imposed adversity and upheavals, it seems unable to implement effective reforms to its own systems before problems reach crisis proportions. The rote -learning educational system is still failing to help students develop the individual analytical and problem-solving skills required in the information age. Another example is the banking crisis, which grew to globally alarming proportions over an eight -year period before the government even admitted a problem existed.
In many ways Japan was a preview of what has happened subsequently in most of the world’s other economies… look at the asset bubbles of the late 2000s and the subsequent attempts to fix them; such as quantitative easing (money printing).
Despite these formidable challenges, Japan will probably end up confounding the pessimists. It will likely emerge in the 21st century as a reginal leader in more than just economic terms.
No matter what the future holds, Japan will remain on of the world’s most intriguing destinations for travellers everywhere.
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