Musings on Japan's industrial economic performance

Over at Japan Economy Watch, Edward Hugh has been supplying readers with copious amounts of data on the performance of the Japanese economy. Recently, he provides us with a chart of Japan's industrial production index for the last couple of years:
Just eyeballing the trend line for the last six months of the industrial production index shows essentially a flatline to me. One could make an argument that on a per capita basis these results aren't too bad since due to Japan's demographics output doesn't necessarily have show positive growth to maintain standard of living for a growing population.

Interestingly, the industrial production index hovered around the 108 mark for the first seven months of 2007 and then the trendline I mentioned above is at about 111; coincidentally jumping up to that level in the same month that the credit crunch hit the USA in full force. I wonder what connection there might be.

The existence of an "Anglosphere"

An individual named James C. Bennett has apparently written a book titled The Anglosphere Challenge, the thesis of which has been described as follows:

"the peculiar island history of England produced a set of institutions that other advanced nations in Europe and Asia lacked--the common law, respect for private property, continuous representative government, a culture that nurtures civil society and entrepreneurial enterprise. It is thus no accident that the Anglosphere has excelled in innovation and economic growth and, Bennett believes, will continue to do so."

I haven't read the book yet, but I agree with the thesis based on what I know about the subject.

Immigrants and fertility

In a thread on Fertility Trends in Europe...commenter Randy says

"it's worth noting that immigrant fertility worldwide, but particularly in the United States and France, might be biased upwards by provisions in nationality laws which grant citizenship to children born in a country, as a manifestation of the jus soli principle. This principle is still intact in American nationality law, less so in French nationality law since 1992 reforms. If one wants to remain in a country with a jus soli citizenship law, why not become a parent and count on not being separated from your citizen child? This incentive won't exist in later generations."

Excellent point!

Spain at a crossroads

Over at Bonobo Land, Edward Hugh has an excellent post describing the Spanish economic outlook at this point. The country has a housing oversupply proportionally greater than that of the US market. Edward suggests that Spain today is at the point where Japan was back in 1990 when that country's property bubble sprang a leak.

It appears to me that Edward is on the same page with Fed Chairman Bernanke regarding the value of quick rate cuts in mitigating the effects of a real estate bust. The discussion threads I read at some US blogs have a lot of folks worrying that the Fed is unleashing inevitable inflation through its recent actions. Nobody is bringing up the Japanese case; perhaps its a situation of domestic blinders. I think I am leaning towards agreeing that the rate cuts are appropriate.

Edward mentions that Spain has room for substantial fiscal stimulus and points to Japanese efforts at the same. My view of Japan's attempts at fiscal stimulus in the 1990's is that it was poorly managed. Much of the cash went to construction projects that really added no value to transportation infrastructure; and due to the corruption in Japan's construction sector (bid-rigging) a material chunk of said cash was siphoned off. The stimulus packages would have been better if they were directed towards research in areas such as biotechnology or pharmaceuticals, or even alternative energy sources. Doing this would have at least provided the chance of generating groundbreaking technology. Instead Japan built bullet trains to nowhere and bought the Olympic Games.

This is where Spain can do it right. Spend the fiscal stimulus on educating its workers and building world class research universities. Building a meaningfully sized military would be a diversification, and would give Spain some clout in global security issues. Plus technical spinoffs from military development can be turned into cash-generating exports.