Stephen Roach asks: Is this the last chance for Japan?

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Japan is the petri dish for the struggle against the secular stagnation that is now gripping most major developed economies. And, notwithstanding all of the fanfare surrounding “Abenomics,” Japan’s economy remains moribund. In the six quarters of Shinzo Abe’s latest stint as prime minister, annualized real GDP growth has averaged just 1.4% – up only slightly from the anemic post-1992 average of 1%.

Abenomics, with its potentially powerful combination of monetary and fiscal stimulus, coupled with a wide array of structural reforms, was supposed to end Japan’s “lost decades.” All three “arrows” of the strategy were to be aimed at freeing the economy from a 15-year deflationary quagmire.

Unfortunately, not all of the arrows have been soaring in flight. The Bank of Japan seems well on its way to delivering on the first one – embracing what it calls quantitative and qualitative easing (QQE). Relative to GDP, the BOJ’s monetary-policy gambit could actually far outstrip the efforts of America’s Federal Reserve.

And that’s pretty much what happened in Japan over the last 24 hours – with an appropriately positive response from world stock markets.

But the flight of the other two arrows is shaky, at best. In recent days, Abe has raised serious questions about proceeding with the second phase of a previously legislated consumer-tax hike that has long been viewed as the linchpin of Japan’s debt-consolidation strategy. Abe has flinched because the economy remains weak, posing renewed risks of a deflationary relapse. Meanwhile, the third arrow of structural reforms – especially tax, education, and immigration reforms – is nowhere near its target.

Abenomics, one might conclude, is basically a Japanese version of the failed policy combination deployed in the United States and Europe: massive unconventional liquidity injections by central banks (with the European Central Bank apparently now poised to follow the Fed), but little in the way of fundamental fiscal and structural reforms. The political expedience of the short-term monetary fix has triumphed once again.

All the fixes left undone by the end of Barack Obama’s first term became impossible during his second term. The Republican strategy of doing nothing – was implemented and increased in the heart of the worst recession in decades. As if they cared?

The problems of dying infrastructure remain. The only tax structure revisions possible over the remaining two years of Obama’s second term would be in response to corporate demands – with a few sops thrown in for Democrat election campaigns in 2016. Even education at the broadly collegiate level is starting to crumble.

We grow closer to the Japanese model of self-destruction month-by-month. Stephen Roach’s article is as cogent as ever. Though his prime area of expertise is Asia – he may as well apply the same analysis to the United States.

Bobby Jindal leads Republican pack in stupid Ebola policies


Governor Jindal announcing policies for health care workers

Louisiana has a message for many of the scientists and medical experts studying Ebola and aiding efforts to fight the deadly virus in West Africa — stay away.

The state sent a letter to members of the American Society of Tropical Medicine and Hygiene, which is holding its annual conference in New Orleans next week. If they’ve recently been to any of the West African countries where the virus has infected more than 13,000 people, they shouldn’t attend the meeting…

The society of researchers, medical professionals and scientists dates back more than a century, according to its website, and has members around the world.

The letter disinvites any registrants who’ve cared for people with Ebola in the last three weeks…

There are 3,588 people registered to attend the meeting, though the society doesn’t know how many have recently been in Liberia, Guinea or Sierra Leone, where the outbreak is located.

Current U.S. policy suggests that people who’ve cared for Ebola patients but haven’t been exposed to the virus monitor themselves for three weeks. The White House has said that mandatory quarantines of health workers from outbreak zones, such as those implemented by New York and New Jersey, aren’t based on science and may discourage relief workers from volunteering…

Tropical diseases thrive in warm, wet, rural conditions that often have poor sanitation, said Robert Garry, a virologist at Tulane University in New Orleans…“We want people to be able to come back from these regions and discuss and share what they’ve learned,” Garry said in a telephone interview. “That’s what these meetings are all about.”

I expect scare tactics, fear-mongering, ignorance and opportunism from Republican politicians. It’s been their stock in trade for more than a half-century – or longer. But, the addition of STUPID as the leading edge of anti-intellectualism, anti-science ideology really is something new.

The saddest part I fear is that their success at diminishing America’s education system – capability, capacity and modernity – has laid the groundwork for an electorate doing their level best to vote against every rational self-interest.

Uncle Sugar continues to fall behind in affordable broadband

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America’s slow and expensive Internet is more than just an annoyance for people trying to watch “Happy Gilmore” on Netflix. Largely a consequence of monopoly providers, the sluggish service could have long-term economic consequences for American competitiveness.

Downloading a high-definition movie takes about seven seconds in Seoul, Hong Kong, Tokyo, Zurich, Bucharest and Paris, and people pay as little as $30 a month for that connection. In Los Angeles, New York and Washington, downloading the same movie takes 1.4 minutes for people with the fastest Internet available, and they pay $300 a month for the privilege, according to The Cost of Connectivity, a report published Thursday by the New America Foundation’s Open Technology Institute.

The report compares Internet access in big American cities with access in Europe and Asia. Some surprising smaller American cities — Chattanooga, Tenn.; Kansas City (in both Kansas and Missouri); Lafayette, La.; and Bristol, Va. — tied for speed with the biggest cities abroad. In each, the high-speed Internet provider is not one of the big cable or phone companies that provide Internet to most of the United States, but a city-run network or start-up service.

The reason the United States lags many countries in both speed and affordability, according to people who study the issue, has nothing to do with technology. Instead, it is an economic policy problem — the lack of competition in the broadband industry…

For relatively high-speed Internet at 25 megabits per second, 75 percent of homes have one option at most, according to the Federal Communications Commission — usually Comcast, Time Warner, AT&T or Verizon. It’s an issue anyone who has shopped for Internet knows well, and it is even worse for people who live in rural areas. It matters not just for entertainment; an Internet connection is necessary for people to find and perform jobs, and to do new things in areas like medicine and education.

In many parts of Europe, the government tries to foster competition by requiring that the companies that own the pipes carrying broadband to people’s homes lease space in their pipes to rival companies. (That policy is based on the work of Jean Tirole, who won the Nobel Prize in economics this month in part for his work on regulation and communications networks.)

In the United States, the Federal Communications Commission in 2002 reclassified high-speed Internet access as an information service, which is unregulated, rather than as telecommunications, which is regulated. Its hope was that Internet providers would compete with one another to provide the best networks. That didn’t happen. The result has been that they have mostly stayed out of one another’s markets.

Unforeseen consequences is often the excuse offered by the corporate pimps in government. Whether getting direct kickbacks – “campaign donations” – or being obedient little trolls while awaiting the promised job opening in private industry, ain’t much to be gained by working on behalf of us ordinary working folks.

New America’s ranking of cities by average speed for broadband priced between $35 and $50 a month, the top three cities, Seoul, Hong Kong and Paris, offered speeds 10 times faster than the United States cities. In my neck of the prairie I have the choice of two of the national ISP’s. One gets me 26mbps download max for $75 all in. Their “competitor” charges about half that amount – for 7mbps.

Competition American style.

Thanks, Mike