When I was a kid, all you ever heard about Japan was how rich they were and how they were buying up everything around you and how strong the Japan economy was.
I remember my dad and my uncles cursing about how rotten Japanese cars were, even though everybody knew they didn’t break down every day and hog gas like American made cars did. And, as a kid, I was at least a little bit aware that all our TVs, stereos and, most importantly, video games were made in Japan!
But then the bubble burst. Everything fell apart. The Japanese economy is on the decline and the country’s doomed! At least, that’s what some people will tell you. But what’s really going on with the Japanese economy? It’s confusing, but let’s see if we can break it all down and understand it.
At the end of World War II, Japan was as war-ravaged as a country can be. Japan is such a wealthy nation, it’s hard to imagine, but people were barely getting by on meager rice rations in the burnt out rubble of the cities. It was a desperate state of affairs, but with some help from the US occupation, as well as lots of the pluck and hard work the Japanese are known for, they rebuilt their nation piece by piece to the amazement of the world.
By the 1960’s, the machine of Japanese manufacturing was whirring to a high pitch. Japan was already producing the electronics it would be world famous for, as well as other specialized goods. Japan was able to import lots of food and other items that had been traditionally available.
The Japanese economy grew because of hard work but also because of the Japanese industrial system. Japan had always had a group of powerful industrialists. Mitsubishi and several other giant companies that are still here today are actually over a hundred years old, and descend from powerful clans of the medieval period! This system of friendly competition has been in place for a long time, and it keeps the Japanese economy in balance. Furthermore, workers are rewarded with lifetime employment and high salaries for their loyalty to the companies.
But what does it mean that “the bubble burst?” That’s pretty ominous, isn’t it? Well, what it means is that the Japanese economy was riding high, ridiculously high, in the late Â80’s and early Â90’s because of deregulation and investment, and when the bubble got too big, there was nothing inside it. There was a lack of the actual goods. And the whole thing burst.
Although the Japanese economy has been slowing down in the last 10 or 20 years, it is still a strong, healthy market. It’s just not the monster it used to be!