If Paul Krugman Were a Woman
He would be Noriko Hama.
"Please do not believe all the talk about the green shoots of the Japanese economy, which I suspect you might have heard. We are in pretty bad shape."
Noriko Hama, a professor of economics at Doshisha University in Kyoto, is a sort of Japanese version of Paul Krugman—if Paul Krugman were a woman with a purple rinse, pink jacket, funky blue jeans, black patent leather pumps, and a vague British accent. Hama, who lived in the United Kingdom as a child in the 1960s, is something of an intellectual celebrity in Japan. (One of my Japanese hosts was excited to get her autograph after our meeting.) She's a respected academic economist and a well-known commentator. She writes a monthly column for the Japan Times and is a regular contributor to Open Democracy. Like Krugman, she's a scholar and polemicist who doesn't shrink from speaking directly about politics. She's also got the columnist's gift for phrasing and buzzwords.
The 1990s, for Hama, were a "period of hospitalization for the Japanese economy," during which "all major Japanese companies were in intensive care." Coming into the crisis of 2008, things weren't much better. In this past decade, she said, Japan's economy had "become a very nonparticipatory economy." As Japanese companies became fully engaged in global competition, they abandoned their paternalistic ways and were "very willing to fire and very unwilling to hire." The Japanese economy and Japanese society used to operate like a convoy—"a fleet of ships that proceeds at the pace of its slowest member. Nothing terribly exciting happens but nobody gets left behind." Now, she argues, the convoy has become a "fleet of ships that is sinking at the pace of its fastest sinker."
Hama is eager to disabuse her audience—Japanese students and visiting American journalists—of hoary domestic myths. Japan, a society that prides itself on equality, is now riven with disparities, between, for example, rich and poor. The struggles of workers over the past decade tamped down Japanese consumption to the point that "as we came into the crisis, it was exports and exports only that were propping up the economy." But Tokyo, with its buzzing department stores and booster-ish business types, seemed to be doing quite well, no? "You'll know next to nothing about what's happening in the economy if you keep talking to people at the U.S. Chamber of Commerce in Tokyo." Out in the rural areas and distant regions, she notes, there's a phenomenon called "shutter street"—all the shutters of the stores and companies closed. "It has become a very serious dual economy, in which Tokyo goes from strength to strength but everybody else sinks further down the tubes."
Like Krugman, Hama is sympathetic to President Obama but also quite critical. The "Buy American" provisions in the stimulus package are counterproductive. The U.S. government, she argues, "is becoming the largest nonconforming loan for the Japanese bankers." And she doesn't like the directions in which things are going. "Ever since his inauguration, I have persistently feared that Obama might become the Reluctant President," Hama said. "And by that I mean someone who keeps on saying, 'Reluctantly, reluctantly, against my better judgment I have to go down this road.' " She cites, for example, the takeover of General Motors.
Hama has a low opinion of the economic capabilities of elected politicians generally, especially her own. She notes that "the Bank of Japan has been very pragmatic, very broad-sighted, and very calm and collected in terms of dealing with this current situation." While it can be a little opaque, "on the whole, we can be confident that the Bank of Japan is not going to lose its mind anytime soon," she said. "The same cannot be said about the government, the prime minister, and the Cabinet." The Liberal Democratic Party, paralyzed by internal rivalries and declining popularity, seems likely to lose power for the first time in a half-century in upcoming elections. "This is the worst possible moment in terms of economic management to have this type of situation on our hands politically. The lot in power are really at the end of their sell-by date."
As with many economists, Hama is excellent on the diagnosis but not as sure-footed when it comes to a cure. What is to be done? She turns to the white board and draws two acronyms with an arrow between them: SLICS and SLYCS. The global economy needs to move from a SLICS (So Long as I Can Survive) mentality to a SLYCS (So Long as You Can Survive) mentality. Central banks and governments should worry less about stimulating domestic demand for domestic goods and more about stimulating demand for traded goods. Toyota workers should buy Nissan cars, and vice versa. "The U.S. has no business saying 'buy American'; it should be saying buy non-American," she said. "It's this kind of a huge mental leap that is actually required if we are going to move out of this situation we're in." Slow food and locavores have their place, Hama says. But she'd prefer that China and Japan export shiitake mushrooms to each other. Japan can send its most delicious, most expensive ones to China, where the free-spending nouveau riche will pay big money for them, while China can mass-produce cheaper ones that can be consumed by Japan's yen-pinching masses. "We'll have a mushroom barbecue."
Daniel Gross is the Moneybox columnist for Slate and the business columnist for Newsweek. You can e-mail him at firstname.lastname@example.org and follow him on Twitter. His latest book, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, has just been published in paperback.
Photograph of Paul Krugman by Mike Clarke/AFP/Getty Images.