Even a Street-dog Has Lucky Days

Storms around Boulder Creek always blows down lots of branches and small trees.  Last night was no exception.  Some branches had hit around my driveway, about a foot from my car.  There is not a scratch on it.  Rare, but sometimes even I get lucky.

(The title is from a Japanese proverb.)

Keynesian Stimulus and Japan's Lost Decade

Two historical examples of fiscal policies that Keynesians like to point out are the US in the 30s and Japan in the 90s.  I have already looked at the 30s, and the numbers did not suggest a Keynesian conclusion to me.  I am speaking here of the Keynesian theory of stimulus spending. 

Today I will look at the numbers for Japan in the lost decade, supposed to be almost exactly the 1990s.

The chart above shows Japan's government consumption, both in absolute terms and as a percentage of the economy.  All numbers are from stats.oecd.org.  The prime minister at the time purported to be Keynesian, and as the cart shows, they did increase spending significantly throughout the decade.  Total spending, in inflation-adjusted Yen, grew by about 50% during the decade.  As a percentage of the economy, government grew from 31% to 39.5%, spiking at 43% during the 1997-98 Asian crisis.  I am sure some Keynesians will say that no single year constitute a model Keynesian stimulus, but I have heard some of them claim that the Japanese economy supposedly got better when the government was keeping up spending.  Let us look at this claim next.

This chart shows GDP growth; unemployment; government consumption, change over year earlier; and taxes, percent of GDP, change from year earlier.  These measures are all in percent, so that enables us to compare them in one chart.

One thing to be careful about is that the slope at any given segment matters less than the distance from 0.  The last good year of the Japanese economy, 1989, is included, and the GDP line drops dramatically from there.  That just means the economy stopped growing, it did not actually shrink until the 97/98 crisis. 

Taxes are included in the chart, though it stays within 1 percent of change over the previous year (except for 1992).  Apparently the Japanese government did not pursue tax relief or revenue-based austerity over the period.  Without making a comment about the effectiveness of that, it is a bit fortunate from an examination standpoint, because it is then an important variable that is held almost constant.

I make three observations from this chart:

1. Government spending growth does seem to lead to some nominal GDP growth.  It is not a silver bullet: it did not seem to help much in 89-90, where I would have expected stimulus to be most effective, from what the Keynesians tell me.  Neither is it required: Japan's economy had some of its best years from 2004-2007, though government spending levelled off.

2. Japan's attempt at stimulus was enourmously costly, yet its best year gave the Japanese a paltry 2.8% economic growth.  For this, the Japanese government grew permanently from ~30% of GDP to ~40% of GDP, and its debt to GDP ratio went from ~20% to ~80%.  Despite all this increase in spending, the economy never did as well as it had done in the 80s, and neither did it achieve consistent growth.

3. Most importantly, the unemployment rate did worst during years with the most spending.  Unemployment rose steadily during the 94-95 years, when the initial stimulus spending kicked in.  It then levelled off when spending slowed to a more reasonable 1% in 97.  As the 98-99 stimulus spending took off, unemployment went up with it.  Not until spending growth slowed after 2003 did unemployment start to come down, slowly. 

Even if unemployment had stayed neutral, the tradeoffs seems dubious, at best.  With the third point above, one of the best arguments normally presented in favor of stimulus spending seems to be exactly on its head.  If we take the Japanese example as a case in point, stimulus spending is a terrible idea.  Of course, it is possible that this period is not a good example of stimulus spending, but then Keynesians need to stop using it as their poster boy.

Denmarks Liberation

It was 66 years ago today that Denmark was liberated from German occupation, by nature of the Germans in Norway, Holland and Denmark capitulating to the English. In these days of earthquakes, terrorism and environmental alarmism, it is worth remembering that the second world war is the most devastating and atrocious event humans have inflicted on ourselves. Nothing matches it in destruction or evil intent. That is not to belittle the hardships incurred by current events, far from it. I just cannot help celebrating all the little, and big, milestones leading to Nazi Germany's defeat.

Almost exactly three months later, the US dropped the first atomic bomb on Japan. Naho and I went to Hiroshima to visit the Peace Park, just before the new year broke. I succeeded in hitting the site on one of the three days in the year that the museum is closed. Still, we enjoyed the Cenotaph (pictured right) and the park (pictured below). You can also see the Memorial through the Cenotaph. The park had several peace-oriented inscriptions, commemorating the victims and expressing hope that mankind has learnt from the events. Judging the decades since then, that has sadly not been the case.

Not being able to visit the museum, we instead spent the rest of the day at beautiful Miyajima.

Disasters and Heroes

The devastation in Japan is mind-boggling. I am sure you have seen lots of news reports on the carnage. I want to mention something positive about these events. What always impresses me is the heroic action of self-less individuals. For instance, 343 Firefighters died during rescue efforts after the 9/11 attacks. This time around, it is particularly the staff at the Fukishima plant that continually puts the safety of the public ahead of themselves. From the article:

"The longer they stay the more dangerous it becomes for them," said expert Margaret Harding. "I think it is a testament to their guts for them to say, 'We'll stay and if that means we go, we go.'"

Another thing I want to point out is that Japan provided awesome help after Hurricane Katrina.

Ronald Bailey writes a sober overview of the issues with nuclear power, from Fukishima to California.

I contributed to Americares.org. I picked them for two reasons: 98% of their funding goes towards programs, and just as importantly, 73% of their contributions come from individuals. I believe it is important for an organization not to be beholden to one or a few main contributors, whether corporate or governmental.

The Scenic Temple

All the temples I have seen in Japan are in beautiful spots. Still, Miayjima, on an island outside Hiroshima, is situated somewhat perfectly between the lush hills, dramatic peaks and a blue ocean.

Miyajima is distinct for having its gate out in water. Believers have to pass through the gate when they pay their respects, they do not get a break just because you can fit a cruise ship between it and the sanctuary.

Some of the woodwork is centuries old. Notice the rice scoop with the inscriptions. I saw several of those spoons of many different sizes throughout the area. You would think there would be some ceremony or spiritual significance attached to them -- and so there is, but I was told the inscription is provided by a company that 'made a contribution.' Another sign that in the Japanese culture, there is no hard boundary between religion and commerce.

Japanese New Year

Above is a short video I took outside of Yasaka Jingu shrine, just a minute or two before midnight on New Year's eve. It was a different experience for me. The crowd was full of anticipation, while still calm and all I heard was chatting from all corners. There was a big woo at midnight, then we left. It was a challenge moving through the pack, but luckily we had another group breaking trail for us.

These are some pictures of the shrine from earlier in the evening, when we had a chance to go in and explore a bit. As usual with religious sites in Asia, inside was a mix of commercial booths and various chapels where people were revering.

We also saw this little chapel in another part of town. This one was in the middle of a retail area, the hutong maze of Kyoto. I am getting the sense that the line between spiritual worship and appeals to temporal fortune is very much blurred. This particular spot was designed as if its purpose was religious, and I understood it to be built and maintained by monks. Yet, the way people approached and acted here, and the way Naho talked about it, it seemed more secular in nature. Its location in between all the shops makes sense, since it is dedicated to fortune and prosperity.

Our meal on the morning of New Year day. Of all the terrific meals I have in Japan, on a repeat basis now, this one still stood out. I like exploring what is in the various bowls -- the lids add to the mystery!

Beatiful Kobe

I am back in Japan, enjoying a few days in beautiful Kobe. I discovered some nice hiking in the hills above the city, which I have taken advantage off.

Stay tuned for more Japan pictures the next few weeks.

Japanese Java

I was pleasantly, but thoroughly, surprised to discover that the coffee in Japan is so good. On reflection, it makes sense. Not only is Japan a food culture, they pay attention to the details that makes the difference between a so-so and an excellent cup of joe.

I have been told that Japan receives the best coffee beans. Again, this must be so, since the Japanese are willing to pay the premium for the quality. I have seen many complaints about Starbucks charging $2 for a cup of coffee, but in the high-end Tokyo shops, they think nothing of paying $5-$10 for a much smaller, but much better serving.

In some shops, they use the characteristic bulbs of the siphon brewing method. Another surprise to me was that the best coffee I had, at Cafe de L'Ambre in Tokyo, poured the water with a steady hand. The care and skill they apply to brewing is fascinating. These guys are my new role models.

Special thanks to Mike Kleindl for turning me on to Cafe de L'Ambre.

On the home front, here is a picture of Genevieve and Jenna-Sue, from my favorite coffee shop in the Bay Area, Jenna-Sue's Cafe in Boulder Creek.

Goodby Kobe

I know I am in Tokyo, thanks to the unique high-rise architecture. I enjoyed my last full day yesterday, having lunch with my friend Hiro, who I met at Nishiho-Sanso. We had a Japanese hot-pot type lunch, the first I had of its kind, and it was outstanding. We called the waitress from an antique phone.

Various unrelated pictures attached.

A Little Cherry Blossoms

I posted some cherry blossom pictures. Following is a link to the album and some samples. I did not get the full bloom, only the initial budding. It was already spectacular.

Enjoy.

Cherry Blossoms

Beware the Osaka Hutong

The term 'hutong' originates in China, but I grokked its meaning in Japan. I think of it as a commercial alley. Oriental cities contain a plethora of such little streets and walk-throughs brimming with close-quarters commercialism. The difference is that in Japan, the concept is upgraded to the 21st century and incorporated into a modern cityscape.

In particular, Osaka, where the shopper's paradise makes New York look like Reykjavik, and even Tokyo cannot compete in sheer density, the alluring retail maze is everywhere. If you spot an entry, be careful. It will suck you up, and if you are low on will-power, it will not spit you back out until you max your credit.

In the following series of pictures, I have included one from Hong Kong and one from Beijing, to round it out.

Japanavia

As I travel around Japan, I notice many details that are distinctly Scandinavian. Sometimes the illusion is so complete as to be uncanny. Following are some pictures that are not that interesting in themselves, except that they could have been taken in Japan or either Denmark or Sweden. To be sure, a native or an expert might notice a revealing detail, so do not take it in a technical sense.

Often, I will see a building or a tile pattern that looks similar to something I might see in Denmark, but something is a little off. For instance, the brick-sizes and methods used in masonry differs slightly, so that a brick building may only look familiar at a distance. Sometimes I cannot put my finger on it. At other times, I will see a house that looks perfectly Danish, but a mountain in the distance or a sign in Kanji destroys the illusion.

To be honest, I am not certain if I initially saw a couple of these patterns, then started looking for them. I will say that they keep jumping out at me in ways that do not happen in other parts of the world.

Poor Norway gets left out. I do not see the wooden construction particular to Norway and northern Sweden, and the mountains near the cities are not dramatic enough.