Paul L. Caron

Monday, November 16, 2020

Japan Can Teach U.S. Lessons In Income Growth And Equality

The Japan Times, Japanese Capitalism Can Teach U.S. Lessons in Income Growth and Equality:

U.S. President-elect Joe Biden can learn a lot from Japan.

I say this not because Japan-style capitalism does not have its share of problems, but because the overall result generated by the Japanese economic system is extremely positive. Japan is the global best-in-class for balancing both income growth and income distribution. The result is not just extraordinary socioeconomic stability, but also strong resilience against the temptations of divisive populism — a la Donald Trump.

Creating and sustaining a stable society is one of the fundamental goals of economic policymaking. For this, an economy must both grow and distribute the spoils of wealth creation in a fair and equitable way. So what’s the score? How wealthy are the people and how is that wealth distributed? At the end of last year, the median net financial wealth — all financial assets minus liabilities — for households in Japan stood at $104,000. In the United States, it was $62,000.

Clear-speak: The average Japanese is actually about 40% richer than the average American. ...

All said, American policymakers can learn a lot from Japan. Of course, there are many complications and complexities that make it impossible to import Japan-style capitalism and economic policy into America. However, the lesson from Japan is clearly that yes, it is possible to balance income growth and income distribution.

I, for one, am confident America’s new leadership team will study Japan closely and find an American way towards both better socioeconomic balance and greater national unity.

(Hat Tip: Ted Seto)

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