Did Japan perceive their hypergrowth as stable and unstoppable as the United States did?

Or was it commonly known to the man on the street that it would fail?

  • 6
    Having lived through a few economic bubbles in the US, I'd say its a pretty good bet that the common person thought the party would last forever.
    – T.E.D.
    Jun 10 '16 at 13:29

Japan thought highly of its hypergrowth as "stable and unstoppable." One major reason was because it was directed from the top, by the "government," specifically the Ministry of Trade and Industry (MITI) that told major corporations what to produce, and how to price it (low, to penetrate foreign export markets). This actually led to the illegal trade practice of "dumping" (selling goods more cheaply abroad than at home).

The Japanese (and other Asians) knew that American business cycles waxed and waned but felt that this was because they were driven by private sector initiatives. The Japanese thought that the "government" would know better, if only because it had access to all the data in the country, and was staffed by graduates of the best schools. This feeling is akin to many Americans' faith in the Fed(eral Reserve Bank).

But even the Japanese "government" could go wrong, particularly if it was encouraging practices that would invite retaliation. And its export-oriented strategy meant that it did not have nearly as much access to the global data set as it might have for Japan alone.

Source: Hugh Patrick, Asia's New Giant: How the Japanese Economy Works https://www.amazon.com/Asias-New-Giant-Japanese-Economy/dp/0815769342?

  • 1
    So the growth of Japan, one of the miracles of Capitalism, was due to a mild form of State Planning? I think this answer would greatly benefit from sources - it seems the NYT has articles on export quotas and dumping
    – user45891
    Jun 10 '16 at 21:04
  • 1
    @user45891: Yes, state planning was part of Japan's success. I added the source from which I learned this.
    – Tom Au
    Jun 10 '16 at 22:48

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