Japan and the jellyfish

Japan isn’t out of the economic woods yet. Which means, of course, that the Commonwealth isn’t either.

Not that our same, lame excuses for punting the tourism market are valid. Japan’s woes were actually an opportunity for the Commonwealth’s tourism sector to get aggressive and carve out some market share from rival Guam, but this is a sophisticated concept far beyond the ken of certain policymaker.

By contrast, we’ll merely float with the financial tide like an economic jellyfish. Japan up, CNMI up. Japan down, CNMI down.

And Japan may very well start bobbing down again. It’s hard to believe that a little over a decade ago, Japan’s bankers were the ones to impress, be you a business or even a government. We watched the second-by-second play as Japan’s institutional cash sniffed at U.S. bonds like picky shoppers in a fish market. The guys from the land of the rising sun had the coin, and they made, and broke, markets, businesses, and governments.

Ah, how times have changed. Japan’s banks are now so shaky that a “Japan premium” is being charged on some loans extended to them. In other words, they are viewed as risky, like an old college buddy who fell from grace and is into you for $200 in bar tabs. At some point, you gotta’ wonder.

For now, Japan is eeking out some economic growth, on the order of 1.5 percent a year. That’s mighty slim. Meanwhile, prices are falling–yes, falling. “Deflation” might sound happy since it’s the opposite of that wallet-zapping monster inflation, but life ain’t so grand. Deflation can signal the risk of a depression, and I wouldn’t be one bit surprised if Japan jumps off an economic Banzai cliff someday and the economy makes a big, headline-stealing splat.

To the foreign eye, the Japanese are perceived as rich, brand-conscious consumers. But you know what? They’re not all that rich. Once you account for Japan’s insanely high cost of living (even though prices are falling) the average worker up there isn’t exactly rolling in the dough, American-style.

Per-capita Gross Domestic Product (adjusted for price levels) measures in at $23,780 for Japan. Compare this with Uncle Sam’s $33,872.

That, folks, is one heck of a difference.

Admittedly, the U.S. economy is a hard standard to measure up to. The government is determined to smother out every nuance of freedom, but it has yet to succeed, and those pesky entrepreneurs (like, say, er, Microsoft…) have sparked the global cyber-revolution. In Japan, by contrast, the government is the reigning sumo wrestler in the financial ring, and has pretty much squished anyone who isn’t part of its old boy network. Result: American businesses are fleet of feet. Japan’s, by contrast, are largely ponderous and clay-footed. In a dynamic world, ye shall be judged as quick…or dead.

As for the CNMI, effective planning isn’t going to happen, so we’ll just float along with Japan’s fortunes. Those fortunes are a lot more likely to sink than they are to swim.

Ed Stephens, Jr. is an economist and columnist for the Saipan Tribune. “Ed4Saipan@yahoo.com”