This chapter highlights economist Ryoji Musha’s argument that Japanese people consistently underestimate their own country and fall into excessive self-deprecation. Although Japan suffered two decades of stagnation after the bubble collapse, its economic structure remains fundamentally strong. The real issue is not government debt but massive private-sector oversaving, which suppresses demand and hinders growth. Musha urges Japan to adopt accurate self-assessment, proactive fiscal policy, and a realistic understanding of global economic trends instead of relying on pessimistic narratives.

October 4, 2017

What follows is the continuation of the previous chapter.

Ryoji Musha
America and Japan Will Both Win

〈Do not listen to the pessimists who paralyze Japan’s economy.
A historic tailwind is blowing.〉

Do not misunderstand Japan.

I have published In the End, the American Economy Keeps Winning While China Keeps Losing (Kodansha + Alpha Shinsho).

The most important message in this book is the following:
I want to correct the fact that Japanese people misunderstand Japan as it truly is, underestimate it, and engage in a degree of self-deprecation that is nothing short of abnormal.

In 1990, at the peak of the bubble, the Japanese overestimated themselves, became arrogant, and the bubble collapsed.
The shock of that collapse stands in stark contrast to the present.

Japan needs correct policies, correct corporate strategies, and correct investment responses based on correct evaluation.

Yes, the overestimation and arrogance of the past were problematic.
But at the same time, today’s abnormal underestimation and self-deprecating view of Japan are equally problematic.

What is truly happening on the front lines of the economy and industry?
Without knowing this reality, far too many pessimists make gloomy forecasts.

Since the collapse of the bubble, Japan has stagnated for twenty years and the economy has suffered.
This past has imprinted the belief that such stagnation will continue forever, and pessimism has become widespread.
It is like driving a car while looking only at the rear-view mirror.
I declare that this way of thinking is a grave mistake.

I am not a philosopher, nor an economic theorist.
I pride myself on being an “empirical analyst.”
I am always searching for and verifying the logic that best explains reality.

From my perspective, there is an overwhelming amount of unfounded argument circulating in society.
One example is the argument that “Japan’s fiscal deficit is a terminal illness, and we must maintain fiscal discipline and pursue sober fiscal reconstruction.”
That we must quickly reduce the national debt, and even if daily life becomes more difficult, we must endure it.

This is a misguided argument.
Japan’s biggest economic problem is not the fiscal deficit.
The true root of the problem is that private companies and households have accumulated the world’s largest excess savings.

If money is earned but not spent, the economy will inevitably decline, no matter how healthy government finances appear.

When excessive capital accumulates and the private sector cannot create demand, the government must borrow instead, return capital to the real economic cycle, and create demand.

If the private sector holds excessive savings and the government also lets its money sit idle, the surplus-capital problem becomes even more severe and the economy falls into a disastrous state.

Readers will surely recognize, through Musha’s article, how correct my “Turntable of Civilization” has always been.

This chapter continues.