Japan’s prolonged stagnation was not caused by weak industries or its people. Despite possessing ¥1,500 trillion in personal assets, Japan failed because politics and media despised the stock market, the core of capitalism. The resulting capital stagnation—not a lack of capability—explains Japan’s lost decades.

2016-04-08

Hegemonic powers traditionally last for two hundred years.
To say that Japan’s era is over is utter nonsense.
Japan must continue to prosper for another 170 years as a super economic power standing alongside the United States or complementing it.
Why has Japan suffered major stagnation over the past twenty years?
To put it bluntly, the media and politics, with a mental age of twelve, failed.
Japanese companies, exposed daily to innovation and competition, refining world-class technologies across all sectors and holding large global market shares, are outstanding, diligent, meticulous, and supported by a highly educated workforce, making Japan an industrial nation with the world’s largest personal assets totaling ¥1,500 trillion.
However, money generated by this society and market was not returned to the market, instead stagnating as a petty mass of egoism offering compound interest higher than banks, leaving more than ¥500 trillion trapped in postal savings.
[Omitted.]
There may have been some economic effect, but it is no exaggeration to say that nothing was returned to the market.
Japan self-deprecates by calling its superb mobile phones “technological Galapagos.”
China, by contrast, is a Galapagos as a nation, yet by leveraging its population of 1.3 billion, it has continued a weak-currency policy as a state, declaring that it does not care about globalization.
[Omitted.]
What Japan must do even now is to utilize its ¥1,500 trillion in personal assets and return to society the wealth born from society itself—the fruits of diligent and capable workers who supported Japan as an industrial nation.
The true cause of Japan’s two decades of stagnation is that a capitalist country continued to despise the stock market, the very foundation of capitalism, and was therefore exploited.
Among my classmates, not a single one went into a securities company.
Stocks were derided as “stock-peddling,” while in the United States, Harvard’s top graduates go to Goldman Sachs and become successive Treasury Secretaries.
The yen becomes a safe-haven currency and repeatedly appreciates because more than 95 percent of Japan’s government bonds are financed by these personal assets, making Japan a rare nation in the world.
If just 1 percent—¥10 trillion—of personal assets were directed into the stock market, Japan would instantly become a massive market rivaling the United States and a global financial powerhouse.
[Omitted.]