Summary
Japan will recover. When its economic achievements once again earn the world’s admiration, its per capita GDP will grow faster, and its Information Technology revolution will prove even greater, than in the United States. As Japan brings its inefficient industries up to world benchmarks, sustained annual growth of 3 percent, perhaps more, will be within reach. This is the confident forecast that begins Japanese Phoenix: The Long Road to Economic Revival by the author of Japan: The System That Soured, which several years ago accurately predicted Japan’s current travails at a time when others were prematurely pronouncing full recovery. Katz warns, however, that there is bad news to go with the good: It will take at least ten more years to reach this promised land. And the road will be very bumpy. So deep-seated are Japan’s dysfunctions that, even if it did everything right today, it would take five years for truly vibrant growth to take hold. But Japan will not do everything right today. Opposition to reform is equally deep-seated, and a myriad of vested interests and millions of jobs are at stake. Still, he notes, there is little doubt that reform will eventually succeed. Katz concludes that while, so far, for every step forward, there have been two steps back, this is just the second round in a 15-round fight. Japan is a great nation currently trapped in obsolete institutions. As it has before, Japan will find a way to surmount its problems and regain its forward progress.