Japan Still Can’t Figure Out How to Avoid Deflation

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No matter what it does, the Bank of Japan just can’t seem to generate any inflation. The BOJ meets on Friday to decide on its next move, and Prime Minister Shinzo Abe upped the ante yesterday by announcing a large spending increase prior to the meeting. He hopes to get the BOJ to coordinate more monetary easing with his stimulus package, something that might finally push inflation up.

So what’s going on, anyway? Obviously I don’t know, but the whole thing is peculiar because Japan’s economy has actually done reasonably well since the Great Recession. As the chart on the right shows, real GDP per working-age adult has grown about as much as it has in the United States.

Why have I carefully shown GDP growth this way? Because Japan’s population is shrinking: over the past two decades, the number of working-age adults has declined from 86 million to 78 million. This means that GDP will shrink too. But that’s pretty meaningless. Obviously a lower population means a lower GDP. What you want to know is how much economic activity you generate per person.

So if economic growth is OK, why the inflation problem? Perhaps it’s inevitable when a population shrinks and ages. If retired workers are too cautious to increase their spending, then stimulus is working against a huge headwind—and one that gets bigger every year as the population ages even more.

But it’s not as if everyone doesn’t know this already, and even so nobody can figure out quite what Japan needs to do to avoid a deflationary spiral. Maybe helicopter money will be next?

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

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