When Barack Obama pointed last night to the stimulus packages passed by the Japanese during their 1990s recession, I had to guffaw because they simply didn’t work. Trillions of dollars were spent on explosive government growth that did little to nothing to spur economic recovery, though it did sink the nation into crippling debt.
Russell Roberts, writing for Cafe Hayek, lays out the Japanese experiment. Click on the link to read it for yourself, the take-home lesson is this:
"In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade. This has led many to conclude that spending did little more than sink Japan deeply into debt, leaving an enormous tax burden for future generations…
"…Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste.
"Among ordinary Japanese, the spending is widely disparaged for having turned the nation into a public-works-based welfare state and making regional economies dependent on Tokyo for jobs."
Last night’s press conference showed the futility of putting economic recovery into the hands of a man who has never created a job, but dedicated his entire life to fattening government.