August 23, 2002	Friday	Jamadi-us-Saani 13,1423

TOKYO: “If this is a recession, I’d like to have one in my constituency”. These words, uttered by an incredulous British minister during a recent trip to Tokyo, are being echoed with increasing frequency as the rest of the world starts to grapple with the sort of economic problems that Japan has lived with for more than a decade.

While the United States and Europe are struggling for the first time in 70 years with the sudden bursting of a speculative bubble, plunging stock prices and a growing fear of deflation, they are things Japan has learnt to live with.

Since the spectacular collapse in Japanese share and property values started in 1989, the country has by turns been demonized as a threat to the world economy, sympathized with for the plight of its suicidal salarymen or discredited for the government’s unfashionable attempt to spend its way out of a slump.

But as the US and others start to show many of the same symptoms that it experienced at the start of the 1990s, many Japanese are asking how other countries will cope with the domestic and global repercussions.

Senior Japanese business leaders are already pointing across the Pacific to identify the big risk to stability. Last week, Hiroshi Okuda, chairman of the Japanese business federation, called the fall of prices on Wall Street, “a serious crisis for Japan”. Nobuo Yamaguchi, chairman of the chamber of commerce and industry, warned that it would have a large negative impact on Japanese banks’ efforts to dispose of their bad loans.

Although Japan can only lose from the slowdown of its leading export market, there is a certain feeling of schadenfreude in Tokyo that the accusations of crony capitalism that were levelled at Japanese executives and politicians during the Asian financial crisis are now being aimed at US congressmen and the chiefs of Enron, WorldCom and a host of other disgraced companies.

Western financiers and central bankers now visit Tokyo with rather more humility than they have done at any time in the past decade. Where once they came to lecture Japanese officials on the need for deregulation and laissez-faire capitalism, now they come to learn from the country’s monetary mistakes and its success in easing the social impact of a protracted recession.

The new view of Japan as a portent rather than an aberration has been apparent since the publication of a paper issued by the US Federal Reserve entitled “Preventing deflation: lessons from Japan’s experience in the 1990s.” It drew the remarkable conclusion that “deflation is more debilitating to economies — and harder to control — than inflation,” a significant departure for central bankers who have long been conditioned to regard rising prices as their biggest enemy.—Dawn/The Guardian News Service.