The State of the Economy, Part 1 - A National Look

Cap markets are unstable. In the past there was no way to make them stable. But today we have computer power that can be used to make them stable. By using the greater computer power of today we can have a much higher turn over of cap in the cap market. This higher turnover will make the market harder to gme or control and the market will no longer have the unstable run ups or declines. Who can change or control the market when say 20% of the capital is trading each day. So now that we have the compute power to provide for all these transactions that will smooth out the market how to we force people to turn over at a rate of 20% a day? Easy, put a cap gains tax of 0% (zero) on all gains of 7 days or less and put a cap gains tax of 90% of all gains of more than 7 days. The likes of Yahoo Micosoft and/or Sun Micro Systems will give us the systems that will provide automated software agents to support turning over one's investments every 7 days (based on the specs you give the agent). A system like this will make the financial markets work as smoothly as the local fruit market.

Many U.S. economists refer to Japan’s “lost decade” of the 1990s, a time when Japanese economic growth slowed compared with that in the United States. One source of slower growth was the disguised insolvency of Japan’s financial system. Many banks and insurance companies were reluctant to lend, partly because their assets lost a great deal of value as a result of the deflation of the real estate bubble of the 1980s. The losses in their balance sheets were not fully reflected in their official accounts, because the Japanese government did not require financial institutions to recognize them. Nonetheless, underlying weakness of institutional balance sheets made most financial institutions reluctant to lend, except to creditors with the most unblemished credit records.

While it is true that Japanese growth was very slow in the 1990s, the country was not nearly as badly off as the USA in the Great Depression. Objective economic conditions in Japan in the 1990s and in the USA in the 1930s were not even remotely comparable. The highest Japanese unemployment rate between 1990 and 2005 was less than 5½%, not 25%, which was the peak U.S. unemployment rate in the Great Depression. The Japanese economy grew during the 1990s, albeit slowly. Finally, the average worker in Japan saw a sizeable decline in the amount of time spent on his or her job. Average work time in Japan by the end of the 1990s was slightly lower than average work time in the USA, though Japanese work hours had been substantially higher than those in the USA in 1980 and 1990. The USA - - not Japan - - now leads the rich countries in the amount of time its salary-men spend in the workplace. Taking account of the living standard improvement that came from a shorter work week and work year, Japanese workers continued to see notable improvements in their overall living standards in the 1990s.

As a frequent visitor to Japan during the past 20 years, I can confidently say that no honest observer would confuse Tokyo, Osaka, or Kyoto in the 1990s with Chicago, New York, or Detroit during the Great Depression. There were no long queues of unemployed workers waiting to apply for job openings or free meals, and Japanese homes, cars, and household appliances continued to improve over the decade. If life in 2009 America were as comfortable as life for Japanese workers during Japan’s “lost decade,” a large fraction of middle class Americans would be quite happy.