Friday, July 22, 2011

"an evil eye, blasphemy, pride, foolishness" - (Japan's Deflation and China)

Around Fukushima Prefecture...



Japan's Deflation and China (La déflation au Japon et en Chine)

In any society, rich people are trying to continue to be rich.

In order for rich people to stay rich, they would not give their money to the poor.

In any society, rich companies aim to continue to be rich.

In order for rich companies to stay rich, they would pay less to workers.

Ultimately, a country full of poor people and ordinary workers will experience less tax revenue and thus a big fiscal deficit if they have rich people and rich companies.

Conversely, rich people and rich companies are basically not interested in a fiscal deficit of their nation. They will simply support an idea of raising tax on poor people and ordinary workers to cope with the financial deficit.

Japan is one of countries facing this kind of a potential crisis.


SECTION I: A False Economic Theory

Prime Minister of Japan Mr. Naoto Kan took a too unique economist into his aid group some time ago.

The economist is very popular among bureaucrats of the Ministry of Finance, since he claims that an increase in tax would improve economy and bring about economic recovery. Though he was professor in the University of Osaka, he is now the head of a governmental institute for study of economy.

According to his theory, the primary interest rate in Japan is now zero percent; therefore no monetary policy can work. So, we have to take advantage of financial policy. In financial policy, investment into public work is more effective than tax reduction. But, the investment should be directed to the social welfare sector but not to construction of industrial infrastructures. Then, the Japanese welfare system will be reinforced while employment will increase and economy will recover. As for fiscal resource, tax should be increased like in some European countries. As people do not spend their money but save it, Japan has been in a long recession. The government should use their money in lieu of them. So, the tax raise is effective. Finally, the tax raise will realize economic recovery eventually.

Of course, this theory is wrong. The economist who supports PM Mr. Kan based on this theory is half-mad.

It is because Japanese workers not only earn less salary but also keep less savings nowadays compared with their state, say, in early 1990's. Under this condition, tax increase is devastating, since the whole economic situation in Japan is in deflation of 20 years.
(http://nando.seesaa.net/article/163430834.html)


SECTION II: Japan's Deflation and China

As I wrote so many times, the reason why Japan's GDP has not increased in these 20 years is that Japanese firms and businesses have invested a huge amount of their funds and capital into China but not into the domestic market. This sequence is as follows:

1. The burst of the Japanese bubble economy in early 1990's.

2. Saturation of the land and people's living space with advanced products, meaning less demands.

3. The Japanese environment damaged by industrialization and development.

4. Need to install plants and factories outside Japan.

5. To avoid huge surplus in trade with America, the above need is emphasized.

6. With advancement of the IT technology, globalization of economy is pushed forward.

7. A need arises to reduce labor costs in Japan, which is difficult.

8. Japanese makers start to move factories to China full of low-paid workers.

9. The salary level of workers in Japan is capped to make it balance with the one in China.

10. The gross income of whole Japanese workers has started to decline.

11. The Japanese GDP growth halts.

In this way, the nominal GDP of Japan has not increased from 1992 to 2010, which is called deflation.

Comparison of Yearly Salary in Japan and China
Year....Japanese Salary......Chinese Salary
2000..... $54,946.59..... $2,317.23
2001..... $54,112.26..... $2,669.47
2002..... $53,397.12..... $2,926.29
2003..... $52,920.36..... $3,330.07
2004..... $52,324.41..... $3,666.39
2005..... $52,086.03..... $4,030.80
2006..... $51,847.65..... $4,443.45
2007..... $52,086.03..... $5,215.56
2008..... $51,251.70..... $5,936.12
2009..... $48,391.14..... $6,430.07

Just think of it. There must be something extraordinary behind the extraordinary economic growth in China. It is Japan. As Japan has moved its investment target from its domestic market to the Chinese market in these 20 years, China could expand its economy. But, Japan has had to suffer deflation in a scale unprecedented in the human history. And, this deflation has hit workers but not businesses. There are no single major corporations in Japan that have failed due to this deflation. They all prosper. Because they have succeeded in transferring their business to China so as to survive in this era of globalization of economy.

The Japanese deflation is a result of success of survival of Japanese businesses sacrificing Japanese workers while leveraging cheap labor force in China.

But, why is this knowledge important to citizens in the world? Because they are all purchasing Chinese goods nowadays, say, in WalMart and so on, while Chinese companies are aggressively operating in Africa, the Middle East, South Asia, South East Asia, and Latin America.

*** *** *** ***

The era of the space shuttle has finally ended.

But what countries have how many artificial satellites on the orbit around the earth?
1. Russia...1437
2. USA...1099
3. JAPAN...124
4. China...107
5. France...49
6. India...45
7. Germany...42
8. Canada...32
9. UK...29
10. Italy...17
11. Luxembourg...15
12. South Korea...12
12. Saudi Arabia...12
13. Sweden...11
13. Brazil...11
13. Australia...11
14. Indonesia...10
14. Argentina...10
14. Israel...10

http://en.wikipedia.org/wiki/Satellite

The future might be bright for mankind with so many countries cultivating outer space if they have enough faith in God.




Mar 7:22 Thefts, covetousness, wickedness, deceit, lasciviousness, an evil eye, blasphemy, pride, foolishness:
Mar 7:23 All these evil things come from within, and defile the man.