The Japanese Experience

Click To See Larger Chart

Automobiles
I don't know if people are aware of the story, but there is a particular reason Japanese auto imports grew to dominate the North American industry.  The single biggest reason, in my opinion, was product.  They made a better car for less, and targeted the entry level buyer.  Their target market was key, since they were limited by North American quotas at the time.  Why target the lower-priced entry level when they could have tried to go after the higher-end, more expensive category?  After all, that is what the North American car makers would do, and they did - SUV, gas guzzlers anyone?

Demographics
No, the Japanese were smarter than that, or were they?  The answer is yes, and no.  The Japanese learned from their own experience that customer loyalty was important.  Satisfied customers tended to buy again from the same company.  Not only did they buy from the same company, they tended to trade up, as well.  After paying off their first car, they tended to buy a more expensive one the next time.  If Japanese customers did so, what made them believe the U.S. customers would do the same?  Demographics, plain and simple.  With an older average Japanese population, it was expected the North American population would follow a pattern similar to that of the Japanese consumer.  And it did.  Brilliant, yes; original, no.

Same Old Same Old
Now, the question is, are we going to learn from the Japanese experience.  I don't mean their auto industry, but their economy.  Sure, there are some fundamental differences in the Japanese and U.S. economies, but let's take a look at Japan over the last two decades.  Their problems really began in the late 1980's.  There were a number of banks misbehaving, and a housing bubble that burst (sound familiar?)  For much of the last two decades, Japan has been trying to stimulate itself out of recession.  The central bank continues to buy government bonds to provide liquidity to the government, and the economy.

So?
Is it working?  By all accounts, Japan's economic course is unsustainable.  While growth has never  recovered, to any great extent, the government debt continues to rise.  The last data point in the chart above was 2008.  Their debt level as a percentage of GDP has only increased since then.

Again?
No, we have tried giving our money to the rich (one percent) with the expectation of jobs, in return.  Clearly that didn't work.  So whose idea do you think it was in the first place?  Now, we are being asked to believe that when it comes to governments, we can borrow our way around the trouble caused by, among other things, too much government debt from bailing out some of the richest corporations on the planet.  And whose idea do you think that was, and is?

Micro Economics
We need to do as they say, and not as they do.  We need to live within our means, and concentrate during these difficult times on reducing debt, and not just maintaining the status quo.  For you and I, reducing expenses is easier than increasing revenues, although we could all use some additional investment income.  The Japanese experience should teach us it is going to take a very long time before things actually begin to start to get a whole lot better!

Do you think we will learn from history?

Checking The Score

How Much Is Too Much?
We can never have too much money!  When I hear the likes of what is being reported about Goldman Sachs these days, I can't help but think they, like so many, have taken a turn down the wrong path.  Too many people think that money is the answer, that money is, in the end, the real prize.  Like drug addicts, the more they get, the more they "need".  I have actually heard stories about people who said they would retire after making a million dollars, or two.  Having actually done so, and more, they were then unable to retire because even ten million dollars was no longer enough!

Keeping Score
I get what they are thinking.  It isn't actually about the money, its about keeping score.  Many goals can be subjective in nature, but money is meant to be counted - that's what the numbers printed on the bills are for.  I have a higher score than anyone who has less money than me.  Because my score is higher, I am better than anyone with a lower score.

Good or Bad?
These people are so far removed from reality, I don't know what it would take to get them back.  I don't know anyone who actually believes that having money makes us better people.  I suppose, it really isn't being a better person that they have in mind. I'm not condemning the possession of money, but in my mind it doesn't necessarily translate into virtue, either.  We do need to be careful on this point, as we are all familiar with the arguments as to how evil money is, and all the bad it can be used for, and how having real money must mean it was obtained at the expense of others.

Skills or Scores?
My reality is coaching soccer.  As a coach, my job was to instill a desire for mastering the skills.  So it made my job a whole lot harder when parents would pay their children for scoring goals.  For me, it wasn't about the score.  If players learned the skills, then the score would take care of itself.  Have you ever seen the best team lose?  What that should tell us is the score isn't always right, and it should never be our only measure of what a team, or any individual is worth.  Still, I see coaches who will cheat because they want a winning score.  When are the grown-ups in this world going to start acting like they really are, in fact, grown up?

Motivation
If you ask me what we should be striving for, rather than money, it is the the things we have a real passion for.  Not that we should let our passion blind us, either.  Still, I can guarantee there is no stopping a person with a real passion, and there is no shortage of money and compensation for such people. Why? Because they are at their best when they are exercising their passion.  As for having to pay the top one percent incredible amounts of money to attract "the best", I have always said I would prefer to hire the person who is so passionate about what they do  they would do it even if they weren't getting paid.  People then say, "Oh, you can't expect people to work for free!" and I don't - they are completely missing the point.

Our Children
In so many ways I feel very sorry for those people who think that the more money they have, the happier they will be.  I just wish a whole lot of people would grow up, and realize that happiness comes from the inside, and not the outside.  We are teaching a whole generation of children everything we know - all the things that aren't helpful, and things which are outright lies.  What ever happened to wanting a better future for our children?  Does anyone really believe that making them slaves to money, like addicts to drugs, is in any way preparing them for a well-adjusted future?  Should not leaders care?!?