LAUSANNE, Switzerland -- In an article on the IMF/World Bank meeting in Washington last month entitled "A Washington gathering of incompetents," Gerald Baker, while lambasting policyma- kers in the United States and the European Union, handed the first prize for incompetence to Japan. "Every time it seems that policy in that blighted country cannot get any worse, it promptly does," he wrote. The problem however is not only bad policy, but also often incomprehensible policy. The Bank of Japan's proposed stock-buying policy is one of the more recent examples.
Policy incompetence in Japan arises from some very woolly thinking, which, in turn, is in good part due to the closed and inward-looking nature of Japan's policy-thinking establishments: its universities, think tanks, research institutes and the media. Foreign experts living in Japan, as I suggested in an earlier column, can be part of the problem. Indeed, in a Japan policy online forum I participate in, a white South African living in Japan came up with the brilliant idea that Japan -- and indeed the world! -- should adopt what he called a postgrowth economic policy; in other words, to simply give up on growing!
This echoes the views of a senior Japanese official who said at a meeting I attended recently that Japan was "enjoying a comfortable recession"! The implication is that Japan, having grown spectacularly for several decades, with growth primarily driven by exports to growing and open markets in America, Asia and Europe, should now just cop out and retire and the rest of the world can go fly a kite.