A better title for Gregory Clark’s Dec. 28 article, “(Japan’s) Economy chasing its tail,” is “Strike 3! You’re out!” Follow Clark’s suggestions and Japan will be headed to the historical dugout. Japan needs to strip itself of its institutional straitjacket. The current set of economic institutions creates this circular decline into the economic abyss.
Keynesian pump priming won’t work and never has. The Soviet Union, the prime example, was all steroid Keynesian with lots of murder. Keynesianism is a myth and works its way into economic chaos. What Japan needs is a set of structural reforms in its economic institutions. This will allow new innovative forms and will release trapped resources into more productive alternatives. These reforms will spring exactly from the free-market/supply side economics that is mocked by Clark.