With the Standard and Poor's downgrading of Japan's long-term credit rating from AA to AA minus, the focus even more is on how the economy can get out of its current deflationary quagmire.

For most of the 1970s and '80s, Japan had no quagmire. It followed sensible Keynesian economic polices — fiscal stimulus when the economy was down, restraint when overheated.

The postwar generation of economists was raised on Keynesian principles. One reason I know this is because my father, British economist Colin Clark, who had worked with Keynes in the 1930s, was a frequent and welcome visitor to Japan. His ideas featured in all Japanese school textbooks. He was often invited to talk and write by the then progressively minded Nihon Keizai Shimbun (Nikkei), Japan's leading economic mouthpiece. One of his students was a young Finance Ministry official, Kiichi Miyazawa.