One of my favorite questions as an unashamed Japan optimist is "what is the biggest problem of the Japanese economy?"

The answer is simple: Japan suffers from too much competition. Deflation, low profitability, poor investment returns, subpar foreign direct investment, falling tax revenues, you name it. Many of the "Japanification" problems can be explained by Japan's unique ability to feed ever-more relentless competition.

In fact, Japan has long surpassed the United States as the world's leading example of a free market economy. This assertion may run counter to the standard mythology, in which Japan is often described as a kind of "socialism that works." But a look at the facts leaves no doubt that Japan, not America, is the world's beacon of free market competition.