Poking around to look for the latest Krugman column in which he illustrates the arrogance of President Bush’s one page request for an additional $25 billion for adventures in Afghanistan and Iraq, I see that he’s also brought together the best of his writings on Japan into one place.
The state of Japan is a scandal, an outrage, a reproach. It is not, at least so far, a human disaster like Indonesia or Brazil. But Japan’s economic malaise is uniquely gratuitous. Sixty years after Keynes, a great nation – a country with a stable and effective government, a massive net creditor, subject to none of the constraints that lesser economies face – is operating far below its productive capacity, simply because its consumers and investors do not spend enough. That should not happen; in allowing it to happen, and to continue year after year, Japan’s economic officials have subtracted value from their nation and the world as a whole on a truly heroic scale.