February 24, 2009
Japan in the rear view mirror
The U.S., Smitka noted, is much better positioned to pursue such policies. Unlike Japan’s in the 1990’s, the U.S.’s transportation infrastructure is aging and in many places has been allowed to deteriorate. There are obvious areas of need where new construction could have a big impact going forward.
Even more important, perhaps, the federal structure of the U.S. government is much better suited to identify and tackle those areas of need in a systematic way. That the stimulus comes at a time when a popular president has just taken office with a Congress full of allies may help the U.S. pursue its stimulus more swiftly, decisively, and in a more coordinated manner than did Japan.
The $819 billion bill that passed the house in late January, for instance, combined construction and tax cuts with health and education investments into one comprehensive stimulus policy. Whether it’s the right one is subject to debate, but that sort of coordinated policy making was something Japan’s governmental structure made very difficult.
And, in contrast to Japan’s fiscal culture, large swaths of the American public and its elected representatives are, at least for the time being, willing to stomach the years of large deficits necessary to maintain the momentum of government stimulus.
Japan’s experience certainly illustrates the pitfalls of using infrastructure spending as an anti-recessionary measure. But it also suggests that, even when conducted poorly, such policies have positive effects, and Japan’s example is a veritable blueprint of where better choices might have produced better results.
Japan’s experience should serve as a guide, not a red light, for the Obama administration.
The author would like to thank Michael Smitka for his invaluable contributions to this article.
*Michael Skocpol is an intern working for Advisor Perspectives.
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