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American Exceptionalism and Worker-Bashing, Adam Davidson Style

NYT/NPR economic guru Adam Davidson misrepresents the facts and appeals to American prejudices to sell worker-bashing.

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And given recent events, are we even sure that the expansion of the financial system was doing anything productive at all?

In short, how much of the apparent US productivity miracle, a miracle not shared by Europe, was a statistical illusion created by our bloated finance industry?

Dean Baker has argued for some time that, properly measured, the productivity gap between America and Europe never happened. I’m becoming more sympathetic to his point of view.

Now let’s get to the GDP per head part. The notion that GDP is all that it is cracked up to be as a measure of economic prosperity is challenged in another article in the New York Times over the weekend, “ The Myth of Japan’s Failure” (hat tip reader Scott):

There are a number of facts and figures that don’t quite square with Japan’s image as the laughingstock of the business pages:

• Japan’s average life expectancy at birth grew by 4.2 years — to 83 years from 78.8 years — between 1989 and 2009. This means the Japanese now typically live 4.8 years longer than Americans. The progress, moreover, was achieved in spite of, rather than because of, diet. The Japanese people are eating more Western food than ever. The key driver has been better health care.

• Japan has made remarkable strides in Internet infrastructure. Although as late as the mid-1990s it was ridiculed as lagging, it has now turned the tables. In a recent survey by Akamai Technologies, of the 50 cities in the world with the fastest Internet service, 38 were in Japan, compared to only 3 in the United States…

• The unemployment rate is 4.2 percent, about half of that in the United States.

• According to, a Web site that tracks major buildings around the world, 81 high-rise buildings taller than 500 feet have been constructed in Tokyo since the “lost decades” began. That compares with 64 in New York, 48 in Chicago, and 7 in Los Angeles…

William J. Holstein, a prominent Japan watcher since the early 1980s, recently visited the country for the first time in some years. “There’s a dramatic gap between what one reads in the United States and what one sees on the ground in Japan,” he said. “The Japanese are dressed better than Americans. They have the latest cars, including Porsches, Audis, Mercedes-Benzes and all the finest models. I have never seen so many spoiled pets. And the physical infrastructure of the country keeps improving and evolving.”

Frankly, I have been hearing from the mid 1990s onwards that things in Japan were no where near as bad as depicted in the Western press. And from the most savvy Japan watchers (as in people who have lived there during this period), the view I hear most often is that it was to Japan’s advantage to depict itself as a basket case, so the US would not press for a stronger yen (remember, Japan is a military protectorate of the US, so we actually can push it around from time to time. For example, during the 1987 crash, the Treasury market became wobbly, and the Fed called the Bank of Japan and told it to buy Treasuries. The BoJ called banks like my then employer Sumitomo, who fell into line).

But the most important tidbit is later in the article, and it touches on hedonic adjustments to GDP, a topic that is not often discussed in polite company. We’ve covered this in greater depth before, for instance, in this 2007 post:

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