No, I don't think those are sufficient, but in combination with other, more positive sociology-economic-technological trends, there is a possibility. that's what my forthcoming book is about.
"...between 2000 and 2020, the combined yearly profits of Japan’s few thousand largest corporations almost doubled, but their compensation to all workers combined fell 0.4 percent and their capital investment fell 5.3 percent"
Do you happen to have any data or general assumptions on where all that money went?
Just one follow up on that: Do you have any theory why the money is not reinvested at all? It is very puzzling that even with the current inflationary pressure there are seemingly no intentions to increase wages or invest in corporate infrastructure.
This is a very good question. For reasons that are beyond me, corporations are hoarding cash to a stunning degree. Maybe it's the trauma of the bank debt crisis. It's not that they are investing too little. However, profits are too big due to wage austerity, which, of course, hurts consumer demand. And there is no effective shareholder power forcing them to return profits that they cannot use back to shareholders via dividends.
Or they are laundering money outside of Japan. There is an article on SCMP by a Japanese journalist who found out about a hidden capital flight from Japan. I found from my connection that most of the money go to Southeast Asia in hard cash.
Do you think the yen devaluation, JGB credit crunch, and rising inflation would force the LDP into structural reform?
No, I don't think those are sufficient, but in combination with other, more positive sociology-economic-technological trends, there is a possibility. that's what my forthcoming book is about.
Wow, thanks for the comment!
Well that’s depressing because if the LDP mishandles a potential credit crunch/rapid yen devaluation, Japan (and the world economy) is screwed.
BTW, I really enjoyed your recent op-ed in WSJ! Look forward to your new book!
Thank you very much for elaborating, Richard.
"...between 2000 and 2020, the combined yearly profits of Japan’s few thousand largest corporations almost doubled, but their compensation to all workers combined fell 0.4 percent and their capital investment fell 5.3 percent"
Do you happen to have any data or general assumptions on where all that money went?
Some of it went into overseas investments, but a huge amount lay fallow in bank accounts and other financial assets. They've been hoarding cash.
Thank you very much for the reply!
Just one follow up on that: Do you have any theory why the money is not reinvested at all? It is very puzzling that even with the current inflationary pressure there are seemingly no intentions to increase wages or invest in corporate infrastructure.
This is a very good question. For reasons that are beyond me, corporations are hoarding cash to a stunning degree. Maybe it's the trauma of the bank debt crisis. It's not that they are investing too little. However, profits are too big due to wage austerity, which, of course, hurts consumer demand. And there is no effective shareholder power forcing them to return profits that they cannot use back to shareholders via dividends.
Or they are laundering money outside of Japan. There is an article on SCMP by a Japanese journalist who found out about a hidden capital flight from Japan. I found from my connection that most of the money go to Southeast Asia in hard cash.
How much money are we talking about? do you have the article?