Is there a way for Japan to enjoy both growth and security? Yes. Up to now, Japan has promoted security-oriented policies that conflict with growth, e.g. shoring up zombie companies. The better way would be for Japan to adapt parts of a Scandinavian policy model they call “flexicurity” and implement them “with Japanese characteristics.” Flexicurity marries the both of the market and policies to promote equality and security. Just as fire insurance leads more people to buy homes and corn futures lead farmers to plant more, market-conforming policies to promote security and equality lead to greater political tolerance of the “creative desctruction” necessary to promote growth. This is one reason the Nordic countries recovered from their own financial-ecnomic crises of the early 1990s, whereas Japan has yet to do so. Unlike Japan, where real wages per worker fell during 1995-2017 or the US where wage growth lagged productivity growth (see chart above), in Sweden, not only was productivity growth (outper per work-hour) high, but the fruits of that grwoth were shared wiht the labor force.
About a decade ago, I wrote few articles on this topic (attached below).
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