Learning from Japan’s Big Debt Spending Failure
Conn Carroll /
The New York Times reports today:
Japan’s rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery.
This should not be news to any responsible law maker. Heritage Senior Research Fellow Ron Utt wrote in October of 2001:
The United States was not the only country to experience an economic downturn in 1991 as the Gulf War and its impact on energy prices and business confidence depressed commerce worldwide. Although the negative impact on the U.S. economy was brief and shallow, the effect in Japan was much more severe, exacerbated by that country’s highly leveraged and overextended financial system and inefficient service, agriculture, and distribution sectors. (more…)