Review:
"Structural reform" has now become such a popular word in Japan, but here is an excellent "textbook" for reform, which was published long before Mr. Junichiro Koizumi took office. The author is a senior editor at The Oriental Economist Report, a monthly English-language newsletter about Japan and, therefore, is quite knowledgeable about the Japanese economy. In this book, he takes a long-term viewpoint to explain "the rise and fall of the Japanese economic miracle," that is the subtitle of this book, and points out main reasons for Japan's economic stagnation. Those reasons include Japan's failure in transforming its dual economy into a more open and competitive one and also failure in transforming its investment-oriented economy into a consumption-oriented one. According to Katz, the "bubble economy" is not a cause (as widely believed by Japanese economists) but a result of Japan's failure, as policy makers tried to stimulate consumption demand not by reform but by monetary easing policy.
Although there are many questions to be asked about his thesis (for example, his lack of sympathy for monetary policy in general; see the Katz-Miyao debate at http://www.glocom.org/debates/200112_katz_miyao_monetary/ ), this book is a must reading for everyone including those who are against the Koizumi reform. Especially we can learn from his stance to seek a new paradigm beyond "revisionism" and "traditionalism." It should also be pointed out that the Japanese translation of this book, "Kusariyuku Nihon To Iu Shisutemu" (Toyo Keizai Shinpo Sha: 1999), contains some interesting thoughts and comments by Katz on more recent developments on Japan's political economy.
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