Matthew's Reviews > The Weight of the Yen

The Weight of the Yen by R. Taggart Murphy
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's review
Nov 25, 2009

it was amazing
bookshelves: business-history, essaysjournalism, economics
Read in November, 2009

Truly excellent. I have to thank AC for recommending this book. Murphy is an eloquent and humane writer and this is evident from the introduction. His analysis of Japan weaves together economics, finance, politics, and an undertanding of the institutions and political culture of both Japan and the US, and adheres to theory as well as to common sense. It helps lay the groundwork for thinking about the comparisons flying about today between Japan (in the 80s) and China, and Japan (in the 90s) and the US.

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message 1: by AC (new) - rated it 5 stars

AC Yes... it is a fabulous book. If you've never read Karel Van Wolferen's The Enigma of Japanese Power, you will probably like that as well -- it's a really, really good book. After reading Murphy and van Wolferen, though, I was quite astounded when I fell in love with Tokyo - I never expected to meet a population that seemed so thoroughly modern and hip.

What is interesting is that China too has -- though it is not so clear from the surface -- really followed the same path as Japan -- of sacrificing the consumer on the alter of the producer. Consumer debt in China is about 12% of GDP (they have been forced savers...), while the corporate sector debt is 100% of GDP ( that producers, i.e., exporters, could borrow). I was quite surprised, in fact, to see these figures for China....

Both societies will now have to shift those numbers..., and those orientations..., if there is to be any hope.

Matthew hi AC, thanks for your comments! Yeah, I think I would like to pick up Wolferen's book as well. I really liked Tokyo too when I was there briefly, perhaps it reflects that under the economic statistics, despite the ossified politics, the people are proud, vibrant, resilient... As with America -- regardless of the headlines, I think the US still has one of the most professional, knowledgable and ambitious human resources, if only it could be channeled the right way.

I've thought a bit about China vs Japan. Aside from the underlying demand issue, it strikes me that Japan kept real household income down by having high retail prices due to fragmented and inefficient distribution chains which supported employment; whereas China keeps real incomes down by keeping nominal incomes down. In this sense China's issue of needing to raise real household incomes may be easier than Japan's, as the solution is the inflate incomes, rather than deflate prices.

The other thing is that according to Murphy, Japan's problems stem very much from its concentration of power in the MOF, which is not accountable to the people. I'm no China expert, but it seems to me the political structure in China is more dynamic, with leaders willing and able to take on the industrial export lobby groups, and also held more accountable (though perhaps not in institutionalised democratic ways) to the people. China may have more ability to transform itself than Japan did.

I'd love to have a more recent update on how Japan is doing, though, seeing as Weight of the Yen was published in 1993!

Yes, I've read Russel Napier's Anatomy of the Bear. I think my review is on my Goodreads somewhere -- agree with you, I liked it very much too. Do you read his ongoing Solid Ground strategy reports for CLSA?

AC wrote: "Yes... it is a fabulous book. If you've never read Karel Van Wolferen's The Enigma of Japanese Power, you will probably like that as well -- it's a really, really good book. After reading Murphy ..."

message 3: by AC (new) - rated it 5 stars

AC That's a really fascinating insight about Japan and China (prices/incomes)...

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