Case Study: Beware Of Japanization

As the reading material for the final paper of this course, I read an inspiring production authored by Dr. Masazumi Wakatabe, economist and professor at Waseda University. The assigned reading part was the last chapter of his recent work “Japan’s Great Stagnation and Abenomics” and the title of the chapter was catchy and straightforward: “Beware of Japanization”. The chapter was divided into four sections: an introduction, what four mistakes that Japan had made are, why those failures had been repeated, and lessons for the world, respectively. In the first section, Wakatabe started off with the statement that “knowing what happened in Japan is the best way to avoid repeating it, and some have already learned the lessons, while others have not” (p141). With regard to the case with successfully applying lessons learned, he illustrated the example of the Federal Reserve Board in 2004 and some governments and central banks after the Lehman shock. As for the opposite cases, he recounted the case of ineffective fiscal policy in the United States, monetary policy in the European Union, and an inconsequent austerity policy of some governments in developed economy.
In the next section, the author listed four major mistakes that took place in Japan. The first failure chronologically was the

For the third lesson, beware of the “policy idea trap”, Wakatabe warned that once bad or negative ideas spread around, it would be difficult to erase them away. Over the course of the second and third lesson, the author stated that “bad ideas”, defeatism or policy nihilism for instance can steal into the media discourse and they can be shared “not only among policymakers but with economists and the media.” (p158) But I wondered to how much extent those bad ideas would influence the actual