Both articles either assert or imply that Japan's economy requires a fundamental restructuring to sustain growth since its existing economic structure is fundamentally flawed. This conclusion is not apparent based on the data. Over the period from 1969 to 1994, Japan averaged per capita GDP growth of 4.9 percent annually, more than twice the rate of any nation that has followed the market-oriented growth model advocated in these articles. Furthermore, even in the years since the Japanese stock market crash of 1990, the immediate cause of the current slump, Japan has managed to maintain a more rapid rate of productivity growth than the United States. Productivity growth in the United States has averaged just 1.9 percent from 1989 to 1999.
Economists usually view productivity growth as the best measure of an economy's dynamism.
Since no economist has identified any factor that suddenly made Japan's previously successful system dysfunctional, the more plausible explanation is the economy simply needs a large demand stimulus to offset the depressing effects of its real estate and stock market crash. This was the argument put forward by MIT Professor Paul Krugman in a paper last year. In this paper, Krugman argued that Japan's central bank should deliberately cause inflation in order to give firms and consumers a reason to spend their money rather than save it. At present, prices are falling in Japan at the rate of approximately 1 percent annually. The nation has the highest saving rate of any industrialized nation.