A business cycle expansion of extraordinary length, the lowest unemployment rate of any major industrial economy, no visible problems with inflation, relatively rapid productivity growth, high stock market values, and technological dominance of the most vibrant and rapidly-growing sectors of the economy. Governing bureaucrats, politicians, business executives, and intellectuals are pondering how they can at lowest costs adopt and adapt the key economic institutions that underpin the past decade's triumph of the American economy. But little more than a decade ago things were very different. The last request of the Japanese executive was to give a lecture on Japanese management techniques. Long-term loyalty is seen as a lack of entrepreneurship.
Patient capital is seen as a failure to respond to market signals.
The pendulum has swung remarkably far away from Japan in the past decade. But before this most recent swing, businesses and governments learned from Japan's economic miracle. The lessons about quality control and productive efficiency taught by Japanese manufacturing firms were painful ones, but the Fords and the Siemenses and the Hewlett-Packards learned. And the pendulum will swing back, away from the United States economy. Claims that current American stock market values are sustainable rest on a belief that attitudes toward risk have changed and that the marginal investor in the stock market now expects a Treasury bond-style rate of return from equities.