Paul Krugman: Japan the Model

A generation ago, Japan was widely admired — and feared — as an economic paragon. Business
best sellers put samurai warriors on their covers, promising to teach you the secrets of Japanese
management; thrillers by the likes of Michael Crichton portrayed Japanese corporations as
unstoppable juggernauts rapidly consolidating their domination of world markets.

Then Japan fell into a seemingly endless slump, and most of the world lost interest. The main
exceptions were a relative handful of economists, a group that happened to include Ben Bernanke,
now the chairman of the Federal Reserve, and yours truly. These Japan-obsessed economists
viewed the island nation’s economic troubles, not as a demonstration of Japanese incompetence,
but as an omen for all of us. If one big, wealthy, politically stable country could stumble so badly,
they wondered, couldn’t much the same thing happen to other such countries?