

Why Capitalism Stopped Working In Japan, with Takeo Hoshi
25 snips Oct 2, 2025
In this engaging discussion, Takeo Hoshi, a professor at the University of Tokyo and expert on Japan's economics, dives into the nation's 'lost decades' following the 1990s bubble burst. He explains how deflation entrenched financial stagnation and the banking system's failures compounded the crisis. Hoshi also highlights Japan's global economic significance, examining its heavy export reliance and the implications of its high public debt. The conversation explores lessons for other advanced economies grappling with similar challenges today.
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Policy Failure Fueled The Lost Decades
- Japan's long stagnation reflects policy failures after the 1990s, not an inevitable macro collapse.
- Forbearance on bank non-performing loans prolonged recession by keeping inefficient firms alive.
Resolve Bank Crises Quickly
- Clean up bank balance sheets quickly after a bubble bursts to avoid prolonged stagnation.
- Restructure non-performing firms instead of propping them up to prevent zombie firms and protect employment sustainably.
Productivity Drop Hidden By Work Patterns
- Measured productivity fell when using GDP per hour because Japan increased part-time work and reduced full-time hours.
- Aggregate-hours measures mask declines in per-worker productivity growth since 1995.