Planet Money

Japan's Lost Decades

Apr 5, 2024

Discover the dramatic rise and fall of Japan's economy, from its 1980s boom to the perplexing 'lost decades.' Explore how a confusing mix of economic policies led to stagnation, despite once being a global powerhouse. Learn about the bursting of Japan's asset bubble and the banking crisis that followed. Delve into innovative strategies like quantitative easing that emerged from the wreckage. The episode offers valuable lessons for other economies, reflecting on recovery, workforce challenges, and the potential future of Japan's economy.

22:50

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Quick takeaways

Japan's economic miracle in the 1980s led to a severe crash in the early 90s, highlighting the vulnerability of even advanced economies.

Japan's struggle with a liquidity trap and unconventional economic measures like forward guidance and quantitative easing to combat economic stagnation.

Deep dives

The Rise and Fall of Japan's Economy in the 1980s

Japan experienced a period of economic dominance in the 1980s, becoming the world's second-largest economy after the US. Japanese companies made significant acquisitions like Sony purchasing Columbia Pictures and Mitsubishi owning Rockefeller Center. However, this economic prosperity was short-lived as Japan faced a severe economic downturn.

The Bubble and Burst in Japan's Economy

01:28

The Challenge of Innovation in a Mature Economy

01:23

Being proactively unconventional in economic policy

01:30

Intro

3min

Unraveling Japan's Economic Stagnation

2min

Japan's Economic Bubble and Its Aftermath

10min

Lessons from Japan's Lost Decades

5min

Japan's Economic Stagnation: Challenges and Changes

5min

Last month, Japan's central bank raised interest rates for the first time in 17 years. That is a really big deal, because it means that one of the spookiest stories in modern economics might finally have an ending.

Back in the 1980s, Japan performed something of an economic miracle. It transformed itself into the number two economy in the world. From Walkmans to Toyotas, the U.S. was awash in Japanese imports. And Japanese companies went on a spending spree. Sony bought up Columbia Pictures. Mitsubishi became the new majority owners of Rockefeller Center.

But in the early 1990s, it all came to a sudden halt. Japan went from being one of the fastest growing countries in the world to one of the slowest. And this economic stagnation went on and on and on. For decades.

On this episode, the unnerving story of Japan's Lost Decades: How did one of the most advanced economies in the world just fall down one day — and not be able to get up? Japan's predicament changed our understanding of what can go wrong in a modern economy. And gave us some new tools to try and deal with it.

This episode was hosted by Jeff Guo. It was produced by Emma Peaslee and engineered by Cena Loffredo. It was edited by Molly Messick. Alex Goldmark is Planet Money's executive producer.

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Planet Money

Japan's Lost Decades

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Rise and Fall of Japan's Economy in the 1980s

The Impact of the Bubble Burst and Recession

Japan's Struggle with a Liquidity Trap and Economic Recovery Efforts

The Bubble and Burst in Japan's Economy

The Challenge of Innovation in a Mature Economy

Being proactively unconventional in economic policy

Remember Everything You Learn from Podcasts