Japan's economy is now officially in recession according to those in charge of labeling such things, which means that they beat us again. While most believe that the U.S. has already entered a recession, it's not official until we have two consecutive quarters of negative growth, so we're just going to have to wait until January. Thus, despite the fact that Japan's auto companies run circles around the befuddled behemoths in Detroit and clobbered our electronics companies long ago, even though Japanese save like misers and Americans spend like sailors, and notwithstanding our $5B trade deficit with Japan, they still out-recessioned us.

While the news may surprise some, Japan has proved itself to the recession-master for the past two decades. After pioneering the modern real estate bubble in the 80's, Japan fell into recession in 1990 and pretty much stayed there, on and off, until 2003. Then they managed to get in a few years of sustained if unexceptional growth only to relapse this year, which is a remarkable feat for what is the second largest economy in the world and which, unlike certain voracious consuming nations I know, consistently runs massive trade surpluses.

I'm no international psychologist, but it seems to me that Japan suffers from bipolar manic-recession, alternating between periods of extreme stagnation and hyper-productivity. In 1639, the ruling shogunate instituted sakoku, the policy under which foreigners could not enter Japan and Japanese could not leave on penalty of death. Translated literally, sakoku means "country in chains." Translated metaphorically, it means "I don't want to grow up." And so Japan languished in feudal stagnation for two centuries until Commodore Perry sailed his "Black Ships" into the Bay of Tokyo and opened it up at cannonpoint. There were only seven British colonies in America when Japan isolated itself. By 1854, the United States had become a world power. During that time, Japan remained largely unchanged.

Shocked from its stupor, Japan went manic. The breadth of change was astonishing. It established a centralized state and embraced Western-style political, judicial, and military institutions. By the 20th century, Japan had become an industrial power and morphed from secluded hermit to avaricious imperialist, culminating in its invasion of China and World War II. Then, after surrendering in 1945, Japan underwent a second manic growth spurt, adopting the modern democratic and corporate practices that created the foundation for Japan's 30 year "economic miracle." In the early 80's, when the U.S. was in a recession, Americans wrote amorous books about the "Japanese model" with titles like Japan As No. 1 (Lessons for America).

Then the miracle bubble popped, and we Americans returned to our natural state of condescending superiority towards our Asian competitors, which is much more fun than fawning imitation. Japan has stagnated because, though it has democratic institutions, the voters seem to miss the whole point of the exercise. The chief benefit of democracy is the opportunity to throw the bums out every decade or so. Americans love to the throw the bums out as we so aptly demonstrated a few weeks ago. Were we to experience two decades of recession under the same bums, we'd be barricading the streets and seceding en masse. But in its entire history as a democracy, Japan has never thrown the bums out. Except for a short-lived coalition government in 1993, the Liberal Democratic Party has governed Japan for over fifty years. Prime Minister Junichiro Koizumi enacted a few much needed reforms, but since he left office, he's been replaced by a series of controversy-prone bureaucrats who have deftly succeeded in doing absolutely nothing, which is just how the party likes it. The latest PM, Taso Aso, took office in September and appears to be no different. In short, Japan has stagnated again. There is some hope that the opposition Democratic Party of Japan, which managed to take control of the less powerful Upper House last year, will at long last win the Lower House a year from now. But history counsels against underestimating the self-destructive intransigence of the Japanese people during a recessive phase.

If we haven't learned from Japan's successes, we should at least learn from its failures. One reason for Japan's sustained recession was the government's policy of propping up struggling banks and corporations which it deemed too large to fail (and which had too much influence in the government), leaving large, inefficient, debt-ridden companies to mutely weigh down the sputtering economy. Sometimes, change is a good thing even when it hurts.

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On a related note, does anyone get the sense that other countries are blaming us for their economic woes? Whatevs. Get your own economy, dudes. If your GDP is based on selling us products that we can't afford, and you contributed to our bubble by buying our real estate and derivatives, you don't get to whine when the bubble pops and we stop buying your crap.

Cross posted at dagblog.com, where the comments are never turned off. For dyspeptic commentary on the auto industry bailout, check out Deadman's Dealing out a bunch of hooey and driving me mad...