[ExI] Japan's young turn to Communist Party ...

[Techno]

On Monday, October 20, 2008 12:14 AM Stathis Papaioannou stathisp at gmail.com 
wrote:
> Why do you assume a shift towards socialism will hurt their economy?

Because socialism does not work.  It's not that it's never been tried in 
practice.  It's been tried close enough and economic theory points to why it 
won't work -- in the same way that physical theory points to why perpetual 
motion doesn't work.

> They've been in recession or near-recession for 20 years while, if
> anything, becoming more right wing economically. What does that tell
> you about laissez-faire capitalism?

What, indeed, does it tell us about "laissez-faire capitalism" or free 
markets?  Not much since Japan is a heavily regulated economy -- not a free 
market.  Part of the reason for its 20 year recession is because it has a 
central bank system and this system has basically kept pumping the money. 
Another reason is the price system is very rigid theory, especially on the 
labor side.  So, instead of allowing the recession to clean up the economy, 
the government has interfered to keep unsustainable firms going.  Further 
socializing Japan's economy won't resolve this problem.  It'll only shift 
more of the costs to either direct taxpayers or everyone else in their 
economy via inflation (which acts as indirect taxation*).

Regards,

Dan

*  It's a form of indirect taxation because by lowering the value of money 
(through increasing the money supply), everyone who holds money or is paid 
according to fixed prices loses purchases power.  It also creates a business 
cycle, since inflation never instantly flows through the whole economy, but 
generally goes to the biggest debtors first and raising prices in an uneven 
fashion, leading to a distortion in investments and the capital structure.