Japan Debates Digging Itself Out; POLS 366

Japan's economy, the second-largest in the world, is shrinking at the fastest pace in more than 30 years, roughly twice as fast as the U.S. economy. Exports and imports declined in February at a record rate, with monthly sales to the United States down nearly 60 percent compared with last year. Tokyo, by far the largest and richest city in Japan, is giving itself public-works medicine for these global trade ills. It is deploying legions of men and women with flags and hard hats to repave streets, repaint crosswalks and fix broken clocks in city parks. Now, a heated political argument is erupting across Japan over whether the entire country should follow Tokyo's lead and pour taxpayer money into major public works. The Obama administration has embraced this idea as a way to kick-start the U.S. economy, spending hundreds of billions on roads, broadband and other infrastructure projects. The dilemma for Japan is that it has already been there and done that. In the 1990s, during the "Lost Decade" that followed the bursting of a real estate bubble, Japan's government spent more than $2 trillion on public works. In so doing, it dug itself the deepest public-debt hole in the history of the developed world, totaling more than 175 percent of the country's gross domestic product.

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/29/AR2009032901931.html