Paul Midford wrote:

Again, the thing about Stiglitz's article that really caught my attention was the claim that labor productivity has been growing faster in Japan than the US. Richard Katz has his own calculation for 2001 to
2011 (this might not be the best period to measure for Japan, but it does have the virtue of being the most recent decade for which data is available)
RK:

A dubious virtue as is the practice of comparing GDP growth during Presidential terms; business cycles don't coincide with such arbitrary starting and ending points

PM:

Although Rick understandably thinks his calculation is better, we are now simply left with two competing estimates and no real means for evaluating which is better or even how they are different (e.g. different PPP models?).
RK:

Stiglitz and I use the same numerator, i.e. GDP. The difference is in the denominator. For "labor force," I use the actual labor force, i.e. those with jobs or seeking them. This has the virtue of combining GDP per hour with how much of the labor force is really being utilized.

Stiglitz, by contrast, takes the alleged "working age"
population, i.e. those15-64 years old. This is screwy.
About 44% of 15-24 year olds in Japan work vs. 69% of
55-64 year olds. So, as the number of 15-24 year olds dropped by 21% over the past decade and the number of
55-64 year olds rose by 17%, the ratio of employed people to the total 15-64 year old cohort rose. Even with zero increase in GDP per employed person, this would show a large increase in GDP per 15-64 year old.
It's like saying 2 + 2 = potatoes. That may be the standard for debaters, but not Nobel economists.

RK:
"From January 2008 through Dec. 2012, the total number of jobs in Japan fell by 1.9% but the total number of hours worked by all workers combined fell by 5.4%.
If we go from January 2001 through Dec. 2012, the total number of jobs in Japan fell by 2.6% but the total number of hours worked by all workers combined fell by 9.7%. That converted into lower real wages per worker, and anemic consumer spending power.

PM:

As macroeconomic problems are like
street cars, how an economy deals with them is no trivial matter, and this should be one way for an economy to qualify as a "model." Spreading the pain among still employed workers is arguably, in some crucial respects, a far superior response, since it can help avoid creating a class of long-term unemployed, a problem that now plagues the US. Workers who remain employed do not loose their skills as the long-term unemployed do, or are perceived to.

RK:

First, going back 50 years, this current US downturn is unique in its high level of long-term unemployment.
Secondly, Japan's system may seem more humane but it is one of the problems obstructing growth, since it's hard to shift workers from jobs and companies where they are redundant to ones where they can have higher productivity and wages. Why restrict our choices to the better of two bad systems (US and Japan)? Since their recovery from their own early 1990s crisis, the Nordic countries, in my opinion, have done the best in combining market efficiency, egalitarianism, a good social safety net, and active labor market efforts that enable workers to change jobs regularly, but protect them in downturns, give them new skills, and help them find new jobs, all with high and rising wages.

PM:

Yes, obviously inequality has been worsening in Japan over the past two decades. On the other hand, Stiglitz is talking about Japan as a model for the US, not for Europe, and is arguing that growth in labor productivity need not require US levels of inequality.
Of course, given the way European economies are perceived in the US as uniformly bad, pointing to Europe as a model of equality doesn't get one very far in a US debate.
RK:

Distorting the picture of Japan in order to score points in a US-centric policy debate does not seem to me either helpful or adherence to basic academic standards. By the mid-2000s, Japan had the worst Gini coeffcient among 17 high-income OECD countries and, if memory serves, the second highest rate of poverty.

Richard Katz
The Oriental Economist Report