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Scoop
5 days ago
- Business
- Scoop
Public Debt, Japan, And Wilful Blindness
I just heard on Radio New Zealand a claim by a British commentator, Hugo Gye (Political Editor of The i Paper), that the United Kingdom (among other countries) has a major public debt crisis, and that if nothing is done about it (such as what Rachel Reeves – Chancellor of the Exchequer – is wanting to do), then in 2070 the public debt to GDP ratio would reach an 'extreme' level of 270% of GDP (gross domestic product). He added for good measure that no country in the world has public debt at a level anything like that. (Refer UK: Macron meets the King, RNZ, 10 July 2025.) So I checked the International Monetary Fund, World Economic Outlook Database, April 2025, and found the following about Japan, the world's fourth-largest national economy, looking at years from 2010 to 2024, with respect to government gross debt and general government financial deficit: minimum debt 206% (in 2010) maximum debt 258% (in 2020) average debt 234% current debt 237% (in 2024) projected debt 232% (in 2030) minimum deficit 2.3% (in 2023) maximum deficit 9.1% (in 2010) average deficit 5.3% current deficit 2.5% (in 2024) projected deficit 5.3% (in 2030) Advertisement - scroll to continue reading Japan does not have a 'cost of living crisis'. Below is a list of Japan's interest (source: and inflation rates (again the reference period is 2010 to 2024): Japan is a prosperous country, with high life expectancy (85, the highest in the world for large economy nations), a very high ratio of retired people to working-age people, low inflation, and low interest rates. It was able to host the Olympic Games in 2021 without any financial fuss, and is about to host World Expo 2025. It has some of the world's most sophisticated infrastructure. Despite its high government debt – actually, to a large extent because of its high government debt – Japan's is a creditor economy. Japan is not in debt to the rest of the world. Japan's national debt is non-existent. Japan's government debt is widely acknowledged, however, to be the world's highest. Too many commentators – using wilful laziness – conflate national debt with government debt. Japan's is the world's most successful twenty-first century large economy. It operates by Japanese savers lending much of their savings to their government at very low interest rates; those savers prefer to lend to their government rather than to pay high taxes to their government. Prosperous Japanese people are not greedy in the way that many rich westerners are. Their mantra is 'private wealth, public wealth'; not 'private wealth, public poverty'. Japan's is not a zero-sum economy; in a zero-sum economy the prosperity of some comes at the expense of the impoverishment of others. Hugo Jye was negligently dishonest – a case of wilful blindness or ignorance – in claiming that no countries had anything like 270% of GDP government debt. Western economists and financial commentators are likewise wilfully negligent in failing to alert their countries' governments that there is an alternative – in plain sight – to our woeful policies of financial suffocation. Note about three other economies Within the European Union, it is rare for professional commentators to sing the praises of Spain and Italy. Spain, with 101% public debt, is enjoying a low inflation economic boom. It has a life expectancy of 83, higher than all European Union countries other than Malta and Luxembourg. Spain has had only government budget deficits since the surpluses of the years leading up to the 2008 Global Financial Crisis (a crisis which hit Spain particularly badly). Despite – no, because of – these accumulated deficits, Spain's public debt (as a percent of GDP) has been falling since 2020; the deficits stimulated GDP. Spain had one year of high inflation (8.3% in 2022; the next highest since 2020 were 3.05% in 2011 and 3.0% in 2021); it recovered very quickly from that one year. Spain's current interest rate is 2.15%. Italy had 135% government debt to GDP in 2024. Its people's life expectancy is high, marginally lower than Spain's and slightly higher than New Zealand's; significantly higher than Germany, Netherlands and the United States. Italy's economy has been growing faster than the European Union average. Its public debt (compared to GDP) has been falling despite government deficits. Spain and Italy are doing relatively well despite having among the highest older-person to younger-person age ratios in Europe. Spain is pro-actively utilising immigrant labour, whereas Northern Europe is scapegoating immigrants. And Spain, unlike most of Europe, is not looking to its 'Defence' budget to boost future growth. Türkiye's public debt has fallen from a high (since 2006) of 40% in 2021 to under 30% in 2023. This is despite double-digit inflation since 2016 and an average budget deficit since 2011 of 5.3%. While high inflation has benefitted Türkiye by bringing about negative real interest rates (meaning interest payments effectively flow from richer to poorer, generally benefitting indebted Turkish businesses and households), current interest rate settings look like suffocating for Türkiye for the remainder of the 2020s. (This monetary policy of suffocation is also true for Australia in 2025, with its particularly hawkish Reserve Bank at present.) Despite challenging geopolitical and climatic circumstances, Türkiye has, at least until 2024, managed to achieve rising living standards for a substantial majority of its people. Unlike the United Kingdom and some northern European countries, Türkiye has not been a crisis economy despite (or because of) a reputation for unsound public finance. ------------- Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand. Keith Rankin Political Economist, Scoop Columnist Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s. Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like. Keith retired in 2020 and lives with his family in Glen Eden, Auckland.
Scoop
09-05-2025
- Business
- Scoop
Make Deficits Great Again: Maintaining A Pragmatic Balance
Donald Trump is a mercantilist, as noted in Trump's tariffs: Short-term damage or long-term ruin? 'The Bottom Line', Al Jazeera, 11 April 2025 (or here on YouTube). But the United States, in today's world, is not a mercantilist country. Or at least not a successful mercantilist country, though it is inhabited by many mercantilists. In that television interview, Georgetown University professor of Public Policy, Michael Strain said: "I don't think [Trump's tariffs are] smart politics, but I think the president [thinks they are]. I think that President Trump is a true mercantilist. The president believes that if the United States are running a trade deficit that means we are losing economic value to the rest of the world." Mercantilism, in its most literal form, is the belief that international trade is 'economic warfare', and that winning is achieved by a country exporting more than it imports. Obviously, the total amount of exports in this world is exactly equal to the total amount of imports. Every internationally traded good is both an export and an import. So, mercantilism is a belief-system which sees the world in zero-sum terms, as winners and losers, as warfare by financial means. My chart and article yesterday (International Trade over time: gifts with strings, Evening Report, 8 May 2025) shows the accumulated 'excess benefits' of unbalanced global trade over the last forty years. The countries on the top-left-side of the chart are deficit/debtor countries; and the countries on the bottom-right-side are surplus/creditor countries. (The countries are selected on the basis of available 'current account' data from the IMF's World Economic Outlook Database, April 2025, and as representatives of deficit and surplus countries. China, if on the chart, would belong close to Malaysia. The chart is made from my own calculations to adjust for inflation.) The chart necessarily – because deficits must be financed elsewhere by surpluses – has a seesaw shape. Some countries are up, some countries are down; and some countries occupy the central pivot, neither up nor down. So long as some countries have consumed substantial amounts of stuff (imports) which they have not yet paid for (the deficit countries), some other countries (the surplus countries) have supplied stuff (exports) that they have not yet accepted payment for (and are unlikely to accept payment for in the imaginable future). Imports are paid for by exports. It's not a true seesaw, which is typically either grounded or horizontally balanced. We may think of it as a seesaw pivoting above a chasm. What is true is that if the downside goes further down – that is, if the surplus countries' accumulated surpluses get bigger – then the upside (accumulated deficits) must go further up. The seesaw is a 'system', and the only alternative to the seesaw shape is system collapse, analogous to the whole seesaw breaking off its pivot and falling into the chasm. Imports are paid for by exports. But many contracted payments are deferred, indeed to the point where the payments will never actually take place. Instead of receiving payment in the form of imports, the mercantilist surplus countries have gleefully accepted 'promises'; effectively 'IOUs' ('I owe you'). (These 'financial promises' or 'financial assets' are essentially bonds [ie credit], or titles [ie equity]; promises themselves can be bought and sold, and can appreciate or depreciate in market trading [including depreciating to zero]. Promises typically earn, for their owners, additional promises in the form of interest and dividends. Interest and dividends may be realised – that is, spent – on imports, or may be 'compounded' – another word for 'accumulated' – hence the concept of compound interest.) Technically, inflation exists when the particular promise that we call money depreciates in market value. In a mercantilist world, all countries want to occupy the low 'ground' (ie a point below the seesaw pivot); they want to import less than they export, and to accumulate promises. In a stable world economy, so long as some countries insist on occupying the low ground, then some others must occupy the high ground. The most obvious deficit countries in the chart – countries with an accumulation of enjoyed (or invested in new structures) but unpaid-for imports – are the United States, Australia, Greece, the United Kingdom, and New Zealand. (Another important deficit country is Türkiye, for which the data is not good enough, but would almost certainly have an accumulated 'current account' deficit of over $US100,000 per Turkish person.) These are the world's 'spendthrifts'. The most obvious surplus countries in the chart are Taiwan, Germany, Sweden, Denmark, and the Netherlands. Indeed, the European Union – more than anywhere else, including China – is a mercantilist enterprise. (Further, the European Union is starting to look quite shabby, especially the countries just mentioned.) This is what Donald Trump means by the European Union 'screwing' the United States. (Refer EU was born to 'screw' US, Trump says, France24, 26 Feb 2025.) Surplus/creditor nations (like Germany) do not want to settle; they want to compound, they want deficit/debtor nations (like Aotearoa New Zealand) to extend their liabilities. The mercantilist countries are content – indeed, more than content – for other countries to enjoy the fruits of their labour and their capital. Just as the deficit countries are the world's 'spendthrifts', the surplus countries are the world's 'misers'. The global economy maintains a successful equilibrium so long as the willing spendthrifts balance out the insistent misers. Donald Trump threatens to disturb that global equilibrium by saying – in effect – that he wants the United States to join the 'miser club'; he says he wants his country to stop being screwed by the misers. The thing is, though, he probably doesn't actually mean it. His natural proclivity is to spend, and to gamble. He's a hedonist, not a puritan nor a thriftwad; his nature is neither parsimonious nor austere. (I would rather Donald Trump than Friedrich Merz was United States' president; and prefer the pragmatism of the United States and Australian Treasurers over the austere Nicola Willis or the United Kingdom's brutally austere Rachel Reeves. In 2027, I am optimistic that, in office, NZ Labour's Barbara Edmonds will be able to break away from the austere image of female Finance Ministers with whom we have become familiar – remember Ruthenasia; public austerity is an election-losing strategy, a generator of societal inequality and low morale.) Nevertheless, Trump may be unintentionally breaking the world economy, on account of his – or his advisers' (eg Peter Navarro) – weak understanding of it. If the surplus/creditor nations sought to spend their credits (except for spending in very small increments) they would: either bankrupt the debtor countries, creating systemic collapse; or, due to depreciating prices of assets being dumped onto financial markets, have to accept many fewer imports than they felt they were due. Financial promises work according to the use-it or lose-it rule. The Great Depression Parsimony, austerity, and mercantilism in the 1920s got us into the Great Depression of 1930 to 1934. (These were the core years of the Depression; the timing varies for different countries.) The Great Depression was a global event that occurred as a 'race to the bottom'; almost all countries wanted to be below the pivot of the seesaw and none at the top. The United Kingdom – under Chancellor of the Exchequer, Winston Churchill – in particular was a deficit country that tried to push its side of the seesaw down through a process of internal devaluation (deflation) at a time when France, United States (under the curmudgeonly Coolidge), and Germany had anchored their side of the seesaw down. (At that time, Germany had been – thanks to post World War One reparations – forced onto the same downside of the seesaw. Churchill's most specific action was the returning of the British pound to an unworkable restored Gold Standard at an overvalued exchange rate.) (In the pre WW1 global environment, one of the most important balancing deficit/debtor countries was Russia. Russia seceded from the global capitalist system in 1917, largely as a result of the war. The loss of Russia's pre-war presence – as a counterweight – was an aggravating factor in the Great Interwar Crisis.) Deep Mercantilism Donald Trump, while an overt mercantilist, is shallow in his convictions. He loves 'money', but he also loves what money can buy. Deep mercantilists love money, and other financial assets ('virtual gold') including cryptocurrencies, in miserly ways; they believe in making money, not spending it. (Stereotypical new wave misers are young men, mining and trading in Bitcoin from bedrooms in the parents' homes.) Through hoarding, they act to impede the global circulation of money, not to enable it. Finance, as an academic discipline, is quintessentially mercantilist. It equates the accumulation and appreciation of financial assets – promises – with the creation of wealth; and that the wealthiest country in the world is the one with the fullest Treasury. And so many people – especially journalists – buy into that vision of wealth as a pile of treasure, as an accumulation of credits. Modern mercantilists only regard mined gold as wealth, not gold still in the ground; and only promises that are tradeable, or at least potentially tradeable. Financial institutions regard your mortgage as their wealth; and they understand public debt to be private wealth; they buy and sell mortgages, along with other assets such as government debt. And they believe in the magic of compound interest. They believe that unspent money – unsettled promises – grow exponentially and indefinitely. The seesaw chart, showing unpaid-for imports accumulated over 40 years, belies this. If the surplus nations all tried to spend their gold and their paper (and other virtual) riches – by becoming deficit countries, by shifting the seesaw into the alternate position – then they would find both that their ability to import from the present deficit/debtor countries would amount to less than the unpaid-for amounts shown in the chart – and they would find that many of their claims (ie promises) would be unrealisable. As already noted, trade credits – promises – are accumulated on a 'use-it or lose-it' basis; this amounts to a negative form of compound interest. The surplus countries have not sufficiently used their credits; without realising it, their hoarded credits have already lost much of their initial purchasing capacity. While individual countries – especially small ones like Finland – may successfully shift from one side of the seesaw to the other, it is too late for the seesaw to swing without the surplus group of countries incurring heavy losses. The present deficit countries are simply not tooled up to produce masses of goods and services for export. Private pension funds represent the epitome of deep mercantilism. Deep mercantilism is not just about countries and international trade. A major feature of the next Great Depression will be the collapse of these funds, as far too many 'first world' people in their fifties and sixties seek to withdraw and spend their retirement savings. Thus, the next Great Depression will be one of stagflation – not 1930s'-style deflation – as there will be a rush of 'Generation Jones' people (born in the later 1950s and early 1960s) to spend their savings and finding that the global cupboard of goods and services is becoming bare. Non-Mercantilism Human wealth is actually the 'factors of production': people (simplistically construed as 'labour') and nature (simplistically construed as 'land') and structures [and inventories; and including intangible structures such as 'knowledge'] (construed by economists true to their discipline as 'capital') and the enjoyable goods and services which flow to humans from these 'factors'. The next global Great Depression can be forestalled if the deficit countries (like United States and Aotearoa New Zealand) – the less-mercantilist countries, or at least the 'unsuccessful' would-be mercantilist countries – continue as net spenders, given that the substantial likelihood is that the prevalent mercantilist countries (like Germany and Sweden and Netherlands and China) are likely to at least try to persevere as accumulators of financial assets through the process of selling more goods than they buy. Or the next Great Depression can be forestalled by most countries slowly moving, in concert, into a position of balance. Imagine each end of the seesaw neither up nor down, a horizontal seesaw on its pivot. Here countries like France, Italy, Indonesia and Philippines serve as examples. Collapse and its prevention Under prevailing mercantilist ideology, the best place for a country to be is on the downside of the seesaw. The biggest danger – the danger of system breakage – is that of the deficit countries trying to get their side of the seesaw down while the surplus countries are also trying to keep their side down. Any option of voluntary balance – of some countries trying to do what the majority are trying not to do – may forestall a global economic collapse; including a voluntary continuation of the present situation, with one group of countries happy to stay up while another group of countries want to stay down. The irony is that the real winners are the alleged losers. For good reason, the seesaw chart shows these real-winner countries at the top rather than at the bottom. The real winners like to import, to enjoy their stuff; they do not pursue the mercantilist illusions of treasure hoards and compound interest. Children understand that when one side of the seesaw is down, the other should be up. And that being up is fun. Will the adults learn what children already know? ------------- Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand. Keith Rankin Political Economist, Scoop Columnist Keith Rankin taught economics at Unitec in Mt Albert since 1999. An economic historian by training, his research has included an analysis of labour supply in the Great Depression of the 1930s, and has included estimates of New Zealand's GNP going back to the 1850s. Keith believes that many of the economic issues that beguile us cannot be understood by relying on the orthodox interpretations of our social science disciplines. Keith favours a critical approach that emphasises new perspectives rather than simply opposing those practices and policies that we don't like. Keith retired in 2020 and lives with his family in Glen Eden, Auckland.
Malay Mail
30-04-2025
- Business
- Malay Mail
From ‘roti canai' to ‘satay': Beloved Malaysian foods see prices nearly double over 13 years, says DOSM
KUALA LUMPUR, April 30 — Fancy roti canai for breakfast, nasi lemak for lunch, and satay for dinner, these beloved Malaysians' staples have almost doubled in price over the past 13 years, according to the Department of Statistics Malaysia (DOSM). The department's report, Analysis of Annual Consumer Price Index (CPI) 2024, showed that the price of roti canai rose by 71.1 per cent, from an average of 90 sen per piece in 2011 to RM1.54 in 2024, while nasi lemak increased by 81.3 per cent from RM2.03 to RM3.68 per plate. Chicken satay saw over two-fold rise in price, soaring 113.7 per cent from 51 sen per stick to RM1.09. Among others, the report indicated that big onions imported from India also saw a significant increase of 139.4 per cent, with prices climbing from RM2.89 to RM6.92 per kilogramme (kg) over the same period. As for other everyday essentials included in the analysis, fresh coconut milk rose from RM7.39 to RM11.54 per kg, and grated coconut increased from RM5.18 to RM8.33 per kg. Meanwhile, local beef prices in the meat category almost doubled from RM19.05 to RM37.84 per kg between 2011 and 2024. The steepest increase, however, was seen in cockles, which surged by 400.3 per cent, from RM3.04 to RM15.21 per kg. Yesterday, DOSM reported that Malaysia's inflation rose at a slower pace of 1.8 per cent in 2024 compared with 2.5 per cent in 2023, with the index points standing at 132.8 in 2024 versus 130.4 in the previous year. It said the country's inflation is in line with the global inflation rate of 5.7 per cent in 2024, slower than the 6.6 per cent recorded in 2023, citing the International Monetary Fund's World Economic Outlook Database, April 2025. — Bernama
Barnama
30-04-2025
- Business
- Barnama
Malaysia's Inflation Rises At Slower Rate Of 1.8 Pct In 2024
29/04/2025 02:23 PM KUALA LUMPUR, April 29 (Bernama) -- Malaysia's inflation increased at a slower rate of 1.8 per cent in 2024 versus 2.5 per cent in 2023, with the index points standing at 132.8 in 2024 against 130.4 recorded in the previous year, said the Department of Statistics Malaysia (DOSM). In a statement today, it said the country's inflation is in line with global inflation, which was recorded at 5.7 per cent in 2024, slower than the 6.6 per cent posted in 2023, citing the International Monetary Fund's World Economic Outlook Database, April 2025. 'Along with the strengthening of the ringgit and the decline in global commodity prices, the government initiatives to regulate the prices of goods and services, as well as subsidies for certain items, to a certain extent, have curbed Malaysia's inflation from rising further,' it said. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin highlighted that inflation for all groups recorded increases in 2024 except for information and communication (-1.5 per cent), and clothing and footwear (-0.3 per cent). 'The slower increase in Malaysia's inflation was driven by the restaurants and accommodation services (3.1 per cent); food and beverages (2.0 per cent); health (1.8 per cent); education (1.5 per cent); transport (1.0 per cent) and furnishings, household equipment and routine household maintenance group (0.7 per cent). 'Meanwhile, the housing, water, electricity, gas and other fuels (3.0 per cent); personal care, social protection and miscellaneous goods and services (3.0 per cent); recreation, sports and culture (1.8 per cent); alcoholic beverages and tobacco (0.7 per cent) and insurance and financial services group (0.3 per cent) recorded a higher increase as compared to the previous year,' he said. Mohd Uzir said that inflation for housing, water, electricity, gas, and other fuels recorded a significant increase, although headline inflation moderated in 2024. This was due to the rise in sewerage services charges by Indah Water Konsortium in January 2024 that offset higher operational costs, he said. 'The increase in this group was also driven by the adjustment of water supply service tariffs by the government through the National Water Services Commission, which involved an average increase of 22 cents per cubic metre for domestic users in Peninsular Malaysia and Wilayah Persekutuan Labuan, effective Feb 1, 2024,' he added.
New Straits Times
30-04-2025
- Business
- New Straits Times
Prices of everyday favourite foods almost double over 13 years, DOSM data shows
KUALA LUMPUR: Fancy roti canai for breakfast, nasi lemak for lunch, and sate for dinner? These beloved Malaysian staples have almost doubled in price over the past 13 years, according to the Department of Statistics Malaysia (DOSM). The department's report, Analysis of Annual Consumer Price Index (CPI) 2024, showed that the price of roti canai rose by 71.1 per cent, from an average of 90 sen per piece in 2011 to RM1.54 in 2024, while nasi lemak increased by 81.3 per cent from RM2.03 to RM3.68 per plate. Chicken satay saw over two-fold rise in price, soaring 113.7 per cent from 51 sen per stick to RM1.09. Among others, the report indicated that big onions imported from India also saw a significant increase of 139.4 per cent, with prices climbing from RM2.89 to RM6.92 per kg over the same period. As for other everyday essentials included in the analysis, fresh coconut milk rose from RM7.39 to RM11.54 per kg, and grated coconut increased from RM5.18 to RM8.33 per kg. Meanwhile, local beef prices in the meat category almost doubled from RM19.05 to RM37.84 per kg between 2011 and 2024. The steepest increase, however, was seen in cockles, which surged by 400.3 per cent, from RM3.04 to RM15.21 per kg. DOSM reported that Malaysia's inflation rose at a slower pace of 1.8 per cent in 2024 compared with 2.5 per cent in 2023, with the index points standing at 132.8 in 2024 versus 130.4 in the previous year. It said the country's inflation is in line with the global inflation rate of 5.7 per cent in 2024, slower that the 6.6 per cent recorded in 2023, citing the International Monetary Fund's World Economic Outlook Database, April 2025. – Bernama
