Japan in the Great Depression

[Knighted]

The Great Depression did not strongly affect Japan. The Japanese economy shrank by 8% during 1929–31. However, Japan's Minister of Finance (MoF) Osachi Hamaguchi implemented the first version of Keynesian economic policies: first, by increasing deficit spending; and second, by devaluing the currency. The MoF believed that the deficit spending could easily be paid for when productivity improved.

The devaluation of the currency had an immediate effect. Japanese textiles began to displace British textiles in export markets. The deficit spending, however proved to be most profound. The deficit spending went into the purchase of munitions for the armed forces. By 1933, Japan was already out of the depression.
http://en.wikipedia.org/wiki/Great_Depression#Japan

If it wasn't the implementation of Keynesian policies, what allowed Japan to escape from the clutches of the Depression far sooner than most other countries?

 

[Anti Federalist]

If it wasn't the implementation of Keynesian policies, what allowed Japan to escape from the clutches of the Depression far sooner than most other countries?

You didn't post the rest of the story:

By 1934 the MoF realized that the economy was in danger of overheating, and to avoid inflation, moved to reduce the deficit spending that went towards armaments and munitions. This resulted in a strong and swift negative reaction from nationalists, especially those in the Army, culminating in an assassination attempt on the MoF, leading to his eventual demise from poor health some months later. This had a chilling effect on all civilian bureaucrats in the Japanese government. From 1934, the military's dominance of the government continued to grow. Instead of reducing deficit spending, the government introduced price controls and rationing schemes that reduced, but did not eliminate inflation, which would remain a problem until the end of World War II.

They didn't escape the clutches of the depression.

They killed the MoF, became more militaristic, imposed rationing and wage and price controls, enslaved the population, then invaded Manchurian China, among other places.

Following to it's logical (and conventional wisdom) end, this resulted in them getting nuked.

Not a plan of action I'm interested in following.

 

[Dequeant]

The buildup for WWII.

If the U.S. started building up for WWII in 1933, we'd have gotten out of it sooner too since industry would have been doing well.

Our trade protectionism is what hurt us the most to be quite honest. Exactly what Obama is trying to do now.

 

[hugolp]

The buildup for WWII.

If the U.S. started building up for WWII in 1933, we'd have gotten out of it sooner too since industry would have been doing well.

Our trade protectionism is what hurt us the most to be quite honest. Exactly what Obama is trying to do now.

The world is getting scarirer by the moments.

Hugo

 

[tmosley]

The buildup for WWII.

If the U.S. started building up for WWII in 1933, we'd have gotten out of it sooner too since industry would have been doing well.

Our trade protectionism is what hurt us the most to be quite honest. Exactly what Obama is trying to do now.

We would have gotten out of it by then if FDR had stopped experimenting with the national economy. As soon as he stopped doing that (at the start of WWII), surprise surprise, the Depression ended.

 

[Knighted]

You didn't post the rest of the story: ... They killed the MoF, became more militaristic, imposed rationing and wage and price controls, enslaved the population, then invaded Manchurian China, among other places.

Yes, but this all took place after the "Keynesian plans" went into effect and the economy began recovering. The article does mention the issue of Japan worrying that the economy was "overheating" after it began to recover, but the article states that it was Japan's attempted reduction in armament deficit spending (in order to cool the economy) that prompted the military upheaval and what followed. In essence, they were never able to reduce spending as much as they wanted.

The deficit spending had a transformative effect on Japan. Japan's industrial production doubled during the 1930s.

In short, this article seems to suggest that Japan successfully pulled out of the Great Depression in half the time of other countries by deficit spending. As the threat of inflation loomed after the recovery, Japan then intended to scale back deficit spending to "cool" the economy, but was thwarted by the military factions of the government seizing control. The reason they attempted to implement wage/price controls to fight inflation was because they refused to scale back deficit spending. But what if they had successfully reduced spending? This seems to at the very least make the case for a short term recovery thanks to government spending.