Getting access to JGBs isn’t easy. Retail investors outside Japan can’t even get them outside of buying into funds that can, so they’re not really part of the demand to begin with. So the fact that they’re turned off doesn’t really matter.
There are institutions in Japan that are simply required to hold them as part of their mandate. They may want as little exposure as possible, but given how risky the Nikkei is and how (not) well it has performed since, like, 1991, you can see why local institutions with local pension obligations might just hold them. Sure the interest rate is crummy, but if they can always sell them to the JCB, at least their principal seems protected.
Obviously, this can’t go on forever, but it looks like it can go on for a long time. It helps that productivity in Japan is high, and they do seem to have more of a culture of cooperation amongst themselves so that it is easier to find people willing to take care of non-working elders as population declines. Because of productivity, it is more feasible, and because of culture it is more acceptable.
But how Japan handles population decline is going to be interesting to watch. They really don’t seem to like immigrants very much, even if they try to be polite to visitors.
The criticism of the growth mindset reminded me of my environmental economics days. It’s worth taking a look at Herman Daly’s Book “The Steady-State Economy” outlining lots of challenges that the “we must always be growing” mindset creates. I don’t know how to break away from that mindset or what will replace it (I know of some ideas, but few of them sound really practical). Nonetheless, that doesn’t mean that Daly’s analysis of the unsustainability of exponential growth forever is wrong.
I met Daly several times, and he’s an interesting - if quiet - fellow. He’s what everyone is looking for: a one-handed (literally) economist.
People wonder why I’m so concerned about the inequality issue. And it’s not simple “bleeding-heart liberalness.” It’s actually founded in the fact that the traditional solution of “we’ll just grow faster to solve it, and the poor will be in a better place because we’ll be producing so much more” doesn’t fit. Productivity improvements will help, but certain kinds of things simply require more resources and more energy that isn’t expanding at the same rate. And every time assets get concentrated, it becomes that much harder to solve. And of course, it looks like growth isn’t trickling down, at least not to the poor in developed regions. Perhaps globally it is trickling down to emerging middle classes in the developing world, and that is kicking off it’s own dynamics. At a certain point, developed market poor will be competitive with emerging market poor in terms of productivity and cost, but that’s likely to be either a generation or two away, or at a dramatic drop in standard of living here in developed countries.
I’m not saying that the developed poor are automatically more deserving than the emerging poor, but there is extra pain when large numbers of people have diminishing prospects for life quality, and sometimes that can be even harder than some forms of absolute deprivation.