A massive earthquake and tsunami have accomplished what Japan's fiscal policy and central bank could not. Rebuilding a large swath of Japan will stimulate domestic growth and global demand, energy-efficient technologies, while helping to integrate China and Japan.
No one – least of all someone like myself who has experienced the existential terror of California’s regular tremors and knows the big one is coming here next – would minimize the grief, suffering, and disruption caused by Japan’s massive earthquake and tsunami.
But if one can look past the devastation, there is a silver lining. The need to rebuild a large swath of Japan will create huge opportunities for domestic economic growth, particularly in energy-efficient technologies, while also stimulating global demand and hastening the integration of East Asia.
Japan has been wallowing in stagnation for years despite massive government stimulus programs and zero-interest rates because, simply put, in such an advanced, mature economy, there was too little demand to generate sufficient returns to attract private investment. Thus the famous “bridges to nowhere” and other projects that amounted to pushing a string.
By taking Japan’s mature economy down a notch, Mother Nature has accomplished what fiscal policy and the central bank could not. Now there are more bridges to somewhere to be built than one can count. Entire cities and regions need to be reconstructed in toto, from housing and commercial buildings to roads, rail lines, information networks, the energy grid, and even the tsunami warning system that must be digitally revamped. Twitter- and Facebook-like platforms will need to be integrated into a system reliant on old technologies like warning sirens and radio or TV broadcasts. (It was reported that at one point on the day of the quake, 20 tweets a second were coming out of Tokyo.)
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