John Tamny, RealClearMarkets
After hitting an all-time high of 39,000 in 1989, Japan’s Nikkei average has mostly fallen since. At present, it sits at 7,969, an ugly drop of 79% over the last 20 years. Japan’s economic and market decline over the last two decades offers useful lessons to the political class in the United States, but in order to understand Japan’s fall, it’s important to first cover what aided its rise.
On its back after the Second World War, Japan was blessed with pro-growth politicians who saw the importance of reducing taxes, or the price put on work. From 1960 to 1970, taxes were cut every year, and far from reducing revenues, according to Nathan Lewis’ 2006 book Hard Money, tax receipts rose from 1.801 trillion yen in 1960 to 7.775 trillion yen by 1970.