Oh, the Horrors of Deflation!

by Jun 6, 2013Liberty & Economy0 comments

It is just horrible that Japanese can buy a soda for the same price today as it would have cost them 15 years ago! It would obviously be so much better for everyone if they had to pay much more of their hard earned wealth to quench their thirst.

In an article about “Japan’s Fight With Deflation”, the New York Times comments about how

vending machines are also a symbol of the country’s big economic problem: deflation. The price of a soda in a vending machine has stubbornly remained the same for 15 years.

Oh my gosh, what a huge problem! It is just horrible that Japanese can buy a soda for the same price today as it would have cost them 15 years ago! It would obviously be so much better for everyone if they had to pay much more of their hard earned wealth to quench their thirst.

Since taking office in December, Prime Minister Shinzo Abe has made fighting deflation a priority, pumping the Japanese economy with cheap money and bolstering public spending in a bid to kick-start growth….

In theory, Mr. Abe’s economic plan makes sense. More money circulating in the economy should lead to higher prices, and help generate a positive cycle of more investment, profits, wages, spending and growth. It also weakens the yen, which helps exporters sell more goods overseas and raises the price of imports.

Gosh, that makes so much sense! I mean, everybody knows that economic growth comes from people spending more. And only an idiot could believe that a country having a strong currency would be a good thing.

Back in the good old days,

the price of a can jumped 10 yen each for three consecutive years, as surging oil prices caused inflation. By 1983, cans were selling for 100 yen, and by 1998, they went for 120 yen.

But then,

Japan’s economy burst, and the country fell into deflation and economic stagnation. Most drink companies did not lower prices, preferring instead to live with lower profits as consumers cut back on spending. But a flurry of third-party vending machine operators, like Mr. Katagiri’s Japan Machine Service, started to source soda on the cheap and sell cans for less than the manufacturer’s suggested price.

Oh, my! Entrepreneurs had an opportunity to profit by offering goods to consumers for less than their competitors could! It obviously would not do for this kind of thing to continue.

With more than a dozen national drink makers and countless sellers, crippling rivalries and razor-thin profits have become the norm of doing business.

Man, this just will not do! It’s plainly no good for Japan to have a situation where a competitive marketplace means that consumers are able to purchase goods they demand at a lower cost!

Consider the seven vending machines at the Ebina Service Area along Tomei Expressway, just outside Tokyo. On offer are 33 variations of hot or cold canned coffee, 40 variations of teas, as well as sodas, mineral and flavored waters, energy and vitamin drinks, fruit juices, cocoa and corn soup, all vying for the attention of the drivers who stream through the rest stop.

My God, so much variety! How horrible!

Yes, obviously having less competition and less variety and making Japanese pay more for things they want translates into an increase in their standard of living, and clearly the solution for Japan’s economic woes is to print even more money in order to even further decrease the purchasing power of the yen in people’s pockets and finally defeat the forces of that pesky free market so that Japanese will have to pay more for sodas.

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About Jeremy R. Hammond

About Jeremy R. Hammond

I am an independent journalist, political analyst, publisher and editor of Foreign Policy Journal, book author, and writing coach.

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