No, I do not think he should, but let me explain the context first.
Two weeks ago Nobel winner and Princeton professor Paul Krugman penned a piece titled “Apologizing to Japan” in the New York Times, where he apologized for being a critic of Japanese policies because he believed that the west has fallen into a worse economic slump than even Japan.
Japanese newspapers such as Yomiuri Shimbun, the country’s largest circulating daily newspapers, quickly picked up the news and made “Dr. Krugman apologized to Japan” the headline. What they seemed to have ignored is that Mr. Krugman’s piece was really just a foil for his criticism of western policies.
Paul Krugman, Laureate of the Nobel Prize in Economic Sciences (Photo credit: Wikipedia)
On the same day that the NYT piece was published, Mr. Krugman came to Japan and delivered a speech. Free and open to the public, the talk drew what looked like at least 1,000 audience, who fully packed the large hall (part of what he said can be found here and here). Here are three points I took home among many others –
First, he is worried about secular stagnation, which he attributed to demographics and a lack of economically-relevant innovation. Second, he is worried about the “Japanification” of Europe and China. Europe is emulating the deflationary stagnation of Japan in the 1990s, and China is increasingly looking more like Japan in the late 1980s bubble era. Third, he said one way out of secular stagnation is policy innovation. We can think of two kinds of innovation, one by the private sector and the other by the public sector. Both are very difficult to come by, but the policymakers should try harder at the latter.
In this context, he praised Abenomics as a policy innovation. Abenomics succeeded partly because it was innovative, and are stumbling now because it could not shake out of “conventional thinking” such as an urge for fiscal consolidation.
But he stopped short of commenting on the most urgent policy question, the decision on the next consumption tax hike. He has made his opposition to the hike absolutely clear in other places – see his interview with Japanese weekly magazine Shukan Gendai – but he did not use this opportunity to hammer his point to the public (he met Prime Minister Abe on November 7; it is reported that he made his case against the tax hike).
A bigger issue though, is that Mr. Krugman has somehow underestimated human misery and suffering of the Japanese people. This comes down to the core of his “apology”. He thought the Japanese workers have experienced less human misery than their Western counterparts, so in that sense Japan managed the crisis better than the Western countries–a point that he has repeated it on other occasions too.
But in fact suicide rate stayed high for more than 10 years in Japan. It started from an abrupt jump in 1997-1998 from below 20 per 100,000 people to higher than 30 per 100,000 people (the actual number was 30,000), when the unemployment rate increased from 3.5% to 4.7%. It was only in recent years that suicide rate started to come down because of rising employment rates. The Japanese may not have protested loudly, but as the high suicide rate suggested, their suffering has been tremendous.
So there’s no need for Mr. Krugman to apologize for his criticism of Japan. Perhaps a more important point coming from his article was, as he put it, “In fact, in some ways [the paper I published in 1998 about Japan’s “liquidity trap,” or the paper Mr. Bernanke published in 2000 urging Japanese policy makers to show 'Rooseveltian resolve' in confronting their problems] look more relevant than ever now that much of the West has fallen into a prolonged slump very similar to Japan’s experience.”