Japanese Economy Hit by Higher Taxes and a Pitiful America

Recently published statistics have shown that Japan suffered a decline in its exports during August of this year. Shipments to the United States began to contract, adding to existing concerns surrounding their economy. Japan has been worried about potentially pitiful growth taking place in the third quarter of 2014, after suffering a deep drop throughout April-June.

Well, what do you expect when you have high taxes and a socialized health care program?

Recently published statistics have shown that Japan suffered a decline in its exports during August of this year. Shipments to the United States began to contract, adding to existing concerns surrounding their economy. Japan has been worried about potentially pitiful growth taking place in the third quarter of 2014, after suffering a deep drop throughout April-June.

Well, what do you expect when you have high taxes and a socialized health care program?

In August of this year, exports dropped approximately 1.3% in comparison to the year before. This is half as much as the median estimate of a 2.6% annual decline. The drop followed a marginal 3.9% gain in July, after another fall between May and June. The evidence numbers have shown so far suggest an extremely patchy yo-yoing economy for Japan.

Higher Taxes

The uncomfortable levels of performance have dampened the hopes that an external demand for goods may have been able to offset the slump in consumer spending caused by the April sales tax hike. The increased tax, hiked from 5% to 8%, created a difficult situation for consumers. The Bank of Japan and the government may now be under some serious pressure to figure out new ways of keeping the economy standing.

Japan is governed by central planners. These same types of people are in the White House right now. They believe they can solve the country’s problems. They just need more money to do it. Unfortunately, bureaucrats rarely solve any problems. They just make things worse according to many political scholars. America’s health care system, being imploded by the ACA, is a fantastic and poignant example.

The Weak Link in the Japanese Economy

Exports failing to perform as well as they should have been a weak link within Japan’s economy for some time now, especially as it struggles to battle the April tax boost. The confidence for manufacturers also saw a significant dip this September, according to a poll, as executives are beginning to fear the impact that the sales tax could have. Anyone who works for a living does not want to see a sales tax hike, and certainly not one of this magnitude.

Lately, the exports provided by Japan have seen a serious decline in shipments to the United States, down 4.4% after a 2.1% rise in July. Furthermore, in August, imports fell by around 1.5%, significantly more than the forecast of a 1.2% annual decline. As a result, the trade imbalance currently stands at around 984.5 billion yen, instead of the 1.0289 trillion yen that was expected.

For the 26th month in a row, Japan’s trade balance was not in its favor, indicating that its status as a powerhouse exporter has faded away as companies have begun to shift production offshore. As a result of the tax hike, the economy fell by 7.1% in the second quarter. This is the largest contraction that Japan has seen since the global crisis of 2009 which was largely caused by Wall Street, Barnie Frank, and Alan Greenspan.

Japan is Hurting Itself

Despite all of this negativity, the governor for the Bank of Japan suggests that the country is still on track to meet its inflation goal. However, serious questions have been raised about the outlook for growth since the contraction. Exports remain low regardless of the yen’s decline to the lowest rate in six years, mainly due to firms shifting their production sites overseas. Japan’s struggles are good for Vietnam, India, Indonesia, and other countries as well.