Japan turning around? Don’t bet on it.

A question we always hear: Has Japan turned the corner?

The straight answer: nope.

We hear a lot about economic cycles, so it’s easy to figure that since Japan has been in the tank, it’s time for an upswing. The problem, though, is that there’s no grand economic pendulum. What goes up doesn’t have to come down. What falls flat doesn’t have to bounce back.

Economists talk about cyclical factors within technical contexts, which is more or less shorthand to describe some well established cause-and-effect relationships. Overall, though, taking a broad view of things, there probably aren’t any big economic cycles.

Economies do, of course change–they change every minute. They zig and zag, boom and bust, rally and flop. These movements are fluctuations. But a fluctuation isn’t necessarily a cycle.

The underlying reality behind the Godzilla economy hasn’t changed a bit. The Japanese government is an economic King Kong, using a heavy hand to steer capital the way it sees fit; a weird fusion of capitalistic industrial production and socialist style central planning. A lot of economies learn the hard way that central planning might look cool on paper, but in the real world it’s a recipe for getting caught financially flat-footed.

And so Japan will continue to drag its feet, as it has for the past ten years or so, and muddle along.

The average Japanese citizen wields less economic muscle than his counterpart in Singapore, Hong Kong, or the United States, based on looking at Gross Domestic Product adjusted for costs of living. Japan, in fact, is bumping along at Canada’s level.

Canada? Yeah, Canada. How embarrassing.

Here at home, then, folks counting on some sort of mythical cyclical “rebound” are in for a profound disappointment. Stop-gap measures to shore up our public finances–based on some cockeyed premise that Japan will spontaneously resurrect itself–will not solve anything in the long run. Our economy, like Japan’s, faces very high costs from having massive government involvement in all things economic.

The costs of Big Brother’s mismanagement don’t have visible price tags. The costs are abstract and invisible. Sure, you can read a number on a government budget, but the more important costs are the lost economic production resulting from government distortion of markets. And you can’t see what hasn’t been produced. Lost wealth is invisible.

As for the future, Japan’s policy makers seem to be too crusty and entrenched to make any real reforms. Ditto here.

So Japan’s not turning any corner anytime soon.

And neither are we. You’ll be hearing the same old tired non-answers to the same old tired problems…but don’t despair. At least we’re not in Canada.