Germany and Japan rose from the ashes of World War II to become global economic powerhouses in a few decades. But how did they achieve this remarkable feat so quickly, and what is the legacy of these parallel economic “miracles” today?
What was the state of both countries after World War II?
Both nations lay in ruins.
Photo: AFP / KAZUHIRO NOGI
A significant proportion of the Japanese population was wiped out during World War II, including an estimated 210,000 people in the atomic bombings of Hiroshima and Nagasaki alone.
Germany had also lost millions of soldiers and civilians, with hundreds of thousands more killed in occupied eastern Europe.
British and US bombardments of German cities such as Dresden, conducted with conventional and incendiary explosives, caused a firestorm that killed up to 25,000 people and wiped out the historic city center.
Photo: AFP/Toyota Motor
A quarter of Japan’s national wealth evaporated during the war.
By 1945, Germany was under the control of the Allied Powers in Europe: the US, the USSR, Britain and France.
Japan was occupied by the US after its formal surrender.
RECOVERY
Japan became the second largest economy in the world after the US in 1968, experiencing average growth of up to nine percent per year between 1955 and 1973.
The German Wirtschaftswunder economic miracle accelerated even faster, transforming West Germany into the world’s second largest economic powerhouse by the 1950s.
“Unlike Germany, carved up by four victorious allies, Japan had to engineer its recovery while occupied by a single power,” professor Tag Murphy recounts in a recent book, entitled Japan and the Shackles of the Past.
“The United States took on responsibility for Japan’s security,” allowing it to focus on its economic recovery.
ECONOMIC POLICY
In 1949, Germany split into two countries, with the occupied zones belonging to the three Western powers merging to form the Federal Republic of Germany (FRG), while the Soviets established the German Democratic Republic (GDR).
The two Germanys would only formally reunify in 1990.
The FRG received US$1.3 billion in aid for reconstruction from the US-financed Marshall Plan, but the leader of the USSR, Joseph Stalin, refused American money for the GDR.
The London Debt Agreement of 1953 saw 60 percent of German loans and reparations written off.
The establishment of a West German economy built along capitalist lines by conservative chancellor Konrad Adenauer and his finance minister Ludwig Erhard saw the country rapidly prosper between 1946 and 1975, with annual growth at around seven percent, although it also experienced recession during those years.
Unemployment fell from 11 percent in 1950 to 0.7 percent in 1965.
The US occupation of Japan lasted until 1952, during which time attempts were made to dismantle Japanese business conglomerates known as zaibatsu.
The Korean War of 1950-53 was a boom time for Japanese firms, whose technological and manufacturing prowess was in high demand by US forces.
Simultaneously, increasing wages in Japan created consumer demand for domestic appliances and other goods.
GROWTH
In Japan and Germany, the economic turnaround was driven by firms with strong employee loyalty gained by the promise of rising wages and jobs for life, as well as innovative products that were exported worldwide.
Whether they were pre-war conglomerates such as Mitsubishi or Sumitomo, smaller pre-war companies like automaker Toyota or new firms representing now-familiar brands — such as consumer electronics giant Sony and car manufacturer Honda — Japanese firms were rigidly hierarchical institutions that closely resembled a family or religious institution, according to experts.
Tight coordination by the powerful industry ministry helped drive economic growth.
“Human infrastructure provided a favorable environment: Japan had a wide pool of highly motivated, disciplined, diligent and quick-to-learn laborers prepared to work long hours for (initially) quite low wages and really committed to serving their companies,” Ivan Tselichtchev, an economist at Niigata University said.
“This was amplified by the formation of a unique Japanese company model with long term employment, seniority and cooperative company unions as its pillars.”
In Germany, companies including Volkswagen, Siemens and Thyssen, operating in the automotive, electronics and engineering sectors, were all seen as pillars of post-war growth.
Japan fell behind China in annual GDP in 2010, to its current third place globally.
Upon taking office in late 2012, Prime Minister Shinzo Abe launched a pro-spending policy blitz that also called for economic reforms and massive central bank stimulus.
The slow death of the culture of lifetime employment and a greater dependence on part-time or casual employment means Japan’s workers, not the firms that employ them, bear almost all the costs of the job market’s limited flexibility.
Germany has the fourth largest economy in the world, and reforms over the past decade have enabled job creation and have driven unemployment to one of the lowest rates among advanced economies, currently at around six percent. However, many companies are struggling with China’s slowdown and recent volatility over the Greek crisis, as Germany’s center stage role within the European Union and its powerful influence over the direction of Europe’s single currency comes under scrutiny.
Other European Union member nations are the biggest market for German exports.
Last week Joseph Nye, the well-known China scholar, wrote on the Australian Strategic Policy Institute’s website about how war over Taiwan might be averted. He noted that years ago he was on a team that met with then-president Chen Shui-bian (陳水扁), “whose previous ‘unofficial’ visit to the US had caused a crisis in which China fired missiles into the sea and the US deployed carriers off the coast of Taiwan.” Yes, that’s right, mighty Chen caused that crisis all by himself. Neither the US nor the People’s Republic of China (PRC) exercised any agency. Nye then nostalgically invoked the comical specter
April 15 to April 21 Yang Kui (楊逵) was horrified as he drove past trucks, oxcarts and trolleys loaded with coffins on his way to Tuntzechiao (屯子腳), which he heard had been completely destroyed. The friend he came to check on was safe, but most residents were suffering in the town hit the hardest by the 7.1-magnitude Hsinchu-Taichung Earthquake on April 21, 1935. It remains the deadliest in Taiwan’s recorded history, claiming around 3,300 lives and injuring nearly 12,000. The disaster completely flattened roughly 18,000 houses and damaged countless more. The social activist and
Over the course of former President Ma Ying-jeou’s (馬英九) 11-day trip to China that included a meeting with Chinese Communist Party (CCP) leader Xi Jinping (習近平) a surprising number of people commented that the former president was now “irrelevant.” Upon reflection, it became apparent that these comments were coming from pro-Taiwan, pan-green supporters and they were expressing what they hoped was the case, rather than the reality. Ma’s ideology is so pro-China (read: deep blue) and controversial that many in his own Chinese Nationalist Party (KMT) hope he retires quickly, or at least refrains from speaking on some subjects. Regardless
Approaching her mid-30s, Xiong Yidan reckons that most of her friends are on to their second or even third babies. But Xiong has more than a dozen. There is Lucky, the street dog from Bangkok who jumped into a taxi with her and never left. There is Sophie and Ben, sibling geese, who honk from morning to night. Boop and Pan, both goats, are romantically involved. Dumpling the hedgehog enjoys a belly rub from time to time. The list goes on. Xiong nurtures her brood from her 8,000 square meter farm in Chiang Dao, a mountainous district in northern Thailand’s