Outlook: American peak, Japanese trough

SOMETHING unprecedented in post-war economic history is about to happen, possibly this week, but certainly within the next month or two. Before long the unemployment rate in the United States is going to fall lower than the rate in Japan. For the first time in living memory, the land of opportunity and insecurity is about to offer its inhabitants better job prospects than the land of lifetime employment.

This week's employment report from the US is likely to show a further decline in the unemployment rate to 4.3 per cent. At the present turbo- charged pace of economic growth in the US, this will fall even lower. Meanwhile the latest figures show that unemployment in Japan has soared from 3.5 per cent of the workforce - already very high by historical standards - to 4.1 per cent, and is heading firmly upward. It will only take another month, two at most, for these trends to cross. There could scarcely be a more telling symbol of the growing economic strength of the US and weakness of Japan.

Certainly it would be easy to cite this milestone as evidence not just of the triumph of the Anglo-Saxon over the Asian model of capitalism, but also of its superiority. Indeed, it is positively satisfying to do so, given how much the red-blooded, free-market variety had fallen out of fashion with trendy pundits who spied advantages in Japanese long-termism.

However, a little bit of caution is needed. Part of the explanation for the stellar combination of rapid growth, low unemployment and low inflation in the US is just that the economy is at that transient stage of the business cycle when everything goes well for a little while. It would be foolish to assume the US has achieved the holy grail of economic policy - abolition of the business cycle. The next stage is for inflation to grow, and then as interest rates are tightened to counter these pressures, for growth to slow and unemployment to climb.

On the other hand, there is almost certainly also some truth in the "new paradigm" model of the US economy. Some of the long-awaited fruits of new technologies are at last being harvested and the economy's growth potential probably has increased compared with the 1970s and 1980s. It is at times like these, when the economic environment is changing rapidly, that free-wheeling and entrepreneurial variants of capitalism are likely to perform best - while those built on tradition and fixed relationships will suffer by comparison.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Tax Manager / Accountant

£35 - £50k DOE: Guru Careers: A Tax Manager / Accountant (ACA / CA / CTA) is n...

Ashdown Group: Contracts Executive - City of London

£35000 - £37000 per annum + benefits: Ashdown Group: Contracts Executive - Cit...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Day In a Page

Giants Club: After wholesale butchery of Idi Amin's regime, Uganda’s giants flourish once again

Uganda's giants are flourishing once again

After the wholesale butchery of Idi Amin's regime, elephant populations are finally recovering
The London: After 350 years, the riddle of Britain's exploding fleet is finally solved

After 350 years, the riddle of Britain's exploding fleet is finally solved

Archaeologists will recover a crucial item from the wreck of the London which could help shed more light on what happened in the vessel's final seconds
Airbus has patented a jet that could fly from London to New York in one hour

Airbus has patented a jet that could fly from London to New York in one hour

The invention involves turbojets and ramjets - a type of jet engine - and a rocket motor
10 best sun creams for kids

10 best sun creams for kids

Protect delicate and sensitive skin with products specially formulated for little ones
Tate Sensorium: New exhibition at Tate Britain invites art lovers to taste, smell and hear art

Tate Sensorium

New exhibition at Tate Britain invites art lovers to taste, smell and hear art
Ashes 2015: Nice guy Steven Finn is making up for lost time – and quickly

Nice guy Finn is making up for lost time – and quickly

He was man-of-the-match in the third Test following his recall to the England side
Ashes 2015: Remember Ashton Agar? The No 11 that nearly toppled England

Remember Ashton Agar?

The No 11 that nearly toppled England
Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks