Lessons from Japan

Japan’s earthquake and tsunami—with a death toll of 14,000 at this writing—are a tragedy. We should foremost mourn those who lost their lives and pray for their loved ones. We should also act hopefully and charitably toward those struggling to rebuild their livelihoods and their nation. Finally, we should look hard at what lessons Japan’s disaster teaches America about preparing for a national emergency.

One lesson is the danger in accumulating massive government debt. America and other developed nations have only gradually sensed this danger because it has crept up on us slowly. Japan is a case in point.

In 1995, Japan experienced its worst seismic activity in 47 years in and around the port of Kobe, a city with a population of 1.5 million. The earthquake killed 6,500 people and caused over $100 billion in damage. Still, as Marine War College Professor Jim Lacey writes in National Review Online, Japan’s government managed the situation well, shouldering 90 percent of those necessary costs.

It later went on to shoulder huge unnecessary costs, creating deficits reaching 10 percent of GDP and bringing its debt above 200 percent of GDP. Japan, like America in the past few years, was engaging in “stimulus” spending to spur an economic recovery. This policy failed in both cases. (Much as some tout a “recovery” in America, unemployment stubbornly remains at nearly 9 percent.)

Even more troubling, such unneeded deficit spending will hamper Japan’s ability to rebound from whatever shock may come along. “At a time when Japan already is close to reaching its debt limits,” Professor Lacey writes, “it will have to dig deep to find significantly more funds to finance recovery.”

So will America, if we’re similarly unfortunate.

When al Qaeda attacked America 10 years ago, debt held by the public as a percentage of GDP was roughly 33 percent, according to the Congressional Budget Office. That percentage hovered around the mid 30s until 2008 when it reached 40 percent. One year after that, it shot past 50 percent. The CBO projects our debt reaching 90 percent of GDP by 2020.

A deep financial hole like that is a frightening place in which to recover from a natural disaster or terrorist attack.

Getting out of this mess will mean reining in the major cost drivers in American government. And no, those cost drivers are not earmarks, or “waste, fraud and abuse.” They are entitlements and military intervention as well as public-sector salaries and benefits. Ideologues on all sides of the political spectrum will walk away unhappy if these expenditures are reformed.  But the American people will walk away secure in the knowledge that when disaster strikes, their government will be poised to recover.