"The bubble, the bubble. It's burst!" has been a common chorus in Japan since 1991 when the economy here began it's long fall from the overinflated heights of the late 1980s. To symbolize this fall let's look at some numbers. In the very beginning of the 1990s the Tokyo Stock Market's benchmark Nikkei index treded at nearly 40,000 Yen. Today (Dec 5) it stands at just over 16,000 Yen. Land prices and other assets have taken similar body blows. The bad news has continued to roll in for many years now. Things start to look up, and then WHAM! another piece of the roof falls in. Just last month alone (Nov) four significant financial corporations failed. The doomsday preachers are having a field day over here. Is all lost?

Silver lining.

Wait a second you may be thinking, "Where is the 'good news'? What's all this writing about such a gloomy subject?" Well, in the short term, unfortunately, yes it is rather bleak. There is no question that many individuals and families in Japan have been badly hurt by what has happened so far in the 1990s. Undoubtedly many more will still suffer. Yet, it is particularly in times like these that we must look hard for the silver lining in the dark cloud, for the ray of light in the stormy sky, for the long-term good that can come as a result of a short-term bad. We need faith that God's truth is not dark. Faith that the clouds will break. Faith that, just like in our own lives, when things look bad for economies, they will once again turn up, even after long stretches in the doldrums. Does this mean that we should sit on our hands and do nothing? Of course not!

Markets.

I in no way mean to suggest that a governments should go ahead willy-nilly introducing untried measures packed with who knows what unforseen consequences; however, of course it is appropriate for governments to go ahead and introduce sound hard-headed policies. For example, it is prudent to introduce policies which increase freedom and allow markets to work as only they can, which is by efficiently coordinating vast quantities of information held by coutless individuals and companies. The market does this coordination through the movement of prices.

We all know that, given a fixed supply, goods that are in hot demand will have rising prices. While goods that few people want or need will have decreasing prices. These are both examples of the market coordinating information, with the information here being what people want to buy and what companies are willing to sell at particular prices. Coordination of this sort cannot reliably and efficiently be replicated on large scales outside of markets, as the dreadful experiences of centrally planned economies have shown. Rather than try to do the impossible task of coordinating this mountain of information, all we need to do to let the market work its magic. With only a few exceptions, the market will do its job.

Motivation to move.

In the case of Japan, the current economic problems can be viewed as an opportunity to push forward and make the changes which are needed to put Japan back on the growth path. In a nutshell the needed measures include: (this list may sound familiar) deregulation of unnecessary controls, stricter enforcement of needed laws, stiffer penalties for breaking laws, more corporate disclosure, less cozy relationships between businessmen and beaurocrats, less red-tape, more freedom, less corporate collusion, and of course more taking of responsibility all around.

No sitting around for US either.

In the United States, we too can take better advantage of the opportunities before us. A healthy economy should not stop us from deepening our examination of the many pressing social problems we face. Just like the Japanese can look at their troubled economy as a chance to make changes, we in the U.S. can say the same thing about our big social problems. We can look at them simply as big opportunities in disguise. Our short list of tough nuts, famous the world over, includes: poor overall education levels, big politics mixed with big money , worsening race relations, and more. None of these problems are too big if we just believe that they can be solved and allow our hearts and our common interests to be our guides. Let me close by wishing you all the best for a healthy 1998! May peace be with you. Until next month, Daniel Heller.