I would characterize long-term Japanese economic policy this way:
- Technocratically planned economy where the government chose winners and losers and directed capital to industries favored for development (e.g. MITI with steel, autos, electronics).
- Strong government favoritism for exports and exporters over the domestic economy -- export industries are heavily protected at the cost of raising costs for internal consumers and limiting competition in domestic markets.
- Enormous, near Herculean commitment to deficit spending as stimulus. With deficits consistently running in the 8% of GP range and total government debt a stratospheric levels, Japan is the poster child for Krugman's anti-austerity
To these three I would add something that is seldom mentioned, that Japan has a near Scandinavian GINI index, with income inequality well under that of the US. Oh yes, and they were an enthusiastic adopter of CO2 limits.
And the result of all this has been... 25 years of stagnation.
I remember when every one of these three planks was enthusiastically lauded by the US elite. I was at Harvard Business School in the late 1980's and much of the discussion was about the US needing to adopt MITI-like government industrial planning and management. If pressed at the time, people might kind of sort of acknowledge that life wasn't so good for Japanese consumers, but we were in a Michael Porter big picture competitiveness-of-nations phase, and no one seemed to care that their definition of national success did not turn out so well for the people actually living there.
To me, Japan is a giant case study in Austrian economics. It's like they set out to run a quarter-century test: "let's see if mispricing of credit and forced misallocation of capital is really the cause of recessions." So it is amazing that no one seems to want to acknowledge the results of this experiment. Paul Krugman appears weekly in the New York Times to frequently advocate for exactly this same economic plan.