I’m reading a book about how skepticism can help clear off many social problems. The book is called “质问する力” by Kenichi Ohmae (大前 研一). Kenichi Ohmae is a renown organizational theorist from Japan. He holds a doctorate in nuclear engineering from the Massachusetts Institute of Technology. This is a good book using Japan as an example to show how the lack of skeptical thinking has hurt Japan’s economy.
From 1991 to 1995, the Japanese government, bankers, analysts, and real estate companies were all encouraging Japanese people to buy new houses. They claimed that after the real estate market boomed in the 80s, the house prices were dropped. The interest rate was lowered too. Banks even rolled out “easy mortgage payment” plans. House buyers only need to pay a small fraction of their mortgage payments at the beginning to own a house. They also claimed that the real estate market will gain a lot in the near future. It was the “best time” to buy houses.
But they soon realized after the first 5 years of “easy” payments, the monthly mortgage payments have increased dramatically! Many people were not able to afford their houses. Because as mortgage payment increased, their salaries were not able to catch up. Even worst, better houses were built after 1995 and sold at lower prices. And that devalued the houses sold in the early 90s. When people want to refinance their old houses, the banks didn’t approve. Because their houses didn’t worth as much anymore. Many people have to keep their negative equity for life and worry about losing their jobs.
If they were skeptical at the beginning and know how to ask the question of “why”, then they would be in a much better state these days.
The reason that the banks trying to sell more houses was because banks rely on mortgage interest to make money. With excessive land and slow cash flow, many banks went bankrupt. Banks were the biggest brokers of national debt. If these banks go bankrupt, the Japanese government will also go bankrupt. Because the government was not able to pay off all the national debts! That’s why the government tried to use peoples’ money to save the banks.
Skeptical thinking can help us in many ways. Unfortunately, the book I’m reading is only available in Japanese and Chinese. But I hope you got the idea and be able to apply it to different things.
Good night New York!