So U.S. President George W. Bush has decided the future of Asia depends on overcoming Japan's puzzling, decade-long economic stagnation. But do he or his advisers understand what is really wrong with that economy?

Japan's No. 1 problem is excessive savings, mainly due to the extraordinary savings propensity of the average consumer. In many ways the willingness of the Japanese to forgo the profligate lifestyle and class-status spending of Westerners is highly praiseworthy. But the fact remains that in today's world, with inflation largely countered and current account deficits largely ignored, the advanced economies show a clear inverse correlation between savings levels and economic vitality, beginning with the United States and the other Anglo-Saxon economies with low savings and high vitality, through to the continental European economies and, finally, to Japan.

Something is urgently needed to break the savings logjam and get funds moving through the economy. Abnormally low interest rates have failed to do this. Compulsory holidays, work sharing or other French schemes, such as those that guarantee older people lifelong services in exchange for assets, might boost spending. But it would be years before Japan's creaky decision-making process could even get round to thinking about such ideas. It will be even longer before Japan agrees to the immigration polices needed to overcome the economic harm from population decline.