>> this is "bbc newsnight." funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. and union bank. >> at union bank, our relationship managers work hard to know your business. working to nurture new ventures. we offer expertise and tailor solutions in a wide range of

industries. what can we do for you? >> this week, derided recoveries, can they teach the stumbling economy is of the world? >> there are parts of the i economy that deserve a lot more praise. >> hundreds say that hungary is drifting into a store turn is them. >> this could lead to a standoff with the european union itself. >> this is democratic post saddam -- iraq kurdistan. -- this is democratic, post saddam kurdistan. >> tokyo was buzzing and the

rest of the world could not get enough. then japan's bubble burst, the stock market crash sent the economy tumbling. they call the next 10 years the lost decade, a time of slow growth and unemployment. other countries are worried as they are destined to follow japan posture tikrit and what lessons must be learned to avoid it. we will talk to a japan watchers who questions the entire premise of the lost decade. >> japan does not look like it has been stagnating for 20 years. the streets are bustling. many of the women have a luxury handbag. there are nearly four times more michelin restaurants in tokyo than in france.

this company has doubled its work force since the bad times began. they produce panels that control the machines that make the exports that japan is famous for, cameras and cars. their jobs have never been under threat. >> have you have ever had to let anyone go? >> we have had a salary let down. >> you have reduced the salary. how come you have never laid off anyone if the economy has been bad? >> we don't have bad people. >> in recent years, japan has been held up as a warning to western governments. but the future will be like if they fail to get a grip on the

economic crisis. not just one but two lost decades with little or no growth. japan's gdp growth has certainly lagged behind the west but other indicators suggest a different story. per-capita electricity consumption grew nearly twice as quickly in japan between 1990 and 2004 compared to the united states. 59 of the world's 100 cities with the fastest broadband connections are here. life expectancy has risen, the highest in the world. the unemployment rate is just 4.5%. in britain, and it is 8.3%. this man has lived in japan for 27 years and advises foreign companies i'm doing business here. >> japan has succeeded in providing a stable economic past, present, and looks like in the near term at least, the

economic stability at a level that the world has never seen before. that is reflected in japanese society. glitters. skyline perhaps not everything is bright. japan's national debt has soared in recent decades, the biggest in the industrialized world. one day, there may be a reckoning. economics collapse not averted but merely postponed. >> i have been speaking to an economics writer who questions at the lost decade for japan and the managing editor of the "financial times." do you really believe that those were a myth? >> yes, indeed. living standards are very high

here. also life expectancy has had great improvements. also, a key thing that people in the west overlook is the trade situation in japan. this is enormously strong. it was very strong and 80's. japan was known as the juggernaut. the current-account surplus was three times the figure for 1989. >> because it did it from a position of weakness. if you look at the growth of the measurement, nothing is happening. are you saying that is not a bad thing? >> this is understated by western accounting standards and there are various reasons for that. there are enormous issues and how growth is tested. the japanese are very conservative on this. if you look at the key things

that are really incontrovertible, japan is doing well. >> this throws our perceived wisdom into a different light. it should lead be looking at japan and saying that we don't want to go that way? >> what is the benefits of the financial crisis is that many cherished perceived wisdom has been questioned, not just about america that about japan. the japanese society and economy deserves a lot more praise. on the issue of growth in gdp, one important factor that people tend to forget is that the japanese population has been shrinking and the american has been increasing. the most important point of all is something that was early discussed which is the issue of social cohesion. something very strong about

japan is the level of social cohesion, the ability to share pain, the ability to work together. >> they do like saving. >> the fact that companies are able to cut workers' pay when times are bad and then raise them again ark it is very very important. this is not that different from what germany has been doing. that creates more flexibility and cohesion has certainly helped them for bad times. >> this is presumably a massive thing but if we are in a similar place to where japan was, can you really say to those in the west that it doesn't matter? >> i think that the position in the u.s. is much more serious than the one that japan faced in the early 1990's. the financial crash was truly spectacular but its effect on

the real economy was rather minimal. basically, the underlying economy of manufacturing was strong then and is even stronger now. >> because they exported their way out? >> yes, indeed. germans are quick to point out that the system of the employment is the strength of japan. this is often criticized but it has this great strength but it is flexible and still maintains a high level of overall employment. >> what about the level of debt? >> there is the issue over social cohesion and shared pain because most of that debt is held by japanese. 95% of the bond market is held by japanese. if they are collectively willing to take a haircut, then frankly that kind of does not matter. if there are foreigners

involved, like there are in the u.k. and the u.s., where half of the debt burden is held by non domestic investors, then it becomes difficult to manage. the downside is that i don't think most americans and probably most british people would agree to live with the other side of that system of consensus, a fairy empress in society where you have to conform. they would find it very hard. would we want to live in a situation where many women when they get married, they stop working and they cannot work? that is the situation in japan. >> thank you both very much indeed. the european union might be forgiven for not studying japan too closely after greece, spain, ireland, and portugal, they have a new problem child, hungary. the eu is planning on

withholding funds because they fear that the country is sliding away from the rule of law. the prime minister dismisses this as merely political opinion. >> hungary is a country where austerity started early and never stopped. its currency is collapsing, its population is weary of it. now, it is dawning on them that the government they elected to sort things out has become the pariahs of europe. the parliament was told that the major law that they might cost that they passed might be illegal but their budget is in violation of the rules? in the space to 18 months,

viktor orbán introduced a flat tax which put a hole in the country's budget. to fill the hole, he privatized a pension scheme. he neutralized the constitution and he has changed the law to give himself a near permanent majority here in the national parliament. he has asked the imf for $20 billion. on ar orbán was elected program of no more austerity. to deliver that, he has had to improvise. he has as large companies to take control of the central bank. last week, tens of thousands of young parents took to the street to oppose what they call a constitutional coup. these voices find very little support within the official system. >> this is a critical party.

>> this man is a leading figure in the green party elected to fight off pollution and climate change. >> they have turned their attention to this national bank which has a reserve of 75 billion euros. half of it would be enough to finance the budget. this is extremely dangerous, the reserve of the national bank is the last anchor of the honduran economy. if they do that, there is not any further stop from bankruptcy. >> this is not just money at stake. this is the only radio station that has been critical of the

government and has reported the process in depth. now, their license has been revoked. some journalists are on hunger strike after one of the government's critics had his face blown out of a news report. >> i have been working in the public media for the last two decades. that was a kind of influence trying to meddle in the public media. what happened, it seems a change of government, they're not to try to make favorable reporting of the public media for the government but they are distorting facts. they are falsifying reports. >> the people were sold the idea that europe meant prosperity. growth has never been high enough to support both a welfare state and tax breaks. now, as in italy and greece,

they are facing economic slowdown and the debt crisis but there is a crucial difference. the technocratic government has already been tried. >> this would be followed by a government which is elected by the voters and the question is how they will react and what type of government they will choose. this is a question for all of the other countries. the question is what will happen after. >> the answer was a swing to the right that brought viktor orbán to power. that might have further to go. this is a hung jury in guard -- this is a hung gary and guard -- he is now riding high in the polls. he still has the image problem.

he said that jews were lice- infested 30 murderers -- dirty murders. this comes across as anti- semitic. >> this is a very unfortunate phrase. this is an unfortunate terminology. this was a private exchange of letters. >> at one of the most prestigious theaters, they are about to find out what is like when -- takes control. are rehearsing herman mann, but soon there will be nothing but hon gary and plays only --

--hing but huna under pressure from the far right and from the european center, the government feels friendless. and weopen for dialogue are part of a community. >> the strength is not just about economics, it is about the central bank, the media, about the closure of crustaceans, far right actors. >> when you refer to major theaters, you probably referred to a single theater representing less than 1% of the hungarian theater market. when you speak about the media, the european commission made some observations and suggestions and all of these suggestions were immediately

adopted in the amendments of the legislation. >> do you see their point? they are worried about the erosion of checks and balances and they see the far right party applauding what your doing. >> they are criticizing us. this is practically on all economic and political points. >> life goes on. this generation never knew of communism but it is getting to know nationalism well. the promise was that the european union would guarantee liberal social values, democracy, and prosperity. all that is no question. >> last year some momentous change in the middle east. libya, egypt, tunisia, all fell.

there are disturbances between militia groups in libya. there might be some clues to be found in northern iraq. the kurds over through a despotic leader and they took to the streets. we look at what the kurds can tell us about the challenges of life after dictatorship. >> it is february, 2011 in a democratic kurdistan. when youths started throwing rocks, the response was ferocious. the guards fired directly into the crowd. one teenage boy was killed. dozens more were injured. it was the first bloody day in a standoff between demonstrators and the authorities in the last

two months. in all, 10 people would lose their lives. >> they are shooting directly at people. >> this man is making a documentary based on his own experiences. >> they are expressing their anger. this is corrupt. do you remember mubarak? >> outside of kurdistan, no one seems interested. the world is transfixed by the arabs spring. the current elected rulers seemed just as intolerant. this is a forecast of things to come. >> people send us letters protesting.

>> they were torturing and arresting protesters. >> this family has come to visit the graves of their son. their child was just 16 years old when he was shot dead. >> that morning, when he went out, i told him not to go. i told him i had a dream that night. i said to him, thank you, i had a dream. don't go that way, take another way. he said, you are right. many will get killed. i kept telling him not to go. he said, good-bye. >> his parents say they know who killed their son. they are militias from the political parties. and is one of them can be seen here firing directly at the

crowd. amongst them is --, the one in the red a jumper. he was rushed to hospital but he died from his injuries. there are two democratically elected parties and they dominate most of the political life. they have their roots in the armed insurgency of the 1970's against baghdad. the men who led the fight against saddam hussein are now in charge here. this is a model of democratic governance. the popularity, the legitimacy is based on large part on the stealth jet and the memories of heroic exploits of the past.

oppression,in's's they did in 1988 with a chemical attack. thousands were killed. suppressionussein's culminated in a 1988 chemical attack. rule came to an end 20 years ago, a full 20 years before the americans topple did in baghdad. you can see the difference. people here walk around without the fear that it get elsewhere in iraq. kurdistan is largely free from the kind of terrorist attacks that are so common in baghdad and elsewhere. for those that oppose the government, the climate of fear

remains. activists have been arrested and beaten up, journalist published unflattering stories of those that have been disappeared. this was a recording of a television -- recording of a conversation. the minister is heard making threats against the magazine's editor. he will not get away with it, the minister says. do you know what i'm going to do with him? >> we are always under threat. not a day goes by without getting a threatening phone call. i have been imprisoned three times. they took me from my office and they beat me. >> the kurds have fought for centuries to gain bill level of autonomy that they have here today. -- to gain the level of autonomy

that they have here today. at the moment, there seems to be plenty of money to be made. kurdistan has vast reserves of oil and natural gas and all of those energy dollars are fueling a consumer boom. with that comes for investment and construction printer everywhere you look, there are new buildings going out. in this narrative, they are the other iraq, the original success story to be emulated by other countries striving to move beyond dictatorship. >> we in the kurdish leadership believe that if we have problems, we should not solve them through the use of force and violence but rather solve them peacefully, democratically, and through dialogue. if they do the same, it will serve their interests, the

interest of their people and their country. >> in march and april, 10 protesters were shot. why was that? >> unfortunately, that was a bad thing to do. the arabs spring had influence on events. people had permission to demonstrate peacefully. after the demonstrations, a few of them turned violent the too some being killed. >> on the 19th of april, after two months of continuous protest, government forces broke up the demonstrations could they burned down the protest is tense and their makeshift stage and filled the central square with their own troops. >> one day, it will happen again. >> clearly, there is unfinished business here. kurdish democracy is a work in progress. it might be a model for countries like tunisia, egypt,

can look like 20 years after their own arabs bring the -- arab spring. >> that is all for this week. goodbye. >> funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. and union bank. >> at union bank, our relationship managers work hard to understand the industry that you operate in. working to provide capital. we offer expertise and to the

solutions in a wide range of industries. what can we do for you? >> "bbc newsnight"