The problem of excess labor is important when we judge whether the recovery of the corporate sector might lead to an increase in private consumption through a rise in income. The Tankan (Short-Term Economic Survey of Enterprises in Japan) has been showing a consistent pattern of excess labor for both the manufacturing and nonmanufacturing industry since the bursting of the bubble economy.
Simple rules are a way of reducing a complex problem with many unknowns to simpler tradeoffs, like yes or no, above or below, or left or right. It’s as in traffic: in the vast majority of situations, driving on the correct side of the road is good advice. Or reducing your speed in misty weather.