Confidence From Chief of SoftBank in Sprint Bid

But the next move by Masayoshi Son, SoftBank’s founder and chief executive, astounded corporate Japan. Mr. Son plunged deeper into debt to acquire Vodafone’s Japanese cellphone unit for about $15 billion — Japan’s largest leveraged buyout at the time — to muscle his way into the mobile market.

SoftBank is now one of Japan’s biggest companies — its market capitalization is three times that of Sony’s — and Mr. Son is confident that his plan to break into the American mobile market with a $21.6 billion bid to buy Sprint will be easy.

“We’ve fought far tougher battles than this,” Mr. Son told investors on Friday in Tokyo at SoftBank’s annual general meeting. Hours earlier, a rival bidder for Sprint had confirmed it was ending its pursuit of the mobile network, America’s third-largest. “It’s just been so much easier this time round,” he said.

Most analysts agree that Mr. Son, who seems set to acquire Sprint along with its Clearwire unit, faces long odds as he seeks to compete in the American mobile market. But his record for taking on giant companies — and coming out on top — bodes well for his chances, they say.

“Mr. Son is simply the most talented and audacious businessman Japan has ever produced,” said Kazuo Noda, chairman of the Japan Research Institute. “And when he goes into a new market, he doesn’t just take on the big guys. He changes all the rules.”

It is Mr. Son’s background as an outsider in Japanese society that makes him so willing to take risks, people who know him say, including Mr. Noda, who first met Mr. Son, then a college graduate, three decades ago.

A third-generation Korean-Japanese, a minority group that still faces discrimination in Japan, Mr. Son has spoken of his roots in a slum on the southern island of Kyushu. But after his family’s fortunes improved, he made his way to the United States.

At high school and then at college in California, Mr. Son was dazzled by an entrepreneurial culture that he said he felt had been lost in Japan. And most of all, he was persuaded the world was about to experience a revolution in information technology.

Mr. Son founded SoftBank in 1981 first as a publisher of computer magazines, then as a successful distributor of computer software. Using money from that business, Mr. Son made a series of investments in the early 1990s, including a one-third stake in what was then a little-known American start-up named Yahoo. That bet paid off, giving Mr. Son money to expand his empire as Yahoo’s share price climbed.

But Mr. Son burst into the big leagues in the 2000s, buying a stake in a bankrupt bank, a small telecommunications company, a baseball team and a part of Alibaba of China, now the world’s largest e-commerce company

When SoftBank began offering fast DSL Internet service in Japan in 2001, it took on losses to undercut competitors’ prices by half. Government officials fretted that the price war would cripple the entire market. But consumers loved the sharp fall in prices, and the DSL market grew almost thirtyfold in two years.

Around that time, Mr. Son also started pushing the Japanese government to let SoftBank into the country’s highly regulated mobile sector, dominated by NTT DoCoMo, a subsidiary of the former state telecommunications monopoly. When his demands were snubbed, Mr. Son took the Ministry of Internal Affairs and Communications to court, accusing it of colluding with NTT to shut out competition.

The ministry eventually agreed to talks, but ultimately gave SoftBank a license to an inferior spectrum. Mr. Son, furious, turned to Plan B. In March 2006, SoftBank announced it would acquire Vodafone’s struggling Japanese unit, borrowing 1.2 trillion yen ($10.3 billion at the time) to finance the purchase. A day later, Mr. Son returned his original license to the government.

Today's Economist: Casey B. Mulligan: Measuring Employer Confidence

Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

The labor market effects of employer confidence are probably real but have been exaggerated.

Perspectives from expert contributors.

American employers have hired more than 230 million times since the recession began, but need to hire even more for employment per person to return to what it was five years ago.

One explanation for this state of affairs, according to the Mitt Romney campaign, has been a supposed lack of confidence among employers who are worried about taxes and new regulations, especially those associated with the Affordable Care Act (often referred to as Obamacare) as it is fully put in effect.

It is easy to find a businessman worried about government intervention, but the prevalence of such worries does not by itself tell us whether a lack of employer confidence depresses employment 10 percent, 1 percent or 0.1 percent.

Presumably if we have two employers who can hire workers at $20 an hour for the same task, the more confident of the two will hire more people than the less confident one, all else being the same. To put it another way, the less confident employer will require a greater immediate profit from his next $20-an-hour hire than the more confident employer, to compensate the less confident employer for the extra tax and regulatory costs associated with the hire that he anticipates in the future.

To the degree that an erosion of employer confidence has depressed the entire labor market, we should see the immediate profit from employees grow over time, as employers perceive more tax and regulatory costs on top of the cash and fringes they already owe their employees.

The gap between labor productivity and inflation-adjusted employee compensation is one way that economists measure the immediate profit from hiring, because the immediate benefits of hiring come from the production of the workers and the immediate costs include the employees’ compensation. (This measure is also sometimes called the “inverse of real unit labor cost.”)

The chart below shows indexes of labor productivity (red) and inflation-adjusted hourly employee compensation (black) since the recession began. Both indexes are measured after taxes and employee subsidies according to single marginal tax-rate series, so their gap reflects changes in the immediate profit from hiring. (For more information on these measures, see my previous post and my recent book on the labor market since 2007.)

About the time the Affordable Care Act was debated, after-tax productivity began to recover, and more quickly than after-tax real wages did. By the end of 2011, wages had still not recovered as much as productivity had.

(Another issue potentially depressing wages more than productivity is the anticipation of a new-employee tax credit, like the one proposed by President Obama in September 2011 and seriously discussed as early as 2009 and analyzed on this blog.)

Something prevented wages from keeping up with productivity, and perhaps eroding employer confidence is part of the story. But even if employer confidence were the whole story, it still explains less of the labor-market depression than do taxes on employees and subsidies for people who do not work. In early 2010, for example, after-tax real wages had been depressed more than 11 percent, of which only two percentage points were because of a failure of wages to keep up with productivity.

As I explained in a previous blog post, subsidies for people not working are the primary reason that wages fell so much after taxes and subsidies.

It would be incorrect to attribute all of the deviation between productivity and wages to employer confidence. A change in the composition of demand in the direction of less labor-intensive industries would have a similar effect, even if employer confidence had remained constant. New Keynesian economists also blame some of the deviation on a failure of employers to adjust their prices fully to their production costs.

Moreover, it is possible that employer fears of future regulatory and tax costs would not depress employment even while they depressed wages to the degree that employees eagerly anticipate benefits they would receive from those regulations and taxes.

While traces of eroded employer confidence are seen in labor market outcomes, it also appears that eroded employer confidence explains less than one-quarter of the overall depression of the labor market.

Euro Watch: Europe Forecast Uncertain as Business and Consumer Confidence Fall Again

The European Commission reported that its economic sentiment indicator for the 17 European Union members that use the euro fell by 1.1 points, to 85.0, the seventh consecutive month of decline.

For the 27-member European Union, confidence fell by 0.9 points in September, to 86.1. An indicator of more than 100 shows more confidence than not about the economy in five sectors surveyed.

The commission attributed the weakening to declining confidence in the services, retailing, industrial and consumer sectors. It cited increased optimism in the fifth sector, construction, as a promising sign.

The data is “another warning that the euro zone economy is sinking further into recession,” Jonathan Loynes, chief European economist at Capital Economics, wrote in an analysis, adding that the results dashed hopes that the European Central Bank’s pledge on Sept. 6 “to take more decisive policy action might have improved sentiment towards the broader economy.”

Mr. Loynes said the confidence results were consistent with an annual contraction in the euro zone economy of about 2.5 percent.

Figures from the core euro zone economies were mixed.

In Germany, the Federal Labor Agency said the number of unemployed rose for the sixth consecutive month. Although the seasonally adjusted unemployment rate held steady at 6.8 percent in September, there were 9,000 more people out of work than in August.

As a result of structural changes in the early 2000s, the German labor market has remained resilient during the crisis in much of Europe. But the Labor Agency predicted the German job market would cool in the rest of 2012 as growth slowed and the impact of the euro zone crisis began to take a toll.

Germany’s labor market has been one of the main drivers of its growth this year, Carsten Brzeski, an economist with ING in Brussels, wrote, and the data Thursday suggests that the slowdown of recent months “seems to have come to at least a temporary halt.” Nonetheless, he added, hiring is losing momentum and manufacturers will probably begin to shed jobs soon. He estimated that the German unemployment rate would return to 7 percent by the end of 2012.

On Wednesday, the Labor Ministry in France said the number of jobless there rose for a 16th consecutive month in August to reach more than three million, its highest level since June 1999.

On Friday, President François Hollande’s government will present its proposed 2013 budget. The finance minister, Pierre Moscovici, has said that the government will cut the deficit to 3 percent of gross domestic product, in line with European rules, from the 4.5 percent expected this year.

Data from the European Central Bank showed that growth in M3 money supply, a measure of lending activity, decelerated significantly in the euro zone in August, to 2.9 percent, from 3.6 percent in July. That was well below market expectations, according to Michael Schubert, an economist at Commerzbank in Frankfurt.

More important, Mr. Schubert wrote in a note, was the decline in lending to nonfinancial companies, which dropped 0.8 percent from a year earlier, while loans to households rose 0.2 percent.

“The E.C.B. probably sees fragmented financial markets as one reason for the low loan momentum,” he wrote, and it therefore believes the new bond purchase program announced by the bank’s president, Mario Draghi, is justified.

Mr. Draghi said on Sept. 6 that the European Central Bank was prepared to buy the bonds of embattled euro zone countries in “unlimited” quantities to quell the crisis, which has driven some members’ financing costs to levels seen as unsustainable.

Melissa Eddy contributed reporting from Berlin.