Virginia Review of Asian Studies
JAPAN’S DOOMSDAY SCENARIO: CAN TOKY?O SAVE ITSELF
DANIEL A. MÉTRAUX
MARY BALDWIN COLLEGE
During a recent trip to Japan on behalf of my college, I received a startling e-mail from an official at one of our sister colleges in Tokyo: “Our Board of Directors has decided to stop recruiting new students forthecollege next year and to close the college in four years.” The school had a long solid tradition dating back to the early years of the
Meiji Era (1868-1912). Though small in size, it had built a new campus on the outskirts of Tokyo in recent years and seemed to have made a successful transition from a two-year to a four year college. “Japan is facing a severe demographic shortage,” reported one of the college’s officials. “There are fewer and fewer young people in Japan and there is little indication that this trend is going to change. We see no real potential for growth and the future of Japan’s economy is even more gloomy.”
The collapse of this small women’s college (it never had more than 300-350 full time students) represents several severe changes within Japanese society. Just as is the case in the United States, single-sex institutions, especially at the college and university level, are going out of fashion. The collapse also represents the failure of academic institutions that tried to expand during the heady days of the 1980s although even then there were dire warnings that there would soon be a growing decline among Japan’s young.
More importantly, the demise of this venerable school is symbolic of Japan’s increasing severe economic crisis. Not long ago, Japan boasted the world’s second largest economy, but by May 2012 it had fallen to a distant fourth behind the United States, China and India. The Japanese government is certainly aware of the problem. A recent report issued by Nippon Keidanren, a major think tank, notes that by 2050, Japan will no longer be a developed country, predicting years of negative growth from 2030 onward. “Unless something is done, we are afraid that Japan will fall out of the league of advanced nations and again become a tiny country in the Far East.”[1] Keidanren further predicts that if Japan does not take the necessary remedial measures, by 2050 it will drop to ninth place in the world, behind France and only barely ahead of Indonesia.[2]
Reasons for Japan’s Decline
The reasons for Japan’s decline are most evident: There is huge debt across Japanese society; a dwindling workforce brought on by a low birthrate together with low savings, slowing industrial productivity, and gradual but real decline in investment. Japan is also being outclassed by such neighbors as China and South Korea. Land values and Nikkei stock values have fallen to about 30 percent of their 1989 values, more and more Japanese companies are shifting their production overseas, and political leadership is a joke—there have been six prime ministers in as many years.
The Population Time Bomb
Japan is already the world’s trendsetter when it comes to aging populations as its citizens live longer but produce fewer children. Its population reached a peak of 128 million shortly after the year 2000 and has begun what is expected to be an increasingly fast decline. The population fell to 127.8 million in October 2011, but by the year 2050 the country’s population is expected to drop to 86.74 million. Japan’s health ministry further predicts that the percentage of Japanese aged 65 or older will grow to about 40 percent compared to 23 percent today, already a high burden for any country to bear. The working age population will fall from 63 percent to 52 percent.[3]
These figures are borne out by figures compiled by Japan’s Ministry of Internal Affairs and Communications. The Ministry estimated that as of April 1, 2012 that the country’s population of children had hit a record low of 16.65 million, falling 120,000 from the previous year for the 31st consecutive yearly drop. The number of childrenaccounted for 13 percent of the nation’s total population, down 0.1 percent from the previous year and down for the 38th consecutive year. Among major countries with a population of 40 million or more, Japan ranked at the bottom.[4]
Japanese birthrates are so low and life expectancy so great that “the nation will soon have a demographic profile that matches that of the American retirement community of Palm Springs.” Thanks to this trend, by 2040, it is not too much of an exaggeration to say that “there could be one centenarian on hand to welcome each Japanese newborn.”[5]
This factor raises the question: Why are so few Japanese having babies? Japan is certainly not unique in experiencing a plunge in birth rates. Nations all across the industrial world are experiencing a similar phenomenon. The Japanese birthrate hovers around 1.3 children per woman, far below the level required to maintain a stable population. South Korea, with a rate around 1.1-1.2, is even lower than Japan and several European countries report rates that are close to Japan. But there are other factors that make Japan’s experience far more ominous.
Demographer Nick Eberstadt notes that Japan’s situation is especially dangerous because its culture combines elements of traditionalism and modern liberalism in especially dangerous ways. Writing in a recent edition of the Wilson Quarterly, Eberstadt notes that Japan’s old sexual culture, which was built up around arranged marriage and family obligation, has largely collapsed. Japan’s marriage rate has plunged and the divorce rate is higher than in northern Europe. But at the same time the stigma around out-of-wedlock childbearing continues. This means that Japanese are much more likely to support “voluntary childlessness” than the unwed parenting that is becoming much more of a norm in countries like the United States.[6]
Japan’s marriage rate is low, even by industrial-world standards: 5.8 marriages per 1000 people per year compared with 9.8 in the United States. The average age of marriage in Japan is 31, and 18 percent of Japanese women between the ages of 35-39 have never married.[7] One might well ask why marriage and birth rates have declined so rapidly in Japan in recent years. In the absence of detailed sociological information, I can extrapolate anecdotal information from interviews with several dozen of my female Japanese students over the past decade.
Young Japanese women seem much more interested in pursuing their own careers and in controlling their own finances and personal independence. For the first time in modern history Japanese women are free to choose their own destinies. They are well educated and want to exercise their newly found independence. Most want to marry some time in the distant future, but virtually all of my former students say that they “want to experience life” for many years before they settle down with a spouse. One told me that “We want to have boy friends, but marriage is not something I will seriously think about until I am in my 30s.” Another said: “marriage itself is confining. If we marry we lose some of our freedom. If we have children, we lose all of our freedom..” Another noted: “If we have children, we will lose our jobs. It is very hard in Japan to work and raise children. It is hard if not impossible to find day care and very few Japanese companies will grant us parental leave..”
Geographer and Bloomberg writer Jared Diamond observes:
Among [Japanese] men, the biggest reasons given for not marrying are worries about their economic future and their ability to bear the responsibility for a family. Married women tend to manage the household expenses and take care of both their own and their husbands’ parents, and many of them now swear they will be the last generation to be saddled with those burdens. Career women, who find strength in their education, jobs and earning power, are capable of supporting themselves in the style to which they aspire, and are buying condominiums and planning for their own retirements. If they do want to marry, they find that their age is an obstacle, because Japanese men over the age of 40 want much younger women. If they do want children, Japanese societal support for working mothers is low. Hence they either forgo children, or leave the workforce or even leave Japan, and that represents a big loss of human capital for the country.[8]
The falling birth and marriage rates and increased health and longevity of the Japanese are a real threat to the economy. Retired folk contribute little if anything to the economy while costing society huge amounts through social security payments and health needs. Japan’s social security system is already overwhelmed and facilities to care for the aged are badly lacking. The growing cost of caring for the elderly threatens to overwhelm the Japanese government.
Fewer younger workers mean that there are far fewer people paying the taxes that are needed to sustain the government and contributing to social security. Japan’s work force, like the rest of the nation, is aging rapidly and there are fewer and fewer workers entering the system. Inevitably this factor threatens future government revenues. There are also increasing concerns that Japan’s increasingly elderly work force is becoming less productive as it ages. Japan’s decline in aging productivity is hardly offset by the decreased infusion of younger workers. The simple truth is that an increasingly geriatric society is more expensive to maintain and less able to produce the goods and services it needs to sustain itself.
The Problem of Debt
The Japanese government is already heavily in debt. Japan’s ratio of government debt to gross domestic product is 2.28, more than double that of the United States and by far the highest in the industrial world. Since 1990 the Japanese government has sought to stimulate its moribund economy by borrowing heavily to promote massive public spending, but to little avail. The government has raised money through the sale of bonds to many investors, both foreign and domestic. Unfortunately, debt payments and the rapid growth of social security payouts have already virtually bankrupted the Japanese government.[9] There is a need for additional revenue, but Japanese already have one of the highest tax rates in the industrial world. Increased taxes would reduce the amount of money in circulation leading to even less economic growth.
Declines in Japanese Industrial Prowess
Japan was once a world leader in modern technological industries, but no more. The divergent fortunes of high flying and innovative companies like Samsung and now rapidly declining Sony fully illustrate the sad plight of Japan’s once very successful technological giants. Today leading-edge shipbuilding and electronics have moved to Korea, computing and semi-conductors to Taiwan, and mass manufacturing to mainland China. Japanese companies have fallen behinds their foreign competitors, have been slow to innovate, and are stuck with organizational models that are becoming out of date.
Consumers abroad are no longer buying Japanese products when they can get cheaper and better products made in South Korea, Taiwan and China.
Consultants McKinsey and Co. in recent months have issued a series of reports focusing on the very real decline of some of Japan’s vaunted high-tech companies. Their point is that for a sector that depends greatly on exports, most of these companies focus on a very inefficient domestic market that has less purchasing power than before. These companies have been surprisingly slow to innovate of late and are stuck with organizational models that are no longer fully reliable in a rapidly globalizing world. They point out that for a sector that depends heavily on export, most major companies are geared for an inefficient domestic market, have been slow to innovate in recent years, and are stuck with organizational models are not reliable in a modern globalizing world. Japan, quite simply, has not reacted as quickly and as expertly to globalization as have other nations such as South Korea or even China. McKinsey has counseled them to revise their revising human relations and marketing functions and to open their work force to more women, foreigners and diversity to better compete.[10]
The Growing Pessimism of Japanese Youth
Ominously for Japan, more and more young Japanese are becoming increasingly pessimistic over their ability to earn enough money or to receive public pensions once they retire. A 2012 survey performed by the Japanese government found that young people, aged 15-29, are most worried about their potential earning power, with 82.9 percent saying that they moderately or very concerned whether they would be able to earn enough to sustain a middle-class way of life. 81.5 percent said that they are worried about what would happen to their pension after retirement, noting that even now the country’s social security system is facing huge problem with little or no prospect of improving in the near and distant future.[11]
Such anxieties will do little to address Japan’s population crisis. If people are worried about their futures, they are much less likely to marry, start families, and produce many children.
What Japan Needs To Do
So what is Japan to do about this very dangerous situation. There are two obvious answers: Increase immigration and encourage greater female participation in the economy. These two steps, however, would require major adjustments in the traditional Japanese worldview. Japanese tend to be very ethnocentric and paternalistic in their attitudes towards women. These traditionalist attitudes must change and change quickly if there is to be any real improvement anytime soon.
Other industrial countries with decreasing birthrates have solved their demographic problems by allowing massive immigration. The introduction of large numbers of energetic and often well-educated immigrants has had a very beneficial effect on such countries as Australia, New Zealand, Canada and even, arguably, the United States. What makes the situation so serious in Japan is the country’s refusal to allow much immigration. It is very difficult to immigrate to Japan, and once having immigrated, even harder to gain citizenship. Japan is the world’s most homogeneous largecountry. Interestingly, in 2009 Japan naturalized barely a third of the number of new citizens as Switzerland which has a population only 6 percent the size of that of Japan.[12]
Women are another invaluable resource for Japan. Although women are better educated than ever and are entering the work force in greater numbers, there is still highly visible discrimination against them in what is still a very male-dominated society. My female students complain that “when we apply for good jobs for which we are qualified, more often the job goes to a male even if he is less qualified.” She is a very gifted major in international business who has studied at my college in Virginia, speaks and writes nearly fluent English, and attends an excellent Japanese university in Kyoto. “When I apply for top tier jobs for Japanese companies that do a lot of business abroad, they don’t seem very interested or concerned about my marketing potential. They won’t hire me for administrative track positions. Rather, they say that I am welcome to come in as a secretary or as some other low-level functionary.. This really disgusts me. Unfortunately, I am not alone. Many of my other female friends have had the same sad experiences.”
There is a very definite glass ceiling that prevents women from getting leadership positions throughout Japanese society. Japan comes a lowly 94th out of 134 countries in the World Economic Forum’s ranking for women in the economy. [13] More active women in responsible positions throughout the Japanese workforce would do wonders for the Japanese economy.
Is there no hope for Japan? Japanese are by nature very innovative and resilient people. Twice in modern times they have remolded themselves and have flourished. When facing a dire threat to their independence in the 1850s, they opened their doors to the West and rapidly modernized all aspects of their society. Japan was totally destroyed in World War II, but postwar reforms and a huge national effort brought the country the huge affluence and success of the 1970s and 1980s.
There is a need today for another national reformation akin to the Meiji Revolution of the 1ate 1800s. Japan must renovate its entire system and worldview if it is to survive, but my bet is that the Japanese will be successful and that the nation will have a renewed renaissance. But first Japanese must get over their current funk. A recent report indicates that fully one in four Japanese has seriously considered suicide in recent years.[14] Japanese must develop a sense of optimism before they can save their nation.
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[1] Quoted in Kevin Rafferty, “Inviting Economic Suicide,” The Japan Times, 2 May 2012, 12.