Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Japanís Geriatric Future (How will a shrinking economic power handle a rapidly aging population?
National Review ^ | 04/29/2010 | Duncan Currie

Posted on 04/29/2010 6:45:30 AM PDT by SeekAndFind

In the 2009 Pew Global Attitudes Survey, conducted last spring, only 18 percent of Japanese said they expected economic conditions in their country to improve over the next year. Remarkably, that represented a 13-percentage-point increase from 2008, when just 5 percent of Japanese said they expected improvement. The corresponding 2009 figures in China, India, and the United States were 82 percent, 75 percent, and 59 percent, respectively. Fewer than one-fifth (19 percent) of Japanese told the 2009 Pew interviewers that children in their country would grow up to be “better off” than people are today, compared with 89 percent of Chinese, 78 percent of Indians, and 36 percent of Americans.

Japan’s economic pessimism is part of a deeper societal malaise. The Asian giant never fully recovered from its early-1990s asset-price collapse and subsequent “lost decade” of stagnation (which actually lasted more than a decade). Within a short period, Japan went from being hyped as an emerging superpower to being dismissed as a sclerotic basket case. In 1992, Japan’s per capita income ranked fifth among OECD countries; in 2002, it ranked 19th. Under Prime Minister Junichiro Koizumi, a conservative who held office from 2001 to 2006, Tokyo belatedly forced Japanese financial institutions to tackle their nonperforming loans. This ended a protracted banking crisis and bolstered the economy. Thanks to Koizumi’s achievements and a post-2002 export surge, Japan enjoyed its longest unbroken expansion since the conclusion of World War II.

Then came the Great Recession, which took a massive toll on all export-oriented economies and proved disastrous for Japan. The country plunged into its worst downturn of the modern era. Though it returned to growth in mid-2009, the durability of that growth is uncertain. Japan’s wobbly recovery has been propelled by a host of government stimulus measures and an improving export picture. In its new World Economic Outlook, released earlier this month, the International Monetary Fund predicts that Japan’s real GDP will expand by 1.9 percent in 2010, after shrinking by 5.2 percent last year. On April 14, Bank of Japan governor Masaaki Shirakawa said that “concerns about a so-called double-dip recession have been greatly receding.”

Yet the country is still grappling with deflation, and Finance Minister Naoto Kan has cautioned that “we need to see corporate and consumer spending rise to say this recovery is self-sustaining.” Perhaps most ominously, Japan’s gross public debt will soon be double its GDP (if it isn’t already), the highest such ratio in the OECD. Granted, nearly all of that debt is held domestically, but it remains a grave threat to future prosperity. In January, Standard & Poor’s slashed its outlook for Japan’s sovereign-debt rating from “stable” to “negative.” Last week, Fitch Ratings warned that absent a “sustained economic recovery and fiscal consolidation, government debt will continue to rise, placing downward pressure on sovereign credit and ratings over the medium term.”

Steering Japan through these choppy waters is Prime Minister Yukio Hatoyama, who took office in mid-September after a historic election that saw the Liberal Democratic Party (LDP) lose power for only the second time since the creation of Japan’s modern political system in 1955. A member of the Democratic Party of Japan (DPJ), which was established just twelve years ago, Hatoyama began his premiership with great fanfare. However, his popularity has fallen sharply since then, amid campaign-finance scandals, persistent economic pain, and turbulence in the U.S.-Japan alliance.

Some Japan watchers initially declared that the DPJ’s victory amounted to a “revolution.” Hatoyama’s policy choices suggest that these claims were overblown. “It’s less a revolution than a throwback,” says William Overholt, a Japan expert at Harvard. In December, the government announced that it was suspending the privatization of Japan Post, a notoriously wasteful institution that delivers mail and also effectively serves as the world’s largest savings bank, boasting total assets in the neighborhood of $3.4 trillion. Postal privatization was a much-ballyhooed Koizumi initiative that dominated Japan’s 2005 national election. Last month, Hatoyama’s minister for financial and postal services, Shizuka Kamei, outlined a plan to roll back privatization and double the ceiling on deposits at Japan Post. Various cabinet officials ripped the Kamei proposal, but Hatoyama embraced it.

The Economist has referred to Kamei as “a blathering anti-capitalist.” He is the leader of the People’s New Party (PNP), one of the DPJ’s two coalition partners in the upper house of parliament. Even though Japan’s lost-decade banking crisis was fueled by a proliferation of bad loans, Kamei has championed a conditional loan-repayment moratorium, which took effect in December. By siding with him on postal privatization, Hatoyama sent a discouraging signal about his commitment to reform. But the move was hardly a surprise. Thus far, the prime minister’s economic policies have been a jumbled mess. When he unveiled a growth blueprint late last year, it was widely panned. Richard Katz, editor of the Oriental Economist Report, quipped that “his ‘growth strategy’ includes neither growth nor strategy.”

A genuine strategy would focus on boosting labor productivity, especially in services, which “account for 70 percent of value-added and employment in Japan,” according to the OECD. The country must become friendlier to foreign investment and start-up companies. In the World Bank’s most recent global survey of the easiest places to do business, Japan ranks 15th out of 183 economies, but it ranks 91st in the “Starting a Business” category and 123rd in the “Paying Taxes” category. It has the highest overall corporate-income-tax rate in the OECD, and many of its regional banks remain poorly capitalized. In general, Japanese firms need to become more reliant on capital markets and less reliant on banks, says economist Edward Lincoln, director of the Center for Japan-U.S. Business and Economic Studies at New York University’s Stern School of Business. Tokyo should also seek to deregulate certain woefully inefficient industries, such as agriculture, food processing, and construction.

Fostering a more dynamic Japan means building on the Koizumi reforms, which were “essential for pulling Japan out of its long period of stagnation,” says economist Takeo Hoshi, a Japan specialist at the University of California, San Diego. On the other hand, those reforms were not nearly as radical or sweeping as some critics have suggested. Moving forward, Hoshi stresses that Japan needs more foreign workers, more flexible labor markets, and a more liberalized agricultural policy — none of which the current government is likely to pursue.

Speaking of labor flexibility, Japan’s shift toward “non-regular” employment, such as part-time or temporary work, has been a double-edged sword: It has made Japanese labor markets less rigid, but it has also increased inequality and reduced companies’ incentives to invest in human capital. The OECD reports that non-regular workers, who tend to earn substantially lower wages than their full-time counterparts, represented 34 percent of all Japanese workers (excluding executives) in 2008, up from 20 percent in 1990. The ongoing retirement of Japanese baby-boomers will exacerbate this trend.

#pagei#Which brings us to Japan’s calamitous demographics. According to one set of projections from the country’s National Institute of Population and Social Security Research (NIPSSR), the Japanese population will shrink by roughly 25 percent between 2010 and 2050, plummeting from 127 million down to 95 million. In 1970, people over the age of 64 made up only 7.1 percent of the Japanese population; today, they represent t23.1 percent; by 2050, they will account for 39.6 percent. Meanwhile, the population share of those aged 15 to 64 will drop from 63.9 percent in 2010 to 51.8 percent in 2050. Over that same period, the population share of those under age 15 will fall from 13 percent to 8.6 percent.

The United Nations Population Division (UNPD) notes that Japan has the world’s longest life expectancy at birth — which is a good thing, except that the country is relying on an ever-shrinking supply of workers to support an ever-growing number of retirees. Using medium-variant estimates of birth levels, the NIPSSR reckons that Japan’s old-age dependency ratio — that is, the number of elderly divided by the number of working-age Japanese — will increase from 36.2 percent in 2010 to 79.4 percent in 2055. By then, the NIPSSR calculates, female life expectancy at birth in Japan will be 90.34 years.

Japan already has the oldest population on the planet — it has the highest median age, followed by Germany and Italy — and the UNPD projects that it will still be the grayest in 2050 (apart from the Chinese territory of Macau). At the midpoint of the 20th century, Japan was the world’s fifth-most-populous country, behind only China, India, the U.S., and Russia. Now it is the tenth-most-populous; by 2050, according to UNPD calculations, it will be the 17th-most-populous, with fewer people than the Philippines and Vietnam. Only a handful of countries — all of them in Eastern Europe — are expected to experience a steeper population decline over the next four decades. Even Russia, with its myriad demographic woes, inferior health care, and lower life expectancy, will lose a smaller share of its population than Japan will.

The nature of Japan’s demographic challenge is hardly unique among advanced industrial democracies, all of which must address societal aging and strained welfare systems, and some of which (such as Germany and Italy) are entering a period of major population contraction. In certain ways, however, Japan is sui generis: It must deal with the triple whammy of exceptionally low birthrates, relatively low levels of female labor participation, and minuscule amounts of immigration.

Japan’s total fertility rate has been below replacement level (2.1) since the mid-1970s, and it hit an all-time low of 1.26 in 2005. This can be explained partly by marriage trends. Only a tiny fraction of Japanese births are non-marital, and Japan’s marriage rate peaked in 1971 (prior to the first global oil shock, which triggered a vicious recession), before declining steadily through the late 1980s. The Japanese are also delaying marriage longer than ever before. In 1970, just 7.2 percent of Japanese women aged 30 to 34 had never been married; by 2005, that figure had climbed to 32 percent. Among Japanese men aged 30 to 34, the never-married segment grew from 11.6 percent in 1970 to 47.1 percent in 2005. By that point, 30 percent of Japanese men in the next age cohort, 35 to 39, had never been married, compared with only 4.7 percent in 1970.

Thanks to these factors and others, Japan’s population has been shrinking for several years now. In May 2008, the Washington Post reported that “Japan now has fewer children who are 14 or younger than at any time since 1908.” Hatoyama has advocated pro-natalist measures, such as offering cash payments to families with kids. But Overholt expects such initiatives to be “ineffectual, because the system makes it so impossibly difficult for women to have children and a job.” A 2005 Goldman Sachs study found that if Japanese women participated in the workforce at the same rate as American women, Japan’s GDP would begin to grow much faster.

#adHigher levels of immigration would also have an impact. Today, foreign-born residents make up less than 2 percent of the Japanese population. (By comparison, they accounted for 12.5 percent of the U.S. population in 2008, according to the Census Bureau.) The country “doesn’t have a future without workers from overseas,” Hidenori Sakanaka, director of the independent Japan Immigration Policy Institute, told the New York Times last year.

Solving its demographic problem may require Japan to embrace a fundamentally new set of economic and social policies — policies that are less protectionist, less hostile to foreign investment, more growth-oriented, more supportive of female employment, and more welcoming to immigrants. Unfortunately, neither the incumbent party nor the opposition has coalesced around a bold agenda for structural reform. “The DPJ is rooted in the same interest groups as the LDP,” says Overholt.

Right now, Japanese politics is in flux. Hatoyama’s ongoing travails could conceivably shorten his premiership and spur an LDP comeback. This summer’s upper-house elections will be a barometer of DPJ strength. Over the longer term, as Lincoln explains, there are three possible scenarios: (1) The LDP could refurbish its brand, recover its political strength, and remain competitive with the DPJ, all without undergoing a thorough makeover. (2) The LDP could collapse, allowing the DPJ to dominate Japanese politics for an extended period. (3) Both the LDP and the DPJ could fracture internally, leading to an ideological reshuffling that would make the Japanese political system more like the American system, with one big center-right party and one big center-left party.

“Nobody knows which of these scenarios is going to play out,” says Lincoln. “It could take another decade to find out.”

— Duncan Currie is deputy managing editor of National Review Online.


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events
KEYWORDS: aging; demographics; japan

1 posted on 04/29/2010 6:45:30 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

send our illegals over there.


2 posted on 04/29/2010 6:46:14 AM PDT by gussiefinknottle (woof!woof!woof!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: gussiefinknottle

“Japan’s Geriatric Future (How will a shrinking economic power handle a rapidly aging population?”

Keep bringing in Moose limbs that multiply like rabbits with their barely teen age brides...it’s working pretty well for Europe!


3 posted on 04/29/2010 6:48:04 AM PDT by jessduntno ("If you want security, go to prison, you're fed, clothed, given medical. But...there's no freedom.")
[ Post Reply | Private Reply | To 2 | View Replies]

To: gussiefinknottle

Japan could actually seriously consider overhauling their immigration program. Thus far, only a few ethinic groups have bothered to apply for immigration -— Koreans, Chinese and Taiwanese ( who are also Chinese ).

There are a few caucasians who have become Japanese citizens but you can count them on your fingers.

The rest that I know of are American Sumo wrestlers from the Islands.


4 posted on 04/29/2010 6:50:13 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 2 | View Replies]

To: SeekAndFind

Coming soon to an America near you...too bad those 30+ million aborted babies weren’t around to pay into Socialist Security, huh?


5 posted on 04/29/2010 6:53:39 AM PDT by stefanbatory (Weed out the RINOs! Sign the pledge. conservativepledge.org)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

i’m sure many people would love to immigrate there, but i don’t
think they are big multiculturalists. i think they would rather have
population problems than immigration problems.


6 posted on 04/29/2010 6:53:50 AM PDT by gussiefinknottle (woof!woof!woof!)
[ Post Reply | Private Reply | To 4 | View Replies]

To: gussiefinknottle
i think they would rather have population problems than immigration problems.

I still believe that there are ways to manage immigration without causing major cultural disruptions. The first thing is NOT to follow the American system. Maybe the Singaporean system would be a good model for Japan to consider.
7 posted on 04/29/2010 6:55:13 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 6 | View Replies]

To: SeekAndFind

yes, it certainly can be managed better. i still don’t think
the japanese want to import people.


8 posted on 04/29/2010 6:57:27 AM PDT by gussiefinknottle (woof!woof!woof!)
[ Post Reply | Private Reply | To 7 | View Replies]

To: SeekAndFind

“ineffectual, because the system makes it so impossibly difficult for women to have children and a job.” A 2005 Goldman Sachs study found that if Japanese women participated in the workforce at the same rate as American women, Japan’s GDP would begin to grow much faster.”

They still don’t get it do they? This will fix their GDP problem, but it won’t fix the demographic problem.


9 posted on 04/29/2010 6:59:40 AM PDT by BenKenobi
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind

Do what I did. Marry a Japanese woman, and get her pregnant a lot.

It’s called repopulation.


10 posted on 04/29/2010 7:01:59 AM PDT by struggle ((The struggle continues))
[ Post Reply | Private Reply | To 1 | View Replies]

To: struggle

RE: Do what I did. Marry a Japanese woman, and get her pregnant a lot.

It’s called repopulation.


Yeah, but do you both live in Japan and do your children ?

If not, you’re adding to America’s population, not Japan’s.


11 posted on 04/29/2010 7:08:49 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 10 | View Replies]

To: SeekAndFind

I don’t care who you “import,” an aging population means a dead country. Most innovation and invention comes from the young, and not immigrants, who typically are older when they arrive.


12 posted on 04/29/2010 7:10:01 AM PDT by LS ("Castles made of sand, fall in the sea . . . eventually." (Hendrix))
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
Japan's nationalism and ethnocentricity will not allow us to import vast amounts of foreigners as laborers, hence our large strides in robotics development.

This avoids many problems, and introduces some new ones of its own. There is no quick, easy fix for this long-standing issue.

13 posted on 04/29/2010 7:12:00 AM PDT by Gantz (Th4+'5 th3 +h30ry, 4nyw4yz.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

China is not far behind...


14 posted on 04/29/2010 7:15:17 AM PDT by Buckeye McFrog
[ Post Reply | Private Reply | To 1 | View Replies]

To: gussiefinknottle
My first thought exactly!
15 posted on 04/29/2010 7:18:14 AM PDT by GrannyAnn
[ Post Reply | Private Reply | To 2 | View Replies]

To: Gantz

RE: Japan’s nationalism and ethnocentricity

How about a slow change in cultural attitude through education ? We live in a global economy now and I am sure that most Japanese are aware of this demographic problem.

One other possibility would be to ENCOURAGE more children via incentives.


16 posted on 04/29/2010 7:21:12 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 13 | View Replies]

To: SeekAndFind

If they had not have been aborting most of their children for these many years...


17 posted on 04/29/2010 7:48:58 AM PDT by Slyfox
[ Post Reply | Private Reply | To 1 | View Replies]

To: Slyfox

I wonder how the abortion rate in Japan is compared to that of the USA. Do you know of any reliable source for figures ?


18 posted on 04/29/2010 7:49:58 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 17 | View Replies]

To: SeekAndFind

RE: Do what I did. Marry a Japanese woman, and get her pregnant a lot.

It’s called repopulation.

>>Yeah, but do you both live in Japan and do your children ?

>>If not, you’re adding to America’s population, not Japan’s.

Yeah, you’re right. My wife doesn’t want to live in Japan.


19 posted on 04/29/2010 7:51:04 AM PDT by struggle ((The struggle continues))
[ Post Reply | Private Reply | To 11 | View Replies]

To: SeekAndFind

Plan would pay Japanese families to have kids
http://edition.cnn.com/2009/WORLD/asiapcf/09/04/japan.children/index.html

Japan’s birthrate is one of the lowest in the world. With about a quarter of the country’s population older than 65, the forecast is that by 2050, this will reach 40 percent if things don’t change fast.

Japanese families have kept their children low in number because of financial difficulties. Out of this comes the “cash for kids” plan, a brainchild of Japan’s new ruling Democratic Party to pay parents $3,400 a year per child until the child reaches high school–a program which is criticized by some.


20 posted on 04/29/2010 8:02:15 AM PDT by Jack Hydrazine (?)
[ Post Reply | Private Reply | To 16 | View Replies]

To: SeekAndFind

Here are some worldwide abortion stats:

http://www.infoplease.com/ipa/A0004397.html


21 posted on 04/29/2010 8:43:30 AM PDT by Slyfox
[ Post Reply | Private Reply | To 18 | View Replies]

To: Slyfox

BAsed on the information (via the link ) you provided, abortion has actually been DECREASING by a LARGE margin since the 1980’s in Japan.

I think abortion is less of a factor in the demographic decrease of population compared to everyone marrying later and having less and less chidlren.


22 posted on 04/29/2010 8:53:57 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 21 | View Replies]

To: SeekAndFind
Abortion has a ripple effect on the population wherever it is employed. In America today, the aborted, if they had not been aborted, would be the ones filling the cities that are now in decline, to the point that there would be no need to have an influx of workers from outside the country.

In Japan, no matter how small the amount of babies aborted, they they are still missing brothers and sisters which make for a more solid society. Who knows, a couple of those aborted may have been economic genius's who would have been helping them out right now.

Birth dearth is a global problem. Schwinn and Gerber would be much larger companies right now, however millions of little kids have not been using their products for the last nearly 40 years.

23 posted on 04/29/2010 9:09:36 AM PDT by Slyfox
[ Post Reply | Private Reply | To 22 | View Replies]

To: SeekAndFind
Maybe the Singaporean system would be a good model for Japan to consider.

What would that be (re:immigration)?

24 posted on 04/30/2010 1:49:31 PM PDT by GATOR NAVY ("The bigger the government, the smaller the citizen." -Dennis Prager)
[ Post Reply | Private Reply | To 7 | View Replies]

To: struggle
Do what I did. Marry a Japanese woman, and get her pregnant a lot.

I'm right with you brother...except we brought the kids to the States so that doesn't do much for repopulating Japan.

25 posted on 04/30/2010 2:17:43 PM PDT by GATOR NAVY ("The bigger the government, the smaller the citizen." -Dennis Prager)
[ Post Reply | Private Reply | To 10 | View Replies]

To: GATOR NAVY
What would that be (re:immigration)?

The Singaporeans make very good sense of their immigration policy. 1) They only accept competent people and/or well-off immigrants who will not be a drain on their wallets; 2) They accept people of all races with the proviso that you are a law-abiding citizen and are willing to assimilate into their culture and way of life; 3) They are not hesitant on DEPORTING illegals; 4) They encourage families to have more than one children; 5) They encourage successful entrepreneurs to become Singaporean residents.
26 posted on 04/30/2010 2:57:33 PM PDT by SeekAndFind
[ Post Reply | Private Reply | To 24 | View Replies]

To: SeekAndFind

Those would be good policies for any country, including us.


27 posted on 04/30/2010 10:05:42 PM PDT by GATOR NAVY ("The bigger the government, the smaller the citizen." -Dennis Prager)
[ Post Reply | Private Reply | To 26 | View Replies]

To: GATOR NAVY

I would also add that Singapore has a very well controlled domestic help program, where people from poorer countries in Southeast Asia ( e.g. Indonesia, Vietnam, Philippines ) can come and work as Domestic help to make money and send home to families.

However, these workers have to apply the LEGAL way and are NOT CANDIDATES for immigration.

Thousands of LEGAL domestic helpers come to Singapore to work every year. Many go home and then come back by the usual legal route when they need more work and when there is a demand for their service.

I thought we in the USA had a program similar to this called Bracerros. How did that come to and end ??


28 posted on 05/01/2010 7:31:10 PM PDT by SeekAndFind
[ Post Reply | Private Reply | To 27 | View Replies]

To: SeekAndFind
I thought we in the USA had a program similar to this called Bracerros. How did that come to and end ??

During the Johnson administration. LBJ cancelled the bracero program as a pay-off to Cesar Chavez -- who wanted those farm jobs reserved for his National Farmers Union (largely resident Hispanics).

It's ironic to see so many illegals (and people who support illegals) invoking Cesar Chavez' name. He actively worked to keep them where they belong -- in Mexico.

Chavez was a real scum-bag -- though I speak as somebody his organization illegally picketed. And, for good measure, I was shot at, as well.

29 posted on 05/01/2010 7:40:03 PM PDT by okie01 (THE MAINSTREAM MEDIA: Ignorance on Parade)
[ Post Reply | Private Reply | To 28 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson