SUSTAINABLE DEVELOPMENT OF JAPAN UNDER DEPOPULATION
by Ambika HANCHATE
Representative of The Light Millennium in
India
ABOUT JAPANESE PEOPLE: The Japanese are very friendly in Japanese way, with the emphasis on the Japanese ideal of properness. In their social interactions, Japanese are very structured, people are organized in to groups, and foreigners fall in to the "GAIJIN" (foreigners group). This means that they will be friendly and proper, but it also means that there are invisible walls. Some foreigners are bothered by this, feeling that they are never accepted in spite of how long they have lived in Japan, and how fluent they are in Japanese. Others are not so bothered by it; accepting this as a quality of Japanese culture. Frequently the gaijin hangout together. An example is that foreigners, unless they are married to a Japanese, won't every go to even their best friend’s home, instead meeting at bars & restaurants. This may even be true for good friends who have known each other for years. Another aspect of Japanese society is their tendency to hide their true feelings, even from their best friends. It isn't unusual for a Japanese to commit suicide, and for their friends not to have a hint that they were depressed. This is almost the opposite of some American's, who publically wallow in their own feelings like hippos in mud. This characteristic of the Japanese has led to some really in intriguing business opportunities. But here my concern is facing related of depopulation in Japan.
ECONOMY OF JAPAN: The economy of Japan is 3rd largest economy in the world. After US and China economy, according to that IMF the countries per capital GDP (PPP) were at $34,739 the 25th highest in 2011. Japan is a 3rd largest automobile manufacturing country; it has the largest electronics goods, industries and is often ranked among the world’s most innovative countries leading several measures of global patent filings. Facing increasing competition from China and South Korea, manufacturing in Japan today now focuses primarily on high-tech and precision goods. Such as optical equipment, hybrid cars, robotics, it is world's largest creditor nation and the economy of TOKYO is the largest metropolitan economy in the world. So Japan having so much of good economy and it will support to the other developed countries, but here we have to discuss the following: Will Japan be able to have a constant sustainability in its economy in thefuture? I've raised this question, because today Japan has been facing one of the most critical issues i.e. depopulation. Japan has followed a policy of modernization and industrialization following the MEIJI ERA (1868-1912), notably after the end of World War II, industrialization progressed rapidly leading to economic growth. However in the process of this development, problems began to average with pollution, the natural environment, rapid urbanization, and the depopulation of the rural villages. Currently, Japan's population is shrinking that it is estimated to decline by an average of half a million people per year for the next 40 years. The country is also getting older and the ratio of dependents to active workers is expected to approach 1:1by around 2030. These two interdependent processes will deliver great changes to Japan in the coming decades. In the 21st century, a historic turnaround in global demographic trends will occur. Europe and East Asia are especially vulnerable to demographic shrinkage, Germany is already shrinkage, as it Russia. South Korea will begin to shrink soon! So, in my opinion, it is about to bring worldwide changes to way of living and working. Because, we already know that the aging of Japan outweight all other nations with the highest proportion of elderly citizen. So the future of Japan will be suffering so many problems that are could be seen under below categories:
1) AGING RECESSION: Yes, I agree with this line i.e. a low birth rate in an aging social is not a unique problem to Japan but it will effect globally in many countries. How? Let see... The casual server can be forgiven for regarding such trends with something’s less than alarm. After all, the general thrust of labor and social policy over the past two centuries has been to artificially tighten labor markets. In the future, nationally tightening labor markets may mean that unemployment will no longer be a problem; young people will find it easier to establish themselves and jobs. And there will be fewer strains on the environment. Even the roots of poverty will be more easily eradicated in a world where every worker is needed and valued. Why should this be a cause of worry? The answer lies in the interaction between population changes and the economy, on the one hand and the economy and the tax base, on the other like it or not, our current economic and social organization depends on continued economic expansion, without it government and private sector finances will become significantly more precarious. The most rapidly depopulating nations face the prospect of lengthy aging recession, characterized by a vicious circle of falling demand, collapsing asset value, shrinking corporate profits, deteriorating household and financial institution balance sheet weakening currencies and soaring budget pressure.
2) HOME BUYER'S AND HOUSING WEALTH: Trillions of Europe's in property valuations could disappear over the next two decades, because depopulation is characterized in its early stages by shrinking of the youngest age groups, demands for products and service consumed by the young is the first to decline. In Germany for instance, the cohort born during 1995-99 is only 47%, as large as the cohort born during 1970-74. To date shrinking numbers of children mainly have been a boon to household and government finances by reducing depending costs. But soon, these declining will work against into the household farming population over the next 20 years, the EU will experience a 20-25 fall off in its 25-44 age group; Japan on 18% decline, Spain and Italy with decline of 36% . Collapsing real estate prices were instrumental in triggering Japans ongoing financial crisis. As well as the saving and loan meltdown that rocked the U.S. financial markets in the late - 1980s significantly, in last - aging countries like Germany and Japan construction sector bankruptcies already are on the rise, like the proverbial canary in the mineshaft, builders are hyper sensitive to population decline.
3) TAX INCREASE AND RECESSION: While countries taxes faces depopulation will need to dramatically boost their tax take in the coming years, they will face grave risks in the process. As growth rates slow, tax increase may prove counterproductive. In Japan an abortive 1996, consumption tax hike is widely blamed for pushing the economy black in to its current slumps. As the economy has swooned, tax revenues have disappointed, leaving the government with a fiscal 2001 budget deficit approaching 10% of GDP- and national debt headed for 10% of GDP yet by 2012. Japan must boost its tax revenues by an estimated 15% of GDP to cover rising old-age benefit tax. If it fails to do so, the markets will come to regard Japan as a default risk, and impose risk - premium that could boost it debt service cost by several percent of GDP. This in turn, would necessitate large spending cuts. If Japan cannot find a way out of this debt trap, its living standard may fall below current levels and stay there for generation.
4) PRODUCTIVE AND ECONOMIC GROWTH: Countries with shrinking labor supplies will need to achieve sustained productivity growth if they are to avoid long, potentially destabilizing aging recession, after 2035, annual productivity growth in the EU-15 and Japan will need to average 1% better in order to prevent recession. Firms typically retain from making productivity enhancing investments in recession - like conditions, where over capacity, excess inventory, and asset deflation combine to reduce returns on investments, instead, capital will tend to move abroad in search of higher return. Managers will especially workout markets, where the tax climate and labor supply present the fewest uncertainties. This suggests that productivity growth could be a major challenge in Japan.
5) FISCAL CRISES AND INVESTMENTS: The social institutions most likely to experiences strain from the twin trends of aging and depopulation are the pension and health system that comprise the crown jewels of the postwar welfare state. These are by far the largest source of public expenditure in the industrial countries. And they are the programs most likely to be affected by the coming explosion in old age dependency. Even if growth in the industrial nations remains at/near its potential, most government can look forward to - consistently rising fiscal pressure, as ever -smaller work forces are called upon support ever larger dependent population. Popular resistant to tax increase and concerns about preserving economic growth may lead government to neglect future - oriented investments in the infrastructure, education and training a course that could weaken long - term growth. So today, we must to take an action toward of depopulation, putting new innovative plans like encourage people to have larger families, reforms of social security and political system, reform of pension plan, tax plan, etc...
While we do these all things definitely Japan could growth/constant their good economy. And they don't face any global effect/problems from other developed countries.
- Ambika Hanchate, The Light Millennium, September 2013.