Sunday, 23 November 2008

Japan: 'the frog that has already boiled'

Japan, it seems, is in real trouble economically, as explored in an interesting Washington Post article. Last year, as stock markets across the rest of Asia rose, Japanese shares declined by 12%, and have declined a further 11% this year. It has just slipped into recession; it has slipped from fourth amongst the world's economies in GDP per capita in 1993 to 20th today; by 2050, according to a PWC study, its economy will be about the size of Indonesia's or Brazil's, and it will have a zero rate of economic growth. This is partly a function of the demographic crisis facing it, with the world's highest proportion of elderly people and the lowest proportion of children. Foreign investors are pulling out; and manufacturing, the one sector of the economy that is sill relatively strong, is set to suffer from increasing lack of international competitiveness.

But - and this is the interesting bit - the population doesn't seem to care very much. Although wages are starting to decline, crucially life for most still remains comfortable. Unemployment is low, crime is low, health care and infrastructure are good, and savings levels are high. Nor do politicians offer solutions. "I have a sense of crisis because Japan has not nurtured industries that will grow in the future," the economic and financial minister Hiroka Ota said cheerily recently.

The Post quotes one Minoru Morita, a political analyst in Tokyo as saying "Although the situation is not good, because it is not so bad, people from top to bottom remain indifferent. The leaders in this country don't expect too much and they are very good at adapting to a new environment, even if that means a downward spiral." And Shumpi Takemori, an economics professor, compares the country's oddly passive acceptance of economic decline to a frog swimming in slowly warming water. "Our problem is that the frog is already boiled. It doesn't have enough energy to jump."

This extraordinary docility in the face of economic and demographic crisis is inevitably linked, it seems to me, to Japan's extraordinary culture and recent history: a once roaring economy powered by obedient salarymen. But it also raises an interesting question. Is this ageing, mono-cultural population quite happily resigned to a slow, relatively comfortable economic decline?  Is this most respectful of people putting up two fingers in this way to the capitalist assumptions of the Post and the rest of the West?  It would be nice to think so.

1 comment:

Luther said...

It would indeed be nice to think so. Unfortunately, as Minoru Morita has pointed out on many occasions, the harmful effects of years of deregulation -- pushed by the Bush administration and others -- are starting to chip away at the very institutions that would have allowed Japan to grow old gracefully. There's a shortage of doctors, the postal system is a mess and Japan now has its very own working poor. The frog analogy is apt. Thanks for the post!