It’s not easy picking the most pessimistic chart about Japan.
The country suffered several decades of economic stagnation following the collapse of a bubble about three decades ago.
That means it’s a bit of a challenge to identify the worst economic numbers.
- Is it the data on ever-rising levels of government debt?
- Is it the data on an ever-rising burden of taxation?
- Or is it the data on an aging population and falling birthrate?
For what it’s worth, I thought the tax data was the most depressing.
But now there’s a new challenger for the grimmest chart.
I’m currently in Japan, where it’s almost bedtime. I just heard a speech from the governor of the Tokyo Prefecture.
As part of her remarks, she shared a slide showing how Japan has plummeted in the IMD competitiveness rankings.
I don’t have her chart, but I found another version with the same data.
And Japan has dropped to #30 in the recently released 2018 version.
By the way, you won’t be surprised to learn that Economic Freedom of the World shows a similar decline.
Japan was ranked in the top-10 back in 1990, but now it’s dropped to #41.
This is not quite as pronounced as Argentina’s drop in the rankings for per-capita GDP, but it’s definitely a sign that something’s gone wrong in the Land of the Rising Sun.
P.S. Japan has a very strong entry in the contest for the world’s most inane regulation.
P.P.S. And if there was a contest for the most ineffective form of government waste, Japan would have a very strong entry for that prize as well.
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I live here. Anecdotally, there is something changing, though I don’t know quite how it will turn out. The birthrate data is still grim in terms of total numbers, but not at all when you look at individual families. In my neighborhood, for example, there are three types of families: people with 0 kids, people with 1 kid, and people with a LOT of kids.
It seems that this pattern started a generation ago and the result is that people who grew up with a lot of siblings think it is normal to have a lot of kids, people who didn’t don’t have kids and that’s the end of their family story: poof! Over the last six years our local elementary school attendance numbers blew up from 300 to over 700. Granted, I live in a favorable place, but the vast majority of kids are born to parents who were also born in my same village.
So something is going on, at least where I live, and the total numbers don’t tell the whole story across generations. Also, all of this is happening almost in spite of government encouragement — the men having kids are doing it because they want kids, and the women having them are finding these types of men because that’s their own primary goal, too.
Demographics may well be a self-solving problem, as long as the culture isn’t squandered in the process. People went from being very eager to see foreign faces to now having had quite enough of that and wish to just be left alone in their towns without oogling, rude foreigners stomping the grass down to nothing (figuratively and literally).
As for economic data… most companies are started here based on loans, not personal or group investment. There isn’t much of a “startup culture” here, but there is nothing stopping a standout or two from coming along and shaking things up. I think certain industries are ripe for creative destruction, but only from within Japan — foreign companies just don’t quite get how to compete here, and a large part of that is social.
Eventually there will simply have to be a cutoff in terms of social service outlay from government. I find it most likely that government will give up on provision of that sort of thing and turn it over to community organs instead of having everything centralized. This is already the case with many types of minor social assistance (particularly with childcare), but healthcare, “welfare roads” and other such projects will have to face the razor eventually as well.
Things that can’t go on forever eventually stop.
My Father spent 20 years working in Japan. His comments are succinct. Great people, very smart, always willing to endure hardships as a community, also oddly brutal with each other. Stubborn when it come to learning languages other than Japanese. Truly believe government is working for them. The zaibatsu and keiretsu business models are stagnating growth, innovation and keeping loser businesses and business models alive. Cannot understand how Americans out work them.
I also hope to be back in Japan within the year, love the place and the people, but hard to make a living.
Yes,I can remember that back in the mid-Eighties, people all thought that Japan was going to take over the world economically and financially!