RETURN OF JAPAN?
Fareed Zakaria thinks it’s upon us.
Japan is back. No, really. The country is finally stirring from a decadelong slumber. And it is waking up politically as well. In the long run, this period might well be seen as the rise of a new Japan.
Many economists look at Japan and remain cautious. The economy is growing and the stock market is up, but in the last decade there have been many such false starts. More important, Japan’s reformist prime minister has not tackled the big economic problems the country faces–writing off bad loans, reforming the tax code and finding the right economic stimulus. In short, there has been no economic revolution. But in the last month Prime Minister Junichiro Koizumi has launched something more important–a political revolution.
In the past few weeks Koizumi has declared war on the LDP’s old guard. He won his election within the party, then reshuffled his cabinet and, for the first time in Japan’s modern history, did not fill it with representatives of the various factions. He has begun tackling construction spending and the postal services because they are at the heart of the LDP’s vote-producing and money-getting machine.
Beyond economics, one is beginning to see a more active Japan. The rise of China, 9/11 and the North Korean crisis have all forced Japanese politicians to recognize that their country cannot remain a sleeping giant. They are beginning to speak about playing a larger international role, about revising Japan’s Constitution to provide for a normal defense force. Some are even broaching the topic of a nuclear deterrent. Words are being matched by deeds. Japan sent a naval flotilla to the Indian Ocean during the Iraq war. It will likely send noncombat forces to Iraq. Washington has welcomed this new stance. A White House official told me, “From Iraq to North Korea, one sees a much more assertive Japanese foreign policy. WeÃ¢€™re comfortable with this. Japan is a democratic country and a responsible ally.”
This is big news. Remember, Japan is still the second richest country in the world, bigger than all the rest of Asia combined. Its military spending ranks fourth in the world. While everyone is wondering how ChinaÃ¢€™s rise will reshape Asia and the world, perhaps the country to be watching is AsiaÃ¢€™s other giant.
This is all quite interesting but, as Stephen Green points out, there are some other obstacles for Japan to overcome.
Even if Koizumi succeeds completely, even if Japan’s banks go through a painful and costly restructuring, even if Japan’s warped electoral system is somehow fixed, the demographic problem remains.
Japan is already as old as Florida. It has already become a land of many retirees and few children. The only real fix is if Japan were to welcome and assimilate millions of immigrants, and keep doing so for, well, ever.
And it ain’t gonna happen — not in a country where, like almost the rest of the world, nationality is determined by race. Japan won’t even assimilate the few remaining aboriginal people who have lived on the islands thousands of years before the first Japanese landed on their shores.
Japan’s phenonmenal success from the 1960s through the 1980s was, frankly, remarkable. An island nation with few natural resources and a large population packed into very little habitable land starts off with two strikes. An almost unhealthy work ethic and ability to delay gratification were key elements to that success. But, predictably, the younger generation of Japanese have become quite westernized and want their creature comforts. They face the same competition from cheap labor countries as the U.S. without our many advantages.
Japan has too much human capital to ever be a poor country. But it’s highly unlikely that they’ll ever be the number two economy in the world again.