Jim O'Neill is right: "The sun can also rise in Japan," the Nikkei Asian Review article of March 15, and the future will be bright if the country uses technology to raise productivity.
But the rosy outlook is conditional. Japan faces powerful headwinds that O'Neill acknowledges -- extremely poor demographic prospects, a weak productivity record, economic uncertainty generated by the Bank of Japan's need to unwind its quantitative easing effort. It is also confronted by even more substantial blasts that he does not, most notably a suite of attitudes that block change and are virtually impossible to surmount.
The Japanese know well the changes are required for a brighter future. Comfort, complacency and conservatism all conspire to put them beyond reach, however.
There is no future for Japan that the Japanese have not anticipated. In the 1970s, demographers charted trends that are now posed to overwhelm social safety nets. In the 1990s, economists warned of unsustainable debt burdens. In the early 2000s, national security experts highlighted threats posed by a rising China. All the while, business strategists were identifying challenges that Japan would confront in the face of new geopolitical, economic and technological realities and the opportunities they would create.
And yet Japan still lost its way. Despite those diagnoses, the country dithered after the bubble burst, enduring up to two "lost decades" as it failed to respond systematically to domestic and external change. Prime Minister Shinzo Abe has tried, with some success, to shake the country from its torpor. But while he has had some important victories, historians will judge them marginal.
Ample work explains why the country failed to adapt. Ultimately, the problem lies in Japanese attitudes. For reasons good and bad, the forces of resistance have prevailed over those of reform.
First, blame the great comfort that characterizes modern life in Japan. Japan is still the third largest economy in the world, comfortably ensconced in the top third of every list of nations in terms of GDP per capita. Consumers want for nothing, and the country sets fashion trends and tastes. Tokyo tops the list of cities with the most Michelin stars: 314, more than twice as many as the nearest competitor, Paris which has 141. Kyoto is third with 138 and Osaka fourth with 121. Novelist William Gibson says that "when I want to see the future, I spend a week in Tokyo." The country is clean, safe and efficient. As one college student explained, "I can fall asleep on the train at night and not worry. What is wrong with that?"
Complementing that comfort -- and facilitated by it -- is a deep sense of complacency. When the country first grappled with stagnation in the 1990s, Japanese were quick to note that all countries encounter difficulties and insisted that Japan would find its feet when conditions changed. Persistent structural problems undermined that optimism and now it is more common to hear that Japan should reduce its ambitions. With a small and shrinking population, limited resources and self-imposed limitations on its military, it is often asserted that Japan cannot compete with a country like China. That outlook is abetted by the unwillingness of many younger Japanese to make the sacrifices that their parents did. There is not the hunger among young Japanese that is evident among peers in China and South Korea.
Japan has celebrated the determination and stoicism that affords its citizens dignity in adversity as a form of resilience, as was much evident after the March 11, 2011 tsunami tragedy. Some root this belief in "mujo," the Buddhist notion that all things are impermanent and change is a constant. Others insist that wa, or harmony, also demands such stoicism. Regardless of the source, observers now fear that it is also a brake on much-needed change.
The most pernicious obstacle, however, is small 'c' conservatism. There is in Japan a powerful desire for the status quo. That is understandable given the country's many successes. Japanese harbor great pride in having created a distinct model of capitalism that produced -- in the minds of most citizens -- a homogeneous society, in which almost all identified as middle class, along with world-beating companies that set global standards for product excellence. Japan has not experienced the political and social strains found throughout the West, nor many of the most virulent indicators of social dysfunction (drugs, crime, homelessness). That is not to say that Japan is not without problems, but most Japanese don't believe they justify the uncertainty and the potential harm that could be unleashed by systemic change. The prevailing view is that Japan has problems but they are tolerable.
Using traditional indices of national power and influence, such as GDP size, this is Peak Japan, the apex of the country's international presence and status. Japan must reorient itself and reconfigure national ambitions and priorities to ensure a future as bright as its past.
Brad Glosserman is deputy director of the Center for Rule Making Strategies, Tama University and the author of "Peak Japan: The End of Great Ambitions" (Georgetown University Press, 2019) from which this article is drawn.
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