the future of japan -- 12/6/22
Today's selection -- from Numbers Don't Lie by Vaclav Smil. After an extraordinary peak by 1990, the economic story of Japan has been one of struggle:
“The war-devastated Japanese economy did not surpass its prewar peak until 1953. But, by then, the foundations had been laid for the country's spectacular rise. Soon its fast-selling exports ranged from the first transistor radios (Sony) to the first giant crude oil tankers (Sumitomo). The first Honda Civic arrived in the United States in 1973, and by 1980, Japanese cars claimed 30 percent of the US market.
|1972-1975 Honda Civic CVCC 4-door sedan (base-mid trim Japanese model)
"In 1973-74, Japan, totally dependent on crude oil imports, was hit hard by the Organization of Petroleum Exporting Countries (OPEC)'s decision to quintuple the price of its oil exports, but the country adjusted rapidly by pursuing energy efficiency, and in 1978 it became the world's second-largest economy after the US. By 1985, the yen was so strong that the United States, feeling threatened by Japanese imports, forced the currency's devaluation. But even afterward the economy soared: in the five years following January 1985, the Nikkei index rose more than threefold.
"It was too good to be true; indeed, the success reflected the working of an enormous bubble economy driven by inflated stock and real estate prices. In January 2000, two years after its peak, the Nikkei was at half its 1990 value, and only recently has it risen above even that low mark.
"Iconic consumer electronics manufacturers like Sony, Toshiba, and Hitachi now struggle to be profitable. Toyota and Honda, global automotive brands once known for their unmatched reliability, are recalling millions of vehicles. Since 2014, Takata's defective airbags have resulted in the biggest recall of a manufactured part ever. In 2013, GS Yuasa's unreliable lithium-ion batteries caused problems for the new Boeing 787. Add to this frequently changing governments, the March 2011 tsunami followed by the Fukushima disaster, constant concerns about an unpredictable North Korea, and worsening relations with China and South Korea, and you get a worrisome picture indeed.
"And there is an even more fundamental problem. In the long run, the fortunes of nations are determined by population trends. Japan is not only the world's fastest aging major economy (already every fourth person is older than 65, and by 2050 that share will be nearly 40 percent), its population is also declining. Today's 127 million will shrink to 97 million by 2050, and forecasts show shortages of the young labor force needed in construction and healthcare. Who will maintain Japan's extensive and admirably efficient transportation infrastructures? Who will take care of the millions of old people? By 2050, people above the age of 80 will outnumber the children.
"Fortunes of all major nations have followed specific trajectories of rise and retreat, but perhaps the greatest difference in their paths has been the time they spent at the top of their performance: some had a relatively prolonged plateau followed by steady decline (both the British empire and the 20th-century United States fit this pattern); others had a swift rise to a brief peak, followed by a more or less rapid decline. Japan is clearly in the latter category. Its swift post-Second World War ascent ended in the late 1980s, and it's been downhill ever since: in a single lifetime, from misery to an admired -- and feared -- economic superpower, then on to the stagnation and retreat of an aging society. The Japanese government has been trying to find some way out -- but radical reforms are not easy in a gerrymandered country that still cannot seriously contemplate even moderate-scale immigration and that is yet to make real peace with its neighbors."