The Economist is convinced that Japan is going to be A.O.K. after all. Why? Well, after fifteen years of sluggish, incremental reforms, the economy has to be back on track, right? Right?
While I was intrigued with the possibility that my long-term language investments would maybe pay off financially in the future, I walked away from the article a little skeptical about the writer’s analysis. The arguments only differ slightly from the outlook in this year’s OECD report on Japan, which essentially said, if Japan increases labor productivity, maybe they can get up to growth rates on par with the rest of the First World.
This Economist article says the same thing — although with greater faith that today’s more stable financial base will allow reform to create more substantial increases in productivity. Sounds good, but the Japanese economic planners still show serious hesitation in enacting reforms that challenge the traditional power structure.
The editors also put a spin on the demographic crisis: less people means less inefficient resource allocation. On paper, that sounds possible, but there are too many people still stuck in the system. The population as a whole is not shrinking — there are just no young people. And there will still be no young workers to pay the taxes of their pensioned elders.
This line — “And the strengths that made Japan rich in the 1970s and 1980s — good education, advanced technology and smooth co-ordination within companies will again come to the fore” — also troubled me, because ” education ” is used as a monolithic concept. Japan does have an excellent primary and secondary education system for instilling fundamental social values and basic mathematics and literacy. But, these are skills most important for a mass-manufacturing economy, not a niche high-tech information economy. Training for the latter comes from a good university system, which Japan is nowhere close to having. Compared to India, Japan may have greater basic rates of education, but are they pumping out as many world-class, high-tech workers?
I really hate to be the eternal pessimist, but Japan’s economic outlook is still contingent upon the government’s active reform in various areas. And the neo-liberal implications of these reforms poses a direct threat to the “Japanese” system — in both general social stability and the centralized power structure. No one seems to think that there is a “Japanese” solution to the economic crisis; that is to say, the path to higher growth rates does not require changing some screws, but installing an entirely new piece of machinery. So, the Economist can assume Japan will make the rational changes necessary for resurgence, but judging on past behavior, there is no reason to believe that the last crucial renovations will be swift and forceful.