An Economically Healthy Japan

Electric Monk's TL "Avoiding Lost Decades" was a great read, it shows how Japan can avoid the bubble and still grow in the 1990s and (apparently) be healthy during the 1997-99 Financial Crisis.

The question is, with the reforms said in the TL, what other efforts are needed to make sure Japan has low debt today, say a manageable 30-40% of GDP? Could the economic growth of this ATL contribute to lower debt?
 
No.

There's no mention if they kept debit spending going, (which is likey, with the amount of tax cuts, and instead of a balanced budget, spent MORE with other tax increases), nor a issue that Japan has no answer for in OTL.

Demographics.

Japan's econ started down in 1992, NOT because they had tapped out all growth, but because they had begun the slow slide down the demographic disaster that they, South Korea, most of Europe (and Europe's solution is WORSE than the Japanese, if that's POSSIBLE!) and China (BOTH!) are in or are headed to.

Given that Japanese pension systems, by and large _ARE_ based heavily on JGB, and as the eldery take more and more out, Japan ethier has to print huge sums of money (inflating the currency, and causing issues (This is what Abe's kinda trying RIGHT now, in fact)), or spend more to redeem and replace those bonds on a smaller tax base.

Eldery, in economic terms are takers from economic activity, not makers. This is generally _fine_, when you have more 'makers' coming in the system, so... Combined with Japan in essense picking up 80% of _all medical costs_, and eldery cost more, that simple... You get issues.

If you don't... what do you do?
 
No.

There's no mention if they kept debit spending going, (which is likey, with the amount of tax cuts, and instead of a balanced budget, spent MORE with other tax increases), nor a issue that Japan has no answer for in OTL.

Demographics.

Japan's econ started down in 1992, NOT because they had tapped out all growth, but because they had begun the slow slide down the demographic disaster that they, South Korea, most of Europe (and Europe's solution is WORSE than the Japanese, if that's POSSIBLE!) and China (BOTH!) are in or are headed to.

Given that Japanese pension systems, by and large ARE based heavily on JGB, and as the elderly take more and more out, Japan either has to print huge sums of money (inflating the currency, and causing issues (This is what Abe's kinda trying RIGHT now, in fact)), or spend more to redeem and replace those bonds on a smaller tax base.

Eldery, in economic terms are takers from economic activity, not makers. This is generally fine, when you have more 'makers' coming in the system, so... Combined with Japan in essence picking up 80% of all medical costs, and elderly cost more, that simple... You get issues.

If you don't... what do you do?

Then, how can you keep Japan growing demographically at replacement level with a POD of 1960 (without of course, a poor Japan) ?

Can massive incentives for having children do?
 
Isn't working (Abe's trying THAT, too, and so are other nations, it's not just Japan.). It seems an axiom, that the richer/more '1st world' a society is, the less children it has. Period.

China's staring down this trap and it's why they're TRYING to restore, but _every_ nation has a clear cut trend: The richer it is, the less children it has.
 
This brings the question to my mind of how immigration might (not certain it does) offset low birthrates in maintaining tax revenues from the working demographic.
 
Isn't working (Abe's trying THAT, too, and so are other nations, it's not just Japan.). It seems an axiom, that the richer/more '1st world' a society is, the less children it has. Period.

The modern economy is the best contraceptive ever invented.

There has been a good deal of academic ink spilled on exactly why this is. It is certainly a complex phenomenon.

Most of the factors so far identified center on education, the number of children a woman sees other women in the society having and the costs of having children (not simply monetary, but also the damage having children inflicts on a woman's other ambitions, the time cost and the house-space cost).

It's not plausible for Japan to ban women from going to university or to encourage them to have more children with any tool available to government. However, it is possible to reduce the costs of having children, which would bring Japan closer to replacement rate.

Steps that would have some effects are as follows:

*Japan needs better women's rights. There is good reason to believe that this one factor is the biggest reason why Japan has lower birthrates than other advanced countries, since women fear that if they have children they'll be bundled into the "mother" ghetto and never allowed out to develop their careers afterward.

*Affordable housing with sufficient space for parents and children. Rents and house prices being driven too high means that couples spend years saving up/advancing their careers to afford a place large enough for children, and by the time they achieve that most of their child-bearing years are behind them.

*Good, affordable childcare. Nurseries and creches relieve the time-pressure on parents, so good ones being available mean less time-costs discouraging potential parents.


This brings the question to my mind of how immigration might (not certain it does) offset low birthrates in maintaining tax revenues from the working demographic.

Immigration certainly does offset low bithrates to maintain the working-age population and immigrants do not behave significantly differently to native-born people as far as finding jobs and developing careers that lead to them yielding more tax revenue.

fasquardon
 
The question is, with the reforms said in the TL, what other efforts are needed to make sure Japan has low debt today, say a manageable 30-40% of GDP? Could the economic growth of this ATL contribute to lower debt?

Gracias, but given more recent economic (well, on nation size scale) experiments I would certainly want to change a fair amount of original planning :).

You don't need debt quite that low, as long as you're growing. Which is, as pointed out, a serious problem as regards demographics in longer term Japan thinking. I patched one problem, I did not even a little bit solve the longer term problem I freely admit.

I suspect you need the 1976 election to go differently if you want a shot at reforming Japan, the money in the 1980s papered over everything; or economists in Japan need to be way more radical in the 1970-90s (they actually were, in some ways) and incorporate a lot of cultural nudging as part of their plans. (But hey, I have a new timeline soon in the right era...)
 
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Is it ever possible to maintain a healthy economy without resorting to what is essentially "ponzi demography," or coming into conflict with the notion that "people should have the choice to not bear children"?
 
Within technology, Japan is strong in hardware still but nearly absent in software. A successful shift to software, although highly unlikely, would have gone a long way to help their economy. Within healthcare, they've had some success in pharma and medical equipment but not nearly as much as they could have, particularly given their demographic trends. I can easily imagine a strong pharma, particularly a generic pharma business, and a much stronger medical equipment industries. Successfully developing these industries could have had a profound impact on their economy.
 
Then, how can you keep Japan growing demographically at replacement level with a POD of 1960 (without of course, a poor Japan) ?

Can massive incentives for having children do?

A radical shift in gender roles and family structures, towards gender equality and acceptance of non-traditional family forms (working mothers, et cetera), would help.

Failing that, Japan becoming a destination for substantial numbers of immigrants would help. Why couldn't Japan become a destination for Chinese and Southeast Asian migrants, on the pattern of South Korea now?
 
Japan's econ started down in 1992, NOT because they had tapped out all growth, but because they had begun the slow slide down the demographic disaster that they, South Korea, most of Europe (and Europe's solution is WORSE than the Japanese, if that's POSSIBLE!) and China (BOTH!) are in or are headed to.

How is Europe's solution worse?

I would point out that Japan's limitation of immigration makes things even worse. South Korea is substantially more open, with a comparable number of immigrants despite having only 40% of Japan's population, and even China is starting to become a destination for migrants the world over. Japan, in marked contrast, has nothing to soften the decline of its native population.
 
Assimilation difficulties negate immigration possibilities...

A radical shift in gender roles and family structures, towards gender equality and acceptance of non-traditional family forms (working mothers, et cetera), would help.

Failing that, Japan becoming a destination for substantial numbers of immigrants would help. Why couldn't Japan become a destination for Chinese and Southeast Asian migrants, on the pattern of South Korea now?

The problem regarding immigration is Japan's view on foreigners; that has been the main obstacle to immigration of any sort. There is a level of xenophobia as well as cultural supremacy/misunderstanding that makes most not want a long term existence in Japan. It is difficult if not impossible to become a citizen of Japan without Japanese blood. If a country treats you as second class and refuses you the opportunity to become one of their citizenry, why bother immigrating unless it's simply for the money; not a good way to build your tax base. A good series of examples regarding the difficulty of assimilation can be found here.
 

gaijin

Banned
A lot of good points already made so far. Allow me to chip in with some observations.

The key point indeed is demographics. The Japanese working population has been declining since the 90’s. GDP is pretty much flat, but if you look at GDP per capita, growth has actually been pretty decent. Standars of life have also increased so in that sense the economy is doing pretty well. One of the key reasons for this is that japanese companies spend a lot on R&D, which keeps them competitive. A lot iof the innovations they make are in the supply chain. You don’t see them, but they are really profitable. You might not buy a Japanese brand, but a lot of the expensive parts in your gizmo are made in japan though. You don't see it, but money flows.

Public debt is very high indeed, but since it is mainly internally held, it is not such a problem as could be expected. In short a lot of the debt and the massive savings held by the Japanese balance out. Steps need to be taken to manage this though. The increase in consumption tax from 8 to 10% is still planned for next year, but some politicians are making noises to delay it (elections are coming).

In regards to the demographics, the main solutions would be to either allow immigration or to use the existing work force better (read, more women). Immigration is taking place much more than people think. Most jobs in service industry like waiters etc. are being done by foreigners these days. The 7-11s in my area (all four of them) are purely manned by Chinese staff. Large scale mass immigration on a US model will not happen though. The Japanese are well aware of the immigration backlash in the US and Europe and are taking a watch and learn approach.

Increasing the number of women in the work force is a priority for the Aso government (to be precise, a priority for Mrs. Aso, she is the driving force behind it). Not only do they want more women to work, they want more women in higher positions,. There are a few obstacles faced though.
1. Culture. A surprising large number of Japanese women simply is not interested in joining the rat race. Very often the future plan of young women is, work for a few years, get married become a house wife.
2. Support for working women. There needs to be an investment in child and day care facilities helping women to work and manage the kids at the same time.
3. Logistics. Saying you want more women in higher positions is easy, but you need to train them. Simply put, if your goal is to have 30% female managers in 2020, you need a pool of assistant managers to promote from. If you only have 10% female assistant managers it will be hard to find enough qualified women to promote. This is a long term project.
4. Work culture. In many ways Japanese work culture is still very traditional and masculine. Not a very welcoming environment for women. It is improving but once again, slowly.
A final point in regards to demographics. The fact that Japan is getting older has bad and good points. The bad point is that the costs for healthcare and so will increase, this funnily enough is also the good point. 70% of all wealth in japan is health by the oldest 30%. So far these people have been saving, saving, saving. In the future they will have to start spending spending spending (retirement houses are expensive). This will mean that a lot of bottled up wealth will be pumped into the economy (good thing). On the negative side, this opens the question that the Japanese government will have to borrow more money abroad and not internally and that would mean higher interest rates.

A final observation, one thing really keeping the economy from sliding back into recession is China. Not only trade with China, but also things like tourism. The retail sector would be decimated if it were not for Chinese tourists. Imagine this: in Ginza (the high end shopping area in Tokyo) there are now shops that sell suit cases and suitcases only. A tour bus with Chinese stops, they get out, go into the store and buy a few empty suitcases (one or two a person). Then they make a round of all the stores (often luxury brands as well) and fill said suitcases with product. And then back to China it is. This is shopping on a truly epic scale. Every single store in the major shopping areas in Tokyo has Chinese speaking staff. English not so much.
Just a few thoughts.
 

gaijin

Banned
How is Europe's solution worse?

I would point out that Japan's limitation of immigration makes things even worse. South Korea is substantially more open, with a comparable number of immigrants despite having only 40% of Japan's population, and even China is starting to become a destination for migrants the world over. Japan, in marked contrast, has nothing to soften the decline of its native population.

First of all, I need to mention that Japan is not as closed of as people believe. The following data comes from the National Statistics Bureau. The official number of foreign residents in japan is 2.1 million
Total: 2.121.831
Asia: 1.731.896
Korean: 501.230
Chinese: 654.777
Philippines: 217.585

This is a rather low number indeed, but be aware that there is also a lot of hidden migration. For one, the official statistics make no diffference based on etnicity or nationality. If I have a child with my wife it will go down the books as 100% Japanese. In other words, the overwhelming bulk of “ethnic Japanese” consists also of Korean Japanese, Chinese Japanese etc. etc. Another interesting statistic is this one:
Total foreigner entry in 2014: 14.150.185
Total foreigner departure in 2014: 12.978.549
Notice that gap in entry and departure?? Now, it might be that 1 million people depart without actually being registered, but I suspect that a significant portion of those people are still in fact residing in Japan and forming part of the (black) labour market.

Having said that, Japan is facing an interesting and unique situation. The standard response from people is always “Japan needs to have more immigration”. That would indeed be good for the Japanese economy. However, this is also an interesting experiment. Japan is maybe the first modern developed country that is trying to go from constantly growing population to stable or shrinking population. This is basically a scenario we are going to face on a global level in the future as the global population stabilizes. Immigration is not always going to be the answer. I think that Japan might be a good test case to see how this change can be managed. There are lessons to be learned here that will be very important for the global future.
 
Isn't working (Abe's trying THAT, too, and so are other nations, it's not just Japan.). It seems an axiom, that the richer/more '1st world' a society is, the less children it has. Period.

China's staring down this trap and it's why they're TRYING to restore, but _every_ nation has a clear cut trend: The richer it is, the less children it has.

South Korea's going that path (demographic disaster), but it has somewhere between 30-40% debt-to-GDP ratio.

And as for immigration, just as Inferus said, Japan wouldn't allow too much immigration.

Good points said above.
 
I think Japan ese focus on robotics is an interesting way to suppress the need for immigration. There's also the problem of population density. A dropping population might be a ncessity for Japan.
 
This brings the question to my mind of how immigration might (not certain it does) offset low birthrates in maintaining tax revenues from the working demographic.

See the US, acutally, we're (and have been outside a few years, below the golden 2.2 birthrate)

Is it ever possible to maintain a healthy economy without resorting to what is essentially "ponzi demography," or coming into conflict with the notion that "people should have the choice to not bear children"?

Yes. As long as _EFFIENCTY_ per worker increases. In otherwords: As the amount of work (in whatever measure you want) increases PER worker, to keep an economy healthy, you need LESS workhours per GDP vaule.

But, in a lot of ways, as it is right now, that's tapped out for 1st rate nations (we're still increasing, but workvaule per hour per worker, is NOT increasing as fast as workers are falling out.)
China just hit the decreasing growth point of workvaule, combined with a demographic curve to make JAPAN's look good. (They also hit THAT!)


As for rights, that's acutally something the JDP (not LDP) tried. Isn't really working. Same with crèche ideas.

Other nations have all that, and STILL have insanely low birthrates (With the exception of France, admittedly, but they're French...)

My view (and I say this as a male, though my wife agrees with me): It's a fundamental issue. You can etheir have women thinking a carrer is a good thing, or thinking motherhood is the 'big thing'

You don't get both.
 
How is Europe's solution worse?
>>
Brussels. Importing those who do not (and I'll agree that Europe doesn't HELP here) want to asslimate and have values RADICALLY different _means you're committing CULTURAL SUDICIE_. Period.
I would point out that Japan's limitation of immigration makes things even worse. South Korea is substantially more open, with a comparable number of immigrants despite having only 40% of Japan's population, and even China is starting to become a destination for migrants the world over. Japan, in marked contrast, has nothing to soften the decline of its native population.

Mm, all three nations still require assimilation (and I'd note ROK's policies ARE NOT NICE. They're WORSE than the Japanese. The problem with Japan, is they make it hard for immgrants to assimilate into the culture)

And ROK's 'immgration'... See who it is. Same with China.
 
First of all, I need to mention that Japan is not as closed of as people believe. The following data comes from the National Statistics Bureau. The official number of foreign residents in japan is 2.1 million
Total: 2.121.831
Asia: 1.731.896
Korean: 501.230
Chinese: 654.777
Philippines: 217.585

This is a rather low number indeed, but be aware that there is also a lot of hidden migration. For one, the official statistics make no diffference based on etnicity or nationality. If I have a child with my wife it will go down the books as 100% Japanese. In other words, the overwhelming bulk of “ethnic Japanese” consists also of Korean Japanese, Chinese Japanese etc. etc.

Do we have any idea as to the statistics involved?

Another interesting statistic is this one:
Total foreigner entry in 2014: 14.150.185
Total foreigner departure in 2014: 12.978.549
Notice that gap in entry and departure?? Now, it might be that 1 million people depart without actually being registered, but I suspect that a significant portion of those people are still in fact residing in Japan and forming part of the (black) labour market.

Interesting. How long has this gap been present?

Having said that, Japan is facing an interesting and unique situation. The standard response from people is always “Japan needs to have more immigration”. That would indeed be good for the Japanese economy. However, this is also an interesting experiment. Japan is maybe the first modern developed country that is trying to go from constantly growing population to stable or shrinking population. This is basically a scenario we are going to face on a global level in the future as the global population stabilizes. Immigration is not always going to be the answer. I think that Japan might be a good test case to see how this change can be managed. There are lessons to be learned here that will be very important for the global future.

Perhaps. I'm more concerned about Japan missing out on opportunities. (See more at the end of my comment below.)

Brussels. Importing those who do not (and I'll agree that Europe doesn't HELP here) want to asslimate and have values RADICALLY different _means you're committing CULTURAL SUDICIE_. Period.

I do not understand what you are talking about.

If you're talking about the lack of integration of immigrants in Belgium, that's a consequence of Belgian immigration policy. Until very recently, the European Union has had absolutely nothing to do with its member-states' immigration policies regarding non-EU countries, or the integration policies adopted for these communities.

Mm, all three nations still require assimilation (and I'd note ROK's policies ARE NOT NICE. They're WORSE than the Japanese.

Not really. On the most basic level, South Korea officially accepts immigration, not only by ethnic Koreans but by people coming throughout China and Southeast Asia. The result is a very real shift in the makeup of the Korean population, one that is likely to continue despite controversy. In Japan, such an outreach towards immigrants is impossible.

And ROK's 'immgration'... See who it is. Same with China.

South Korea's immigrants come mostly from China and Southeast Asia, the same areas that would be major sources for Japan if that country had opened its doors to substantial immigration. Quite a few of the migrants from China are ethnic Koreans, yes, but when countries shift from net emigration to net immigration the attraction of migrants from diasporas is quite common.

Japan also began attracting migrants from its South American diaspora in the 1990s, when it was on the verge of becoming a major destination. When the Great Recession hit, the Japanese government paid these migrants to leave and never return. That's a fundamental difference from South Korea.

If these Japanese policies, and attitudes, discouraging migrants continue indefinitely, then it's quite possible that Japan might lose out relative to countries which maintain more open policies. Germany missed out on the main wave of Polish and Baltic immigrants after 2004, despite a very long history of being a destination for immigrants from these regions, simply because Germany opted to keep its labour markets closed to migrants from A8 countries while the United Kingdom had opened them. Japan might one day find that, even if it changes its policies, it won't get many migrants simply because the migration networks which developed while Japan was closed will leave that country out.


For potential migrants from China, or Vietnam, or the Philippines, the choice would seem relatively easy.
 
Warning: I HAVE studied this topic for this region, though my focus was 2001-2005, and I haven't kept up on Korea for about 5 years, at all. (too busy with other things, and the ROK is... eh, not my thing)

Do we have any idea as to the statistics involved?
With Japanese numbers, be careful!(To be fair, this ISN"T JUST JAPAN) If it doesn't cost Japan face to be honest, they will be, generally, though. But some numbers are iffy.

It's only recently that Koreans didn't have to change their name, to a Japanese one, after all.

As for Gaijin (assuming non Japanese, given his implications, but if wrong, wrong): That's fairly new, pre... 2006 or 2009, to qualify as a Japanese citizen, you not only had to have 'blood', but culture. And by blood, born to a Japanese citizen (or claimed by one. I'm sure people can do the research of certain ... situations)

(though Japan even then treated those of blood and BORN in Japan, generally as 'qualified')

Interesting. How long has this gap been present?
A while, and about 2/3rds ARE the illegal labour market, Gaijin's referring to. And some of the numbers are really... interesting. What's really quirky is how Japan does this number, too. As Gaijin was helpful in the date (2014): A gap of about a million two, right? How many of those left later. And by 'gaijin' (using the Japanese word for ...): they mean ANYONE WITHOUT citizenship, period. It gets quirky. A month by month breakdown would be more helpful.

Perhaps. I'm more concerned about Japan missing out on opportunities. (See more at the end of my comment below.)
Um, Gaijin? Japan _wasn't_ trying to do this. It just happened. First nation to ACUTALLY officially try was _CHINA_. (and they're now going ooops.)

The curve in numbers was obvious as early as 1980, if people paid attention.
I do not understand what you are talking about.

If you're talking about the lack of integration of immigrants in Belgium, that's a consequence of Belgian immigration policy. Until very recently, the European Union has had absolutely nothing to do with its member-states' immigration policies regarding non-EU countries, or the integration policies adopted for these communities.
Yep, yep, I am. Europe (and to a lesser extent several Asian nations), have in de facto, practiced no integration attempts for their culture. Immigrants are fine. (legal anyways). This combined with a high rate OF immigration, and a low birthrate spells trouble.

Note: Going to Japan. Japan _requires integration_ (like Korea, too, per 2004 laws). However, Japan does/did (I'm not on scene anymore, so.) nothing to help this along.

Not really. On the most basic level, South Korea officially accepts immigration, not only by ethnic Koreans but by people coming throughout China and Southeast Asia. The result is a very real shift in the makeup of the Korean population, one that is likely to continue despite controversy. In Japan, such an outreach towards immigrants is impossible.
Official != reality. And note you linked the controversy, pointing out. Korea, per articles I did research on, changed their laws (so did Japan, too) vis a vis immigration, rather recently, in some ways, in response to the demographic curves. I suspect backlash they didn't expect is going to hit, and hit hard.

South Korea's immigrants come mostly from China and Southeast Asia, the same areas that would be major sources for Japan if that country had opened its doors to substantial immigration. Quite a few of the migrants from China are ethnic Koreans, yes, but when countries shift from net emigration to net immigration the attraction of migrants from diasporas is quite common.
Since they have since 2009 (IIRC): Where are they? I think you also forgot to factor in each nations' reputation there...
Japan also began attracting migrants from its South American diaspora in the 1990s, when it was on the verge of becoming a major destination. When the Great Recession hit, the Japanese government paid these migrants to leave and never return. That's a fundamental difference from South Korea.
Different economic situations, too. Korea didn't have the same recessions, and same response to them. Apples and peaches, apples and peaches, there.

If these Japanese policies, and attitudes, discouraging migrants continue indefinitely, then it's quite possible that Japan might lose out relative to countries which maintain more open policies. Germany missed out on the main wave of Polish and Baltic immigrants after 2004, despite a very long history of being a destination for immigrants from these regions, simply because Germany opted to keep its labour markets closed to migrants from A8 countries while the United Kingdom had opened them. Japan might one day find that, even if it changes its policies, it won't get many migrants simply because the migration networks which developed while Japan was closed will leave that country out.
See above. Japan IS officially trying to attract migrants.

Not so simple as changing the law, and attitude locally (which concede, to large extent, it hasn't, but it IS changing) Reputations and actual history play a factor, as well as appearances.


For potential migrants from China, or Vietnam, or the Philippines, the choice would seem relatively easy.

"Not the nation til recently (if they even KNOW) didn't let 3rd generation Japanese-Koreans get citizenship, and that 'enslaved' or 'slaughtered' my fellow..."

Note: Denmark has a similar problem in Europe.

>> << (See Scand/World webcomic, has a GREAT scene.)
 
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