Japan a country of contrasts

After three weeks on holiday in Japan, I am still reeling from the enormous contrast to any other country I have ever visited. When I first went there on business 40 years ago, I was getting used to life in New Zealand after immigrating from the UK, so probably didn’t register the size of the contrast, apart from the total lack of any street signs in English and the politeness of the people. All these years later the differences in lifestyle and behaviour have become even more apparent, especially when set against the huge progress in infrastructure and technology around the world, a lot of it invented by the Japanese.

 

Japan has a very orderly monocultural society in which everyone, at least on the surface, appears to be comfortable with their status and how things work. However, Japanese conservatism and compliance with the law are driven by the desire to avoid social stigma. The most obvious demonstrations of these factors are people’s honesty, politeness and driving habits which are diametrically different from almost any other country I can think of. Given Japan’s population of 127 million, it is amazing, particularly to an Auckland resident, to see things move as well as they do. Nobody runs the traffic lights, all public transport services are frequent and on time, and people insist on helping you, if you are looking lost.

 

In the last 40 years Japan has successfully adopted some aspects of Western life without compromising its true identity. McDonalds and Starbucks are evident, but not everywhere and certainly not in such profusion that they threaten to take over from traditional Japanese restaurants and bars. It will be fascinating to see how visitors to Japan for the Rugby World Cup and Olympics cope with the relative lack of large Western style drinking and eating facilities, or perhaps the Japanese will surprise by how they adapt to the invasion.

 

The biggest challenge facing the country is the falling birth rate, currently 1.43, and ageing population. In 2017 deaths exceeded births by nearly 400,000 or 41% and the population is forecast to fall by one third by 2100 with an increasing proportion over 65. This makes New Zealand’s concerns about how to fund national superannuation seem relatively minor. Japan is unique among first world countries because of the lack of immigration with 98% of the population being Japanese who are either too old or unwilling to marry and have children. The birth rate has fallen from just over 2 in 1970 to the present level, the reasons for this not being immediately clear. The Abe government has relaxed immigration controls to allow firms to bring in workers, particularly in the construction industry, because there is an acute lack of labour, an unemployment rate of 2.5% and more than 1.5 jobs for every job seeker.

 

It will be interesting to see how Japan adapts to the implications of playing a lead role in the CPTPP and the effect on its agriculture of more exposure to imports. At present its primary sector, including agriculture, fishing and mining, constitutes 1.3% of GDP and only 20% of land is suitable for cultivation, but farming production is highly subsidised and most farmers earn the majority of their income from off farm activities.

 

Rice is by far the largest crop with most fertile land devoted to rice paddies to take advantage of subsidies. Up until the end of World War 2 the primary sector employed half the national workforce, but this declined sharply with the upsurge in industrial production and the resulting economic boom from the 1950s onwards. Beef production only meets 2% of local demand with the balance largely being met by Australia and the USA which makes the introduction of CPTPP very important for putting New Zealand beef imports on a more level playing field.

 

Despite the huge contrast between the two countries, there are a number of problems in common facing both governments, although obtaining a mandate for change doesn’t appear to be as large a problem for Japanese Prime Minister Shinzo Abe. He has been re-elected president of the governing Liberal Democrat party for a third term and, assuming he wins the election in 2019, will be in sight of becoming Japan’s longest-serving prime minister ever.

 

But he faces several challenges, not least being social security reform, notably introducing more sustainable medical and pension schemes to cope with the declining and ageing tax base. Immigration remains a politically sensitive issue and immigrants are viewed as second class citizens, but maintaining a large enough workforce to sustain growth will clearly be a massive challenge.

 

There are many contrasts, both between Japan and other Western countries and its Asian neighbours and within Japan itself, where younger people appear unwilling to work, live, and build a family the way their parents and grandparents did. Japan’s post war economic miracle has come at a significant cost to its future sustainability.

 

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