August 30th, 2024

Japan was the future but it's stuck in the past (2023)

Japan's economy has stagnated since the 1990s, with real wages unchanged for 30 years. The ageing population is projected to decline significantly by 2050, compounded by low immigration and political resistance to reform.

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Japan was the future but it's stuck in the past (2023)

Japan, once seen as a beacon of economic prowess, is now grappling with stagnation and an ageing population. The country, which boasts the world's third-largest economy, has not recovered from the economic bubble burst in the early 1990s, leading to a prolonged period of deflation and declining property values. Despite its advanced infrastructure and high living standards, Japan's real wages have stagnated for three decades, and its citizens now earn less than their British counterparts. The population is shrinking, with projections indicating a potential loss of a fifth of its current size by 2050. Japan's resistance to immigration exacerbates this issue, as only about 3% of its population is foreign-born. The entrenched political elite, largely unchanged since the Meiji Restoration, continues to resist necessary reforms, leading to a rigid societal structure that stifles innovation and adaptation. Cultural quirks, such as the obsession with manhole cover designs, highlight a disconnect between Japan's modern image and its underlying economic challenges. The country remains skeptical of foreign influence, as evidenced by its strict border policies during the COVID-19 pandemic. As Japan faces these multifaceted challenges, the question remains whether it can adapt to a rapidly changing world while preserving its unique cultural identity.

- Japan's economy has been stagnant since the early 1990s, with real wages not increasing for 30 years.

- The population is ageing and shrinking, with projections of a significant decline by 2050.

- Japan has a low rate of immigration, with only 3% of the population being foreign-born.

- The political elite remains largely unchanged, hindering necessary reforms.

- Cultural practices reflect a blend of modernity and tradition, but economic challenges persist.

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By @telchior - 6 months
It's interesting to consider that these "Japan is backwards" takes might persist in part simply because it hasn't melded with the global first world culture. I can go to various countries and very similar experiences at an electronics store, a hotel and a gas station. In Japan all of those (and many others) are distinctively Japanese.

I've read travelogues from the 17th-19th centuries, and in a lot of them, all of the countries are described like Japan. "Look at these weirdos, they insist on ______!" A tourist going from France to Italy would be constantly amazed, offended and puzzled. No longer.

It's a weird thought for me to have. I'm not a conservative; I view xenophobia, fear of change, and cultural/economic death grips by an older generation as negatives. But it feels like most of the world that doesn't have those things is increasingly homogeneous, in a way that's also uncomfortable to see.

By @akimbostrawman - 6 months
>"Well, you would need to learn our way of life. It wouldn't be easy." The village was on the path to extinction, yet the thought of it being invaded by "outsiders" was somehow worse.

throwing foreign people into a country without them adaption the culture is not reviving that country but changing it which on a longer time scale is the same as that country (read culture) dying. nobody would claim old empire are still alive because on there rubble a country stands today.

By @nextworddev - 6 months
Lived in Japan. I think world will come to realize that Japan's past is also the world's future.
By @hackeraccount - 6 months
Total aside.

In Neal Stephenson book Seveneves the technology of a future is in a few small ways described as weirdly un-advanced compared to the present. I wouldn't describe it as the focus of the book but it still seemed particularly implausible to me but ... I hadn't really thought about Japan. I've never been but I've read that in a few ways technology (fax machines were (are?) still popular just a few years ago) is weirdly retrograde.

That said for potential readers of Seveneves - as with all Stephenson's book it needed an editor to keep him in line. The second half was no where near as good as the first. There were plausibility problems with the technology used throughout the book. Also it was really a lot of fun and I have to admit that I enjoyed reading it.

By @worstspotgain - 6 months
There are two entangled curves: the demographic shift and the urban real estate pyramidization game.

The demographic "leveling off" is inevitable. Until that point is reached, however, favorable demographics can partially offset pyramidization. The US population is still growing (largely through immigration) so it has not reached the endgame stage like Japan and parts of Europe have.

The pyramidization game works by artificially restricting urban housing supply more and more over time. If everyone reacted by buying instead of renting, the game would always end in a 2008-style crash, when the pyramid's bottom-most layer finds itself under water with no further buyers to push it up.

Instead, with renters in the picture, housing prices rise until rents equal the maximum amount of income that can be extracted from renters. This keeps the bottom-most pyramid layer just afloat.

At the equilibrium point, economic growth is stunted. The "working segment" of the population is trapped by rents and mortgages, and cannot take chances. The "housing baron segment" tends to underfund productive investments like the stock market, with real estate looming large on their books. The government has to allocate a lot of resources to the budget effects and stabilization requirements caused by the real estate system, including indirectly via the banking system.

By @billy99k - 6 months
I traveled to Japan and Vietnam last year. I got far faster Internet speeds in Vietnam. Sometimes double or triple the speed.
By @ChrisArchitect - 6 months
By @mdp2021 - 6 months
Very good recent (Aug 12, 2024) exposition from Economic's Help (Tejvan Pettinger, Oxford):

# The Rise and Fall of Japan's Economy - Can it Recover?

https://www.youtube.com/watch?v=MNYMNzdSQwc

By @woodPurchase - 6 months
Nations are not made from dirt. National character wont seep into any group that wonders in. Replacement of the Japanese means the death of Japan, just as much as it does to any other country and has caused so many issues in the west

Economic stagnation is preferable (and has better solutions anyway), the only ones to gain from immigration are foreigners that hate you, your way of life, and some fat cats that hate you ten times more

By @alephnerd - 6 months
Ehn, Japan doesn't have the same zeitgeist as it did in the 1980s-early 2000s, but it is still cool and imo forward facing - just different and more self assured.

The kind of guy who enjoyed Japan in the 80s or 90s probably isn't the kind of guy listening to modern J-Wave, watching Anime, or digging into METI and the ADB's Flock of Geese strategy.

Instead of mimicking and pastiching western culture like back in the 80s and 90s, Japanese subcultures now merge the west and Japan in a more imo mature and self assured manner.

Also, Japan has absolutely become more diverse compared to 20 years ago - before the foreign population was fraction of a percent, but now it's reached 2-3% - most of whom are from all across Eastern and Southeast Asia.

Japan has been developed now for a generation, so there isn't much of a pull to leave Japan and evangelize within America - especially when Japanese firms have a much stronger market position in ASEAN and India. Same thing will happen to Korea in 10-15 years.

By @Xcelerate - 6 months
I’ve lived in many parts of the U.S.—from major cities to the rural countryside. I’ve also lived outside the U.S. And without fail, every time I visit other developed countries, I become so confused about how our economy is apparently one of the strongest, and yet the U.S. just feels behind a lot of other places.

A friend was telling me the first time they moved to the U.S. to work in Silicon Valley, they were expecting some sort of high tech glassy utopia. “It’s just suburbs” they said with a frown, “and San Francisco was a grimy disappointment as well.”

Most of the U.S. doesn’t even look as nice as the Bay Area. It’s mostly the same suburbs minus the wealth, nature, and sunshine. The buildings and infrastructure and in many cities are decades old by now. What exactly does it mean to have the highest GDP if it doesn’t reflect in your daily life and surroundings?

I read that people in Japan tend to travel some of the least in the world outside their own country despite their amazing passports, and most will say it’s because they’ve got everything they need right there. Perhaps relentless economic growth shouldn’t be the goal—rather, building something nice for the society you live in and keeping that way should be.

By @nothercastle - 6 months
The Japanese central bank doomed their economy to 20+ years of stagnation. Instead of allowing prices of assets to crash after the big bubble they locked interest rates at 0 and prevented a recession and repricing of assets but at the cost of future
By @erie - 6 months
Perhaps a look at Japanese software development will give an interesting look into the subject, not sure how accurate this one is https://www.youtube.com/watch?v=ky1nGQhHTso Then there is politics and a controversial one is mentioned here. ''US spy agencies began recruiting former fascists and Nazi collaborators. US officials freed Class A Japanese war criminals from prison, some of whom went on to lead the government in Tokyo.Many of these figures were involved in founding the right-wing Liberal Democratic Party (LDP), which has essentially run Japan as a one-party state since 1955 (excluding a mere five years of opposition rule).A textbook example of this was Nobusuke Kishi, a notorious war criminal who ran the Japanese empire’s Manchukuo puppet regime and oversaw genocidal atrocities in collaboration with the Nazis. He was briefly imprisoned, but later pardoned by US authorities and, with Washington’s support, rose to become prime minister of Japan in the 1950s.Kishi’s fascist-linked family still commands significant control over Japanese politics. His grandson, Shinzo Abe, was the longest-serving prime minister in the East Asian nation’s history. https://geopoliticaleconomy.com/2023/08/07/atomic-bombing-ja...
By @keikobadthebad - 6 months
From Jan 2023
By @garou - 6 months
US tried very hard after ww2 to make japan to be "the future" (https://en.wikipedia.org/wiki/Japanese_economic_miracle). But as it is said in this article (not with these words), the neoliberalism is not compatible. The youngs are literaly dying of too much work and what it wants to summarize is 'the old are still in power', 'samurais that surrended'. It all is just neoliberal ideology. All these contradictions are roting its society.