Japan Must Either Open Up To Foreigners Or Face Economic Collapse – Forbes

Japan faces a stark choice these days: Either open up to gaijins—foreigners—or face economic collapse.

There was a time Japan was the world’s second largest economy, on track to bypass the world’s largest economy, the US. 

Scores of books and editorials praised the country’s advantages. Like its state of the art management, hard working and well-disciplined labor force, sound economic policies and technological progress. 

That was back in the 1980s, when the Japanese economy was growing at a fast pace, and Japanese corporations were collecting American landmark trophies. 

Now, Japan is the world’s third largest economy, almost one-third of the size of China and less than one-fourth of America, barely growing, and mired in debt. And its per capita GDP falling. In the most recent quarter, Japan’s GDP grew at 0.79%, and its debt to GDP ratio reached 240%. 

Nowadays, there’s no more praise for the country’s policies and institutions.And the few books written about Japan talk about the 1980s bubble and the “lost decades” that have followed. 

What went wrong? Many things.  

Like the burst of the equity and the real estate bubbles back in the early 1990s. That’s something that destroyed a great deal wealth, and left banks with piles of non-performing loans. 

Then there was trade friction with the US and a soaring yen, which undermined one of the country’s growth engines, exports. 

And competition from South Korea and China made matters worse for Japan’s exporters. 

But the biggest problem of all was demographics: low birthrates coupled with rising longevity rates. They created a “crumbling” population pyramid. 

This is Japan’s biggest problem because the crumbling population pyramid shrunk the country’s labor force and diminished its productive potential. 

It also caused a spike in the “dependency ratio,” from 43.3% in 1992 to 67.55% in 2018. 

This means that they are roughly 68 dependents (people less than15 or older than 64) for every 100 people of working age (15-64). 

Today’s high dependency rate undermines Japan’s economic growth, and pushes the country further into government deficits that add to already skyrocket high debt; and sets up the country for a Greek style debt crisis that could cause an economic collapse. 

What’s causing low birth rates? Low marriage rates, which is rooted in the prolonged economic stagnation in the post-bubble economy and the high cost of property values, among others. 

And what’s the solution? A number of incentives which encourage young people to get married and have more children. 

The trouble is that the Japanese government has tried almost all of them, without avail. That’s why the time may be ripe for Japan to try something radical: like opening up to an American style immigration.

But that will eventually change the fabric of the Japanese society, from a one-race/and culture society to a multi-racial, multi-cultural society.

Is Japan ready for that?

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