What Is This Japan’s Contrarian Yet Successful Model?
By Jitendra Kumar Sharma
Japan’s population is decreasing and its economy slowing yet its human welfare GDP per capita is superior to advanced and advancing economies of the world. Available figures show, from 1991 onwards, average growth is about 0.9% compared to 4.5% of earlier two decades ago. Inflation in Japan is just about ZERO! Government debt has risen from 50% of GDP to 236% of GDP.
Prime Minister Shinzo Abe is popular as ever and in a recent internal party election he has won a renewed vote of confidence. His efforts at increasing inflation to 2% remain fruitless. Japan’s fertility rate is 1.4 and and immigration is nil. Will it not reduce Japan’s workforce and make the care of its aging population a challenge? For the time being, such challenges are being met by enlarging the fiscal deficit, currently at 4% of GDP.
Japan is not assailed by any doubts about its slow economy and declining birth rate. In fact, it seems to remain unaffected by western theories of economic growth because, surprisingly, Japanese are currently living at the world’s highest living standards. On the contrary, US per capita growth over an entire generation has been faster but it is marred by monumental income inequality. American Labor’s real wages throughout this period of 25 years has been stagnant.
Socially, Japan is a happier society today. Crime rates are fiercely increasing in he erstwhile docile societies like India but in Japan the crime rate is almost lowest in the world. Tourism-wise, Japan is indeed upbeat; foreign visitors were six millions in 2000-05 and now in 2015-18 nearly 20 million.
Japan’s model is a despair of the Economists who are pessimistic about its demographic unsustainability because Japan’s population is decreasing apace at 1.4 rate. Japan is countering the problem of aging of its workers by reviewing the working age as 65. Abe is raising working potential of workers to 70 and above and ratio of workers to retirees at 2.1 today is expected to be 1.8 in 2050, which is not so alarming. Abe government is taking good care of the health of the Japanese nation as well as Japanese economy.
Japan’s technological excellence is another assurance for its continuing prosperity. Robots and machines are assisting older people to remain economically active beyond the present retirement age and produce goods and services involving fewer human hands. Japan is a McLuhanic paradise where automation and robots are not destroying jobs, but changing them into roles.Automation is also creating more leisure for the Japanese citizens.
Prime Minister Modi ought to read the best-selling book The 100-Year Life to overcome his phobia of the aged and aging seniors. Modi may also benefit from exploring possibilities of automation. Instead of making false promises and wasting his time on the improbability of creating millions of jobs for a rapidly increasing population,he ought to opt for rapid automation.
The real challenge today is not creation of wealth but its redistribution.
Japan government cocks a snook at doomsayers who are ringing alarm bells about its 236% of GDP debt and, the International Monetary Fund, the sanctuary such pessimistic economic philosophers has made an official re-calculation to announce that it is really152% .
236% or 152%., Prime Minister Prime Minister Shinzo Abe could not care less.
In fact, Bank of Japan has government bonds worth 90% of GDP. It gives to the government all the money it gets as dividends as interest. This way, debt level remains within the range of 60% percent of GDP. This is a most effective remedy and bulwark against all high or low fiscal deficits.
Japan appears to be lucky and beyond the pale of western economists who spread panic and confusion in advancing countries like India as Indians have become nincompoop followers of all that comes from America and Europe; they are agog at World Bank and IMF praise, and are happily leaping into the western economic maze like a spider who gets caught in its own web.
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