Wednesday, April 25, 2012

Japan: High-Income Economy

Just got back from Japan and here are some of my observations.

Before this trip, I had dropped into Japan several times on quick dips and transit simply because it was very expensive. With the strengthening of the yen, thanks, I think, to the Plaza Accord of 1985 when the US forced Japan to revalue by a third, Japan has been forced into a downward spiral. The reduced growth of the economy was then bolstered by an expansionary monetary policy ("quantitative measure") that caused the asset bubble in the 1990s and the subsequent asset deflation which is still happening. That revaluation and the asset bubble made Japan so expensive today - for Malaysians (!) who also have to be content with a depressed ringgit.

Japan today, to my eyes, has become a developed nation after years of hard work and economic growth since the end of World War II. Factories are everywhere in the smaller cities and towns. The transportation system all working perfectly and well-interlinked. The people putting their heads down, working and coming and going to work. There is that busyness which lay below the headline of a slow and anemic growth for the Japanese economy. Japan has reached the saturation of its heavy industrialisation. There is so much pollution that can be generated.

On the ground, the Japan society seems to have reached its zenith. Roads are perfectly clean and tidy, houses tidy and cute swarmed along both sides, people ever so polite and socially conscious, the traditional food perfectly healthy and well-proportioned and identically well presented everywhere - the social system working like a clock and the people simply moving along this huge conveyor belt system.

But this is a system and utopia created by the post-war heroes of Japan which are now happily enriched with their cosy little houses and the comfortably big pensions. These old people are the ones who are now challenging themselves to live long so that they can maximise the benefits of the pensions. That longevity is now being obtained through strenuous hard work of brisk working, exercising and working on projects in order to keep the mind alert. Everywhere in Japan, you see old people who are well-dressed and well-kept.

The new children who are being produced in Japan today now has to face a situation where there are no more jobs in the industrial sector. They walk by factories and feel no affinity to them. Factories have no meaning to the young people, except fatherly neglect and a lonely mother. Against the industrial perfection of Japan comes the counter-cultural revolution at the other extreme of the arts. The children all dressed untraditional in order to disgust their parents, and probably as they do that for a few more years, to find themselves. It is this undercurrent of the young generation on the search for their own soul which is exciting for me because it will represents the saviour of the Japanese society and economy.

Japan has been, so far, known for its mechanical perfection but not its innovation or inventiveness. We may now be witnessing Japan at the inflexion point. As the Japanese society rebels against tradition and structure, it learns to think for itself. By looking inward, Japan will discover a new self which we have not seen yet. This may be time for Japan to leave the stereotype that the whole world knows, and to have the confidence to reveal a new self which will incorporate the simplicity of its forbears but the new outlook of life which is better integrated with the rest of the world. This is the excitement I found when I visited Japan recently.


walla said...||||____________________

Their high's are everywhere in the fabric of their industries and society; ours are just in some dubious data on a bunch of powerpoints plus a handful of jaded retail outlets.

Jamie Sarner said...

I totally agree with the notion that Japan is facing inevitable change. Historically strong growth apparently already reached its limits. The problem is that the structure of Japan society that enabled it to get to the place where it is now makes impossible any structural reforms. Their political parties - DPJ and LDP are great proof for that.

fakemalaysianews said...

Our big concern with Japan is the 250% debt to GDP level. Its the largest in the world and makes Europe look good! Japan has an aged population, have little immigration and a very high savings rate which has held their country back over the past decade. Right now the Yen is also quite high vs their trading partners making it hard for Exporters to compete. If they continue their attempts to inject stimulus into their country without a private market capable of buying up all their issued debt then we might see some real fireworks like Greece unfortunately.

pooja nabar said...

japan's industrial revolution revolves aruond it's popular technique KAIZEN, which litteraly means improvement, achieving perfection, so japan's phylosophy of success is very mechanical, its not based on innovation, which is the contemporary driving force for buziness & economic succes, also, it's a well known fact, that japan is one of those few contries whose demography is of aging population. which explains the essence of this post