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Sunday, Feb. 26, 2012

BIG IN JAPAN

Media continues to despair over Japan's fall


Japan's decline has no historical parallel. It is a current fed by two streams — economic and demographic. Economically, barring an unforeseen upsurge, gross domestic product is forecast to fall 16 percent by 2025, 42 percent by 2050. Demographically, in 50 years there will be 40 million fewer Japanese than there are now. That, notes the weekly Shukan Gendai, is the equivalent of losing a city the size of Niigata (pop. 800,000) every year. The research foundation Nihon Keizai Chosa Kyogikai, in a recent report cited by the magazine, says, "This degree of population decline, apart from a major war or an epidemic, is a first for the human race."

What will Japan look like in 50 years? It will, first of all, be elderly, as no nation on Earth ever has been. Forty percent of its shrinking population will be 65 or over. Sixty-five today, thanks to advances in medical science, is not the same as 65 a generation ago. The old are healthier and more vigorous than they were. Very likely this will continue, and old age will grow increasingly youthful. But youthful old age is not youth. Declining vigor can be slowed but not reversed. Shukan Gendai's scenario is "a nightmare for Japanese business." Reduced demand pinches production and sales. Manufacturers wither, department stores die, the stock market tumbles, banks fold or merge into bloated mega-banks. Regional depopulation accelerates. Train service is reduced. Schools close for lack of students, and are converted into facilities for the elderly. School playgrounds become gateball courts.

Care services and hospitals, you'd think, would prosper in post-youth Japan, but Shukan Gendai doubts it. Care is expensive, and everything that makes it affordable — wages, pensions, subsidies — faces the cost-cutters' axe. Care increasingly will be given at home, further sapping the energy of the diminishing working-age population. Far from thriving, hospitals and care homes will shut down, engendering a new population category, the "medical refugee." "How low," demands Shukan Gendai in despair, "can this country sink?"

There are potentially positive aspects which the magazine does not consider. A less crowded, less frenetic Japan, less fixated on mass production and insatiable consumption, would have time for other things — love, friendship, reflection — that get short shrift today. Shukan Gendai says, though without enthusiasm, that it's already happening. It sees the generation under 35 as having "given up on getting ahead" and settled into unambitious languishing. An optimist might say that out of that languishing something new might grow. Or would a pessimist be right to retort that nothing grows out of languishing?

Meanwhile, the only winner to emerge so far is the ever-more-ubiquitous convenience store. These seem in a way the modern equivalent of the gerry-built markets that sprang out of the postwar rubble — thriving alone amid general desolation. "The population is decreasing but seniors, singles and working couples are all increasing," says a convenience chain executive. They're the sectors who find the convenience stores' convenience most appealing. Among them, "our role is expanding."

Another role is too — the government's as caregiver, or at least as underwriter of the inexorably increasing caregiving an inexorably aging society requires. Rising need, falling revenue. Is there a way out? Prime Minister Yoshihiko Noda touts a consumption tax hike, a modest and gradual one by most standards, hopelessly insufficient in the view of many experts, and yet widely unpopular. We'd better brace ourselves, says the weekly Shukan Shincho. This is "the age of the great tax increase." The consumption tax is only the beginning, it predicts. Income tax, inheritance tax, taxes in general are on the way up. It's inevitable, and that's that. All you can do is ... recognize the dire need and accept the sacrifice? Far from it. The magazine's point is quite different. To wit: a clever and knowledgeable taxpayer can evade the worst of the burden, so why not sharpen your cleverness and acquire some knowledge?

Under a headline reading "Instructions on saving taxes in the age of the great tax increase," Shukan Shincho suggests numerous feints and dodges. For example: if you're diagnosed with metabolic syndrome — basically middle-aged paunch with various attendant health debilities — you can join a sports gym and claim it as a tax deduction. If you're laid off — a heightened and omnipresent danger in an economy like this — "no need to get depressed," just register yourself as your working wife's dependent and become thereby her tax deduction, applicable not only to her income tax but to her residence tax as well.

What major expenses loom on the horizon — a wedding? A new home? A room in a senior citizens' facility for an aged relative? A cemetery plot? These can run to millions or tens of millions of yen — reason enough to procrastinate; reason also, however, not to procrastinate. Sign your contracts before the tax increase goes into effect, not after, counsels Shukan Shincho.

And so on and so on, through 12 pages. "Our discussion has been very detailed," it winds up almost apologetically, "but if you're going to ride the raging waves of the age of the great tax increase, now more than ever you need to know how the system works."

True, but you also need to know the long-term challenges Japan faces. A solvent government would find them daunting. An insolvent one? Well, we'll see.



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