NCPA - National Center for Policy Analysis

Land Of The Setting Sun?

August 2, 1999

Aside from its recent economic crisis, Japan suffers from other infirmities which may well set it on a long-term downhill course, analysts warn. Specifically, the country undermines productivity by squandering money on moribund industries and backward regions. Also, its work force is aging and shrinking fast.

  • The government's own projections show the nation's population rising only a tiny bit until 2007 -- and then tumbling rapidly to 100 million in 2050, compared to 126 million today.
  • With the working-age population declining by about 650,000 a year over the next 50 years and the aged proportion rising to one-third of the population by 2050, each worker will have to increase output dramatically to pay for those who are retired.
  • While Japan never built a huge public welfare system, it has instituted safety nets and subsidies to create a welfare state for companies and towns and declining industries -- prompting critics to observe that Japan is picking losers and propping them up on a grand scale.
  • Economists predict that Japan's gross national product in 2050 will be 5 percent smaller than it is today -- leaving it with less than one-third the share of global output it enjoys today.

Subsidies have led to high electrical charges, postal rates and taxes which have made it increasingly difficult for Japanese businesses to compete internationally. It is, for example, more expensive to mail a letter within Tokyo than it is to mail it from the U.S. to Tokyo. So Japanese businesses began sending their mass mailings from the U.S. -- until the Japanese government banned the practice.

Source: Nicholas D. Kristof, "Empty Isles Are Signs Japan's Sun Might Dim," New York Times, August 2, 1999.


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