New Government in Japan No Reason For Comfort – No New Ideas, While Country Is Deeply in Debt And Population Is Shrinking – More Broadly, Population Declines Throughout the West – Lack Of Faith In The Future?

By Paolo von Schirach

December 23, 2012

WASHINGTON – Japan’s Liberal Democratic Party (LDP) won the elections with an almost historic landslide. With its allies of the Komeito the LDP now controls 325 seats in the lower house, the Diet. The Democratic Party, the humiliated incumbent, is now down to 57 seats (from 230).

No good news

So, good news for Japan, now finally with a stable government? Not really. As The Economist reminds us, this victorious Liberal Democratic Party, now under the leadership of Shinzo Abe, is pretty much like the old one: “cynical, chauvinistic, in parts corrupt and beholden to special interests”. It did not win because of new, bold ideas and brilliant leaders. It won by default, because the inept Democratic Party imploded.

Except for ill advised plans to force the hand of the Bank of Japan, so that it will do more to end deflation, no new ideas. In particular no new ideas that will relaunch a tired economy, and cut down a gigantic national debt, (more than 200% of GDP). And certainly no magic formula that will increase the birth rate in a country that is slowly but surely becoming a geriatric ward.

Negative fertility rates

Yes, unless well established demographic trends are quickly reversed, Japan will become a society of old people and down the line a country with a shrinking population. With a fertility rate of 1.39 children per woman, Japan is well below population “replacement levels”, (at least two children per woman). As Japan does not welcome immigrants, if not enough children are born at some point there will be no more Japan. This may sound preposterous, but it is mathematically inevitable. The only variable is the actual speed of the overall population decline.

With this rather bleak background in mind, whatever the fortunes of the new LDP government led by Prime Minister Shinzo Abe, it is hard to be bullish on a society that does not believe in itself.

No children in rich societies

More broadly, we should not ignore that we have similar or even worse population decline trends throughout the West. With the exception of the United States and France (a country in which there are laws encouraging families to have children), in Europe and Canada we see negative fertility rates. And this goes also for the richest Asian countries, big and small: South Korea, (1. 23 children per woman); Taiwan, (1.10); Hong Kong, (1.09); and Singapore (0.78).

Northern Europe, with an average of 1.7 children per woman, does a little better than the South, where the average is 1.4. Former Communist countries do very badly. (Hungary, 1.41 children per woman; Serbia, 1.40; Poland, 1.31; Czech republic, 1.27).

Hard to say what is causing this population implosion across affluent or semi-affluent countries; but it is abundantly clear that shrinking societies in which the elderly will become the dominant component do not have a bright future.

Immigrants cannot be easily assimilated

In the case of Europe, the only source for replenishment are immigrants from poor Africa. While this may be comforting for those who look at numbers, the assimilation of semi-illiterate new comers who are hardly in a position to become net contributors to these societies is a source of additional worries.

Whatever happened to the West, its self-confidence and faith in the future?

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