Nicholas Kronos has a fascinating essay on the future of Japan — and the potential lack thereof:
The Japanese are a resilient people who proved themselves capable of a miracle recovery after World War II. Even so, their 2011 population is an aging one, with almost one in four Japanese over 65. As difficult as such demographics are for a stagnant economy to support, rebuilding economic prosperity to its previous levels with such a workforce challenges credibility. It seems to me–even should the nation avoid the ultimate disaster of Chernobyl-type nuclear accidents rendering its scarce land resource even scarcer through 1,000-year half-life contamination–reconstructing Japan will require something like the Marshall Plan.
The United States no longer can provide that level of assistance, but perhaps the Chinese–their coffers bristling with reserves from years of trade surpluses–can. Thus far, I am not aware of any large-scale assistance from the one long enemy to the other, and it seems that a Japanese decline should, in fact, benefit the Chinese. Nevertheless, a competitor’s misfortune may be a wise investment opportunity.
AdvertisementThus, aside from all the human tragedy that has thus far occurred and the risks for far greater that could well end in making this the greatest natural disaster in modern times–recall that the fire after the San Francisco earthquake of 1906 caused 90 percent of the damage–I also see a great loss for America.
As Amity Shlaes wrote at the very beginning of 2007′s The Forgotten Man, brilliantly — and tacitly — linking a natural disaster in the late 1920s which inadvertently stage set for Hoover, FDR, and the calamity of the following decade with Katrina and our own dormant economy,”Floods change the course of history, and the flood of 1927 was no exception.”
The America of the 1920s was a still largely rural nation with a few urban pockets about to face all of the challenges of the 20th century and ultimately very much up to the task. Japan has a demographically exhausted population and a rapacious neighbor right next door. As Kronos writes, “Undoubtedly this disaster has knee-capped our loyal ally Japan’s regional power for some time to come and perhaps permanently. China enjoys the best position to move into the resulting vacuum and exploit Japan’s hobbling.”
What happens next?
(And what about us? Jeff Goldstein boils America’s potential fate down to six simple words: “USA Inc.: Bought high, selling low.”)
Color me skeptical of this narrative. China has 30-40 million young men who will never marry (selective sex abortion gender imbalance). A robust and chronic set of separatist movements in Tibet and XianXing, both religiously and ethnically based. Corruption on the scale Westerners cannot imagine (My Father is Li Gang.) A house of cards financially, with constant rickety prop-ups of bankrupt State owned enterprises and financing of export led growth on the backs of household savers. Which in turn fuels bubbles as households seek desperately returns.
Meanwhile Japan has a robust industrial workforce, world class companies, and the ability to earn dollars and euros by shifting production from China to Japan, and pushing out much higher quality Nikon and Canon cameras and imaging products, Hondas and Toyotas, Seiko watches, and the like. Really, who besides avid readers of the Wall Street Journal can name Foxconn or Huwai as important Chinese companies?
Indeed China’s status as cheap workshop of the world may be threatened by Japan desperate to earn cash to rebuild, rivaling it via capital-assisted production. Most of which remains intact and unhurt.
Look at the West circa 1000-1500. It too was older, less populated, and desperate. That meant it was far more open to change (fewer people = less inbred resistance to social change from technology). The West having fewer people readily adapted new technology invented elsewhere that went basically nowhere in native lands (principally China) due to social resistance. Japan is desperate, has few people, and might like feudalistic Europe be catalyzed by disasters into radical change. Japanese people like being Japanese, they love their culture and society, and don’t feel the need to see it die.
Japan is no more doomed than China is an unstoppable juggernaught.
Y, China has a lot going for it but also a lot going against it – not the least of which is the crony capitalist model so admired by certain newspaper columnists. The trouble with crony capitalism is that it’s NOT actually capitalism – capital is allocated for political reasons as much as economic ones, and such a paradigm is not sustainable. There is potential for great political upheaval in China and who knows where that might lead their economy. It could be North Korea or it could be early 20th Century America.
Japan is a different story. Demographics aside, the government has taken the country’s huge store of saved capital of 20 yrs ago and flushed it down the toilet in misguided attempts at Keynesian stimulus. Now they are on the cusp of a debt problem and the natural disasters are not going to help. Japan could still rebound if they are able to acknowledge past mistakes and finally kick the Keynsian idiots to the curb. That may be difficult but the culture survived a crushing defeat and two nuclear bombs in WWII, so they may well be up to the challenge.
Juggernaught is about right. But seriously, whiskey makes much more sense, and is much better informed, than the laughably fanciful Mr. Kronos.