Commentary Magazine


And You Think We’ve Got Troubles . . .

Two articles in today’s New York Times show just how much trouble Japan is in economically. On the front page is an article on how young Japanese are finding it increasingly difficult to find a good job. Only 56.7 percent of college students have a firm job offer when they graduate, an all-time low.

An aging population is clogging the nation’s economy with the vested interests of older generations, young people and social experts warn, making an already hierarchical society even more rigid and conservative. The result is that Japan is holding back and marginalizing its youth at a time when it actually needs them to help create the new products, companies and industries that a mature economy requires to grow.

With a population that is actually falling in numbers, a very low birth rate, virtually no immigration, and an ever-increasing life expectancy, Japan is a demographic time bomb as the average age of the population steadily increases. There are more and more recipients of old-age pensions and medical care and fewer and fewer young workers to fund them.

And Standard and Poor’s has lowered Japan’s credit rating, down to AA-. That’s three steps below the top grade of AAA. China has the same rating, but China is growing rapidly, and its debt is only about 15 percent of GDP. Japan’s debt this year will reach 203 percent. (The debt/GDP ratio of Greece last year when it nearly defaulted and had to be rescued by the European Union was 137 percent.)

Of all the major economic powers, Japan is by far in the worst shape, and its politicians seem unable to take the tough steps necessary to turn things around. It’s hard to imagine that only 25 years ago, there was a spate of chin-pulling books and articles on how Japan was poised to become the world’s leading economy.