Wednesday, December 19, 2012
What is happening in Japan-3?
I guess the easing of monetary policy and spending money on social projects while you don’t have money or idea of how to revive the economy is a good way to deflect attention to the shortcomings that Japan is facing now and will be in the future if things remain as is. The biggest threat is right now the demographics where the rigid and ultra strict restrictions on immigration to Japan are reducing the population below the replacement level. Japanese people are living longer than ever and hence their social security and other benefits are rising but with the population in decline, fewer young people would be able to supplement or replenish these benefits in the future until either local population goes up or immigration is opened up. More immigration means more young people would be able to support the older generation. In order to open up immigration, the nation should start to shed its attitude towards foreigners if it wants to grow economically. Although India and China also do not have robust immigration programs in place but their huge population insures that their economy will keep on growing outlasting the Japanese one and the Japanese companies would tend to relocate to other cheaper locations. Other thing is that Japan has to come with ideas of how to revive and grow their economy instead of relying on Public works to generate jobs which are at best a temporary solution. The rigid educational system which was fine when Japan was growing has to change so that the flow of ideas should flourish and students need to think for themselves and have entrepreneurial spirit also. Also the idea of working in a company for your entire life so that you can retire with a good pension needs to be revisited. In this case the attitude of the Japanese population will have to change drastically. Until the current thinking and mindset of the Japanese people does not change, Japan will slowly follow down a steep decline in its economy.