A woman passes a restaurant in Tokyo's Harajuku shopping district… (Yuriko Nakao/Reuters )
TOKYO — Jesper Koll, an economist who’s lived in Japan for 26 years, says it’s not easy for him to keep faith in a country that’s shrinking, aging, stuck in protracted economic gloom and losing fast ground to China as the region’s dominant power.
“I am the last Japan optimist,” Koll said in a recent speech in Tokyo.
Indeed, the once-common species has been virtually wiped out. It was only two decades ago that Japan’s boosters — mainly foreign diplomats and authors, economists and entrepreneurs — touted the tiny nation as a global model for how to attain prosperity and power.
But the group has turned gradually into nonbelievers, with several of the last holdouts losing faith only recently, as Japan has failed to carry out meaningful reforms after the March 2011 triple disaster.
The mass turnabout has helped launch an alternative — and increasingly accepted — school of thought about Japan: The country is not just in a prolonged slump but also in an inescapable decline.
There’s frequent evidence for that in economic data, and in the country’s destiny to become ever-smaller, doomed by demographics that will shrink the population from about 127 million today to 47 million in 2100, according to government data.
The current doom is a sharp reversal from several decades ago, when Japanese companies bought up Columbia Pictures and Rockefeller Center, and Americans argued whether Japan was to be feared or envied.
Like a separate but related group, known as “Japan bashers,” the optimists were bullish about Japan’s future as an economic powerhouse. But unlike the bashers, who viewed Japan as a dangerous challenger to the United States, the optimists saw Japan as a benevolent superpower — rich but peaceful, with a diligence worth emulating.
Now, when Japan is discussed, it’s instead for its unenviable fiscal problems — debt, rising social security costs, flagging trade with China because of an ongoing territorial dispute.
China, not Japan, is mentioned in U.S. presidential debates and described as the next threat to American supremacy. Japan’s government has announced record quarterly trade deficits while some of its iconic companies — Sony and Sharp — have announced staggering losses.
By 2050, Japan “will be the oldest society ever known,” with a median age of 52, according to the recent book “Megachange,” published by the Economist magazine. Even over the next decade, Japan’s aging population will drag down the gross domestic product by about 1 percent every year. That will further strain Japan’s economy, which in 2010 lost its status as the world’s second-largest, a position now claimed by China.
“If you speak optimistically about Japan, nobody even believes it,” Koll said. “They say, ‘Oh, in 600 years there will be 480 Japanese people left. The Japanese are dying out and debt is piling up for future generations.’ Japan is an easy whipping boy.”
Now a pessimist
Japan optimism became a mainstream movement with the 1979 publication of “Japan As No. 1,” an international bestseller that described the way a country the size of Montana had come to make cars as well as the Germans, watches as well as the Swiss and steel as well as the Americans — in more efficient plants. Japan’s people worked hard, its government guided the economy, and its streets were clean and crime-free.
“Japan has dealt more successfully with more of the basic problems of postindustrial society than any other country,” wrote author Ezra Vogel, a sociologist at Harvard.
But Vogel, who has lived for several periods in Japan, and has traveled here at least once a year since 1958, says he, too, has become a pessimist. Most Japanese still have a comfortable life, he says, but the political system is “an absolute mess,” juggling prime ministers almost every year. The youngest generation, its expectations sapped by years of deflation, “doesn’t have the excitement about doing things better.”
Even the promise of lifetime employment and tight cooperation between government and corporations has backfired, leaving a bureaucracy-enforced status quo that makes it hard for established companies to reform and for smaller, more creative companies to emerge.
“What I did not foresee is that the slowdown would be such a challenge — that many of the things that worked so well on the way up . . . would be so difficult on the way down,” Vogel said.
Vogel, still a professor emeritus at Harvard, says he has switched his focus in the past five years to China.
A disturbing trend