Image: Tokyo, Japan. Aleksandar Pasaric, via Pexels.

Japan ranks highly when it comes to the availability and affordability of housing. This is despite Tokyo’s current investment boom (triggered by a weak yen and international nervousness about the Chinese real estate market and geopolitical situation). The boom has caused a recent surge in property prices and rents relative to incomes. Hence the current situation has raised fears among many young professionals and would-be home buyers that sound familiar to North Americans.

Nevertheless, the first two decades of this century were characterized by remarkably stable prices, the lowest rate of homelessness of any large country and a very high level of satisfaction with housing. The fundamental soundness of Japan’s housing policies, which helped to rebuild the country after the Second World War and again after the collapse of the property bubble in the 1990s, should help it weather the current market fluctuations as well.

It might be thought that Japan’s generally enviable housing situation has simply been linked to its demography. Japan has long resisted substantially expanding immigration, and largely as a result is facing acute labour shortages, dying rural towns and rapid population decline (dropping more than three million since 2008 to under 125 million in 2023). There are between eight million and 11 million empty or abandoned houses in Japan.

Yet this does not explain Japan’s success in expanding supply during its years of rapid population growth, or its usual success at maintaining the supply of affordable housing in the largest cities throughout the postwar period, or its current success at keeping the national rate of homelessness in 2023 at 0.2 persons per 10,000 population, as compared to 10.0 for Canada, 17.5 for the United States and 54.4 for the United Kingdom. The low rate of homelessness has not been achieved by an exodus of poor people to the countryside to purchase inexpensive abandoned homes; the population flow has been in the opposite direction, just as it has during most of the postwar period, as younger people gravitate to the larger cities in search of employment.

Thus, demographic trends are not as important in explaining Japan’s history of providing affordable accommodation to all income groups in the largest cities as is the country’s unique housing policy. Japan has benefited greatly from concentrating zoning authority in the central government after the war, as well as instituting astute mortgage market reforms in recent decades.

After millions of houses were burned in the Second World War, there was a shortage of about 4.2 million units, exacerbated by the postwar baby boom. In that context, the government of Japan undertook a “three-pillars” approach:

  • The Government Housing Loan Corporation (GHLC) was established in 1950 to provide liquidity to mortgage markets;
  • the 1951 Publicly-Operated Housing Act authorized “Local Government Units” (LGUs) to construct public rental houses for low-income people;
  • in 1955 the Japan Housing Corporation (JHC), established “to promote collective construction of housing and the large-scale supply of residential land for middle-income people, mainly in major urban areas,” addressed the needs of people migrating from rural to urban areas.

Between 1954 and 2019, cumulative migration into three of Japan’s major metropolitan areas was 12 million people – of whom 10 million moved to Tokyo’s metropolitan area. This massive migration created a significant housing shortage in urban areas, especially during the 1950s and 1960s. It was alleviated in part by large public sector loans from the Fiscal Investment and Loan Program (FILP) under the Ministry of Finance.

FILP raised funds from postal savings and national pensions nationwide, thus mobilizing unused financial resources that otherwise might have been devoted to less productive uses – an excellent example of how Japan both encouraged and capitalized on its famously high savings rate. As a result, the GHLC financed the construction of 19.4 million homes nationwide between 1950 and 2007, when it was replaced by the Japanese Housing Finance Agency (JFA). Overall, the “three pillars” oversaw the construction of 76.7 million units for 54 million households between 1948 and 2020.

These pro-housing policies did not always proceed without local resistance. In the 1970s there was some backlash against the proliferation of highrise condominiums in Tokyo and Osaka, which delayed the implementation of zoning reforms. The resulting housing shortages and price rises exacerbated the bubble in property and asset prices that occurred in the late eighties.

The collapse of the bubble in 1992 was disastrous in terms of short-term unemployment, falling incomes and a string of bankruptcies and bad loans that nearly ruined the financial system. However, the collapse also provided the perfect economic and political context for the national government to reassert its authority over NIMBY impulses. When zoning is a national law (and not just a municipal bylaw), administrative changes can have widespread and rapid effects, as occurred in Japan in the mid- and late nineties. These changes culminated in Prime Minister Junichiro Koizumo’s Urban Renaissance Policy in 2002, which made it easier to rezone land and sped up the process for building permits.

Cities can only choose among 12 possible zones (as opposed to the hundreds of zones found in North American cities). Further, Japanese cities are constrained in terms of ratios of floor to lot size areas that they are allowed. Such measures have made it possible for Japan to engineer a cultural shift away from suburban sprawl. As Alan Dunning of the Sightline Institute puts it, “The national interest lies in developing compact, walkable, low-carbon neighborhoods with plenty of homes for everyone, and that’s what policy allows, obstructionists be damned.”

One reason for the relative success of Japanese central planning in this policy area is that housing obstructionism surfaces only occasionally and has been quickly responded to by the central government. Another related reason is that social cohesion and support for policy is assured by Japan’s greater attention to the interests of lower-income renters and homeowners. Since local governments are more constrained by national zoning laws and therefore less easily lobbied by existing homeowners to prop up house values, they have more incentive to use central government grants to build, buy or rent public housing on behalf of low-income renters.

While concern about income inequality has been increasing in Japan since the 2008 global financial crisis, this aspect of Japan’s postwar social contract has remained intact: the stock of public housing reached 2.16 million in 2016, and has been maintained through the government’s five-year plans as Japan’s focus has shifted from the quantity of housing in the 1960s and 1970s to the quality of housing stock. The 2017 Law Concerning the Promotion of Rental Housing to Those Who Require Special Consideration created three different programs for (1) a registration system for supply of private housing; (2) financial assistance for renovation of registered housing; and (3) housing income supports of up to ¥40,000 (approximately C$400) to pay the difference between market rates of rent and the rent paid by qualified low-income tenants, with the necessity of the subsidy being reviewed every three months.

Several distinctive characteristics of Japan’s housing market and the policies governing it limit their applicability and transferability to other countries, such as Canada. The scarcity of land (a per capita habitable area of only 800 square metres) is the fundamental difference. The prevalence of earthquakes (Japan has 20 per cent of the world’s high-magnitude earth tremors) is another: the national building code has been revised after every major earthquake; old structures become obsolete and depreciate very rapidly, with the largest difference in housing value being between homes built before and after the 1981 Building Code Revision. Rapid postwar growth and urbanization have meant a faster turnover of housing stock, and according to the 2018 Housing and Land Survey, fully 76 per cent of the 53.6 million currently existing housing units have been built since 1981.

Nevertheless, there are two instructive takeaways from an examination of Japanese housing policy for other countries in general and Canadian jurisdictions in particular. One is stressed in the conclusions of Masahiro Kobayashi’s 2016 analysis for the Asian Development Bank Institute: “The most important lesson from the Japanese experience is that policymakers should be vigilant to detect and prevent bubbles in property markets.” In the post-1992 era, financial prudence by the national government in containing property speculation has been conducive to good housing policy as well.

A second takeaway is provided in 2021 by Alan Dunning: in a ranking of ten industrial democracies in terms of their ability to construct “an abundance of housing … in compact, low-carbon neighbourhoods that allow car-lite lifestyles,”

The clear frontrunner is Japan. It’s likely no coincidence that Japan’s overall system of regulating housing has always been simple, uniform, and markedly more welcoming to homes of many sizes and types than are other nations’ policies. This national control has only grown in recent decades, even as other nations have gone into residential lockdown. In Japan, a broad public interest in abundant housing has usually trumped parochial housing obstructionism.

There is clearly more to Japan’s housing success than just low immigration and a declining population.

In Europe, Finland has succeeded in reducing homelessness
Henry Milner

In the mid-1980s, there were around 20,000 single homeless people in Finland. According to national estimates, in 2021 this figure had been reduced to around 3,950. Finland is committed to eradicating homelessness by 2027.

Finland is the only country in the European Union to see homelessness numbers significantly decrease. In Helsinki, decades of progressive housing policy laid the groundwork for tackling street homelessness. The municipality owns 70 per cent of the land in the city, including over 60,000 social housing units, and maintains a housing policy that increases this housing by around 6,000 units a year. District housing laws limit segregation, ensuring that 25 per cent are social housing with the rest a mixture of purchased and private.

The core principle is that people are better able to move forward with their lives if they are first housed. Studies have found that something like €15,000 a year is saved for every homeless person in properly supported housing, against the cost that would be otherwise incurred in emergency health care, social services and criminal justice involvement.

A result of these initiatives has been the conversion of existing homeless shelters into permanent housing. Programs have been developed and implemented through wide partnerships between the state, municipalities and local NGOs, notably in the city of Helsinki, which has become the model.

Pictured: Fumio Kishida, 切干大根 CC BY-SA 4.0. Via Wikimedia Commons.

Japanese politics has once again proven to be remarkably stable, confounding even the modest expectations of realignment suggested by opinion polls prior to the October 31 general election. For the second time in a little over a year, the Liberal Democratic Party (LDP) chose a new leader, generally perceived as the “Establishment” candidate, who was subsequently elected Prime Minister by a vote of the House of Representatives, which the LDP controls with the support of its coalition partner, the Komeito Party. And while the LDP was always expected to remain in power, many polls had predicted a weakened position or even a loss of its majority control of the 465-member House of Representatives, with one poll by the Japan Times suggesting that the party would lose around 40 seats.¹

In fact, the LDP emerged from the election with a comfortable working majority of 263 seats – a loss of only 15. Even more surprisingly, the main opposition Constitutional Democratic Party (CDP) also shrank from 110 to 96, leading to leader Yukio Edano’s resignation shortly afterwards. Although the combined total of LDP and Komeito seats (293) is still well short of the supermajority of 310 that is needed to proceed with constitutional amendments and override vetoes in the House of Councillors, new Prime Minister Fumio Kishida’s unexpectedly strong performance will give him additional political capital and room to manoeuvre as he seeks to regain control of the upper house when half of its 245 seats are up for grabs next summer.

Several factors combined to fool the pollsters and media outlets. To be sure, luck played its part. The number of daily COVID-19 infections in Tokyo, which had risen to 5,000 per day in mid-August and was still around 2,500 when former Prime Minister Yoshihide Suga announced that he would not run for reelection, fell to 62 on October 14 and then to only 24 on October 29, just two days before the national vote. Furthermore, Japan’s record tally of medals at the Olympics may have softened the public’s attitude toward holding the games during a pandemic.

But more deep-seated reasons lie in the weakness of the Constitutional Democratic Party’s electoral strategy compared to that of the LDP-Komeito alliance, and in the sudden rise of the right-populist Nippon Ishin No Kai (Japan Innovation Party), principally in the Osaka region. The CDP tried to capitalize on the government’s apparent weakness in the polls by forging an alliance with the Communist Party of Japan and two other opposition parties. The parties in this centre-left coalition coordinated with one another to avoid vote-splitting in more than 200 of the country’s 289 single-member constituencies. Their common platform emphasized taxing the rich, reducing the unpopular consumption tax and permanently moving away from nuclear power.

Kishida’s September 8 economic policy statement, which spoke of the need to “redistribute wealth while the nation is still suffering from the pandemic” and “move away from neoliberalism” was aimed at assuaging discontent with the LDP’s handling of the pandemic and preventing too much support from draining away to either his most popular rival for the LDP leadership, Taro Kono, or – once Kishida had secured the LDP leadership on September 29 – to the CDP.

The results of the internal LDP leadership contest in September were also less predictable than usual, notwithstanding the LDP’s hybrid electoral system for leadership selection, which gives LDP Diet members half the votes to ensure that established parliamentarians have an edge in controlling the process. Unlike 2020, when a majority of the party’s prominent factions swiftly banded together to back Suga, most factions in 2021 were divided over whom to support. This was the first LDP leadership race in history in which the most popular candidate in the public opinion polls, the candidate most favoured by the leading elder statesman in the party (Shinzo Abe) and the candidate most favoured by the party establishment were actually three different people.

Moreover, these divisions cut across factional lines, with junior Diet members, who lack the solid local support bases enjoyed by their more senior colleagues, being correspondingly less worried about being “primaried” from above by faction leaders and more likely to back a candidate who could help them win reelection. Even Abe was only able to deliver the support of about half the Hosoda faction (with 96 members the largest of the five main LDP factions) to his preferred candidate, eventual third-place finisher Sanae Takaichi.

The closest thing to an “outsider” among the leadership candidates was the 58-year-old Kono, who had been Foreign and Defence Minister in Abe’s cabinet and who had been named by Suga in January 2021 to be the minister in charge of Japan’s vaccination rollout. Kono’s popularity was due in part to his willingness to deviate from establishment conservative views – for example by allowing a reigning empress or emperor from the maternal line of the imperial family. He was also the most adept at using social media: his Twitter account boasts some 2.4 million followers, giving him far more than Suga or the other leadership candidates in that department.

A longtime champion of more renewable energy in Japan’s $150 billion electricity industry, Kono made waves in 2018 when as Abe’s Foreign Minister he convened a panel that recommended getting rid of nuclear power and coal while dramatically increasing renewables. As Minister of Administrative Reform, he set up a task force to remove regulatory hurdles that hindered Japan’s shift to renewables. Kono and Kishida more or less agreed in the LDP leadership debates that continued reliance on nuclear power was necessary for the time being, but Kono certainly gave the impression of being the most determined to find climate-friendly alternatives that would actually meet emissions-reductions targets.

But while the “popular maverick” Kono brought some much-needed colour to the LDP leadership race, it was Abe’s favoured candidate, Takaichi, who presented the most intriguing option. Her election as Japan’s first female prime minister would have no doubt improved Japan’s image as a laggard in the area of gender equality. Yet at a time of growing inequality and growing concern about public health and climate change, she was also by far the most conservative of the leadership candidates when the public mood indicated a slight shift to the left.

Takaichi is an admirer of Margaret Thatcher, and her recent book, whose title translates roughly as To a Beautiful, Strong, Growth-Driven Nation: My Plan to Strengthen Japan’s Economy, is a manifesto for a renewed and deepened commitment to neoliberalism – what she calls “the New Abenomics.” She of course supported Abe’s proposed revision of Article 9 of the Constitution, which refers to Japan’s renunciation of war as a means to solve international conflict and its possession of armed forces, by adding a third clause that would unambiguously legitimize the constitutional status of the Japan Self-Defense Force (JSDF). She has also strongly opposed legislation allowing women to retain their maiden names after marriage; she would strengthen sanctions against North Korea because of the unresolved issue of North Korean abductions of Japanese nationals; and she favours measures against “serious China risks,” such as the theft of Japan’s cutting-edge technology.

The most pro-nuclear of the candidates in energy policy, she emphasizes the development of small modular reactors and funding (in cooperation with U.S. firms) for nuclear fusion research. A noted hawk in defence matters, she favoured accepting U.S. intermediate-range nuclear missiles on Japanese territory. And as if that weren’t enough to provoke the ire of Japan’s neighbours, she also has defiantly made several well-publicized visits to Yasukuni Shrine, a memorial to Japanese war dead that is seen in China and South Korea as a symbol of past Japanese militarism.

One way of interpreting Abe’s support for Takaichi is that her program contains all of the unfinished business that he had hoped to accomplish while he was in office, as well as a major statement of policy ideas that can serve the ultraconservative and nationalist Nippon Kaigi lobby well into the future. He may have also been indulging right-wing fantasies for several things that will remain out of reach. But with the sudden rise of the Ishin Party in the context of growing tensions with China in East Asia, another possibility lies on the horizon: should the LDP’s coalition with the pacifist-Buddhist Komeito party break down over the remilitarization of Japan or other issues, the Ishin could be available as an alternative coalition partner, with Takaichi as the most suitable leader for such a right-wing shift.

Social and environmental reformers can only hope that Kishida’s centre-left intimations are more than just a feint calculated to keep the CDP out of power. The early indications, however, are that Kishida’s triumph does not herald great progressive policy changes. In terms of democratic participation, voter turnout, at 55.33 per cent of eligible voters in single-seat districts, was only slightly higher than the 53.68 per cent figure in 2017.² Incredibly, the number of women elected to the House of Representatives in 2021 actually fell, from 47 to 45.³

The country’s parallel PR-list system worked beautifully to rescue several leading LDP politicians who had lost constituency seats – most notably Akira Amari, who had been the party’s Secretary-General – but it did not work at all to advance the stated legislative goal of achieving 35 per cent female members by 2025. This result is maddening from the perspective of feminists and electoral reformers alike, since an element of proportional representation (PR) was added to the Japanese Diet nearly 30 years ago, in part to deal with this very problem. Emma Dalton’s study of how LDP politicians defused the democratizing potential of PR is instructive: first by gradually reducing the number of PR seats being proposed, then by allowing dual candidacies across the two electoral segments to benefit incumbents (the “zombie” clause), and then by resisting calls for gender quotas.⁴

Since the general thrust of economic policy and reform of corporate governance in Japan has been toward deregulation and away from compulsory quotas of any kind, it is not surprising that politicians have been similarly slow to regulate themselves.⁵ Japan’s divergence from other developed countries in climate change policy has been similarly attributed to pro-business policies that try to minimize the use of compulsory rules. At the World Leaders’ Summit of COP26 in Glasgow on November 2, Japan was not among the 46 countries that pledged to phase out coal by the 2040s,⁶ because Kishida had successfully evaded the overtly anti-coal forces both inside and outside the LDP that would have constrained Japanese business. The government wishes to encourage businesses to invest in green innovations, but not to force them to do so.⁷

Perhaps the CDP, having failed to endear itself to suburban Japanese voters by forming a coalition with Communists and fringe parties, could try a different approach in future elections: by requiring half of its list MPs to be female and by doing more than the LDP (which clearly benefits from voter apathy) to encourage youth, green and female turnout. But for the time being, the impetus for change will have to come from within the ruling party. If the new Japanese PM is really serious about “moving away from neoliberalism,” as he himself has put it, he will need to confront what the problem of neoliberalism really is in contemporary Japan. In particular, he will need to consider how much treating corporate elites, businesses and conservative social groups with kid gloves has limited the effectiveness of initiatives in the areas of public health, gender equality, labour law, democratic reform and the climate crisis. And this needn’t be seen as buckling to external pressure: after all, meeting collective action problems with vigorous and farsighted leadership used to be Japan’s forte.

This article was published as part of a larger elections feature for Inroads 50. To check out the rest, go to Elections Bring Change (Except in Canada).

Continue reading “Political Change, Japanese Style”

Photo: Schoolgirls wear masks during the Spanish flu pandemic, Tokyo, 1919. Via Wikimedia Commons.

The global pandemic of 2020–21 has been like an X-ray that exposed the strengths and weaknesses in the social systems, political cultures and leadership of every country. Nowhere have those revelations proven more ambiguous than in Japan. With more than three times Canada’s population, Japan has had fewer than half the total number of COVID-19 cases and only slightly over one third the number of deaths. However, the public clearly feels that Japan’s relative success has come about more in spite of than because of its leaders.

Japan was not the only country accused of foot-dragging and misplaced priorities in response to the pandemic, but it was, arguably, the only country to get away with it. The Diamond Princess cruise ship, where there were more than 700 cases and 13 deaths among passengers, was stranded in Yokohama harbour from early February 2020.1 And yet Prime Minister Shinzo Abe waited until April 7 to declare a state of emergency, and then in only seven of Japan’s 47 prefectures, despite having had the legal authority for almost a month.

He extended the emergency to the whole country on April 16, but using largely noncompulsory measures recommended by the Japanese Business Federation (Keidanren). After infection rates levelled off, the government lifted the state of emergency on May 25, a week earlier than planned. “We did not enforce restrictions with punitive measures, but we have been able to bring the outbreak under control in just a month and a half,” Abe pointed out with satisfaction, noting that the number of patients in hospitals had decreased to below 2,000 nationally. “The Japanese model has demonstrated its strength.”2

In the following year, however, Japan experienced two more waves of infection, straining hospital capacity in several cities and prompting a second state of emergency for Tokyo and the neighboring Saitama, Chiba and Kanagawa prefectures that extended until March 21, 2021. Noting the rise in coronavirus variants and the slowness of Japan’s vaccination rollout, observers argued that the nation’s current countermeasures would not be enough to prevent a fourth wave of infections stretching into the summer of 2021. The greatest threat to Japan’s “Recovery” Olympics, rescheduled from the summer of 2020, may stem from the government’s downplaying of the risks posed by the virus.3

The reasons for Japan’s comparatively low COVID-19 case count are varied. Handshaking and hugging and kissing in public are rare, and mask wearing is common (public mask wearing has been widely practised since the Spanish flu epidemic killed at least half a million Japanese in 1918). There is also speculation that Japan’s mandatory BCG tuberculosis vaccine might have helped, as it has been effective in protecting against other contagions, including respiratory diseases (in Canada and the United States the BCG vaccine is recommended for use only in TB-vulnerable communities, and it is now voluntary in most European countries). But the “Japanese model” touted by Abe is not for export: Japan is uniquely blessed with a culture, geography and history that gave its government the luxury of choosing either to be New Zealand on a giant scale (the option preferred by the majority of its citizens) or to play chicken with the virus (the path preferred by the nation’s political and economic elites and the one ultimately chosen).

As a result, Japan tumbled from a close second to New Zealand in Bloomberg’s COVID Resilience Ranking (which scores 53 major economies of more than $200 billion according to 10 key metrics of success in “containing the virus with the least amount of social and economic disruption”) at the end of 2020 to ninth place just two months later.4 The country seems fated to fall even further given its dependence on foreign supplies of vaccine and its overstretched health system. In the last Mainichi Shimbun poll conducted before Abe’s resignation in August 2020, 32 per cent of those surveyed indicated that they still supported Abe’s government (down from 50 per cent in March, 40 per cent in June and 35.1 per cent in July), but only 17 per cent gave his government’s response to the coronavirus a positive evaluation.5

Abe’s successor as leader of the Liberal Democratic Party (LDP) and PM, Yoshihide Suga, after a brief honeymoon, experienced a similar fall in support following a wave of new infections in early 2021, and for essentially the same reason. Like his predecessor, he attempted to place economic recovery ahead of preventing virus spread – downplaying risks to salvage Tokyo’s estimated $28 billion investment in the Summer Olympics and vacillating over the suspension of the “Go To Travel” campaign, devised to promote regional tourism.6 Suga will need a successful Olympic Games, an improved COVID situation and a revived economy if he is to retain his position after the LDP’s leadership election in September and lead the LDP into the general election scheduled for the following month.

An end to political stability?

If Suga fails to survive 2021, his departure would likely signal a return to the “revolving door” politics that prevailed before Abe’s second term in 2012, when Japan went through six prime ministers in as many years. That would end what many see as Abe’s greatest achievement: political stability. His record-setting tenure was notable for modest economic growth despite huge downward pressures caused by the oldest population and highest debt-to-GDP ratio of any major country (a success claimed for his “Abenomics” strategy), in addition to his role in maintaining the liberal international order in the wake of Donald Trump’s election and America’s withdrawal from the Trans-Pacific Partnership in January 2017.

These domestic and foreign policy innovations were deeply connected: it was Abe’s ability to finally overcome the veto power of the agricultural lobby and to contain the LDP’s interministerial factionalism that enabled him to respond swiftly to fill the void created by Trump, leading to the formation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership in March 2018, along with several other free trade initiatives. Abe nimbly managed bilateral relations with China (support for its Belt and Road Initiative in exchange for greater openness and transparency conditions, for example), while inventing a formal security arrangement with India, Australia and the United States, striking a balance between Beijing, Japan’s biggest trading partner, and its major security ally, Washington.

Abe’s electoral dominance was due less to deep-seated support than to circumstance (the public’s disillusionment with opposition parties, which had mishandled the Fukushima disaster and failed to spark the economy) and electoral management (ensuring lower election turnout, which traditionally favours LDP candidates, and the LDP’s coordination with coalition partner Komeito, a Buddhist party that supports its own candidates in the proportional party list but instructs its eight million members to vote for LDP candidates in district elections, providing the winning margin in enough seats to largely explain the LDP’s stability during Abe’s tenure). Notwithstanding the government’s COVID response and the decision to push ahead with the Olympics, both opposed by a majority, at least 40 per cent of voters say they intend to vote for the LDP in the next election.7

It is doubtful that this formula for managing the expectations of a cynical public while tending to key political constituencies can come to grips with the long-run issues of demographic crisis, environmental sustainability and relative economic decline. As Takeda Pharmaceuticals CEO Yasuchika Hasegawa observed in 2011 while commenting upon Japan’s recovery from the Great Eastern Japan Earthquake, “Despite our long record of withstanding sudden external shocks, we are less successful in combating gradual, long-term challenges, especially when those challenges are homegrown.”8

Baby boomers still in awe of Japan’s past miracles, schooled about the collective rationality touted in books such as Ezra Vogel’s Japan as Number One: Lessons for America (1979), may admire Japan as the one major industrial country where populist backlashes have not erupted in recent years. They like to imagine a farsighted elite harnessing the public-spiritedness and resourcefulness of the Japanese people to reverse a growing debt and declining population without resorting to mass immigration or other disruptive social changes. But the IMF forecasts that Japan will have the world’s 11th largest economy by the middle of this century; Goldman Sachs predicts that it will only rank 15th, a country that punches at its demographic weight but no more. Is that all Japan has to look forward to?

Gender inequality and the promise of ‘Womenomics’

The answer to that question may lie in an aspect of Japan’s uniqueness: the untapped potential of its female population. A G-7 country that ranked 19th among all nations in the 2020 United Nations Human Development Index, it has slid to a shocking 121st of 153 countries in the World Economic Forum’s Global Gender Gap Report, a drop of 40 places since 2006. That ranking is a composite of four subindices: a somewhat respectable 40th in health, a worrying 91st in educational attainment, a dismal 115th in economic opportunity and an abysmal 144th – by far the worst of any advanced industrial country – in political empowerment. No other country in the top 20 of the UNHD index is also in the bottom 50 of the WEF index of gender equality.

This is largely attributable to Japan’s lifetime employment system, still based on a single male breadwinner despite the growing need for two-income households, and to the inherent limitations of what Ayako Kano has called “state feminism” (state sponsorship and co-option of gender issues), particularly under the aegis of the LDP and Shinzo Abe.9 Are recent initiatives around child care, parental leave, work hours and tax policy, in addition to a number of ambitious but completely voluntary targets, promotional and educational activities – collectively referred to with considerable fanfare as “Womenomics” – sufficient to address the country’s demographic and economic challenges?10 Early returns looked promising (3.3 million women joined the workforce between 2012 and 2019), but the policies’ limitations were cruelly exposed by the coronavirus: of the record 970,000 people laid off in April 2020, 710,000 were women, making them the “shock absorbers” of the Japanese economy.

The only feasible policy alternative to “Womenomics” is mass immigration.11 In 2009 the United Nations estimated that Japan would need 650,000 immigrants per year to stabilize its population. The actual net number of immigrants in 2019 was 165,000. The majority of Japanese are not opposed to gradually increasing immigration to meet labour shortages, but there is official opposition to creating a large permanent immigrant community. So immigration is unlikely to do the job.

Nor will Japan succeed in reaching its official goal of raising the fertility rate from less than 1.4 to 1.8 by 2025. To do so it would have to double the rate of increase France achieved with its social policies between 1993 and 2003, but Japanese supports are less wide-ranging than those of France. The Abe government did invest nearly ¥2 trillion ($20 billion USD) in early childhood education and daycare and did legislate generous paternity leave, but this is not enough to simultaneously maximize women’s productive potential (estimated to be worth an additional 13 per cent of GDP if women participated in the workforce on equal basis with men) and dramatically increase the number of births.

In the face of entrenched gender inequality, it would be a mistake to believe that the “critical tailwinds” of social investment and generational cultural change will blow Japan across the finish line.12 Believing that would miss the historical lesson that what fashioned “Japan Inc.” in the first place was determined political leadership. Today that requires tackling the rigidities of Japan’s employment system and the extreme underrepresentation of women in national politics, and directly and forcefully confronting cultural inhibitions against sexual equality. By choosing not to offend any of its key political, religious or business constituencies as it confronts the post-Abe era, the LDP may have maintained its short-term grip on power at the risk of jeopardizing Japan’s best chance for another miracle.

Continue reading “Covid Lays Bare Japan’s Vulnerabilities”