Opening Remarks

Japan's Incredible Shrinking Empire


Japan's Incredible Shrinking Empire

Illustration by Tracy Ma; Flag photograph by Superstock

In 1985, as a supercharged Japanese economy awed and unnerved Western business executives, Tadanobu Tsunoda published a book called The Japanese Brain. An audiologist at Tokyo Medical and Dental University, Tsunoda developed tests with an auditory feedback device in which subjects responded to cues heard through headsets by tapping a key. He used experiments with alternating and delayed sounds to analyze brain activity and concluded that the Japanese rely more on their left cerebral hemisphere to interpret language compared with foreigners. He also believed this finding explained the unique characteristics of the Japanese language—and even the emotions and thinking patterns of the Japanese people.

Tsunoda’s work elicited skepticism abroad and fascination at home—as did an array of anthropological, sociological, linguistic, and pop psychology works stretching back decades, a genre known as nihonjinron, or the theory of Japaneseness. In the early 1970s, University of Tokyo anthropologist Chie Nakane and psychoanalyst Takeo Doi, in separate works, noted that their fellow citizens naturally sought out authority figures for guidance and approval in contrast with more individualistic Westerners. Other writers touted Japan’s homogeneity in race, language, and culture as unique strengths. In 1989 the novelist and archconservative Shintaro Ishihara (who would become governor of Tokyo) and Sony (SNE) co-founder Akio Morita, in The Japan That Can Say No, wrote triumphantly about the superiority of the nation’s culture as reflected in its technology and collaborative business practices.

With a more than two-decade run of subpar growth since 1992, including five recessions, Japan is nobody’s idea of an economic exemplar. Yet the nihonjinron industry lives on (The Japanese Brain is in its 40th printing) and assumed darker hues during the country’s fallow period. One of the hottest trends in Japanese publishing is the kenchu-zokan (works critical of China and South Korea) paperback, several of which have been best-sellers in 2014. A manga series called Kenkanryu (or The Hate Korea Wave) has sold more than a million copies since its launch in 2005.

Japan of course is scarcely the only society to have fallen prey to epic hubris or unbridled xenophobia. (The list pretty much winds back to the Babylonians.) Yet Japan’s brand of cultural bigheadedness is proving an obstacle to Prime Minister Shinzo Abe’s three-pronged policy to revitalize the country with a mix of radical monetary easing, fiscal stimulus, and pro-growth measures. Abenomics, as these initiatives are known, requires foreign capital and younger overseas workers to offset Japan’s graying masses. Last year, Abe pledged to double foreign direct investment to 35 trillion yen ($340 billion) into his country. “Turning our eye to the world beyond Japan, we find a great number of non-Japanese who are brimming with ability,” Abe said in an early May keynote speech at an Organisation for Economic Co-operation and Development (OECD) ministerial council meeting in Paris. “I wish to have such people more actively engaged within Japan.”

Japan is a jus sanguinis (right of blood) country, meaning that even if you were born and bred on the archipelago, speak the local tongue as eloquently as the emperor, and recite long passages from The Tale of Genji with ease, you’re out of luck if your parents aren’t Japanese. Naturalized citizenship is a possibility, but it requires five continuous years of residence, no run-ins with the law, and the financial wherewithal to support oneself. The rules governing work and permanent residency visas are among the strictest in the world. Foreign nationals account for only 1.6 percent of the nation’s population, the third-lowest proportion after Poland and Slovakia among 26 members of the OECD that provide such data. In the U.S. the rate is 6.8 percent, and in Switzerland it’s 22 percent.

All of this matters because Japan is simultaneously aging and shrinking. In 2013 the overall population fell by a record 244,000, and it’s projected to decline by about a third, from the 128 million counted in 2010 to 87 million by 2060, according to a report in 2012 by the Japanese National Institute of Population and Social Security Research. The nation’s workforce is forecast by Japan’s Cabinet Office to dwindle by 41 percent from current levels, to 38 million 46 years out. Even with more Japanese women holding jobs, the country needs to increase the flow of imported foreign workers from 50,000 a year (the annual average during the past five years) to 200,000, according to Kazumasa Iwata, a former Bank of Japan deputy governor who presented his proposal to the Abe government’s top economic policy panel.

Yet while the math is pretty straightforward, the politics are anything but. Just as anywhere else in the world, lowering Japan’s drawbridge for an onslaught of foreign workers isn’t a winning political hand. Some 59 percent surveyed by Yomiuri newspaper said Japan shouldn’t take in more overseas labor. “Most politicians are still opposed to accepting large-scale immigration mainly because the general public is opposed to it,” says Hidenori Sakanaka, head of the Japan Immigration Policy Institute. “People are afraid that the public safety will deteriorate [and] pure Japanese culture will be impaired,” he says.

Japan’s population institute foresees a labor force with 41 percent fewer workers by 2060

Turning that around will not only take some political guts and candid talk about the urgency of Japan’s economic challenges but also a sustained education campaign to shatter some of the nuttier aspects of Japan’s postwar ideology. After all, much of what Japan considers unique—its language, art, literature, modern parliamentary and legal systems—is derived in part from China, Korea, and western Europe. And what does racial homogeneity actually mean in this age of genetic analysis in which researchers have traced Japan’s ethnic roots to other destinations in Asia, not to mention humankind’s probable link to a common ancestor, Mitochondrial Eve, in Africa?

Japan isn’t ready for a massive influx of foreign workers, but a gradual buildup stretched out over several decades could provide the solution. It’s been done, though hardly flawlessly and not without social friction, in Germany, a country that once adhered to abhorrent notions of racial purity. Berlin, Frankfurt, and Munich have become multicultural hubs, with immigrants often representing 25 percent of the population in these cities. Like in Japan, German fertility rates fell in the 1970s. Yet the expanded immigration levels helped prevent the country’s population from contracting.

Facing a labor shortage in the mid-1950s, Germany signed agreements with Italy, Greece, and Turkey to attract low-skilled guest workers, mostly men aged 20 to 40. After the collapse of the Soviet Union, about 3 million migrants headed to Germany between the mid-1980s and late ’90s, according to the OECD. “Germany has been attractive to immigrants for a long time,” says Christian Dustmann, the director of University College London’s Centre for Research and Analysis of Migration. Where Germany has fallen short is in attracting high-skilled workers, he says, a group that’s made up a much higher percentage of immigration to the U.S.

As it turns out, with Tokyo hosting the Olympic Games in the summer of 2020, Japan needs both Chinese construction workers and high-end Indian software developers. The nation’s demographic challenges have become so pressing that even the ultraconservative Ishihara is shifting ground. Although he has said incendiary things about Chinese and Africans in the past, the 81-year-old flamethrower told Japanese magazine Sapio recently that he supports liberalized immigration laws and has for about 10 years now. “Population is power,” he says.

Whether the rest of the country will sign on is another matter. It will take a massive sales job from Abe and one of those abrupt changes in mindset that the Japanese have pulled off in the past when confronted with historic challenges. This is after all a culture that has given the world sushi, Harajuku street fashion, manga, Hayao Miyazaki’s sublime anime, and Masahiro Tanaka’s fastball. Japan’s global influence is undeniable. To further it, the country needs to loosen its immigration policies and let talented workers from around the world give something back to Japan.

With Masaaki Iwamoto and Alex Webb
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Bremner is an assistant managing editor for Bloomberg Businessweek. Follow him at @bxbremner.

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