Pity poor Japan. the "lost decade" has now turned into two. The country is gripped by self-doubt. And yet is it all really so grim?
Japan certainly has it tough economically. The government debt burden is disconcertingly heavy. Service-sector productivity is going to have to go up. So must consumer spending, if the country is to break the cycle of anemic growth leading to falling prices leading to continued weak growth. This is a nightmare for all but the most innovative businesses. I understand the frustrations of Japanese executives who are despondent at the continuing failure of economic reforms.
But when you look at what the country is doing right, it no longer seems like a place wallowing in crisis just one that's decided to go its own way. Back in the 1970s and 1980s, Japan was derided for being nothing but a nation of nose-to-the-grindstone workaholics who needed to get a life. Well, the Japanese are starting to do that. More and more salarymen are deciding not to go drinking with the boss. Some, heeding government pleas for a greater work-life balance, are focusing on their homes and their hobbies, while others are taking sabbaticals or even dropping out of corporate life.
Japanese women have decided not to have babies in a society where kids mean the end of a career, the end of independence and a cutthroat struggle to get little Hirotaro into the best kindergarten, then the best school and the best university. Japan's glass ceiling admittedly limits many well-educated women to lowly jobs but even that, apparently, beats being a mom in a country with virtually no child care. So we have the office ladies on their trips to Paris and Hong Kong, lining up outside Louis Vuitton and Chanel shops. They might be living with their parents, saving their salaries for designer handbags. But is that really worse than picking up diapers and ironing shirts for salarymen husbands?
Weak consumption need not be seen as such a dilemma either. It might actually be making Japan a global leader in environmental sustainability. The immediate postwar years saw filthy air and a mercury-poisoning scandal, but as far back as four decades ago Japan began pursuing energy efficiency (U.S. efforts to save energy flag whenever oil prices drop). Always conscious that it has no oil of its own, Japan is now the most energy-efficient large economy. And it's set to get better. From energy-efficient steel mills to constantly improving efficiency standards for humble household appliances to the rooftop gardens sprouting across Tokyo, there's a nationwide effort to live within environmental means. Two generations of Japanese have been imbued with the national obsession to use energy in smarter ways. Today, Tokyo is virtually the only Asian capital where bicycling is part of normal life, rather than something done only by the poor, eccentric or foolhardy. The capital's public-transport system also makes it easy and cheap to get around. With more than 3 billion passenger rides a year, Tokyo's subway is the world's busiest by far.
Then again, superlatives are commonplace in Japan. Average life expectancy, at 82 years, is one of the highest anywhere, while crime levels are among the lowest. The nation's artistic life from Kabuki to cinema is exquisite and world-famous. Education is notoriously high-pressure, but it is also extremely effective (almost all children complete senior high, and in some years tertiary enrollment is an outstanding 50%). Social cohesion remains strong. Income disparities are low.
Japan will be the first large, developed country to grapple with the problems of a shrinking population, but by many measures, it seems to be improving the quality of life for many in its increasingly aging society. Sustaining that performance will be tough if projections that the population will halve by the end of the century prove true, but at least there will be no problems sustaining the nation's appreciation of the things that are truly important. Tokyo's 160,000 restaurants, for instance, boast more Michelin stars between them than those of Paris and New York City combined. So while legions of salarymen are working themselves to death, plenty of other Japanese are indulging their appetite for life.
Clifford is executive director of the Hong Kong based Asia Business Council