Japan, The Reluctant Reformer
Article Summary and Author Biography
For years the Japanese have weathered their country's ongoing recession with apparent stoicism. In fact, however, Japan's citizens have learned to find private solutions to their country's many ills, just as Japanese corporations have moved more and more of their operations overseas. But this trend has only driven Japan into deeper economic straits. If the country's charismatic new leader cannot push through fundamental reforms, capital flight and emigration could be the public's next moves.
Leonard J. Schoppa is Associate Professor in the Department of Government and Foreign Affairs at the University of Virginia. The author of Bargaining with Japan: What American Pressure Can and Cannot Do and Education Reform in Japan, he is currently writing a book about Japan's struggle to reform.
TOO MUCH OF A BAD THING
At the end of last year, Japan's citizens, having struggled for years with a bitter recession, were hit with still more bad news: another arbiter of international opinion had forecast their country's imminent decline. In its Global Trends 2015 report, the CIA predicted that, in view of China's ongoing rise, Japan "will have difficulty maintaining its current position as the world's third largest economy [after the United States and Europe]." Just a few months earlier, Japanese bonds had been demoted for the second consecutive time by Moody's, the U.S. credit-rating agency. After long enjoying Moody's highest rating, Japan's credit was now judged to be as risky as Portugal's.
Both stories made big news in Japan, as did the underlying problems that provoked such negative appraisals in the first place. Yet despite the widespread attention these economic woes received, the Japanese public remained strangely quiescent. This resignation has become a typical response to the ailing economy. Voters keep returning the long-dominant Liberal Democratic Party (LDP) to power, although it has presided over a decade of stagnant growth and sunk the government deep into debt. Japanese investors accept interest rates of less than one percent on their savings accounts, labor unions swallow pay cuts, and the business community watches meekly as the government's attempts to end the financial crisis fail to revive the nation's banks or alleviate the credit crunch.
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