For many people of my generation, myself included, Japan will always be the land of technological wizardry: trains that travel at the speed of a bullet, humanoid robots, and acres of neon lights. I spent three years there in the early Nineties working as an English teacher, mainly in Tokyo.<\/p>\n
It\u2019s hard to credit now, but throughout the Eighties a real fear existed in American boardrooms that Japan\u2019s rapid economic growth would lead to it overtaking the US as the world\u2019s largest economy. In those days, the Imperial Palace was said to be worth more than the state of California. However, after I left in 1993, Japan went into the first of several \u201cLost Decades\u201d. The GDP growth rate flatlined, wages stagnated and living standards went into decline.<\/p>\n
When I returned 24 years later, this time as a journalist, I was curious to see what happens when a country starts to shrink. Returning for another three-year stint was a fascinating exercise in watching a country in slow decline: the empty business hotels, the tiny cars, the poorer quality of the goods in the shops. Japan is still a sign of things to come \u2014 but this time round, the future doesn\u2019t look so bright.<\/p>\n
There are lessons here for the UK. Japan is now well-versed in post-growth economics \u2014 i.e. how to make a living once an economy has flatlined. But the main lesson is how to adjust to the consequences of a low birth rate. Japan\u2019s total fertility rate hit a record low<\/a> of\u00a01.15 in 2024. Apart from Israel, all countries in the developed world now have a fertility rate below 2.1 children per woman \u2014 the level required to maintain a stable population. What makes Japan the canary in the coalmine is that its fertility rate dropped below replacement level in 1974, before any other country. This means that the consequences of low fertility \u2014 a rapidly aging society and a shrinking population \u2014 are becoming apparent there before they do anywhere else.<\/p>\n Last year, the population of Japan shrank by over 900,000, and the rate of decline is only going to grow faster with time. The country is also aging: the proportion of over-65s in the total population currently stands at 29% and is expected to rise to 38% over the next 10-20 years. On one level, this is a great achievement, a tribute to a high standard of living, a universal healthcare system and healthy lifestyles. The problem is the exorbitant cost of providing pensions, medical care and long-term care to so many over-65-year-olds.<\/p>\n Another problem with mass aging is the way the political landscape tilts towards the gray. Electoral turnout is higher among the elderly than it is among the young \u2014 and older voters tend to plump for stability and continuity. That\u2019s all very well when your country is in the clover, but it comes to look ostrich-like when it is facing an existential crisis.<\/p>\n Japan has been suffering labor shortages for decades. This is because there are so few young people to become the farmers, carpenters and IT workers of the future. In just about every occupation, Japan has the oldest workers in the world. But the ruling Liberal Democratic Party (LDP) still can\u2019t bring itself to admit the need for mass immigration. That\u2019s partly because elderly voters tend to be more hostile to mass immigration than younger voters.<\/p>\n Many LDP politicians argue that mass immigration is unnecessary, if only businesses can raise productivity \u2014 which is stubbornly low<\/a> in Japan. Conventional thinking says that raising productivity means investing in education and R&D. But this is not high on the list of elderly voters\u2019 priorities. Indeed, government expenditure is being diverted away from education and R&D into pensions and healthcare for the elderly.<\/p>\n Under its new Prime Minister, Sanae Takaichi<\/a>, the LDP government is now hoping that by embracing AI and robots<\/a>, it can kill two birds with one stone: on the one hand, raise productivity; on the other, provide care for the country\u2019s burgeoning elderly population. There has been a lot of hype around \u201ccarebots\u201d in particular. Huge sums have been invested in carebots like The Hug and the Robear, which are supposed to be able to lift care home residents in and out of bed. The latest iteration is the Lovot: a plump, baby-like robot that has clearly been designed to fill the gap once occupied by Japan\u2019s toddlers.<\/p>\n The LDP likes robots, partly because it hopes they will obviate the need for foreign care workers, and partly because robotics is one area where Japan still looks like a harbinger of a brighter future. Like me, the country\u2019s politicians still see Japan as the land of technological wizardry. Most of them came of age in the years of miraculous economic growth rates, when Japan was synonymous with technology. The disastrous meltdown of a nuclear power station on the coast of Fukushima in 2011 made the public suspicious of state authorities, but trust in science and high tech remains high. Despite the gradual decline in R&D budgets, there are still loads of inventions to inspire national pride \u2014 from the bullet train to the pot noodle.<\/p>\n Culture goes a long way in explaining Japan\u2019s love of robots. Japan is not scared of robots in the way that Europe is. This may be because there is no Luddite tradition in Japan, and no Frankenstein\u2019s monster. Japan is the home of the vengeful Godzilla, but also of the irrepressible Atomboy.<\/p>\n The love of robots may also be down to Shintoism, the indigenous, animistic, and polytheistic religion of Japan, which holds that everything has a soul. In the old days, that meant rocks and rivers; in the modern era, all kinds of inanimate objects have been deified. Priests at Sensoji temple in Tokyo have been holding retirement ceremonies for leather workers\u2019 needles for many years (they are entombed in blocks of tofu, in the belief that they will appreciate its softness). These days, they also hold ceremonies for aging robots.<\/p>\n In Europe and the United States, there are fears that AI will lead to mass unemployment. But if there\u2019s one thing a country with a shrinking population doesn\u2019t have to worry about, it\u2019s unemployment. The problem is that robots are of limited use in addressing Japan\u2019s most pressing labor shortages. \u201cCarebots\u201d are just too clumsy to be of use in care homes. They are also too expensive. Investing in robots makes good financial sense for manufacturers of TVs and cars, but it is beyond the budgets of most care homes.<\/p>\n Japan\u2019s politicians and bureaucrats have known about the declining birth rate for 40 years. So far, their response has been piecemeal and cosmetic. It\u2019s easy to criticize a stodgy ruling party that has been in power for the last 70 years \u2014 and in their defense, what is happening is unprecedented. Still, the LDP seems stumped for answers.<\/p>\n Many companies accept that Japan needs more foreign-born workers, but the country still doesn\u2019t really have an immigration policy. Japan has been traditionally hard to migrate to, but this has changed in recent years, and the beginnings of a multicultural society can be seen in the big cities and manufacturing centers. The new migrants come from across east Asia: China, Korea and the Philippines, but also Uzbekistan, Bangladesh and Vietnam.<\/p>\n The electorate is finding mass immigration a bitter pill to swallow. It\u2019s not hard to understand why. Rich, confident countries with younger populations prize their autonomy. Dependence on others is a sign of declining power, whether for people or nations. Like the Reform Party, the LDP wants to have it both ways, rallying its supporters behind the twin cries of \u201cLet\u2019s stop migration\u201d and \u201cI\u2019m old! I\u2019m entitled to a triple lock pension!\u201d<\/p>\n \u201cIn an era of economic stagnation, mass aging and rising debt, Japan\u2019s old virtues have come to look like vices.\u201d<\/p>\n Viewed from one angle, Japan already exists in a kind of far-Right fever dream: a highly patriarchal, near-ethnic monoculture that is pro-business and high tech, ruled over by a party in hock to an entitled, conservative and xenophobic electorate. This was all well and good when Japan was booming, but in an era of economic stagnation, mass aging and rising debt, the old virtues have come to look like vices. Official government data shows that Japan has moved from having 7.7 workers supporting each OAP in 1975 to around 1.9 supporting one in 2025. That\u2019s not sustainable and neither is the country\u2019s national debt, which is the largest in the OECD.<\/p>\n Aside from native xenophobia, the problem is that, notwithstanding the timidity of the LDP, every way forward seems blocked. Japan\u2019s multinationals are flush with cash \u2014 but investment opportunities at home are limited. As all kinds of businesses, from electricity producers to food producers and car makers, are learning to their cost, an aging society consumes less than a young one. More importantly, a declining population means shrinking markets. What is the point of investing in a business if the only certainty is that returns are going to diminish over time?<\/p>\n Crucially, Japan is still rich, or at least its big companies are. Many of its people are poor and getting poorer. This is one of the root causes of its low birth rate. Poverty might not hold people back from having kids in the developing world, but it certainly does in the developed world.<\/p>\n The second root cause of the low birth rate is the country\u2019s outdated gender norms. The ruling party has its first female leader, and the country its first female prime minister, which is a good start. However, notwithstanding Takaichi\u2019s landslide election victory in February, Japan is still a remarkably male-dominated society.<\/p>\n You might think that a patriarchal society, in which men are expected to become salarymen and women to stay at home, might result in a higher birthrate. But men are no longer the only breadwinners. Economic stagnation and declining living standards have been pulling women into the workforce for the last 30 years. Despite this expansion, Japan\u2019s corporate culture still doesn\u2019t make enough allowance for working women. Women\u2019s issues (of which raising children is considered one) are habitually brushed over. This is changing, but at a glacial pace.<\/p>\n Across the developed world, governments need to do more to help people hit the 2.1-kids requirement. If they can\u2019t, or if people simply don\u2019t want to have 2.1 kids anymore, they need to get used to mass immigration. Productivity boosts are all well and good, but on current showing, the robots just aren\u2019t smart enough to take the places of all those missing workers.<\/p>\n ***<\/p>\n