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Japan Shrinks

By Fred Hiatt
Monday, November 20, 2006

TOKYO -- Japan has embarked on a path no developed nation has ever followed -- of sustained and inexorable population decline.

Japan won't be alone, of course. Italy, Russia, South Korea and many others also will get smaller. The United States is the exception among advanced nations, and not only thanks to immigration; its overall birth rate is higher, too.

But Japan, which shrank by about 21,000 last year, is in the forefront, and so everyone else will be watching. Does population decline inevitably sap vitality and doom a country to genteel poverty? Or is there some way out?

"Japan is the leader, so it's important for Japan to show success," says Hitoshi Suzuki, a cheerful senior researcher at Daiwa Institute of Research, who pronounces himself "not so worried" -- so not worried, in fact, that last year he wrote "Population Decline is Not Something We Need to Fear."

But why not? For a population to hold steady, every woman must give birth on average to 2.1 children. When the birthrate drops below 1.5 and stays there for any time, it's almost impossible to recover, given the momentum of demographics. Below 1.3 is considered "lowest-low." China is at 1.7 and dropping. Japan last year clocked in at 1.25.

As a result, Japan's population, now about 128 million, is expected to fall to about 100 million by mid-century. Big deal, you might say. Wasn't Japan happy enough 50 years ago, when it blew through the 100 million mark on the way up?

Yes, but it was a very different 100 million then. In 1965 there were 25 million children in Japan, 67 million people of working age and 6 million senior citizens. In 2050 there will be 11 million children, 54 million potential workers and 36 million people 65 and over. No one knows whether such a society can maintain a spirit of innovation, or how its capitalists will adapt to a shrinking market. There will potentially be a lot more dependents for every productive worker.

Faced with this prospect, a country could choose to fight (raise the birthrate) or cope (prepare to manage the consequences). Japan gives lip service to the former. Since 1990 the government has sought to encourage more births, but the policy has had no impact. Today the portfolio of the minister in charge of spurring fertility seems to indicate a certain lack of governmental focus: She is minister of state for Okinawa and Northern Territories Affairs, science and technology, innovation, gender equality and social affairs, and food safety.

In truth, Japan doesn't seem to want to change as it would have to in order to increase the birthrate. Japanese women say in surveys that they want two children, but they delay or abstain from marriage and motherhood in astonishing numbers because fathers don't help around the house, because mothers feel isolated in tiny apartments and because it's so hard for a woman to combine career and motherhood.

In theory, the government is dedicated to reforming this. In practice, its philosophy seems aptly represented by Deputy Chief Cabinet Secretary Hakubun Shimomura, who said this month, when pressed about long waiting lists for public nursery schools, that the problem would be solved if mothers would only "stay at home and raise their children."

When I asked Prime Minister Shinzo Abe last week about this comment, he diplomatically avoided contradicting Shimomura but said his aim is to provide choices so mothers can work or stay home as they see fit. But he also made clear that he is focused on the coping rather than the preventing: "Even considering the decline in the population, I am convinced Japan will be able to continue on a path of growth," he said.

The trick will be "innovation," Abe said, and economic reform. In fact, robots and other ways to improve productivity are one of four possible routes to economic growth despite an aging population. The others would be making better use of women; immigration, which has increased slightly but remains unpopular in this ethnically cohesive country; and keeping the elderly working longer. According to Naohiro Ogawa, a population expert at Nihon University, if every healthy elderly person worked, Japan's total economy in 2025 would be worth 791 trillion yen instead of the currently projected 619 trillion yen, an increase of 28 percent. Just raising the retirement age from 60 to 65 would produce a 12 percent increase.

Not every old person is going to work. But, Ogawa said, "there will be some adjustment. Japan's not going to fall apart."

It could certainly decline, though. Toru Suzuki, a demographer at the National Institute of Population and Social Security Research, believes Japan will eventually accept more immigrants after it has tried everything else. But he's also less convinced than Hitoshi Suzuki that Japan will find a path to growth.

"It brings you to a very tough question," Toru Suzuki says. "What is happiness? Can we be happy without economic growth?"

At least Japan will find out from a starting position of wealth. China, which imposed a one-child policy before it had developed economically, may get old before it gets rich. That will be a first, too.

fredhiatt@washpost.com

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