Having read Ayn Rand’s novel “Atlas Shrugged”, I’m struck by the parallels of the story to the Sasago tunnel collapse. The Sasago tunnel collapse has many people asking whether a quarter of 1575 tunnels in Japan also have similar problems. These tunnels were built in the 70’s, and are now part of a wider concern regarding the safety of Japan’s aging infrastructure. By the end of Ayn Rand’s three part epic the infrastructure of the USA gives way, causing bridges to collapse and railway tracks to fail. Eventually whole cities are starved of food and resources, as the whole country grinds to a halt from loss of energy and transport links, not to mention incompetence at every level of society.
I’ve felt for some time that Japan is the country that
the whole world should be watching during this hour of rising national debt
across the developed nations. Japan has the highest debt to GDP in the world, reported
by the IMF as a staggering 229.7% in 2011. Not even Greece can top this,
with a debt to GDP of 160.81%. Some might argue that Greece is incomparable to
an economic giant like Japan, but quite
honestly debt is debt, no matter how “big” you are, and Japan has a lot of problems
aside from this that make it a country with a far from certain future.
The level of debt corresponding to any potential Japanese
collapse could provide a lot of answers for Western nations, wondering how high
national debt can reach before society begins to fall apart. No nation, aside
from Japan, has a national debt to GDP above 200%. Perhaps the threshold for
the insane Keynesian madness countries have grown accustomed to will be
revealed by Japan’s potential fate.
Another big Japanese problem is its aging population,
which really translates to people not having enough children. Japan has one of
the lowest birth rates in the world, at merely 8.39 births for every 1000 people
as of 2012. Presently this puts it all the way down at 217th position
in world rankings, and keep in mind that there are only 229. Much of the faith
of a debt based fiat currency system is derived from the assumption that people
will continue repaying their debts, and this includes taxes and other forms of
state enforced obligations. If there isn’t enough money going into the system
to pay off debt and maintain social programs then this is the very definition
of a Ponzi scheme. Avid statists will insist that this is not the case if
people are still paying up. But if birth rates are dramatically shrinking then
this is impossible without only one viable solution; immigration, and Japan is
a country that prides itself on homogenous national identity far more than the
Marxist infected Western hemisphere.
Japan has another problem somewhat similar to the
fictional world created by Ayn Rand. A growing trend among Japanese men is to
opt out of conventional life. It’s estimated that as many as 20% of men are now
becoming “herbivorous”, literally turning their backs on all the traditional
trappings of masculinity; money, sex, success. The Japanese economy has been
struggling with stagnation ever since the 1990’s, when it went through a
serious economic downturn. Japan has never truly recovered. The male herbivore
trend seems to be a direct result of the apathy drawn from a society that
denies young people with opportunities, while surrounding them with short-term
consumerist highs. Admittedly these men don’t appear to be the titans of greatness
that turned their backs on society in Ayn Rand’s novel. But one thing’s for
sure; these men aren’t going to be providing a regular flow of taxation for the
Japanese government. Woes betide if this trend continues to grow at the best of
times, let alone in an economy in the state of Japan.
None of this paints a pretty picture for Japan’s future,
and unfortunately that’s not the entirety of the situation. Major Japanese
multinationals are struggling to maintain the success of their brands on a
world stage. Toyota recalled 9 million vehicles from 2009-2011, due to
pedal problems associated with multiple vehicle models. Even the mighty Nintendo
are failing to compete in the evolving gaming industry. Some even say the WiiU
is Nintendo’s last chance to increase sales, lest the company goes the way
of Sega.
Only time will tell whether Japan can dig itself out of
the increasingly bleak future it finds itself in. Personally I’m still inclined
to stick to my prediction that Japan is the country the whole world should be
watching for a glimpse into the future. If Japan’s economy goes down due to the
present trajectory of debilitating national debt, apathy and incompetence, then
the rest of the world should take heed – maybe Atlas is ready to shrug in the
West too.
It's in what currency the debt is denominated that makes the difference. Japan's debt is largely in its own currency owed to its own citizens. Greece's debt is in Euros and unlike Japan it's not sovereign in this currency... Greece's debt may as well be denominated in gold.
ReplyDeleteThere will still be issues even if the debt is denominated in their own currency. As the gov. inflates away their old debt, they increase the prices they have to pay to buy current goods/services. They don't make any real progress. If this was a viable solution, we wouldn't see currency collapses like Wiemar or Zimbabwe.
DeleteI agree, in the case of supply shocks that happens, certainly. Consumer price inflation doesn't occur when the private sector is heavily deleveraging as in the case of Japan, following their bubble of the late 1980s. Prices have barely budged for years in Japan as people pay off old debt (money supply contracting) rather than take on new debt (money supply increasing).
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