Joi Ito's Web

Joi Ito's conversation with the living web.

Here are some supporting figures about the aging population and the lack of diversity and risk taking in Japan.

(1) Population
A quarter of the population will be over 65 years old, and at the same time, children 14 years or less will represent only half of the population of 65 or older – Japan will be the oldest nation in the world.

(2) Financial burden of this ageing population:
The current average annual burden on a worker (taxes, medical insurance and public pension): approx. 2.5 million yen, or about 20,000 dollars US. By 2020, this would have more than doubled, to 6.2 million, or about 50,000 dollars US.

(3) From 2024, the actual GDP growth rate might become negative as an on-going trend: by 2025, current account will be in deficits, which, combined with the already aggravated fiscal account deficit, will result in Japan having a twin-deficit problem as a permanent burden.

Entrepreneurship is not socially accepted
Percentage “yes” on item: People you know respect those starting a new business - 1999
Japan 10% US almost 100%

Lack of diversity
4% of the top universities provide 32% of the CEO's for public companies


The bugaboo we're facing in the US is deflation. First, stocks lose value, so there goes retirement cushion. Next, and this hasn't happened yet, but doomsayers say it will, real estate deflation. Is there any point of comparison on this between recent long deflationary experience in Japan and possible deflation in US? For example, is a house in a big-city suburb worth $500,000 in 1990 still worth this amount, or is it worth substantially more or less? The reason I raise this is the importance of the relation of government and the public sphere to property owners and the private sphere.

Japan is in a terrible deflationary spiral. Japan lost 80% or so of its asset value during the bursting of the bubble. That's 3 years of GDP. The great depression in the US was 1 year of GDP. The S&L crisis was something like 20% of a year of GDP. This has triggered a deflationary spiral that continues across the board.

Paul Krugman would argue that structural reform will not help the deflation problem. He would say it is a monetary policy issue. We need to increase the money supply. The problem is, that although the BOJ is printing money, it isn't ending up in the hands of consumers. Some blame the banks. Some say that BOJ should be buying assets in the market, bypassing the banks. Again, this deflationary spiral is a strange phenomenon without much historical precident. Usually when the system is broken, the value of money decreases, not the value of assets...

There is some truth to Krugman's words I think. I think people link suffering with positive change. I think that we still need to push for structural reform, but I think it maybe a separate issues than the short term macro economic problems. My theory is that the short term economic problems provide a good reason to push for structural reform which is necessary for mid-long term health.

Certainly your view on structural reform is in agreement with many other voices. It isn't easy to find meaningful data on housing trends and residential real estate trends in Japan, and can't vouch for success. Hope a look at the housing situation provides some of the short and long term impetus for reform you are seeking.