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Japan headed for (natural or demographic) disaster? The economic consequences?

Those who watch Japanese movies may remember 日本以外全部沈没 (Everything Except Japan Destroyed), a B-grade film in which, well, everything except for Japan was destroyed.

This afternoon I noticed a few news reports expressing the opposite sentiment. Let’s start with a Cabinet Office report released on June 1st that warns of the challenges facing disaster prevention in Japan as more skyscrapers are built, shopping malls move underground, and the population continues to grey.

Earthquakes and storms threaten to do ever more damage to densely populated cities that are increasingly filled with high-rise office and residential towers. The number of buildings topping 100 meters has quadrupled over the past 15 years in Japan. At the same time, the report’s authors wonder if Japan’s current disaster response measures will be as effective when faced with a growing number of elderly who may be injured in the event of a natural disaster. According to the report, the number of single elderly households has nearly doubled over the last decade.

Further threatening Japan’s economy is the upcoming demographic crunch, which this observer still feels is going largely ignored by those in policy-making positions. In a recent article entitled “Japan leads world in demographic decline,” the Telegraph points out that although Japan is not alone in facing a future population decline, it shoulders the burden of being the trendsetter:

Japan is slowly shrinking. Last year it became the first nation in modern history to tip over into outright demographic contraction, pioneering a path that will soon be followed by Italy, Germany, Spain, and most of Eastern Europe, with China close behind.

What’s behind this? As the article points out, wages have fallen for five straight months - as reported by data from the Ministry of Health, Labor and Welfare. The most recent consumer confidence report showed that more people in Japan are positive than negative about employment, and in April, the Ministry of Internal Affairs and Communications released a report showing that in March, income at households in Japan had increased 3.5% over a year ago, showing an increase for the sixth straight month.

At the same time, as we cited a few days ago, recent data from the Ministry of Health, Labor and Welfare shows:

Average monthly total cash earnings per regular employee in April 2007 were 278,193 yen, down by 0.7%. Contractual cash earnings were 271,310 yen, down by 0.8% and scheduled cash earnings were 250,969 yen, down by 1.0%. The real wage index was decreased by 0.7%.

Wage data coming out of Kasumigaseki has been inconsistent at best, and cherry-picked at worst. What we can be sure of is that the economic boom going on in Japan is not having a significant enough impact yet at the nation’s cash registers, or else an increase in interest rates would be a given, instead of a cat-and-mouse game with investors.

Wages aside, what other factors could be propping up the decreasing birth rate? As the Telegraph tells us:

Women are silently protesting through refusal to have children under the existing social contract. “The ancien regime makes it very hard to have both a career and a family so women are putting off marriage. They are no longer willing to accept a double shift where they come home from work and have to do all the household chores,” said [Professor Mariko Bando, the former chief of Japan’s gender equality bureau]…

“Women have their proper place: they should be womanly,” said LDP policy chairman S[h]oichi Nakagawa, right-hand man to premier Shinzo Abe.

“[Women] have their own abilities and these should be fully exercised, for example in flower arranging, sewing, or cooking. It’s not a matter of good or bad, but we need to accept reality that men and women are genetically different, ” he said over breakfast in Tokyo.

Emphasis added. I wonder who made that breakfast?

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