Japan: ‘But Oldsters Don’t Riot’

From my Annual Forecast, dated December 7, 2011:

The population began to shrink in 2005 and the new data from the 2010 census will be released in February 2011. It will show an accelerating decline in the number of Japanese. What will increase is the number of households headed by people 60 years of age or older. In 1990, Japan claimed 10.2 million such households. In 2011, watch for the number to leap to 21.2 million households, likely comprising a full 42 percent of all households.

Why does this matter? Because, while households headed by ‘oldsters’ own some 80 percent of all household assets, Japan’s low interest rates have devastated the income generated by those assets. (The interest rates are low, of course, because of the quantitative easing instituted by the central bank.) The result is that those households have largely stopped spending. But because consumption is about 60 percent of the GDP, there has been little to drive the economy besides exports.

The strong yen cripples the competitiveness of Japan’s exporters. Their principal response has been to hire more temporary workers – without benefits – further depressing consumption and moving their production facilities out of the country – further depressing consumption. A new assembly plant in Mississippi, for example, will begin to produce Toyotas in 2011.

Sluggish growth and declining fortunes will be Japan’s fate in 2011.

But oldsters don’t riot. Besides too much wealth has been amassed. So 2011 will be a gentle year as well.

Post-2011 Catastrophes

It is still a sure bet that the Japanese will not riot. One basic rule of political risk is that governments that respond to catastrophes ineptly, get overthrown. So it was with George Bush and Katrina in the U.S. So it was, as well, with the shah of Iran in the earthquakes of eastern Iran in 1978. But, despite the massive failings of the Japanese government and the Tokyo Electric and Power Company, know as TEPCO, Prime Minister Kan and his New Democratic Party allies are unlikely to be overthrown by mass protests.

Inept they were. The Chief Cabinet Secretary of Japan acknowledged as much. “The unprecedented scale of the earthquake and tsunami that struck Japan, frankly speaking, were among many things that happened that had not been anticipated under our disaster management contingency plans,” he said. “In hindsight, we could have moved a little quicker in assessing the situation and coordinating all that information and provided it faster.” One wishes to know what the meaning of “unprecedented” is in the context of Japan, perhaps the major earthquake country in the Pacific “ring of fire.” Surely the possibility of a major earthquake followed by a tsunami should not have been difficult to anticipate.

Nor is it possible to understand the construction of sea walls, which governments have built along the coast over decades. Didn’t the governments understand tsunamis? Did they imagine that these walls would actually withstand the sea? Regrettably, the answer is probably not. The sea walls were just another public works project by the Liberal Democratic Party to buy votes through major public works projects. Another Japanese version of the “bridge to nowhere.”

But the sea walls turned out to be a catastrophe as well. Not because of the hundred of billions of yen they cost. Not because they blocked views of the sea. But because they provided a false sense of security both to the inhabitants of the coastal plain and also to TEPCO, which built its 6 nuclear reactors at Fukushima at sea level with its back up generators below sea level.  

TEPCO Blows It

TEPCO, while a non-governmental corporation, was equally inept. TEPCO is the largest power utility in Japan and made a profit of $1.66 billion on sales of $62 billion in 2010. It is the most experienced nuclear power plant operator in Japan, having operated Fukushima since 1970. Yet in 2002, the government accused the company of falsifying reporting. Eventually, the company admitted to more than 200 occasions between 1977 and 2002 when it submitted false information to government nuclear regulators. What TEPCO has been saying now is widely considered suspect.

Furthermore, what is known suggests that TEPCO has bungled this tragedy. “This disaster is 60% man-made,” said one government official. “They failed in their initial response. It’s like TEPCO dropped and lost a 100 yen coin while trying to pick up a 10 yen coin.” (Quoted in Foreign Policy, March 18, 2011, by Joseph Cirincione.)

October 2010 Census

The results have been released with a surprise. The number of people living in Japan did not decline from 2005. Their numbers actually increased by 0.2 percent or 288,032 persons, the slowest rate of increase since the end of World War II. Of the increase in population, some 170,000 are foreigners resident in Japan at the time of the census. So the population among Japanese has finally leveled off and a decrease is expected by the next census, scheduled for 2015.

As expected, the aging of the population has continued. The gap between the number of ‘seniors’ and the number of children continues to expand. In 2010, there were 16,860,000 young people between the ages of zero and fourteen. The number of Japanese sixty-five years or older was 29,470,000. (In 2005, 376,000 people were eighty-five or older. In 2010, their number climbed to 400,000.)

Japan is the oldest country there is. Its elders, so many of whom were seen suffering in the earthquake photos, are not likely to riot, despite their suffering and anger.

The Politics Of This Catastrophe

More likely, the catastrophes will be met with by “calm meditation . . .  dating back to the ‘Burning House’ parable in the Lotus Sutra: “The world rightly seen is a burning house, and it is that because it’s a fragile world, it’s made the more fragile because of human greed and avarice and desire, and a way to deal with it is to curb desire if not to suppress it entirely.” (Brit Peterson, writing in Foreign Policy, March 14, 2010, quoting the Columbia University scholar, Paul Anderer.)

I do not know about the Lotus Sutra in operation today. But I do know that the elderly are unlikely to riot.

The next elections for the Diet are scheduled for 2013. There is little likelihood that Prime Minister Kan will last until then. He may be ousted – in Japan, it’s called a resignation — for any of a number of reasons from charges of corruption to illegal campaign donations to a collapse of his New Democratic Party. But it will be an elite game at the top of the political hierarchy. There will be no mob scenes on the streets of Tokyo or even Sendai.