They got overtaken by Germany a country with 50% lower population and the gap is widening. Their gdp per capita is below some Eastern European countries and way below other developed countries that used to have similar gdp per capita. Yen’s devaluation is getting faster so in the future I don’t think Japan can even be called a first world country anymore. What exactly caused this? I know Japan has been in recession since the early 90s but this last few years seem to be extra harsh on Japan
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Japan is in some aspects the most advanced nation on earth, and in other the aspects one of the most conservative. This is very apparant in their work. I work with them, they are NOT easy. Everything, no matter how small takes a long time, they can get stuck on the most minor and unimportant details, and they are very rigid and unopen to change.
They also have a huge population decline and high suicide rate.
Population decline, cultural rigidity, and politics that are slow to adapt and focused on preserving the status quo as much as possible.
Overworked people, rigid work culture, and antiquated technology.
You’ll spend 18 hours in the office because your boss hasn’t left yet and you can’t leave before them. Then your boss will invite everybody for drinks, and you have to take that invitation. Next day, hung over and on 4 hours of sleep, you’ll receive a fax that your robotics department ran out of floppy disks and you need to buy more.
If you look at their GDP PPP per capita, it has been increasing, but the devaluation of the yen means that their nominal gdp is decreasing. On a more general note, after the bubble burst, their central bank and governments made a bunch of bad decisions and never managed to revive their economy which has led to stagnation for 2 decades.
Something important to bear in mind:
Numbers don’t tell you everything. If you actually visit Japan, you’ll find it to be very affluent, functional with very low levels of poverty. On paper Japan might seem poorer then the USA, but guess which country has good public toilets?
Personally, I think the root cause of most of Japan’s problems is population aging. Aging means less of the population works. Aging means most companies are dominated by conservative hide-bound geriatrics. Japan is not an inherently conservative place, and historically was a place that embraced change (just look at how much Japan changed between 1870 and 1970). The problem is that over time Japan’s leadership lost it’s forward thinking outlook and instead became conservative. It can happen anywhere, and we can see it happening in western countries as well as our population ages.
In 1950 the median age in Japan was 22 years old. Today it’s 48. Should it surprise you that old people are conservative and resistant to change, and a country where half of the population is middle aged or older is set in it’s ways?
In the USA, in 1950 the median age was ~30 and today it’s 38. The USA has a younger population, is it surprising that there’s more new ideas?
Japan is a very special case. It is the only non-Judeo-Christian country in the world that went through an industrial revolution on its own. They had a very particular social structure until WW2 and afterwards they simply copied (or were imposed) the US model – and in the beginning it was an incredibly successful cultural fusion. Do as the Americans they said, and everything will be all right. However, socially, they never evolved and you can copy only so much. Once you start copying, you lose your own ability to invent. They also remained incredibly conservative.
A typical example – despite having one of most developed electronics industries in the world, Japan has not produced a successful innovative technological startup for the last 40 years or so. Japanese are incredibly averse to business risk taking. They take failure very personally. It is a cultural problem – their society relies heavily on shame as primary driver.
They used to be quite successful in the video games market – both technologically and artistically – owning to a very unique cultural heritage – but they slowly lost even this. Large companies are always slow to adapt and unless you constantly produce new companies, your efficiency goes down the drain. I think they will eventually recover, but it won’t come easily, there is a lot that needs to change.
Japan is one of the weirdest economies in the world, the country itself has a lot of contradictions, generally the product of old institutions and cultural norms falling to adapt to the modern necessities and sensitivities, this has led to a nation that offers money just to have children, but continues to opress it’s working class (aka the ones they want to be having babies) with 14+ hours of work daily , a rigid work culture that doesn’t allow for things like
r/antiwork to even be a possibility in most people’s minds
And others, japanese economic and cultural norms are the ones responsible for their economy being in shambles
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Since no one has seemed to mention it yet, Japan is **the** most indebted nation on Earth. Combine this with a rapidly aging population and you pretty much have the issue. Additionally their central bank management is very unusual.
Everyone here is talking about long term problems. The recent issue has been more the BOJ’s lack of interest rate hikes and QE causing the yen to fall relative to other nations. This increases costs for importers, which can cause bankruptcy. Losing pricing power parity is a big deal.
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