Made in Japan, not for Japan

By Ocean in Articles, Featured, Immigration, Letters/Contributions

An excellent article by Edward Hughes discusses Japan’s dismal situation and how it arrived there.

Of particular interest is his analysis on how its stringent immigration policy has kept many foreign nationals out and this, coupled with the low fertility rate, has brought the median age to 43 years of age. While many thought this would not have many consequences beyond social security payments, he argues differently:

The consequences are, basically, to be seen in very weak domestic consumption growth, which means that economic growth (which is needed to pay all those pensions and health care costs) is totally dependent on exports, and hence the economic well-being of others.

When countries like the United States and China are consuming less, therefore, Japan’s manufacturers lose customers they cannot gain back in their own market. It is hard to sell flat screen TV’s, new cars and electronics to retirees. Much less so to soon-to-be-retirees weary of their jobs in export-driven industries.

A low fertility rate coupled with a strict immigration policy starts a vicious cycle which slows domestic demand and increases reliance on exports. This can work when other countries continue importing, but is unsustainable as the population ages, new workers don’t enter the market as quickly as old ones exit, and younger kids leave the country to seek opportunities elsewhere. The same pattern can be seen in Germany.  While the problems have become evident due to the slowing global economy, they would manifested themselves sooner or later regardless. 

Of further interest would be a study on the direct impact of immigration policy on domestic consumption and/or export reliance in a group of countries. If keeping foreign workers out decreases domestic consumption, companies will start focusing on foreign markets, setting up more stores and factories abroad, while focusing their local branches on exports. Something to keep in mind when talking about sealing borders and foreign nationals stealing local jobs.

Hat tip to Doug for the article.