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Examining Japan’s Lost Decades


If anyone is the master of mega-trend analysis on Japan, it is Yoichi Funabashi, former editor-in-chief of the Asahi Shinbun and now chairman of the Rebuild Japan Initiative Foundation. He is the editor of and contributor to this outstanding collection on Japan’s ‘lost decades’, with Barack Kushner as deputy editor.

At the risk of over-alliteration (and over-simplification), it would seem that the last decade of the 20th  and the first decade of the 21st century in Japan can be summed up by a string of ‘d’ words: ‘debt’, ‘deflation’, ‘depopulation’, ‘decline’, ‘digitization’, ‘deficiencies’, ‘downturn’, ‘disaster’, ‘desperation’, ‘depressed demand’, ‘disparities’ and last, but not least, ‘Japanese disease’. Each chapter tackles the realities presented by these and other problems, highlighting their causes and consequences.

Perhaps the book’s most important message is that a succession of corporate, policy, institutional and governance failures were the primary cause of Japan’s lost decades. The individual chapter contributions examine in forensic detail the specific dimensions of these failures including those related to monetary and fiscal policy as well as in labour market, education, trade, demographic and immigration policy and diplomacy. Some refer to critical shortcomings in corporate governance reform and in corporate strategies and management practices while others discuss institutional deficiencies in risk preparedness, the lost opportunity to solve Japan’s history problems in the early 1990s, the unresolved US base issue in Okinawa, failures in the Gulf Crisis and crisis management, and Japan’s loss of a clear and coherent vision of its regional and international roles.

If there is any single thread running through many of the chapters, it is the reluctance or inability on the part of those in charge to implement rapid, fundamental and effective reform. Digging deeper, some contributors refer variously to Japan’s cultural and ethnic insularity, its institutional conservatism and inertia, corporate and organisational rigidities, aversion to real social and economic change and all-pervasive vested interests in both the public and private domains. Clearly, the explanation for Japan’s lost decades is multi-causal – a very complex set of processes and issues requiring very complex elucidation.

The story makes for depressing reading although it is punctuated by a few positives including the many changes that have taken place in Japanese business, the political and administrative reforms of the 1990s and early 2000s, the partial shift from particularistic to universalistic social and economic policies, the establishment of a new, fully independent Nuclear Regulation Authority, the rise of ‘Womenomics’ and the increasing labour force participation rate of older people.

Through it all, Japanese leaders have continued to inflict their empty promises and meaningless platitudes on the hapless Japanese voters – perhaps best epitomised by former Prime Minister (and current Minister of Finance), Taro Aso, who, towards the end of Japan’s second lost decade, described his administration’s policies as attempting to maintain a ‘society that provides peace of mind to its members’. In none of the pictures of Japanese society drawn by the contributors to this book does such a vision come to mind.

Yoichi Funabashi and Barak Kushner, Examining Japan’s Lost Decades, (Routledge: Contemporary Japan Series, 2015)

Aurelia George Mulgan is a Professor at the University of New South Wales, Canberra. This article is published under a Creative Commons Licence. It may be republished with attribution.

Published April 14, 2016

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