Editorial: Population of 100 million in 50 years a fantasy requiring a shift in thinking

In order to meet the reality of a population decline head-on, leadership from politicians with long-term vision is crucial. But does such a thing exist in Japan?

In 2015, Prime Minister Shinzo Abe announced a goal of maintaining a population of 100 million 50 years later. He also announced that he was aiming to create an environment in which the "desired" birth rate (the birth rate that would be achieved if all people had the number of children they wished to have after marriage) could be raised to 1.8, and has been trying to introduce measures to counter the low birth rate, such as resolving the problem of children on waiting lists for day care centers.

Yet, the government's countermeasures have not improved the birth rate. The number of children born in 2017 stood at about 940,000, failing to reach 1 million for the second consecutive year.

Even if the birth rate were to rise going forward, the number of women of childbearing age would continue to decrease, meaning the number of children being born will not increase. A birth rate of at least 2.08 children per couple is necessary to maintain the current population, but the birth rate last year stood at 1.43.

In 2065, the population will not stay at around the 100 million mark, but is estimated to drop to somewhere between 80 million and 90 million.

More than a few bureaucrats and researchers have a sense of impending crisis over Japan's late start in instituting measures to stem depopulation. However, under Abe's monopoly on political power, in which the prime minister's foremost concern is economic growth, there's an atmosphere in which those who hold views that are different from Abe's have a hard time voicing them.

Social security costs, including pensions and health care, total approximately 120 trillion yen. Health and social insurance premiums only cover about 60 percent of this, with the rest being paid for as a stopgap measure through deficit-covering government bonds. By using a method that leaves debt to future generations, the cumulative deficits of both central and local governments have already surpassed 1,000 trillion yen.

Over the next several decades, the number of elderly citizens will rise as the population of working-age people drops. Discussion on increasing the burden shouldered by taxpayers cannot be avoided. However, the Abe administration has put off raising the consumption tax from 8 percent to 10 percent twice, citing the potential of raised consumption taxes dampening consumption, and therefore economic growth. In the meantime, bureaucrats, whose appointments -- including promotions and demotions -- lie in the hands of the prime minister's office, cannot speak out against the prime minister.

The Abe administration says that "without growth, there is no fiscal reconstruction." The thinking behind this is that economic growth will lead to increased revenues for corporations and increased income for workers -- and increased tax revenue for the state as a result. This, in turn, would allow the government to reduce its national debt. In fiscal 2017, both tax revenue and profits from managing insurance premiums increased. The Abe administration has characterized this as the fruits of Abenomics.

However, relying solely on Abenomics means that Japan is at the mercy of what happens in the world economy. And it does not provide a fundamental, long-term solution to depopulation and to sustaining social security systems.

There is a deeply rooted theory that even if the population goes down, economic growth is possible if productivity goes up.

In 2016, Prime Minister Abe repeatedly made bold remarks in a speech he gave to those in the finance sector in the United States. He said that while the productive-age population in Japan had decreased by 3 million people over the last three years, "the nominal gross domestic product had grown," and that he had "no concerns in the shifts in demographics (depopulation)."

His rationale was that companies, pressed to increase their productivity due to a decline in manpower, would increasingly utilize robots and AI.

Depopulation, however, does not only mean a decrease in manpower, but a decrease in consumers. Domestic consumption constitutes 60 percent of Japan's GDP. Even if productivity rises and the volume of products and services is secured, the economy will shrink if the number of people buying those products and services drops.

Ninety percent of Japanese corporations are small- to mid-sized companies. Many are run by elderly managers with no one to take over their business, and about half are said to be turning a profit. At this rate, it's possible that 6.5 million people's worth of jobs and 22 trillion yen from Japan's GDP will be lost. The Abe administration's goal of achieving "a GDP of 600 trillion yen at around the year 2020" is far from being a reality.

In recent years, we've seen aging infrastructure such as roads and bridges, alongside shopping arcades full of shuttered shops, and increasing numbers of vacant homes. Government ministries and agencies have haphazardly distributed subsidies under various pretexts to counter these problems.

However, the problems that we will be facing in the near future cannot be dealt with through the policies that have thus far been instituted, or that will be instituted as an extension of those that are currently in place. Instead of an expansion-minded plan that presupposes growth, we must draw up a blueprint of a depopulated society, and shift to a policy that aims for congruity and maturity.

The government should set up a comprehensive headquarters for depopulation countermeasures, and commit to making a significant shift in social structures and values through strong political leadership. It would be the equivalent of building a new nation.

There are countries that have far smaller populations than Japan, where entrepreneurship among younger generations is thriving, bringing vitality to society. Japan, too, should be creating a system in which people who are starting new businesses or trying to make society better are given more assistance. Education and working conditions must also change.

We cannot avoid depopulation or a rapid change in the population's age composition. It is only when we stop excessively fearing the impending change, alter the way we think about it, and take on challenges in various fields, that values fit for a new era will be born.