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Bill Emmott: Heisei era marked by long-term economic, social changes

Bill Emmott

By Bill Emmott

    Looking back on the three decades of the Heisei era, it is tempting to conclude that although much has changed in Japan's economy and society, very little is really different either in domestic politics or in foreign affairs. After all, the Liberal Democratic Party (LDP) is still governing the country, the opposition is weak, and in defense and security, Japan remains dependent on the United States, a partner that regularly handles that dependence in an impolite way.

    Yet if we look more closely, I think the picture becomes quite different. In both economics and politics, change has taken place steadily, step by step, rather than in dramatic transformations.

    Thanks to the drama of the bursting of the stock and property market bubble, it may seem as if economic change took place in a more rapid, turbulent manner. But in reality, the drama of financial crashes and banking crises was just a superficial set of symptoms, while behind that dramatic appearance a slower, more fundamental set of changes were emerging.

    On the surface, politics and foreign affairs were much calmer -- though to an outsider, the relative calmness of the political reaction to the bursting of the bubble was a surprise. In Europe or North America, the political reaction to our own financial crisis of 2008 has been much more turbulent, with Donald Trump being elected to the White House, with Britain voting in a referendum to leave the European Union, and with populist-nationalist parties rising in strength in many European countries.

    Let me start briefly with what I see as the long-term economic and social changes, for I think they are also the essential background to the political and foreign affairs evolutions during the Heisei era.

    Basically, I think future historians will identify four major economic and social changes during the three Heisei decades. The first and most obvious one is demographic: the transformation of Japan's population from one of the youngest among industrialised countries during the 1970s and 1980s to become one of the oldest.

    The second is economic: From a nation known for its trade in manufactured goods, with economic growth often driven by exports, Japan's trade (and its economy) has shifted substantially towards services. From approximately 1% of GDP in the early 1990s, services exports have now more than tripled, coming close to 4% of GDP. Manufactures remain important, of course, but now services of all kinds stand alongside those famous cars, semiconductors and consumer electronics as drivers of economic activity and employment.

    The third is the decline in the sense of security for employees. Where in 1990, about 80% of employees had permanent contracts of employment, by the end of Heisei that figure had fallen to 60%, with the remaining 40% having to cope with short-term contracts and part-time work. The financial security that came with permanent, highly protected contracts has disappeared for a large proportion of the population, with some consequences too in declining rates of marriage and childbirth.

    The fourth change is a much more positive one, however: the huge rise in the number of female high school graduates choosing to go on to enter full, four-year university education rather than the two-year junior colleges that had been the rule for women in past generations. In 1990 only 15% of female high-school graduates entered four-year university courses compared with about 33% of males; by 2018 the numbers were 50% of females compared with 55% of males.

    As the Reiwa era begins, Japan's economy is based on a broader range of strengths than before, but with a society more divided both between rich and poor and between the secure and the insecure. The future leadership of the country, at all levels, promises to be more female than at any time in the past, thanks to the surge in supply of well educated women and greater access to employment for women too.

    So what does this mean for politics and foreign affairs? Well, the question is harder to answer for politics, but I think what can be said is that the superficial stability of the political landscape is likely to be misleading. It is true that the LDP began and ended the Heisei era as the clearly dominant ruling group. But with more insecurity and inequality in society and with women's role rising, I don't think this stability can or should be taken for granted.

    It is sometimes claimed that Japan has been immune to the sort of populist nationalism we see in Europe and North America. Yet this is a strange claim given the landslide electoral victory in 2009 of the Democratic Party of Japan, which was highly populist, and the clear nationalist shift in the LDP especially under Prime Minister Shinzo Abe which has been quite populist in its character.

    In the coming decade, there is likely to be new political volatility and new appeals to populism, both on social issues and international ones. For although the fundamentals of Japan's foreign policy have not changed -- for neither geographic reality nor the importance of the US-Japan alliance have altered -- many of the characteristics of that policy have had to change quite substantially.

    Japan's military strength in 2019 is far greater than it was in 1990, for good reason: the threats to the country's interests, both from North Korea and from China, have become much greater. And, especially but not only under President Trump, it has become ever clearer that although the U.S. is a vital partner it is not an entirely reliable one. For that reason, diplomacy within Asia-Pacific, such as the Trans-Pacific Partnership and closer ties with ASEAN, have become far more significant.

    This trend is bound to continue. The Heisei era began with the publication of the notorious book by Shintaro Ishihara and Akio Morita, "The Japan that Can Say No" and with Ichiro Ozawa's "Blueprint for a New Japan," which promoted the idea that Japan should and could become "normal." Three decades later, Japan is in fact far more "normal" in foreign affairs than it was in 1990. And it is now destined to continue on that path.

    (Bill Emmott is an independent writer, lecturer and consultant on international affairs)

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