This category focuses largely on matters pertaining to Japan

Kyoto Report 2024 – 7

This Tuesday report will provide some insights into life for a westerner (me) who is working for an extended period at Kyoto University in Japan. This is my final report for 2024 as my working time at the university is completed for another year and we will resume these reports in 2025 when I return.

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Japanese government investing heavily in technologies to help its population age

The – Japanese National Institute of Population and Social Security Research – is the go-to place for understanding demographic trends in Japan. The latest revisions to the population estimates (as at 2023) show that the current population of 125.5 million will shrink to 96 odd million by 2060 and then 87 million a decade later. There is a rapid decline after that expected. The male population is shrinking faster than the female population. Much has been made in recent weeks of Japan’s slide down the GDP world ranking. First, China overtook it into 2nd place a few years ago and now Germany is moving into third place. India is projected to push Japan out of fourth place next year. Some have referred to this as “Peak Japan” with the population dynamics likely to push the nation further down the GDP table. There is a lot of anxiety among policy makers here about that ‘fate’. My perspective differs. In fact, I think that the challenge is not to solve the population decline but rather to work out ways to live well with a smaller population, and demonstrate to the world how a planned degrowth strategy can be achieved with minimal disruption to material security.

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The ‘MMT is dead’ crowd are silent now the yen is appreciating

It’s Wednesday and I am mostly thinking about Japan today. In just over a week’s time, I will once again head to Japan to work at Kyoto University. I will be there for several weeks and will provide regular reports as I have in previous years of what is happening there. The LDP leadership struggle is certainly proving to be interesting and there is now a view emerging that the hoped for break out from the deflationary period has not happened and further fiscal expansion is necessary. This is at a time when the yen is appreciating and the authorities are worried it is making the external sector noncompetitive. That is, light years away from the predictions made by the ‘MMT is dead’ crowd when they saw the depreciating yen during 2022 and beyond. It just goes to show that trying to interpret the world from the ‘sound finance’ lens will generally lead to erroneous conclusions.

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Japan exports up sharply as a response to the weaker yen

It’s Wednesday, so a few topics. Tomorrow, I plan to address the issue that the US economy is heading into recession. The short assessment is that it doesn’t look like it to me despite the relatively poor labour market data that came out at the end of last week. But there is certainly a lot of fluctuating fortunes being recorded around the globe at present. Recent Japanese data is quite interesting and I discuss it in what follows. We should also remember that yesterday was the anniversary of the Hiroshima bombing – a very sad day in human history. Constantly reminding us of the damage that the US bombing caused should warn us off war altogether and nuclear weapons and technology specifically. Unfortunately, the trends are working against such a view. And we also have some music to listen to while cogitating over those issues.

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