More immigrants, please!

In particular I believe Japan should consider entrepreneur visas. Everybody says (and has been saying for years) that Japan needs to let in more foreign talent. Why not focus on folks starting up businesses? If dysfunctional corporate culture is holding back the country's productivity (and thus ultimately growth, and living standards) one way to change that culture might be to import a bunch of business people from different, erm, cultures.

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I see Noah is still using GDP/capita as a stand in for comparing standard of living between countries. I remain skeptical. Maybe we can have a column about the various ways of comparing standards of living some day. Pretty please?

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I feel like this article glosses over Japan's most important problem: population density. The woes of Japanese society seem to revolve around living space. The poorest workers are "sleeping in tiny bare rooms". People are having a hard time starting families because they can only afford a cramped apartment. Parents are forced to share living space with their children. There's three solutions for this that I'm aware of:

1) YIMBY - build dense buildings everywhere! Unfortunately Japan is already the most YIMBY nation in the world and hardly anyone could accuse them of having restrictive construction codes.

2) Build new cities / expand small cities. This is difficult for Japan because they don't have that much room left to develop. Most of the unbuilt territory is either used for agriculture (which you can't entirely eliminate for national security reasons) or is taken up by mountains where construction is very expensive.

3) Make it easier to commute over long distances. Again, Japan is the leading nation in the world by public transport development, so there's not much room there for improvement.

So even if productivity in Japan grows to the levels of Switzerland... how will this change the livelihood of the average citizen? They could afford the latest iPhone instead of a 2 year model? They could take more vacations abroad? They'll be able to buy a fancier car? These are nice luxuries to have but at the end of they day its living space that's the fundamental problem and you can't solve it via larger productivity.

From this perspective Japan's immigration strategy makes perfect sense - why allow even more people to come when your core problem is around the lack of living space? Instead they'll wait out another few decades until their population comes down to the point where every citizen could get 1500 sq.ft. of living space and have a happier life as a result. I don't know if doing this is actually sustainable or necessarily desirable, but it seems to be the only way to grant people bigger houses.

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I hadn't realized France has less poverty than Sweden. They must be doing something right... I know their health system is rated best in the world but I wish someone would explain to me how it works.

Progressives in the US are suppose to treat Northern Europe as their social ideal--Bernie Sanders always talks about Denmark--but I think this underestimates the extent to which some Scandinavian cultural peculiarities, like intense pressure for social conformity, are pretty unattractive to most Americans. (This goes double or triple for Japan, obvs.)

If we switched the slogan to "Let's be more like the French, another nation of relentless individualists but one that does some stuff better than us" we might be able to associate progressive ideas with great food and cool avant-garde cinema instead. It's worth a try.

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I appreciate the mention of the GDP of $48000 per capita as a limiting factor. One repeatedly sees financial commentators focusing on Income inequality as the core economic issue, as if redistributing money can increase standard of living for an entire nation.

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Very insightful article (as usual).

A curious question, you said "low-income Japanese people will still be behind their German or British or French counterparts, because Japan is simply a poorer country", I read that Japan is a (much) poorer country compare to German, UK, and French, and I'd assume their GDP per capita at least 20% higher than Japan.

According to https://www.worldometers.info/gdp/gdp-per-capita/, GDP per capita for UK is $44,920, France $44,033, Japan $42,067, Italy $40924. There is not a big difference among these 4 countries. Are you using a different source?

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Interesting piece! I'm sure I'm not the only one reflecting on what they saw in Japan a little differently with all this information in mind.

But shouldn't the title be the other way round. Japan's living standards are too high, given their relatively low GDP per capita. And maybe that is why things don't change. Changing the growth model might also change the institutions and social conventions that make Japan such a nice place despite relatively modest resources. I don't know if that is a real trade-off but it seems that political debates might run that way.

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"First of all, it means that many Japanese people are suffering in quiet, hidden poverty. Tourists from the U.S. tend to assume Japanese people are almost all middle-class, both because we’ve been inundated with stereotypes of Japan as a highly equal society, and because you don’t see a lot of crime, dirt, urban decay, or the other visible markers Americans associate with poverty."

Without those visible markers, can we really assume that there's much poverty happening? If it is, then maybe we shouldn't be so quick to link poverty or inequality with poor social outcomes. If Japan can go through decades of stagnation and rising inequality without really developing any of the social pathologies we like to blame on those things in the West, maybe we are blaming the wrong things. It suggest there is a way to avoid the problems currently associated with inequality and poverty without resorting to much redistribution.

If so, it should definitely be identified and pursued. After all, one person's virtuous and ethical redistribution is another person's confiscatory mugging (for charitable purposes of course).

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Noah - your reference to OECD social spending data reminded me of something notable, which I remember being surprised about when I first learned it long ago:

Out of the top 10 countries in terms of % GDP spent on social spending, the U.S. is *the most generous* out of any of them, on an absolute $ (PPP) per person basis. Top 10 (did it in excel, source links at bottom):

Country | Total Net Social Spending $ (PPP) per capita:

USA 21,000

Switzerland 19,250

Denmark 16,500

Netherlands 16,250

Belgium 16,200

France 15,810

Germany 14,750

Sweden 14,400

Finland 14,000

Italy 11,750

Source 1: OECD 2017 Net Social Spending % of GDP: https://www.oecd.org/social/expenditure.htm

Source 2: OECD latest available GDP per capita (PPP $): https://data.oecd.org/gdp/gross-domestic-product-gdp.htm

P.S. Thanks for the post! Love visiting Japan and always surprises me when I see how poor they are relative to a lot of the rest of the developed world. It certainly doesn't "feel" like it when you're in Tokyo station as a tourist about to board the bullet train.

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"Japan’s famous culture of overwork rewards employees who put in long hours at the office instead of those who accomplish tasks quickly and efficiently. This is mostly a result of the country’s notoriously low white-collar productivity rates —workers are working overtime to make up for broken corporate cultures. But it’s also likely that there’s a feedback loop involved; excessively long hours have been shown to make workers tired and ineffective."

Not just a 'feedback loop', but I would tend to think of this as a CAUSE of low productivity. If employees are rewarded for working long hours without necessarily accomplishing much, then that is what most of them will do. And that is pretty much the definition of "low productivity".

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worth the wait Noah

Thank you

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Thank you for the informative article. I would like to reformulate part of the article, using something quite Japanese: Humility. This cultural trait is rather specific to Japan---unaware of any other country with this level, border-line interpretable as submissive behaviours. What is sometimes baffling is to see sharp entrepreneurs taking advantage of others, exploiting this humility, and at the same time radiating status to the others. And this status seems to be all that matters. There is something beautiful and respectable in there. And when this "pristine" way of doing gets mixed with different cultures, and now cornered into deep change because of the need for immigrants, this creates discomfort inspired by the need for change. But here again, the cultural humility kicks in, and people usually lower their head and get to it. Except the ones longing for some glorious isolationist past.

Another aspect, perhaps surprisingly absent from the article is the startup world. Japan is no Silicon Valley, but the past decade is peppered with measures to facilitate innovation. In fact many new entrepreneurs are "underdogs", and more incubators/accelerators have accepted people without "credentials" (slowing down with the pandemic and war). Yet stepping back, measures like the 2001 changes on setting up a company (from more than ¥1M to about ¥200K of consolidated costs), the trend to re-name startups from the dirty "venture company" to the cool "startup" anglicism, the multiplication of general and local government programs, is quite encouraging. And this is long term structural investment that should hopefully pay off in a few years. Yet as Noah's reporting, living standards remain "low" here, from a western eye at least (inequality is clearly and objectively large), but the trend looks good albeit slow.

Anecdote: What does it mean that "venture company" were "dirty" ? In 2008 I joined a venture company (ベンチャー企業). My salary was above median salary, even in my industry. All in the team were rejecting when applying for credit card (there was no debit card at the time, 2008!). When we were at events, we did not exist. To get appointment with clients, we needed to get introduced (typically Japanese), but were asked for many more "credentials", and were put at more work right from the start to prove any claim. Fast forward circa 2017 and many young and less young create "startups" (スタートアップ)---using only characters for foreign words---and no one uses the former word of venture company. Now attending events is easier, and deals or trials can be signed any other day. Still a la Japan, which does often come with many advantages (deeper and stronger relationships, way easier up-sales, etc). When Japan "switches" it is always impressive, as it looks like the whole "group" does---group is basically the nation here.

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What I see from Japan is a country that has castrated its younger demographics to support the elderly people. The elite politicians have abused their power and made the country a dull, old place for their own eternal control. The first two sentences are connected as majority of voters are elderly ppl who will sacrifice younger demographics for their well-being. Young ppl just don't have interest in politics as they think they can't make a difference(which is true) and also think all politicians are the same(which is also somewhat true). i.e., castrated. I don't see the country as democratic. It's more of a one party dictatorship, with some flavor of aristocracy. It is a slowly dying country hoping for a war to happen not in their territory but somewhere in their neighborhood 'hopefully' in Korea or Taiwan so that they can have another shot at growth.

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This is an excellent article on a sad situation. For many years Japan had the reputation of being a country with a relatively equal income distribution (at least post-World War II). I wonder how much of this is due to a widening gap between rural and urban districts, a phenomenon common to the US and Canada?

On a personal note I would appreciate it if my contact e-mail address could be changed to;


Thank you in advance,

Carl Mosk

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Thanks for putting words to what I had felt for a while when traveling in certain areas of Japan.

Hey, will you consider politics in your next post? I mean, Japan is essentially a one-party "democracy". Can you really hope for some change initiated by politics there?

Some things are more democratic than elsewhere (great press!). But politics...

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Everywhere needs to make houses, public transport and food (including eating and drinking out) cheap.

Plus not too long daily working hours and a four day week. Somewhere to live, not too long a commute, ability to meet friends for some food on a long weekend.

This may sound like a pipe dream. But I reckon it's probably not. Start with houses.

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