In a political climate that is already turbulent, will debt and population decline hinder Japanese Democracy? If so, how can the Japanese government stop these problems from contributing to a democratic decline?
Japan has the highest national debt to Gross Domestic product ratio in the world, at more than 230% (Country Comparison, 2017). As of 2013, the actual monetary figure reached over one quadrillion yen, or about $10.46 trillion (Krek, 2013). Most of Japan’s debt is owed to the Bank of Japan (BOJ) and other Japanese banks. The banks have avoided massive inflation of the Japanese Yen by lowering interest rates on the government to extremely low levels. Interest rates have fallen into negative percentages, meaning that the Bank of Japan is effectively funding the Japanese government at a loss. As a result, prices in Japan are able to continually decrease or at least stay the same despite the massive growing public debt (Bank Of Japan, 2019). This relationship between the national banks and the government of Japan has worked in Japan so far, despite the ridiculously large amount of debt accumulated. Nonetheless, this situation is the first of its kind. It is unknown whether or not this Japanese method of avoiding financial crisis is maintainable in the long-term. Unfortunately, Japan is facing another crisis that will likely compound the debt issue: a rapidly declining population.
Japan’s population has been steadily declining since 2008 due to a combination of low fertility rates and one of the highest life expectancies in the world. Other factors include declining marriage rates and an increase of women in the workplace. This issue is a mounting crisis in it’s own right– Japan has lost more than 1.5 million people since the beginning of its population decline and is projected to have only 88 million people by 2065, a similar population to that that Japan had in the 1950’s (Kato, 2018). Still, the most pressing matter that will come out of a large scale population decline is not the decline itself, but the financial repercussions of such a decline in a country so deep in debt. Japan’s elderly population is increasing every day, while the working population and child population are dwindling. As a consequence of this, Japanese government will have to increase tax rates to fund its social security programs for its growing elderly population. However, it is not known whether or not the next working generation will be able to support the elderly because tax revenue will be scarce and social security expenditure will have to be historically high (Kato, 2018). There is a real chance that the Japanese government will not be able to support its elderly, despite historically high tax rates on income and consumption, resulting in an economic depression or collapse.
Income inequality and job insecurity are products of economic collapse, as well as catalysts for potential democratic backsliding. At the same time, economic collapse would sever ties of trust the Japanese people with their government; the government implemented the policies that allowed the Japanese debt to balloon so much. To make matters worse, trust of the Japanese people towards the Japanese government has dwindled in recent years (Brasor, 2017). Scandals from members of the Liberal Democratic Party of Japan (LDP) and and snap elections called by the current prime minister, Shinzo Abe, have made Japanese voters distrustful of their government and apathetic to the current democratic system (Japan’s Snap Election, 2017). For example, in recent Municipal elections voter turnout has been historically low, such as in Matsue (58%, lowest ever), Fukushima (38%, lowest ever), and Tokyo (37%, Lowest ever) (Brasor, 2017). In a country where trust in the government is already dwindling, potential economic collapse may be the last catalyst necessary for a potential democratic decline to actualize.
In summary, Japan’s current debt crisis will only be worsened by its declining population. The debt crisis may cause the Japanese economy to implode, which could accelerate the symptoms of democratic backsliding that Japan is already experiencing. To avoid a financial collapse, the cleanest solution that Japan has is opening its borders to immigrants. Vast immigration would reverse Japan’s declining population, and immigrants would pay taxes and contribute to the economy. This approach would allow the Japanese government to slowly chip away at its debt with real tax revenue instead of loans from the national bank, thus solving the problem at its core. Still many Japanese citizens are anxious about an influx of foreigners, and immigration to Japan has never been as open as other countries with huge markets. Japan is faced with difficult cultural and financial problems in the near future.