Can Japan Survive Its Demographic Crisis? | Samo Burja

Can Japan Survive Its Demographic Crisis? | Samo Burja

Today on Moment of Zen, we’re airing a conversation I had with Sam Obura, analyzing Japan’s present and future. We recorded this back in January 2024. Head to Sam Obura’s podcast, Live Players, and newsletter, The Bismar Brief, for more excellent country case studies. [Music] Everyone ends up talking about US versus China and we’re going to do uh some deep dives on on China as well, but it feels like uh Japan is kind of an underrated or underexplored uh country in terms of uh you know what what people talk about when they talk about geopolitics. Um so let’s do a deep dive on Japan and and maybe we can start with what is the right sort of mental model to think about Japan and its role. Let’s say let’s say over the last century though you can go back further if you want because it seems like you know it was an enemy of the US then then turned client state of of the US or that’s what some people say then then uh you know has has become more independent o over time and is going to be uh you know pretty significant player in sort of how how Asia uh evolves as the US retreats a little bit. So so why don’t you give a brief um kind of background or overview of how you see how how Japan’s situation has evolved and then we’ll get to what is situation today. Well, Japan used to be considered the upand cominging superpower and replacement for the United States and the late 1980s as the Soviet Union ceased to be a challenge. uh there was a lot of uh fiction released but a lot of also serious books right there’s I think a book called uh the coming war where the coming war wasn’t a war with uh China it was with Japan making the argument that since it exceeded the United States in GDP per capita which uh by the way was the case in uh you know the early 1990s uh for a period uh China would become a much more economically productive society and also technologically more advanced society than that the United States, uh, the fiction of the era, uh, sort of, you know, everything from Bladeunner to, you know, of course, anime films, uh, such as Ghost in a Shell, they were all expecting Japan to have these very like very technologically advanced, sprawling mega cities, maybe opening up to immigration, maybe not opening up to immigration. Um but either way the expectation was that you know this country might actually per capita and eventually in absolute terms become wealthier than the US and again they’d replicated most of uh America’s uh advanced electronics manufacturing. They had actually uh you know surpassed the United States in a way this vision of a Japan that exceeds and surpasses the United States came to be. It’s just that this Japan is much smaller not in geographic terms but in population terms. Today Japan remains a country with over 100 million people but the proportion of young people and working age people is much lower. Now what are the consequences of a much older population? the dependency ratio shoots up which means that for every uh person that is in the workforce uh that is working uh there might be one person or even two people that are supported. Now they might not be supported directly by the individual. It’s not necessarily, you know, a diligent son or daughter taking care of two elderly grandparents. But because of taxation and other transfers, it amounts to that. And very few societies so far uh have really figured out how to make the economics of elder care work, especially since once you are relatively affluent, you know, the Eskimo solution of uh pushing the old people out on the ice, that doesn’t work. I’m sure Canada is experimenting with its uh you know with its medicallyass assisted uh death program which of course expands every year in a way that’s you know completely unprincipled and not what the thing was supposed to be. So I’m being a little droll here. I’m being I’m being um skeptical of the Canadians in their Eskimo Eskimo ways or pardon Inuit ways. Um, I don’t think that’s actually going to solve their problem because I think it undermines the social contract in too fundamental a way. People will become much more uh selfish and or much more libertarian, however you take it, if they believe that universal health care is just putting you uh, you know, out of your misery once you’re in your 60s, 70s or 80s. The core of the social democratic social contract that you know Canada has and many European countries have even if it’s not immediately obvious is that we’re kind of all in this together and it’s supposed to be this like mutual aid society and you can’t have you cannot have an unprincipled exception excluding the old. Now ironically in Japan actually this concept of self-sacrifice for the greater good works a bit better. There are many people who uh came out of retirement to work on the Fukushima plant cleanup. Some of them even saying like pretty dark things about like, oh, you know, I’ve had a long life, etc., etc. Uh, but Japan remains an extremely high trust society in a way that’s distinct from Canada or from Sweden or from uh, you know, Germany or any of the other social democratic countries. And I do think it’s correct to think of Japan as some sort of social democratic country, right? They do have significant taxation. There’s a push for the common good. You know, maybe the welfare transfers aren’t as big. Uh but the basic structure is this very very in a way uh communitarian society except it has this added view that you are supposed to, you know, self-sacrifice to a significant degree to fulfill your social role. Now, this is no longer the feudal Japan of the samurai, but it is still the Japan of the salary men. Uh the salary man that stays with the, you know, large company for most of their working life, uh sacrifices, you know, with long working hours, uh barely seeing their wife or, you know, their husband in so far as women are in the workforce in modern Japan. And the result is this this life where in a way your immediate manager is the most important person in your life. In the United States while people are work obsessed and work very hard. You know your manager in theory can be replaced by another manager. Uh you could go work anywhere or so you tell yourself. and the large companies that still work very well in Japan like you know the another staple of 1980s fiction was the idea of these very efficient very technologically advanced uh Japanese you know mega corpse right developing uh you know replicants and off-world colonies and all of that stuff that we associate with the future um in a way those never stopped in Japan in the United States there came to be an alternate culture right we didn’t quite go into the IBM future. Arguably were a little bit in the um you know uh a little bit in the Microsoft future. But these companies at least when they got started like Google, Facebook uh these were not supposed to be mega corporations, right? These were supposed to be small, nimble companies uh changing the world, eventually growing, staying uh creative, flexible, etc. Um but in a way perhaps the United States had these industrial giants in the ‘ 50s,60s and so on, right? General Motors, General Electric, all of these like you know economic bedrocks and foundations. Companies like Toyota today in Japan remain that for Japan. And you know while they have adapted and adopted uh modern technology to a great degree in a way you know the Japanese office today is perhaps still more stuck in the 1990s than we might think. In some ways it’s you know um you know the the super apps are more fashionable there just as they are elsewhere in East Asia but there are still offices that expect you to fax things in. Um and that’s you know that’s like a an interesting example of like you know when a country first modernizes the standard way of doing things stays standard even if technology pushes forwards in a way maybe you know the peak of Japanese civilization was circa 1995 before the dependency ratio became crushing before it became clear that the fertility problem was not a short-term blip but a long-term trend and ever since then you know they have tried to offshore in an interesting way, right? Like major Japanese firms have invested in manufacturing facilities in in first in Taiwan and China and now in Vietnam because they wish to diversify from a geopolitical rival. Uh to this day, you know, this uh South Korean and and Japanese firms actually, you know, assemble and build many of their components in Vietnam. And uh this is a result not just of Japan being richer than Vietnam but Japan having a constricted supply of labor. So the labor costs are going up faster than Japan is becoming richer. There is an interesting economics paper however that demonstrates that even with all these problems even with taking some of the same solutions that the United States did with you know to preserve profits to preserve the large companies of offshoring etc. um Japan, you know, if you control for the aging of the population, all of the US advantages in productivity gains over Japan vanish from the economic data. So that’s very important, right? We love talking about how the US is unique and it turns out if Japan had stayed young, it would be just as unique as the United States, except in a very different, very Japanese way. Wow. Hey, we’ll continue our interview in a moment after a word from our sponsors. What does the future hold for business? Ask nine experts and you’ll get 10 answers. It’s a bull market. It’s a bare market. Rates will rise or fall. Can someone invent a crystal ball? 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Well, Japan has made efforts to reduce the labor costs of elder care and they have made some efforts to become a more child-friendly society. I think what should have been done on a very fundamental level was uh the equivalent of you know you know here’s the thing if if Japan was say the United States or even France you could argue that hey let us accept main some amount of mainland Chinese immigration let’s accept some South Korean immigration let’s accept immigration from these various sources and perhaps this will help alleviate this uh this speed bump while we slowly adjust upwards basically the um you know basic things like the child care subsidy stuff that Sweden does. This would have definitely improved their situation. It wouldn’t have solved it and of course it would have transformed Japanese society. So I’m saying I don’t think Japan could have done this. you um you would have provoked a terrible um in some ways maybe justified political counterreaction to any such program within Japanese society. Uh I do think that what could have been done is the equivalent of declaring a national emergency and immediately giving sort of huge tax exemptions for the second child and even making it more importantly a policy that top executives you cannot make top executive unless you have more than two children. Like if they made that a careerist requirement in the major Japanese corporations which sounds super interventionist like lock up the upper echelons for those who have children. Um it’s a form of I’m sure it’s a form of uh you know kind of discrimination etc. But I think that would have trickled down. It would have trickled down through the salary man culture. Now it might be almost too late because for people having children has become this exotic strange thing. And uh you know we’re seeing some of the same trends of course in the western world. But I think there’s a a difficult crux here that no western country has solved and no east Asian country has solved uh which is the contradiction between the expected social role of a parent, a father, a mother uh and the role of a good employee, a hardworking employee, a dedicated employee, someone that puts in weekends, right? Unless you can have the family person pro be promoted, um upward mobility comes at the cost of fertility and people will always choose upward mobility over fertility. And the problem then is if everyone chooses upward mobility over fertility, the whole country experiences downward mobility and uh you know that’s that’s a big problem like in the international rankings, right? Yeah, that’s a fascinating idea. Maybe it could work in the west too. uh sort of you know uh make a cultural movement if not a a legal uh you know one to uh encourage executives to have have two kids and uh and shame the ones who don’t. I mean there at least should be a removal of stigma of having uh lots of children and I think that is partially driven by uh the the misamed environmentalist view that you know fewer people fewer environmental problems right I think that’s that’s not correct because often when you go for fewer people in an already industrialized society the result is less efficient ways of doing things and more polluting ways of doing things as we discussed on some of our previous episodes but to go back on the big picture of Japan, you know, the Japanese situation is not hopeless. There might be a significant cultural revolution and rebound eventually. Um, I do think that for Japan to be Japan, uh, it does require a fairly high population. So, it’s not the case that Japan’s population could ch shrink to 50 million people or 60 million people, which is it it is set to over the next hundred years. and it stays economically Japan, it will become rapidly very impoverished. And people might say, well, is is that a problem in itself if it becomes relatively impoverished? Right? If it becomes relatively impoverished and and goes from being a first world country to, you know, maybe having a GDP per capita comparable to, you know, I don’t know, modernday Portugal or something like that or modern day uh modern day uh Poland. Uh the problem is that if you have an already old society that experiences a decrease in wealth, the immigratory pressures for the young become very severe. It’s sort of like, you know, you’re fighting against economic headwinds, right? There’s no tailwind pushing you forward. Uh and you find yourself completely uh you know, swimming against the current and you might as well move to the United States. you might as well move uh to Canada, you might as well move to Australia, maybe even move to China, right? That’s still an economically rising country. Um I think that there might be something like a tail spin effect which we’re starting to see in some of the poorer Eastern European countries. The wealthier ones are, you know, in a way succeeding, but the poorest ones such as Ukraine and Romania have their few young people move abroad because they can and because it’s much richer. Uh the world’s much richer and the economic growth is much better. Um there’s the opposite of this of course which is Poland, Estonia and these places that are experiencing rapid enough growth and are sometimes at this point benefiting from um you know people coming over from Ukraine as refugees or economic migrants or people coming from Romania as economic migrants or Bulgaria. Japan can still adjust especially if the automation bets that the whole world is making work out. They have pushed automation in this classical sense very very far in Japanese manufacturing and they have been doing this and pushing in this direction intentionally as a matter of government policy since the 1980s. Right? what was it the effort for the fifth generation computer for example and uh various robotics initiatives. Um these have shown middling results where the use of capital to substitute for labor is sort of the basis of the industrial revolution and they certainly do not have very expensive energy in Japan because of a well-developed fleet of nuclear reactors. However, it seems that automation is most productive when paired with a large labor force and you just need the scale of tens of millions of people working in the ind in a in an indust industrial sector for there to be benefits to an elomeration effect such as we observe in the you know uh in the broader Shenzhen area and Guandong province in China and also other provinces in China. It becomes very useful to deploy automation when you have a highly diversified specialized economy at scale. Um you know building a machine to do a job that only one company needs to do is always very expensive. building machine for a job that uh at least even if it’s still one company uh is needed in a 100 factories or a thousand factories becomes much cheaper let alone if it’s done by many many companies across the world right so in a way automation is something that we do in society to basically allow the the vast majority of workers to move on to a frontier area where we don’t yet have enough workers for it to be worth to automate things. So I think thinking of automation and scale as almost synonymous is a good description of what automation has been for the last 200 years. It’s not that you make a single smart machine to do everything that a human can do. You make a single dumb pretty energy expensive machine that however is cheaper than the labor that does what you know a thousand humans could do or 10,000 humans could do, right? uh or or at least a dozen. You you know I think it’s it’s hard to get even the economics to have to buy a machine that replaces a single worker to work, right? Uh what’s the yearly salary of a worker? Um you know, if it’s like uh you know, European style country might be $30, $40,000, something like that. Well, okay, how much maintenance and care and labor does this machine that you bought to replace this factory worker cost? It might be €5,000 a year. It might be €10,000 a year. uh it’s certainly not going to be uh quite a steel that kind of steel unless you replace many many workers right you mentioned that Japan can’t remain Japan you know and go down to 50 million people or something like that as some people predict but do you not uh can you not imagine a world where the sort of automation or robotics or sort of the AI and tech gets so good that we can actually substitute a large amount of human labor with uh with with technology and thus Japan Japan will be uh will be okay. I mean Japan is shockingly okay. It’s certainly it’s certainly dealing with a different set of problems than western countries that um say directly embraced immigration. Um but it’s doing actually fine. It’s per capita, you know, GDP has not yet gone down. It’s almost this red queen race where they’re pushing ahead in these investments in automation and everything else and they’re sort of barely keeping up with this uh demographic demographic tailwind. I think that look even in a world of very good automation you still want to have more people up until the moment you have automated everything right and the moment if it happens when you out auto automate everything or when you out compete humans in everything through truly generally intelligent cheaply manufactured machines right machines that can be adaptable and can be put into any part any new part of the economy that a human can be put in. Right? When we get to the point where machines do things that can’t scale, right? Um at that point, you know, yes, you are perhaps okay, perhaps you have been a leader in automation. Um but Japan sure has been waiting for this for a long time, for 40 years. And you know uh I I think that there is an important way in which they have to they have to solve the fertility issue to some degree. They have to solve it um in the next 10 or 20 or 30 years or this country. you know, they would still speak Japanese, but they would be significantly impoverished, right? And the young people would flee. And then I don’t think there’s an easy or good solution once that tail spin starts. For now, no one’s leaving Japan in great numbers. But I think that could very easily happen since this red queen race is becoming ever more intense. Now, there are substitutes they could pursue, right? They could say they could choose to lean into cheap energy to a great degree. I’m, you know, not really sure if they could compete in international nuclear exports immediately. Um, but if they were new cheap and abundant energy sources, uh, that I think almost does more than advances in artificial intelligence. Now, let me explain why. It also does feed into artificial general intelligence in into various kinds of uh other kinds of artificial intelligence. Um mostly due to the GPUs uh being an energyintens thing to manufacture and an you know modestly consumptive thing to run in great quantities. Um it is the case that the energy energy just is required to move stuff around basically. So everything basically everything we do can do some substitute we could do more of it if energy is cheaper right so that can help keep the dependency ratio going and the intelligence systems could help increase the dependency ratio but the case still is that even if Japan is saved by these economically right these technologies are available to the whole planet planet, right? China might be saved by it, too, but uh there’ll always be countries such as Turkey and India that might grab these same technologies yet also have cheaper labor. So, of course, they might out compete Japan and key manufacturing sectors. So, not there are two things we’re talking about. There’s the like absolute couldn’t much older society actually sustain itself uh through the use of advanced technology? answer is probably yes. At least if it doesn’t get worse, if the TFR doesn’t drop even lower than 1.3, uh maybe down to like 0.7 is what South Korea has that point, you have to actually expect the singularity within the next 20 years uh for that to work out. Um but in an international competitive sense, it’s not an absolute sense. Uh there will be a country somewhere around the world that is just as good at using automation as you are and has young well- educated labor that’s not being taxed incredibly to support the old. So like how are how is your company how’s Toyota going to out compete them, right? Why hasn’t Japan embraced mass scale immigration to and and if they did or do what what would the effects have been or or be? I think they could have embraced a system similar to the sort of Canadian point system. I think the jury is out as to whether countries other than the United States can make mass immigration economically successful. Maybe you only want to be the richest country in the world with open borders and you don’t want to be the second or third or fourth or 10th richest country in the world with open borders, right? Um I mean you know truly open borders is a different thing but uh the case is that the US sort of takes the cream of the crop of the world’s talent and then you know maybe Canada’s number two where on this list would Japan be in terms of top talent to some extent sure uh they would attract some people like Japanese culture has a deep charisma in the west there are people who uh like it love it appreciate it um But I don’t I don’t think it’s clear that say immigration will work out even for Germany, right? Maybe not even France. And France is much better at assimilating immigrants than than Germany. It seems that the scale required to make it work is so much greater and already at this limited scale that’s not even solving the pension system in Germany and in France they’ve sort of run out of economically productive immigrants like straightforwardly if you run the numbers the social services that are used by uh immigrants in in Germany and France on net almost outweigh the economic benefits. Now eventually this calculus can change either through cutting social services or uh you know hopefully the second generation then ends up being uh you know more highly more highly skilled more highly educated uh you know they’re not say escaping war torn Syria anymore there maybe maybe they gone to a good university maybe they’ve uh you know created a new and interesting interesting company uh it’s it’s not clear it’s not clear Japan could have competed in that. Singapore I think is trying and succeeding very hard at competing at attracting top talent but also has a system that in the west we would find distasteful where there are people with uh you know basically like tempor actually temporary migrant labor where uh people get to work in Singapore but they’re not tracked on citizenship or anything like that. It’s similar though less extreme to uh the system that the Persian Gulf countries use where the vast majority of the population in the country living in the country uh do not have citizenship and do not have a right to stay beyond their term and are basically just working for the minority of people who are citizens right who receive sort of the oil dividends. Um so I feel like I feel it feels to me that Japan could have done significantly more in this domain like especially in the 90s and especially in the early 2000s. Uh they could have been in a better place today. Um and the political and social problems would have likely been minor but they would face a very similar problem. Uh they couldn’t have done it at a massive enough scale without introducing like this massive cultural war uh domestically, right? And honestly, at that point, Japan wouldn’t be Japan anymore either, right? If half of the population were Chinese, is that still that’s that’s no longer Japan really. So, you can’t fault them for not choosing that if they feel themselves culturally distinct. Uh, but I think they could have easily been Japan could have stayed Japan and just been 80 uh 80% Japanese. I think that would have worked out fine. Yeah. Hey, we’ll continue our interview in a moment after a word from our sponsors. Every time I hop on the 101 freeway in SF, I look up at the various tech billboards and think, damn, Tarpentine should definitely be up there. And I bet I’m not alone. 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I mean, it’s it’s definitely it’s it’s a it’s an ethnostate. There are not many of those in the world, but they they are one. And how does that affect the culture relative? Like if Japan was 70% Japanese versus 97% like at what point do you start to see material impacts in the culture? And and how do we differentiate the ethnostates from the like what makes them so distinct besides the fact that they’re you know 97% or mostly one people? Like where else do we see that impacting the the the country? Well, here’s um you know, you know, we almost inevitably are now making this accidentally a meditation on on nationalism, right? This not necessarily the direction where I want to go talking about Japan. However, it is unavoidable. I think Japanese Japan is a very nationalist society. Um the view is that the state is the embodiment of this common community that our people has. And historically speaking, at least in Europe, the less libertarian European countries uh tended to be nationalist like 1930s Sweden social democrats were Swedish nationalists. They were talking about the creation of, you know, a a a national a national home, right? like a place to take care of everyone in our community where the idea was that there’s this deep uh sense of feeling kinship history and there are ways in which civ civic nationalism can replicate some of these basically like honestly pre-rational deep emotional commitments. Uh these motivate action both with very talented people but also motivate just generally people um you know everyday people uh to uh to do things better to do things for each other uh to accept taxation to accept conscription to accept all of these other things. So I think civic nationalism can replicate 70 to 80 again something like America is also a surprisingly nationalist country on most measures except it’s not quite a single nation. It claims to be but it’s it’s deeply conflicted about what it means to be a nation and there’s constant cultural war waged over that. But let’s say civic nationalism with the right ideology can sort of replicate a lot of these social techn social technology aspects of being homogeneous. Um, of course now even that might start breaking down in some western countries arguably like in France the big debate is are we still going to do civic nationalism and the belief in the republic and making everyone learn the French language regardless of you know what their religion is or where where their parents are from or grandparents are from? or are we going to embrace like this plurality of ideas this um multi multicultural approach where maybe honestly different legal standards apply for different people etc etc this is kind of this you know I I I don’t want to call it you know woke you don’t want to use those terms you don’t want to politicize things um but the view in the 2010s was hey assimilation failed let’s try to let’s try to do let’s try to make several parallel societies ities just work together in the same polity and that’s that’s a challenge European countries haven’t solved. uh but for Japan and you know other countries that are that are like this you know I do think that there is a significant social trust benefit there’s a way in which you know the old people going to clean up Fukushima or whatever they sort of feel they’re doing this for their extended very very extended family right that’s kind of the vibe right and you know that China has some aspects of this though it has more national diversity where you know people sometimes describe China as an ethnost state but it’s not quite true there’s like a lot of difference even between uh Han if they speak different languages like Cantonese versus Mandarin. So, China I think is like almost a I think it’s uh twothirds of the way towards Japan but it has some elements of the American civic nationalism solution for trying to produce a high trust society and again you know there are all sorts of questions that stop being awkward in Japan crime is not a racial uh racialized question and crime crime uh fighting right like or policing is not such a question. Why? Because there’s no there’s no there might be class discrimination, but there’s no idea of like, okay, there’s there’s racial discrimination or something like that. That doesn’t come up. And in a in a way, maybe they then accept policing that is too harsh or unfair, but it doesn’t feel like it’s oppressing a minority or something like this, right? Is the benefit of homogeneity that there’s much less culture war, much more unity, easier to rally around? Is is some drawback that maybe there’s less dynamism or is that cope and there’s actually not really a drawback? Well, you know, I think Japan was very dynamic in a uniquely Japanese way in the 1980s and it is much less dynamic today. You know, people like to discuss the um you know, you know, the iPhone is certainly an amazing breakthrough. The iPod was a breakthrough, but you know, the Walkman was a pretty cool breakthrough, too. Like it’s 1990s era tech. uh the Japanese were often very innovative in consumer electronics. We didn’t narrativize them as innovative but they were and uh we all adopted their consumption patterns in many ways. Um I think that even a homogeneous society can be very creative if it is tolerant of or rather if it does one of two things. If it highly encourages excellence and the other one is it’s tolerant of individual eccentricity. And let’s put it this way. I think the Japanese always excelled at encouraging and rewarding excellence, high skill, doing something remarkable, achieving mastery in something. Uh let’s say 1900s Britain was perhaps better at tolerating eccentricity, right? Or 1800s Britain was probably better at this than 1900’s Britain to be honest. So you can have a very innovative but relatively uh culturally homogeneous country. Um so I think in some ways yes it’s cope. Uh in other ways if you have a diverse country you can profit off of the creativity of the world and bring in anyone and everyone right you can bring the maroneies and you can bring the technicians and you know you can bring whoever you wish right whatever expert from any part of the world they can become your expert it’ll be fairly easy for them to to to to you know put down roots and live and contribute in your society. Um, and also again you could be a very diverse country and not be very creative. I’m again looking at Canada, right? I’m looking at Canada. Canada is a very diverse country. It is not very technologically or economically or even culturally creative. It could be, but it’s not. So, I think that uh it is possible to do both, right? You can imagine a situation where, you know, severe ethnic tension actually gets in the way of doing things in some very poor, very diverse countries. you have this immense problem, right? Like the former Yugoslavia broke up uh due to these problems. Nigeria and Ethiopia struggle to govern themselves uh because of uh the conflicts. And this gets in the way of political stability. It gets in the way of rule of law. It gets in the way of fighting corruption because if you try to fight corruption in Ethiopia or Nigeria, it’s it’s always the case that one tribe is going to think that you’re secretly purging them from all positions of power. even if you just wore a gun to arrest everyone who was a corrupt politician or something like that, everything gets viewed through a tribal lens. Uh so I think that youth is perhaps even more important than diversity in terms of creativity. So the United States is I think a very creative western country partially because it’s one of the younger western countries and yes this is partially due to immigration working but it’s also partially due to until very recently its fertility having been higher and young people you know they tend to need space to do things in a society that has transitioned from a bottom up to a top downheavy uh sort of age pyramid. The corporate hierarchy also becomes very heavy from the top downwards. The social hierarchy, the academic hierarchy, the governmental hierarchy. Uh it becomes impossible to be the senior anything. You have to be the junior everything. And the result of this then is that people waste their most creative, productive, energetic years there. And again, that’s sort of maybe part of the reason for the USS continued actual creativity lead has been this idea that you can be very young and can just start and create your own company instead of working up uh your way in someone else’s company and tech in a way greatly enabled this from the 1990s to at least until uh the late 2010s. We’ll see how the 2020s shake out. Yeah, it is interesting in Japan how there’s this sort of juxtaposition of sort of this careerism or scleroticism or you know strong hierarchy rigidness rigidity as you’re talking about but also and maybe the exhaust of that is this kind of weird cultural uh sort of perversity or or creativity in in you know things like video games or things like sex robots or or sort of uh I don’t know incel culture. I don’t know if that’s actually true. I mean that’s that’s also now true of the United States, right? Maybe Japan was just ahead of the curve. It was the society of the future. And the society of the future, we don’t leave our room and we play video games all day. Speaking of US and Japan, why don’t you talk a little bit about that relationship and how that relationship has has evolved and what what that looks like today and then we’ll get to where Japan sits in Asia. Right. Um Japan uh was definitely a one of the most successful countries in the world in terms of development and modernization even long before uh the successes in recent decades. Right? The major restoration basically resulted in a massive political and economic change where Japan very quickly caught up to some of the leading powers of the western world militarily. uh first defeating Russia and then over time uh you know coming to contest Britain and the United States culminating in sort of the second world war. Uh there was in between of course also a long period where the Japanese were close allies of the British uh because they were considered a naval uh balance and a military balance to Russian expansion in East Asia. Interestingly enough, after the United States defeated uh Japan in World War II, uh the United States note had uh put on basically an oil embargo um on Japan. They had uh stopped exporting various key natural resources to Japan when Japan invaded China. Uh eventually the Japanese were sort of convinced that they only had uh this very limited window with wi within which they could win uh the war in China. And there was a unrealistic view that if you wiped out uh enough of the American naval fleet, it would just be possible to retain naval supremacy for long enough to push terms onto the US and allow Japanese expansion in Southeast Asia and other places where it could acquire a resource base, a natural resource base to match its growing industrial base. So in a way, Japan was pushing outward because it industrialized and required natural resources that were you know um independent of the geopolitical whims of foreign powers to sustain and grow that industrial base and that drove them into this uh form of Japanese imperialism. This clashed with US ambitions in the Pacific Ocean because the United States had already in the 30s identified honestly even the 1920s had identified the Pacific as a key area of future interests. Right? Theodore Roosevelt was instrumental in uh working out the arrangement in China after the intervention of European powers. You know, the Philippines were basically a US colony. Hawaii, you know, had not yet been made a state, was just a territory. Now, after uh the war was over, Japan’s industrial base in a way was allowed to redevelop for similar reasons to that of Western West Germany. Um someone put it the the worry was that these countries if they are de-industrialized become impoverished might become breeding grounds for communist revolution like if the US a capitalist occupying country is making us poor perhaps we should be a communist country instead and there was you know a communist party movement in Japan after World War II as this industrial base redevelops in a way Japan got its uh you know co-rossperity sphere, which is what the name was for the extended Japanese empire and its puppet states. Uh, but it wasn’t Japanese. It was America’s co-pros prosperity sphere, right? America guaranteeing global ocean trade. America guaranteeing Japan uh, you know, fair trading terms for natural resources underneath uh, you know, with other American client states. And ultimately while the US did forbid Japan from arming itself militarily from uh developing from developing uh significant uh that’s not quite true. The while the United States prevented Japan from openly remilitarizing openly redevelop you know redeploying its navy its air force its army uh and definitely preventing it from intervening anywhere. uh the US was a a final guarantor of Japan’s security first versus the USSR and secondly now ever more versus China. So the United States and Japan went from being political rivals for the Pacific to okay, America owns the Pacific de facto, but Japan gets to thrive economically and now are in a position where the US sees Japan as a as a useful counterbalance to China and Japan views the US as necessary for it to remain politically independent with of China even as it does far more business with China than it ever did before. There was uh also a period where economic competition from Japan was considered excessive and this led to a by now forgotten trade war where the US attempted several protectionist measures that were arguably somewhat successful uh to not be outco competed uh completely uh by the Japanese corporate world. say more about uh the sort of the state of the military um today. You did a deep dive on in a bismar brief that people should should should check out and um you know what is Japan’s military situation mean for for you know where it situates itself and and um in sort of the geopolitical you know game here. Well, Japan uh had imposed on itself and to a great extent has accepted a pacifist constitution since 1945. Next year will be, you know, 2024 will be the first year since 1945 that Japan will have an operating aircraft carrier. So, how can you have a pacifist constitution with a self-defense aircraft carrier? Um, this is very interesting, right? Um the the solution to this is essentially that they nominally were not immediately allowed to rearm in the 1940s and50s but by the 50s especially the Korean War um that the US was involved in that China was involved in that the USSR was involved in uh changed everything and the belief was very quickly that in practice we should allow Japan to rearm. Does this mean that the constitution is toothless? No. It does mean that for example uh Japan cannot enter certain kinds of military treaties and Japan cannot justify easily intervention abroad. Japan has invested in one of the world’s best navies even if it’s you know uh not notionally it’s supposed to be closer to a coastal to a coast guard than a proper navy but it is one of the world’s best navies. um their air force buys and uses the same equipment that the US air force uses. You can have these wonderful uh you know pictures of Shinto priests uh blessing the uh F-22 or the F35 or whatever. Uh it’s kind of surreal seeing like American what we consider American hardware, right? the jet uh the jet fighter uh sort of completely uh you know uh completely uh assimilated into that cultural practice and completely owned by Japan. Um Japan has a space agency uh actually a very high quality civilian space agency but this also means it has all the technical expertise needed for uh ICBMs for intercontinental ballistic missiles. when it puts uh you know a UAE uh probe, when it puts a UAE uh lander on the surface of Mars or an orbiter or whatever mission uh another country hires them to carry out, you know, if you can put a a probe in the orbit of Mars, you can certainly put a nuclear warhead in Beijing and, you know, maybe even further a field, maybe even Moscow. That capacity is there. there’s just some assembly required. It also has a large stockpile of plutonium. Again, there’s a civilian uh energy program which I think is very good for Japan. But in practice, this means that they are known to be by all major powers one year away from developing nuclear weapons. So you have a space program and a civilian uh research program. Plutonium by the way is not necessary to generate electricity but you know you’re stockpiling it for a reactor that you’ve not even built a special experimental reactor when really it’s like okay that is your reserve so that you can build hundreds of nuclear warheads if you need to within a year if the geopolitical situation changes. So there is a nuclear arsenal in Japan some assembly required. their navy is a significant factor in any potential future fight over Taiwan. So that’s why it really does matter whether Japan has a navy and why the US the US might have not wanted Japan to have a navy in 1930. They certainly want Japan to have a navy today. Why? Because no matter how strong the Japanese navy, they’re never going to dominate the Pacific. It’s only a question does the US with Japan dominate the Pacific or does China on its own dominate the Pacific? Right? So the US is now in favor of that type of naval naval buildup. Finally also um the perspective on the Japanese military though of the general population might be an example where the pacifist constitution has become real. The population in general is not in favor of significant military engagement. It is not clear they would be happy with significant military casualties. Now, under the certain conditions, I’m sure the Japanese people, again, this is perhaps a benefit of nationalism, would be willing to fight for Japan, like if there was a literal invasion of Japan by China. But even uh but a more ambiguous situation where US and and Chinese ships start shooting at each other around Taiwan. There’s perhaps not even an invasion of Taiwan yet. It’s not clear how many casualties uh the Japanese public would would want to endure especially since again in young societies it’s a tragedy of history but in young societies young men’s lives are cheap in old societies I think we are starting to see that young men’s lives are dear they are expensive uh Ukraine’s and maybe even Russia’s demographic damage uh the economic damage caused by people dying staying on the battlefield and not being replaced by other workers because you’re not you’re not having enough babies that might yet prove to be crushing, right? Like the hundreds of thousands of dead in Ukraine today. And this is keenly felt on a basic social level. It’s um we uh you know anyone who’s a parent know you love all your children and you certainly you know it’s it’s not it shouldn’t be and it’s not the case that you would feel the tragedy of your only child dying more keenly. However, however, in practice, I think people work much much harder to stop their only son or only daughter from dying in a war than they do if they, you know, if they have 10 children. Maybe they care all about all of their children equally, but they have to disperse their efforts at draft dodging and bribing to 10 kids. So, it’s you can’t do it for all of them. Maybe you can do it for uh for three, but you can definitely do it for one. Even if you’re a middle-ass family, you can probably find a way to smuggle your your son or daughter out of the country, right? And again, in war, mostly we still conscript men. Though, I’m going to note if the drone warfare revolution continues, then truly there’ll be no argument not to also conscript women. And that might result in a very interesting culture war of its own kind uh for 21st century society. Wow. Yeah, that would be interesting to see. Um maybe gearing towards closing here, um maybe maybe as the last big question to take on is like say more about how you expect uh Japan’s role in Asia to to play out as sort of the the chess board changes a bit. what are the sort of things you’re you’re watching out for or what are the the things you you predict uh besides what we’ve discussed so far might uh might play out as a visa v China or or elsewhere within uh within Asia. Well, one of the most important things is that there is no economically prosperous future in the aftermath of a of a hypothetical war with China because Japan already is significantly invested in China, right? Like there are just factories that are owned by uh Japanese companies. There are business partnerships that have become integral just as the US cannot you know you know cannot reshore everything home or even French shore that is you know put it on into allied countries uh in the same way Japan can’t really do that anymore. Now having said that Japan is determined to be politically independent from China. It is determined to not follow Chinese policy on a very fundamental level. they disagree with the Chinese approach to society um and they they will basically for nationalist reasons continue to oppose China. So even if economically it was better for Japan to enter into a Chinese economic arrangement right because China at the end of the day doesn’t put that much ideological pressure on its client states it’s very few client states but precisely because Japan is homogeneous because Japan is a very weird country because it has a nationalist uh identity I think the view of political independence being paramount ount is going to be top of mind. So my prediction would be Japan will if the US remains in Asia continue to be a staunch US ally. Now does this mean that they will be a US ally in everything everywhere else around the world but they will regionally be a US ally? um they will basically not have significant frictions with South Korea despite the economic competition. That’s going to be resolved through whatever protectionist sort of uh trade war these two countries might engage in. Right? But if the US were to withdraw from East Asia, I actually think Japan would continually would continue to stay independent from China except they would very quickly, you know, assemble that nuclear arsenal I mentioned. Russia demonstrates today that with a sufficiently large nuclear arsenal, even if all other indicators of power are unfavorable, there remains a hard limit beyond which a more powerful country uh can’t necessarily stop you from doing what you want to do or cannot actually uh affect regime change uh no matter how hard the other stuff is. So I think Japan were the United States to decide that actually we lost the struggle for East Asia. It’s now China’s backyard. We’re no longer, you know, the great power in the Pacific. We share the Pacific. In that situation, I think we would see a nuclear armed uh Japan. And I think that would be mostly fine except it would uh definitely put pressure on China to increase the size of its nuclear arsenal. So that might have negative effects because then that is a race that the United States might feel compelled to reenter and uh that is perhaps a more unstable world. That might be a good place to wrap, but but I just wanted to ask um is there anything we didn’t get to uh that you about Japan that you think is particularly important to to leave listeners with as a another thing to keep in mind as as we think about the country? I think Japan is a a great exemplar of a country where the short-term economic future of having people work very very hard and sacrifice everything in their life and dedicate everything in their life and rejoice in their life through uh their work. I think Japan shows the limits of that and I think these are limits that we will encounter in the western world as well as well. Maybe this is top of mind because it’s uh Christmas, but to me it, you know, at least was yesterday. Um, but to me it seems that we have to reintegrate family life uh the obligations and responsibilities of a citizen and work into something more coherent and uh sustainable than what we have currently. That’s a great place to wrap this holiday episode. Uh Samo, thanks so much for coming to the podcast and until next time. Yeah, thank you. [Music] Hey everyone, Eric here at Tarpentine. We’re building the first media outlet for tech people by tech people. 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*Today on Moment of Zen is a conversation I had with Samo Burja back in January 2024 on Japan’s existential demographic crisis, analyzing how collapsing fertility rates and population aging threaten the nation’s economic and geopolitical future. The discussion explores cultural barriers to family formation, automation limitations, and Japan’s dilemma between preserving identity versus accepting transformative change.

Make sure to subscribe to Samo Burja’s Bismarck Brief and the Live Players podcast to read analyses and briefs like this one:

Bismarck Brief: ⁠https://brief.bismarckanalysis.com/⁠
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HIGHLIGHTS OF THE DISCUSSION:
Demographic Crisis
* Fertility rate collapsed to 1.3 – population shrinking from 125M to 50M this century
* Aging dependency ratio crushing economy – fewer workers supporting more elderly
* Young people may emigrate if decline accelerates

Cultural Challenges
* Work vs. family contradiction – salaryman culture prioritizes career over children
* Proposed solution: Require executives to have 2+ kids
* 97% ethnic homogeneity creates social cohesion but limits immigration options

Economic Implications
* Automation needs scale – fewer people makes it less effectiveJapan’s productivity gains vanish when controlling for aging
* Risk of economic tailspin and brain drain

Military Transformation
* From pacifist to military power – world-class navy, converting carriers for F-35Bs
* Nuclear weapons ready – space program + plutonium = “some assembly required”
* Key player in Taiwan scenarios

Geopolitical Positioning
* Economically tied to China, security-wise allied with US
* Will stay politically independent from China due to nationalism
* Would go nuclear if US withdraws from East Asia

Japan must choose: Maintain cultural identity and accept economic decline, or transform through immigration to stay economically viable. Currently choosing the former while hoping automation saves them.