Those two so-called ‘lost decades’ have frequently been cited as an object lesson in failed economic policies, from central banking to innovation to failure to reform financial institutions.
Growth remains low and there is a host of challenges facing Japan in the longer term because of its hyper-ageing and shrinking population, high government debt and revolving-door politics. On top of all this, Japan suffered the triple disaster of a massive earthquake, tsunami and nuclear meltdown in March 2011. Not even the triple disaster seems yet to have stimulated the change that many had hoped for. Reform and change seems agonisingly slow.
Yet Japan is a prosperous society. Its people are safer and enjoy greater longevity than the people of most other countries. Its social infrastructure is the envy of the world and unemployment is low. The cities are efficient and clean. It has modernised while maintaining its uniqueness, with Japanese fashion, music and culture (even anime) a major cultural force in Asia and beyond.
Despite what seem to be insurmountable problems, Japan appears to get things done and the idea of policy and institutional failures in the ‘lost decades’ probably needs to be re-evaluated. At the same time, aspects of Japanese infrastructure have become less competitive, the under-utilisation of the talent and potential of women in the workforce, a cosseted agricultural sector and uncompetitive service sector all beg reform, and national politics has taken what internationally is construed as a problematic or at best unpredictable turn to the right.
Political stalemate hampers national reform and international influence. In the latest issue of the East Asia Forum Quarterly published today, those areas that are in urgent need of change are set out alongside stories about what Japan has done right and where Japan continues to be in front. The idea that Japan is successful in ‘leading from behind’ is one about which I wrote around thirty years ago. It still resonates with Japan’s diplomatic circumstance, in both a positive way as well as a way that is rather less positive.
In this week’s lead essay Shiro Armstrong recalls a time when ‘Japan played an important and active role in creating and providing public goods and development assistance in the region, and in maintaining open and robust markets’.
Today, one couldn’t describe Japanese diplomacy in terms like this. Like Japanese domestic policy, international diplomacy is in stasis: directionless, reactive and commanding little influence, however well motivated the hapless diplomats and foreign policy tribe who would wish it were otherwise but have no political traction to make it so.
Armstrong reminds us of the risk Japan and all of us face if this does not change: ‘the risk of Japan’s descending into further irrelevance’ or fuelling regional uncertainty is not negligible.
With the national assets that Japan has amassed through diligence and social will, it should not remain thus.
Japan can seek to retake the diplomatic space which it occupied in the 1970s and 1980s when it had a clearly ‘articulated international strategy that was important to securing regional and global growth and development — in establishment of the ADB; its diplomatic initiatives with China; its role in the formation of APEC; its large scale global development assistance program and its role in funding and supporting the United Nations processes’.
Defining a foreign policy strategy that captures the national interest in collective regional and global prosperity and security and turns around the inward-looking and populist tide that is sweeping across the country is essential to arresting the drift in Japanese diplomacy. Australia has a deep interest in retaking this diplomatic ground with Japan.
Peter Drysdale is Editor of the East Asia Forum.