Posted on 9-1-2002
Japan
at the Crossroads
By Hazel Henderson*
Japan is the world's first economy to attain maturity. From
the
perspective of GDP growth indicators and conventional economic
theory,
Japan, we are told, is "stagnating." US economists dispense
advice almost
frantically: "loosen monetary policy," "liberalize," "open Japan's
economy
wider," "cut company payrolls and make Japan's labor force more
flexible"
and from the usually conservative, London-based The Economist:
"print money"!
From a futurist's perspective, all this advice is nonsensical.
Japan is
transitioning from short-term, material economic growth at whatever
social
and environmental costs - to more mature long-term economic
optimization.
Recognizing that Japan has reached a comfortably high plateau
of
widely-shared, materialistic achievement, will require a new
national
debate. Japan is discovering that it needs a new economic game
plan. This
change of course, will require a new scorecard of national wealth
and
progress, which can measure advances toward greater quality-of-life
for all
Japanese citizens.
As people acquire more and more material assets - cars, well-furnished
homes, high-quality food, clothing, TVs, cellphones, toys and
novelties -
they turn to more spiritual, non-material concerns. Such satiated
consumers look for personal development, intellectual challenges,
opportunities to volunteer and make their communities more livable.
These
higher goals become new measures of satisfaction.
All this is reflected in the public sector. Japan already has
the finest
public buildings, trains, roads, bridges and cities in the world.
Like
most visitors, I love Toyko's clean, safe, orderly streets and
efficient
subways, riding on the Hikari to Osaka and Kyoto and the ease
with which I
can visit Fukuoka and Sapporo. Japanese people have higher average
educational attainment than Americans. Decades of low unemployment
and
wide income distribution maintained social harmony and avoided
US-style
poverty gaps. Japan retained many valuable traditions and aesthetics,
which
visitors admire. In a word, the quality-of-life in Japan seems
higher on
many social and environmental indicators than that in the USA.
Japan's economy is twice as energy-efficient as that of the
USA, which
means half as much pollution and waste. Japanese people can
still shop in
friendly, small stores in local neighborhoods - while Americans
must get in
to their gas-guzzling 2-ton SUVs and often drive 25 miles for
a container
of milk. During the trade-related "structural impediments" debates
of the
1980s, US "free traders" tried to make Japan as energy-wasteful
as the USA!
So why all the advice from foreign economists to sacrifice such
social
amenities to hype material growth of GDP? Growth rates must
always be
related to the base size of an economy - as it grows large -
the rate of
growth naturally must slow. Why keep constructing ever more
highways,
bridges and other unneeded public works - just to boost such
"adolescent"
economic growth rates to impress global markets and raise investors
rates
of financial return? Does money always equate with wealth?
Japan is admonished, "you must keep GDP growth rates high, get
the Nikkei
moving back up so your banks will stay solvent and you can reduce
your
"shockingly high" public debt of some 120% of your GDP."
Let's look a bit closer at that public debt. Yes, it is high,
but look at
all of the fine array of public assets, those funds bought:
the railways,
roads, public education, universities, etc.. These assets are
still there
- and will be for hundreds of years! And what about the generations
of
healthy, well-nourished, highly educated citizens these public
funds have
produced, which will go on paying social dividends for many
decades?
Today, there is no need to go on trying to hype GDP-growth by
more
construction projects. There are new and better ways to grow.
Japan can
invest in improving quality-of-life, human development and an
ecologically-sustainable economy with "greener," high-tech companies,
products and services. Prime Minister Koizumi has some of the
right ideas:
like having government departments buy new energy-efficient,
less polluting
cars, such as the hybrids of Honda and the Toyota Prius, which
I own.
But the first thing Koizumi needs to do is challenge those economists
who
don't understand the difference between money and true wealth,
between a
society's "adolescent" growth stage and its wiser, adult maturity.
Imagine
if your son and daughter kept on growing at their teenage rate.
They would
end up as monsters! Parents hope their teenagers will learn
and grow
spiritually - to become good citizens. Economies and societies
can also
reach for non-material goals, higher levels of services, culture,
art and
spiritual development.
Prime Minister Koizumi could announce that GDP is no longer
an appropriate
measure of economic maturity and that GDP will be re-calculated
to include
social and environmental costs and benefits. As a start, in
the same way
that the USA did in January 1996 and Canada adopted in 1998,
Japan's public
works investments in national infrastructure will not only be
recorded as
public debt. These public infrastructure investments will also
be accounted
as the long-term assets they are - and amortized over their
5-100 year
useful life (just as factories are on company balance sheets).
This would
correct the false impression that Japan is carrying any more
public debt
than the USA or any other OECD country. Indeed, it was this
very same
accounting change in the USA that contributed in large part
to the much
vaunted (but now shrinking) US budget surplus! The same happy
national
account recalculation produced a $50 billion windfall, which
put Canada's
budget in surplus.
Once Japan has corrected its national accounts in the same way,
the banking
"crisis" will recede and restructuring can proceed more easily.
Japan's
budget will look more manageable - if not show a surplus. Victory
can be
declared, and Japan will announce to the world that it is now
calculating
its national progress even beyond this new GDP. The new mature
Japan's
scorecard will measure Quality-of-Life - using selected new
statistical
measures similar to the UN's Human Development Index (HDI) and
the World
Bank's new Wealth Index, which counts 60% of the wealth of nations
as human
capital and social assets, 20% as ecological assets and only
20% the built
assets (financial capital, factories, etc.), which GDP measures.
Even economist John Maynard Keynes wrote in 1930 in his "Economic
Possibilities for Our Grandchildren," the economics problems
may be solved
in 100 years," Then man(sic) will be faced with his real, permanent
problem,….how to use his freedom and occupy his "leisure." This
is mature
Japan's new challenge.
* HAZEL HENDERSON, author, futurist and consultant on sustainable
development. Her latest book is Beyond Globalization: Shaping
a
Sustainable Global Economy. www.hazelhenderson.com
Henderson's Quality of
Life Indicators, partnered with the US based Calvert Group of
socially-responsible mutual funds are at www.calvert-henderson.com
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