Simon Guznetz, an American economist who won the Nobel Prize in economics in 1971 said.
There are four kinds of countries: developed, developing, Japan, and Argentina.
In 20 years this phrase will change like that;
There are three kinds of countries: developed, developing, and Japan&Argentina.
If you want to live longly in Japan, you want to know the prospects of this country, right? Well let’s think.
Argentine where was a very rich country
In 1904, a poor country went into debt with countries around the world to fight Russia. One of some countries that bought government bonds at that time was Argentina. Also, this very wealthy country sold two warships that it imported from Italy, so this developing country was happy to use these ships for war. Then, betraying the expectations of the world, this Asian country defeated the Russian fleet. Yes, this country was Japan.
However, what amazes us is the wealth of Argentina at that time. In fact, the country’s economic growth rate was the highest in the world before the First World War. Good immigrants from Italy, Germany and Spain came to the port of Buenos Aires, and their new homeland was very rich for agriculture thanks to Pampa.
Buenos Aires was a very modern city, and innovative European architects tried designing beautiful buildings.
But, Argentina’s GDP is currently not high compared to that of Japan. What happened in this country? Well, it’s possible that you are Argentine, and you may know more than me.
So today I want to analyze from this study from “The Academy of International Japanese Economics”. And what I noticed that the same phenomena also occur in Japan are two.
1. Fall of the middle class
Argentina developed with the force of immigrants from Europe, but when it was not able to change its main industry from the food industry to heavy industry, the internal economy was in danger. In this crisis, the first victim was the middle class, therefore populism spread, and the classes went to fight in the same country.
2. Failure of industrialization
Argentina has many natural resources, but it could not change its main industry more modern, when other countries made money from producing cars, the country lost the opportunity to breed new technologies.
The same phenomena are occurring in Japan.
Japan will be Argentine
Japan is not the country of little inequality.
It’s a graph on the GINI coefficient, and the countries are like this;
So we can notice that Japan is more like the country of “Peaky Blinders and Downton Abbey” than the EU countries.
According to Thomas Piketty, inequality tends to grow more in recession than the normal economy, so Japan could be a more unequal country than now due to the Covid 19 recession. If inequality grows more and the middle class will die out, the economy Japanese will not be able to maintain the current scale.
Class immobilization is also prominent in the political world. For example Abe’s former prime minister’s father was the minister, and his grandfather is prime minister and (the CIA agent). In fact, to enter the political sector we have to marry the women of politicians, so I can say that Japan is a country of the Aristocracy.
Japan can’t invent new technologies lately
30 years ago Japan was the country like a bright new star. Sony and Toyota invented the new products, but today these companies suffer greatly from not easily changing their business. Because they have experience of success, that is why they cannot act drastically as before.
Also, society is a bit lazy to change. For example, if an innovative company sells an interesting system, many companies do not want to install it because they have to pay the initial cost. Honestly many Japanese factories think that using foreign labor is better than Robot. The reason is cruel but, it is why many come “spare parts” from the other countries.
Because of this mentality like the colonianists of the 16th century, this country has already lost the contested with China on the development of AI.
Considering the two previous points, I believe that Japan can decline like Argentina. The Japanese have the ant mentality as I explained, but if the queen ant monopolizes the food, won’t the nest collapse? although each ant cannot live alone.
When we think about Japan’s long-term future, we come up with many decline scenarios, but we realize that there is little potential for development. I would like you to understand that the country’s market is such a place and move here.