The Absent Superpower: The Shale Revolution and a World Without America by Peter Zeihan

Author:Peter Zeihan [Zeihan, Peter]
Language: eng
Format: epub
Publisher: Zeihan on Geopolitics
Published: 2017-01-29T00:00:00+00:00

Japan’s Surprising Strength

One of the great examples of conventional wisdom being misinformed is the idea that Japan is a major trading power. This certainly was true in the 1980s, when some 10 percent of global merchandise trade started in a Japanese workshop, but those heady days are long over. The 1990s brought a near-collapse in the banking sector that would have been so total that rather than attempt a repair that would have guaranteed a complete Depression-style collapse (in the best-case scenario) Tokyo instead smothered the entire system in a never-ending flood of printed money. Armageddon was avoided, but the cost was all of Japan’s long-term dynamism.

After a quarter-century of economic growth averaging below 1 percent, Japan’s population has become so accustomed to stagnation that it has stopped consuming, causing a slow-motion deflationary debt spiral every bit as lethal in the long term as the financial catastrophe the Japanese narrowly avoided. The funk is now so deep that most Japanese aren’t even having children, making Japan the first country in the world to age past any hope of demographic recovery.1 Unsurprisingly, Japan now suffers under the economic weight of supporting the world’s oldest population: Japanese labor costs — the highest in Asia and among the highest in the world — nudge up a bit higher every year and the country now purchases more diapers for adults than for children. Combined, these intermingled crises have manifested as seven recessions in under 25 years. Perhaps most galling to the Japanese citizenry is that with every blow suffered, the technological gap between Japan and the rest of the world — and particularly among it and its Asian competitors in Korea, Taiwan, and China — has narrowed.

Such sky-high (and rising) labor costs have forced bit after bit of Japanese industry to move away, either to locate in lower-wage countries, closer to end markets, or both. Far from being a major force in world trade as it was in the 1980s, Japan in 2016 is the third least integrated major economy in the world. Japanese domestic production is now almost wholly focused not on further shores, but instead upon the domestic market.2 Looking forward, it is difficult to muster the optimism that this will all end well.

But never confuse “irrecoverable” or “doomed” or “decline” with “broken” or “irrelevant” or “powerless.” Even if Japanese labor costs double from today’s high levels, even if Japan outsources the entirety of its export industry, even if the Koreans manage to achieve their quietly-held dream of matching and then surpassing the Japanese in technical skill, Japan still matters hugely.

In fact, Japan’s future strength and relevance comes directly from today’s weakness.

Of what’s left of Japan’s trade portfolio, by far the biggest piece isn’t even any specific export category at all, but energy imports. And therein lies Japan’s power over the future. For while the Japanese import almost every molecule of the oil, natural gas, uranium, and coal they need, they also have a military capable of going to anywhere in the world to get it.

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