The European Council on Foreign Relations

Japanese lessons - Waving or drowning?

Date: 9th May 2012  |  Author: Nicholas Walton,

Categories: Euro Crisis, Europe and the world, Reinventing Europe,
Tags: euro crisis , euro crisis, immigration, japan, podcasts, demography

Few things make Europe's problems seem a long, long way away like 43° heat and fabulous wealth. But, as I walked along the seafront Corniche in Doha just 48 hours ago, I was thinking about just where Europe goes from here.

I was listening to a couple of thought-provoking podcast programmes on my ipod. First up there was an episode of (the ever-excellent) Peter Day's World of Business that looked at Japan's economic situation and asked whether it was waving or drowning. Noriko Hama argued that it was, as is widely believed, drowning, thanks to massive debts, deflation, insularity and demographic catastrophe.

Not so, argued Eamonn Fingleton. His reasoning made interesting listening to a European. He was dismissive of the problems associated with debt, and instead emphasised Japanese strengths, such as its ability to produce extremely high-spec products, making it clear that he thought this made Japan uniquely well suited to the challenges of the 21st century. He also spoke about demography, and argued that it was correcting a baby boom that led to overcrowding with a deliberate downsizing of the population that also avoided traps such as social conflict from large-scale immigration, or chasing growth through chasing demographic increase. The latter was a chimera, he said, that both overemphasised the value of sheer economic growth and also devalued it (he drew attention to the US, where growth figures also had to factor in a rising population). A further problem was that such an approach led to the dilution of strengths such as a smaller, high-wage, highly educated workforce.

There are obvious parallels with the EU. Take Germany - it's doing rather well with many of the advantages that Eamonn Fingleton points out, such as a highly productive and educated globalised workforce. It also faces severe demographic problems. From Fingleton's point of view these perhaps are not problems, and should be embraced (including by reducing immigration). Chasing sheer size is not the way that Germany, or Europe as a whole, will thrive in the 21st Century. Among other things this is an argument against those who reason that Europe's faltering demography should be corrected by a combination of expansion (a favourite argument in favour of Turkish EU membership) and immigration - in essence stoking the economy with an input of fresh workers to compensate for the ageing, shrinking workforce. Instead, Europe should ramp up its education and its technological advances and fund its future that way. Personally I have a great deal of sympathy for this argument, but after listening to the programme found that Noriko Hama's much less counter-intuitive and more pessimistic take was just as convincing - but at least it made me think.

The other thing that caught my attention was an excellent three-part series by the well respected veteran BBC correspondent Allan Little, examining the anatomy of the euro crisis. The first episode dealt with the bargain at the heart of German reunification; the second with the shoddy enforcement of the Growth and Stability Pact; and the third with the resentments that had been stirred up by the crisis. Among those interviewed for the series are ECFR board member Timothy Garton Ash and Ulrike Guerot. It's a terrific listen, and is a good run through of exactly how we ended up in this extraordinary mess.