Many economists say the Japanese economy is at a “standstill” ahead of the start of a full recovery. For some time I have used a similar expression — but in a different context — to describe Japan’s economic condition following the “Heisei recession,” which lasted from February 1991 to October 1993.
Following the end of World War II, Japan steadily expanded as an industrial society. Around 1990, however, the economy came to a standstill as the industrial society matured. The stagnation continued for more than 10 years. Since the standstill, Japan faces the prospects of emerging as a postindustrial society.
The postindustrial society is best exemplified by the United States, where two phenomena have occurred:
Manufacturing industries have revitalized themselves by reforming production and management processes through the use of information technologies.
Nonmanufacturing industries (such as banking, information, communications, health, legal affairs, education, think tanks and consulting) have come to play a central role in the economy.
I believe that unless it transforms itself into a postindustrial society Japan will be unable to sustain economic growth of more than 3 percent annually. The question is when that transformation will occur.
In plain words, reforming production and management processes means cutting jobs. Under traditional Japanese management practices, however, it is extremely difficult to cut jobs in manufacturing industries. Furthermore, Japanese are not adept at developing software technologies, despite their sophisticated manufacturing skills.
Japan is unlikely to lead the world in the aforementioned nonmanufacturing sectors, to say nothing of computer software technologies.
In particular, the Japanese banking industry lags far behind its foreign rivals because it has long been protected under the Finance Ministry’s “convoy system,” whereby the government ensured that all banks would survive.
As far as software is concerned, Japanese excel in videogame and animation technologies — and little more.
Outdated employment practices in Japan are beginning to change slowly, but little is being done to nurture creative abilities for developing software.
In my opinion, emphasis on the rote learning needed for college entrance examinations spoils abilities for developing software, stifling creativity, logical thinking and the aesthetic sense.
More time should be spent, in primary and secondary school, fostering skills better suited for software development. Toward that end, the college entrance examination system should be reformed.
Another problem is that education in the arts is excluded from major universities and is addressed only by small colleges that offer degrees in specialized subjects. This appears to reflect the assumption that arts and sciences are incompatible.
Unlike their U.S. counterparts, Japanese university students do not have the option of majoring in mathematics with a minor in jazz music, for example. Such opportunities should be offered if Japan expects to develop software brains like that of Microsoft Chairman Bill Gates in the future.
Unless drastic educational reform is implemented, Japan is likely to remain at an economic standstill for years to come, with annual growth rates of 0 to 2 percent.
In my opinion, educational reform is essential if Japan hopes to transform itself into a postindustrial society.
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