Japan is an Excellent Country and Ally: But its structural fissures are harmful to US trade and itself.

I have been to Japan several times. With the exception of its most northerly island, I have travelled throughout. I was even generously hosted in a home exchange programme at no cost to me. As well, my tour guide at Nara visited Canada and presented me with a lovely stitched scrolled poster in cloth.

The people were polite, everything was clean and the transportation infrastructure was impeccable. On a daily basis, the world can learn from Japan how to makes things work, generally on time and with a great sense of aesthetics, traditional or not. I fully support more foreigners going there as tourists.

It is pretty well tied with China as the second largest economy in the world. That reality and it being favourable enough to the West means we should keep it as a good ally. That is despite some near horrendous economic imbalances it is facing causing trade distortions with the West.

The first grotesque one is the total amount of government debt to GNP.It is a deadly 200 percent whereas most of the West has figures in the 70 percent range. This cannot be beneficial to social and educational expenditures on the long run, if not medium run as more money gets sucked out of the public sector. The only offset is much government debt is owed to Japanese.

The next related issue is demographics. If Germany can be argued as having way too many refugees recently, Japan has had minuscule levels of immigration especially given the very low birth rates. A ballooning senior citizens demographic bubble risks choking out decent growth for decades.

There is another worrying phenomenon of younger people just dropping out and living with relatives and/or not upgrading their training and staying in the Seven-Eleven economy into their middle years. This neither improves government taxation revenues nor builds up sufficiently, social security funds.

So instead of thriving domestic consumption from higher birth rates, higher immigration and more cohorts entering higher pay work, the government compensates by having an aggressive export policy. This includes depreciating the yen, the Japanese currency.

Unfortunately, the United States has overall not benefitted from Japan’s structural problems which it has tried to export to the West through stepped up exports particularly of high value added items.

In the face of underemployment and unemployment especially in the US Mid-West, it has been easier to play the Japan bashing political card in America. But it is an old card that was heavility played in the 1980s leading to Japan making more cars in the US. But those related profits from these sales go offshore to some degree. A study of these figures would be interesting.

My view is like China and even Germany, Japan represent those countries that need to get their people to be more confident to consume more of their own production, nationally. They need to get more exports going regionally. In complement to this, they need to produce more factories in the US to deal with expanding consumption for Japanese brands, there.

It seems the Japanese Prime Minister is of some sympathy. There have been offerings he has brought on his trip to America to encourage offsetting Japanese investment in America.

If the UK is like a huge aircraft carrier for the US to protect its interests in Europe, then Japan and to a lesser extent Taiwan are the same for East Asia. However jurisdictions like South Korea and Japan with huge trade surpluses with the US and as more mature economies can and should do more to militarily assume greater responsibilities.

It would be very foolish to undermine the US Japan alliance. But more encouragement is needed for Japan not to export its structural problems to the US. And Americans should think about this carefully. Japan holds more US government debt than any other country possibly excluding China. That US structural debt problem undermines US sovereignty and even national security.

Both countries, thus need to work harder on internally solving very caustic internal structural problems that if not careful could put at risk the politics of international cooperation and trade between these two countries and well beyond.

Meanwhile, President Trump should accept the Japanese Prime Minister’s peace offering with good grace. It will be good for jobs and US national security, his big litmus tests to a good deal with foreign countries. Then he should watch with an eagle eye the delivery on these promises, which knowing the Japanese they will be true to their word and deliver with excelkent quality all with a positive attitudes to the West. Let’s keep it that way.

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