Overview
The idea of Japan becoming a superpower once again didn't seem farfetched if you lived in the 1980s. From its defeat in the 1940s to the 1980s, Japan managed to become by some metrics the second-largest economy on Earth. By the 1980s, Japan seemed to outpace the United States in many ways. Detroit's auto industry was so outpaced by Japanese auto production, GM formed a joint-venture factory with Toyota to learn about Japanese production techniques note and established Saturn as a way to compete with Japan. Nintendo replaced Atari as the major video game company in the United States. Anime was beginning to trickle into American television. And Japanese investors were buying up American companies and even building factories in the United States.
Japan's rise was so rapid the geopolitical analyst George Friedman wrote a 1991 book titled The Coming War With Japan, where he predicted Japan's growth would lead to a conflict with the United States in 20 years. But this didn't come to pass, and Japan has declined in recent years.
What went wrong for the Land of the Rising Sun?
Background
A significant factor in Japan's boom was the necessity of rebuilding all the infrastructure after World War II. While a burden in the 1950s and '60s (where they were known to manufacture cheap products), by the '70s the Japanese economy was enjoying the benefits of much newer, more modern factories than the United States (a similar situation happened in Europe, particularly in West Germany, but the Cold War was more of a factor there). Also, the West put quite a bit of investment into the reconstruction of post-war Japan, particularly during the Allied occupation and the decades that followed. They also got help from W. Edwards Deming,
who had been responsible for researching major means of improving manufacturing efficiency during World War II. The American automakers, comfortable with their own profits and confident in their future, didn't want to have anything to do with him, so Deming went to Japan and taught them how to make cars that were both more reliable and cheaper than the Americans'.
Plus, as a bonus, thanks to Article 9 of the Japanese Constitution prohibiting Japan from maintaining a military (though it never mentioned anything about a Self-Defense Force) and instead relying on the United States for military muscle via the Yoshida Doctrine and the current Security Treaty, the lucky ol' Japanese government doesn't have to worry about spending as much on defense as it normally would with China, Russia, and North Korea so close by – and thus could pump a lot more money into public works, education, healthcare, infrastructure, and government subsidization of business.
Facade of Prosperity
The Japanese hypergrowth of the 1970s and '80s was built on a system of buddy-buddy relationships between various corporations and the government. At the time, this system appeared to be a triumph of modern corporations and state-directed capitalism, but nowadays, we just call it "crony capitalism". Predictably, this created an unsustainable economy based on — ahem — loose credit, a housing bubble, selling below profit, and toxic loans. Property values became massively overinflated, to the point where prime real-estate in Tokyo could sell for more than the entire GDP of smaller countries. At the height of the property bubble, office space in Tokyo's main business district went for a million dollars per square meter∞ ; land in the Ginza shopping district cost ¥30,000,000 per square meternote ; and the value of the Imperial Palace was greater than all the real estate in California.
The post-war yen was initially fixed to a low value compared to the US dollar, and was considered undervalued by the 1970s. After the Plaza Accord in 1985, the appreciation of the yen started a Japanese buying spree of American properties such as Firestone Tire and Rubber Co., Columbia Pictures, and even New York's Rockefeller Center, prompting feelings of insecurity especially in America, where Japan was often still remembered as an old foe.
But once the bubble popped, the economy stagnated, and Japan entered a "lost decade," and some say it still hasn't completely recovered almost 30 years later. Banks became zombie institutions, the central bank got stuck in a liquidity trap, and Japanese twenty-somethings faced a fate worse than death – while their fathers had enjoyed lifetime employment at one company, they moved from temp job to temp job, failing to build much in the way of careers. In short, they weren't half as inhuman as the mythos. Also, many Japanese electronics companies had been leaders in the Cassette Futurism (Everything Is a Walkman in the Future) era, but had not adapted to the digital/software revolution, and have thus lost competitiveness in the era where Everything Is an iPod in the Future. This was because Japanese industry became extremely adept at designing and manufacturing mechanical components which works well for cars, appliances, consumer devices and such and translates well to manufacturing analog electronics (particularly those based of vacuum tubes and discrete transistors) but didn’t port over to digital electronics and integrated circuits note .
Demographic Decline
A longer term issue for Japan which was overlooked by the people who believed Japan would take over the world is an aging and declining population. While most wealthy countries have declining birthrates, Japan is a specifically pronounced case, having reached below-replacement fertility in the 1950s, and currently having one of the lowest fertility rates in the world. This has brought the country's population into active decline, starting in 2010. These low fertility rates, coupled with the world's highest life expectancy, has resulted in the highest median age of any country. Other wealthy countries often compensate for low birth rates with immigration, but Japan has long maintained very low immigration levels. In 2015 there were 9,469 applications for Japanese citizenship approved in a population of 127 million. Canada, with a population of about 35 million, averaged almost 11,000 immigrant citizens per month in 2013 (total of 129,000), the United Kingdom—with a population half that of Japan—had 118,000 new citizens in 2015, and the United States naturalized 653,416 new citizens in 2014. Japan's annual number of new citizens was therefore about 33% less than an average week in the United States.
This trend, which currently shows no sign of abating, means a greater and greater portion of the Japanese economy is going to have to be devoted for caring for an aging population with fewer younger people to carry that burden. These economic challenges make Japan less likely to dominate the world economically while also making the notion of military aggression seem like much less of a danger.
Strategic Situation
Even if some future Japanese government tried to go on a rampage and rebuild Japan's old empire, Japan would be screwed for several reasons.- Japan is not materially self-sufficient. Japan must import over half the food it needs to survive, on top of other resources like natural gas and oil. When the U.S. cut Japan off during the Second World War, it quickly ran out of resources needed to prosecute the war and was forced on the back foot after the Battle of Midway. If the world were to cut off Japan today, its economy would collapse almost instantaneously.
- The other Asian nations can hit back against Japan. While Japan did make considerable advances in China during the 1930s and 1940s, China in this period was divided into several factions that vied for power and whose central government struggled with legitimacy. Mainland China was still at a pre-industrial level of development, with little industry and most of the population still being rice farmers. Other Asian states were easy to conquer during this period because they were underdeveloped colonies with weak militaries. Since the 1960s, China and other Asian states have industrialized rapidly and have much stronger armies. If Japan were to launch another invasion, they'd face a more robust and industrialized Asia. Since these nations haven't precisely forgotten Japan's war crimes against them, they'd be all too eager to join together to crush Japan.
