RetireJapan

I agree. I think I might partly be reacting to how much has changed in prospect from the Japan of 1990 when I had my first work experience here compared to today. Certainly feels more safe here politically and economically than in China and seems more physically safe --and more civil-- here than the USA.

My worry is not that Japan will not be safe in the future - but that it will be poor (and by dint of this, I will be poor too).

RetireJapan wrote: ↑Sun May 28, 2023 7:19 am
I think Japan has good natural resources (people talk about fossil fuels -not relevant for much longer, or imported calories -I think this could be turned around if necessary by reducing things like olive oil or animal feed imports and modernising Japanese farming ie through making larger farms or growing things via hydroponics, etc)

Fossil fuels need to be replaced by another source of energy - and Japan is very poorly off for renewable siting too. The topography of Japan (mountains) means land for solar & onshore wind is limited. There is almost no available land left, all the easy sites are already built on. 20% of Japan's electricity is generated from renewables, in recent years this has been rising by around 1% a year but will slow as FIT has been cut and the economics for new build don't work any more.

Offshore wind sounds like a great idea given the amount of coastline but the steeply shelving seabed means not many sites are suitable using existing technology, which anchors wind turbines to the seabed. Japan is experimenting with floating turbines but these are a long way away.

Japan already has the most expensive electricity in the world, lags behind on renewables and has signed up to cut carbon emissions. Price of electricity is still being subsided and EPCO's have just won the right to raise prices even further...

There is certainly a lot of room to modernise farming, but these improvements aren't likely to result in more calories grown - the scope is mostly to replace 70 year old+ Japanese ojisans with tractors - Kubota makes a good line in rice planting machinery that is sold in Thailand for exanple.

Hydroponics - energy hungry - Japan very expensive for electricity, don't think this technology is a starter - even for leafy greens like lettuce the economics are not favourable even now.

TokyoWart wrote: ↑Mon May 29, 2023 4:21 am I had a few conversations recently that made me a little less complacent about the future for Japan. My wife has been helping a friend at her restaurant which is located in one of the upscale business districts in Tokyo. The restaurant used to do a booming business at lunch with clients who worked at foreign financial firms (e.g. Goldman Sachs, Merrill Lynch, etc.) but she recently related to me that so many financial firms have left over the years that they have shrunk the restaurant business to a fraction of what it was. Much of that change started 10 or more years ago (with an extra bump when the exit tax became applicable to foreigners) but the weekend before this we missed attending the farewell party for a friend who works in compliance in investment banking who is being moved to Hong Kong as his company transfers functions out of Japan.

This is spot on, Far from a new story though - it has been going on at least 15 years. Japan simply can't compete with HK and Singapore due to the monstrously high personal taxes, as well as the language issue and general bureaucracy. International school places are also very limited here compared to those locations. The introduction of the HIghly Skilled Professional visa helped a bit with the bureaucracy and path to PR - but Japan having a top marginal tax rate of 55% vs 15% is a very hard barrier for most people in finance to climb over. The tax on overseas income, the inheritance rules, taxes on dividends and capital gains all compound the high income tax rates.

I've flitted between HK and Tokyo for a couple of decades now and our Tokyo office has shrunk by over 100 people (250>120) whereas our HK office has grown by 200 (100 to 300). In those 15 years, only two people have moved from HK to Tokyo (and I am one of them).

The good news is that finance isn't such a big part of the Japanese economy, so this isn't the end of the world

Deep Blue wrote: ↑Fri Jun 02, 2023 5:16 am Fossil fuels need to be replaced by another source of energy - and Japan is very poorly off for renewable siting too. The topography of Japan (mountains) means land for solar & onshore wind is limited. There is almost no available land left, all the easy sites are already built on. 20% of Japan's electricity is generated from renewables, in recent years this has been rising by around 1% a year but will slow as FIT has been cut and the economics for new build don't work any more.

What about geothermal energy? I doubt know how feasible or safe this is, but up here in Hokkaido the main concern seems to be that the beloved onsen resorts will be affected too much by it. Maybe with some kind of compromise or better technology this could be an abundant source of energy in the future?

The solution to many of Japan's problems is very simple - ramping up immigration to augment the workforce and help rebalance the demographics away from too few working age adults taking care of too many pensioners.

However, there seems to be no appetite for this in the population as a whole, and certainly no political appetite to lead in this direction. It is fairly undeniable that immigration is not a one-sided coin - for all the benefits it brings there are challenges and problems too. Currently the other side of the equation seems to be thought the most important - immigration will cause more problems than it solves.

I expect the benefits side of the equation to start getting more weight over time though. It is fascinating to see already Japan can't staff it's hotels properly and many operators are having to keep rooms vacant as they can't get staff to clean them and change the bedsheets. Even if Kishida's child friendly reforms work (they won't) it will take at least two decades for those babies to get into the workforce. Too little, too late, sadly.

northSaver wrote:What about geothermal energy? I doubt know how feasible or safe this is, but up here in Hokkaido the main concern seems to be that the beloved onsen resorts will be affected too much by it. Maybe with some kind of compromise or better technology this could be an abundant source of energy in the future?

It is a good point, well made. The current 2030 plans only target 1% from geothermal. I have spoken to a lot of people about this and have not really gotten a satisfactory answer why this couldn't be a more important power source. The onsen thing is true, there is a lot of opposition from onsen owners because of fears of spoiling the water (which is bullshit) and spoiling the aesthetics of the area (which is more reasonable).

I really don't think local onsen owners should be able to block nationally strategic projects but every expert I have spoken to has basically pooh-poohed the idea of geothermal being anything other than niche. To my mind, the only possible realistic route for Japan to fix it's energy problems is new nuclear, but again the political will doesn't seem to be there.

JohKun wrote: ↑Fri Jun 02, 2023 3:31 pm Honestly, I don’t think low wage immigration is necessary.

How about in five, ten and fifteen years time? Where do you think these 11 milion workers are going to come from?

https://www.bloomberg.com/news/articles ... #xj4y7vzkg

Take a look at this population pyramid... pretty scary. One wonders how sustainable the national pension scheme is.

https://www.populationpyramid.net/japan/2040/

eyeswideshut wrote: ↑Fri Jun 02, 2023 2:43 am
My worry is not that Japan will not be safe in the future - but that it will be poor (and by dint of this, I will be poor too).

I don't worry about safety here at the moment either.
However, if the trends continue and the money in Japan is increasingly held by older people and opportunities are tough for youngsters, it is possible that we could see more crime in the future. These recent gang-led thefts have targeted older people who keep cash at home.
Again, not something to lose sleep over, but just because society here is generally orderly, there is no guarantee that it always will be.

I do agree that wages are too low and there is substantial room to augment the labour force with automation, productivity enhancements and higher wages enticing the participation rate higher.

Nonetheless I don’t think these measures alone will be enough to offset the reduction in the working age population.

It is interesting we are already starting to see wages tick higher, driven by market forces rather than begging from the Government. Even since early Abe the GoJ has been trying to pressure companies to raise salaries, and this has continued under Suga and now Kishida. But it’s only when they actually need to that companies are responding with salary base-up hikes.

Did you see the latest Bank of Japan Tankan survey? The DI for labour tightness by industry was eye-opening - every single sector responding they are short of labour with construction, hospitality and software development the most acute.