Japan: Long-Term Consequences Of The Tohoku Earthquake
It is now just over one month since Japan was struck by a devastating earthquake, tsunami, and nuclear crisis. On Tuesday, the government raised the severity rating of the Fukushima reactor disaster to level seven, matching that of Chernobyl, Ukraine, in 1986.
Perhaps the biggest question is, how will its worst since World War II change Japan?
The Tohoku quake followed 20 years of bad news for Japan, characterised by the bursting of the Nikkei bubble in 1989; a slow-motion banking crisis in the 1990s; the Kobe earthquake of 1995; the Aum Shinrikyo sarin gas attack on the Tokyo Metro in 1995; the rise in suicides, which have surpassed 30,000 annually since 1998; population decline since 2005; a particularly severe recession in 2009 (GDP dropped by 6%); the almost relentless rise in public debt; Japan’s loss of status as the world’s second-biggest economy to China in 2010; the rotation of 12 prime ministers since 1991; and the failure to exercise any diplomatic leadership in Asia or elsewhere.
Despite persistent political and economic disappointments over the past two decades, Japan as a whole has largely resisted enacting major reforms to its system, which are widely believed to be necessary to put the economy on a higher growth path. One reason for this is that despite its economic weaknesses, Japan is still a remarkably stable and wealthy place. Many Japanese appear to believe that neoliberal economic reforms and opening the door to mass immigration could jeopardise this relative harmony.
So, will the Tohoku quake prove the final straw that galvanises Japan into meaningful change? Several commentators have noted that previous mega-quakes preceded or coincided with periods of dramatic upheaval in Japan, citing disasters in the Tokyo region in 1855 and 1923. However, I would be cautious about drawing too many parallels with those episodes. Japan’s domestic political scene, international circumstances, and demographic factors were vastly different back then.
Overall, as I explained in a report, ‘Long-Term Consequences Of The Earthquake: How Will It Change Japan?’, published in Business Monitor Online on March 29, the quake will lead to the following changes:
- Greater public activism and calls for more responsive government
- Greater scrutiny of ties between government and vested interest groups (eg the nuclear lobby)
- Greater environmental concerns
- Greater fiscal expenditures (mainly for reconstruction)
- Greater profile of Japan’s Self-Defense Forces (SDF) after its relief operations
- Greater sense of economic and geopolitical vulnerability
- Greater calls to decentralise functions away from Tokyo
Yet, it is still too soon to say how the above factors will work to transform Japan. Japan – by which I mean the government and society – can essentially respond to the post-earthquake crisis in two ways.
The first is that the quake serves as a catalyst for change by prompting a broad reassessment of the ‘way things are done’ – in politics, the economy, society, and in foreign affairs.
The second is that the quake cowers Japan back into traditional ways of doing things – that is to say, reliance on single-party rule with a big bureaucracy, heavy fiscal spending, and a risk-averse ‘stability at all cost’ attitude.
Japan is finely balanced between the two paths. Ordinarily, I would tend to believe that Japan will become more risk averse after the crisis, precisely because its vulnerabilities have been so cruelly exposed, and because its population is ageing rapidly. The ageing of the population is a major obstacle to political and economic reform, because older populations tend to favour the status quo. However, the magnitude of the Tohoku quake may have been sufficient to jolt Japan out of its traditional complacency.
As devastating as the Tohoku quake was, there may be two bigger tests to come. The first would be another mega-quake in the Tokyo area itself, the likes of which have not been seen since 1923. The second would be a new fiscal crisis as a result of Japan’s colossal debt burden.
Overall, the Tohoku quake will be the beginning of the change, rather than the change itself.