Japan’s Ride into the Demographic Danger Zone – and Why It’s Nothing to Fear

• Nathanial Gronewold
• June 20, 2022
• Forum Papers
• Forum Paper
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Japan’s Ride into the Demographic Danger Zone – and Why It’s Nothing to Fear
An NPG Forum Paper
by Nathanial Gronewold
June 2022

Abstract: Major media outlets are still sounding false alarms over the precipitous slowdown in America’s population growth. Bloomberg and  The Atlantic are the latest to join the fray, warning of only dire consequences to come should the nation’s leaders fail to encourage more births and ever-higher levels of immigration. But Japan’s experience paints a different picture: the positives of population decline often outweigh the negatives. This reality and new research are inspiring a few brave voices to push back, lending credence to the majority opinion that America is already too crowded and could use some relief. The evidence is mounting: a declining population need not spell economic doom and could even usher in something of a renaissance.

Japan’s population is falling. This isn’t news to you – almost everyone already knows this. And it isn’t all that unusual – lots of countries are losing population, but the rate at which Japan’s population is contracting is worth noticing.

China will soon surpass Japan’s population decline in terms of gross numbers, but for now, all eyes are on the Land of the Rising Sun. According to the Statistics Bureau of Japan, this nation’s total population declined by 949,000 from 2015 to 2020. As of October 1, 2020, the government counted 126.15 million people living in Japan.1 The loss of over 1 million native-born residents was slightly offset by a gain in foreign-born residents. Factoring in an ongoing trend of population decline, the government’s COVID-19 ban on new foreign entries, and pandemic-related mortality, and it’s safe to say that figure is likely lower now, probably just north of 125 million.

Most pundits have declared this trend to be an unmitigated disaster for Japan. Doom and gloom will surely follow the nation as its population numbers dwindle over time, they say; or at a minimum, the economy will stagnate and then contract at an alarming rate. It’s certainly reasonable to anticipate an economic contraction, but thus far the data doesn’t show one. When Japan shed nearly 1 million people from 2015 to 2020 the nation’s gross domestic product (GDP) expanded somewhat – the World Bank’s data shows GDP rose from $4.4 trillion in 2015 to around $5.14 trillion in 2019. Sharp annual declines in Japanese GDP have occurred in the past but these episodes are attributed to the devastating March 2011 earthquake and tsunami that hit the Tohoku region, as well as the ongoing pandemic. Subsequent GDP expansions likely represent economic rebounds from past catastrophes. Thus far, these earlier negative swings in GDP can’t be attributed to population decline – the statistics don’t show it, and the academic literature hasn’t found it, either.

Here’s the real mystery – as Japan’s population is falling, its domestic electricity consumption has actually been increasing.

Japan started losing population back in 2009 or 2010 nationwide. In several regions of Japan, particularly on the islands of Hokkaido, Shikoku, and Kyushu, populations have been falling since the late 1990s. Meanwhile, electricity consumption in these same regions expanded even as the number of individual electricity consumers fell, according to the Institute of Energy Economics, Japan. IEEJ reports that regions experiencing population declines of 3% or greater since 1997 had collectively experienced a 22% increase in electricity demand up until the devastating 2011 tsunami. Post-tsunami, those regions lost an additional 4% of their populations but boosted their electricity consumption by another 16%, even as the government begged citizens to conserve electricity.2 “Populations in the areas of seven general electric utilities other than Tokyo, Chubu, and Kansai Electric Power Companies – namely Hokkaido, Tohoku, Hokuriku, Chugoku, Shikoku, Kyushu, and Okinawa Electric Power companies – have already declined over more than 15 years since 1998,” IEEJ economist Akira Yanagisawa noted in a report. “Electricity consumption, however, had increased almost consistently before the global financial crisis.” IEEJ now thinks Japan’s total electricity consumption rose by another 1.1% last year but attributes this to recovery from the COVID-19 pandemic….Continue reading the full Forum paper by clicking here.