Japan's population may be shrinking, but the Land of the Rising Sun has no intention of letting its economy shrink as well. Bloomberg has a deep dive into how Japan's powerhouse robotics industry is keeping its economy afloat in the face of challenging demographic changes:
The rise of the machines in the workplace has U.S. and European experts predicting massive unemployment and tumbling wages.
Not in Japan, where robots are welcomed by Prime Minister Shinzo Abe’s government as an elegant way to handle the country’s aging populace, shrinking workforce and public aversion to immigration.
Japan is already a robotics powerhouse. Abe wants more and has called for a “robotics revolution.” His government launched a five-year push to deepen the use of intelligent machines in manufacturing, supply chains, construction and health care, while expanding the robotics markets from 660 billion yen ($5.5 billion) to 2.4 trillion yen by 2020.
Japan's surplus of capital and technological know-how combined with its aging population and hostility to mass immigration makes it well-situated to become a robot superpower. If a job can be automated—from health care to table service in restaurants—the Japanese will figure out how to do it.
This is going to have a big global impact. It’s expensive to develop new kinds of robots for new and more complex tasks. In countries where labor is relatively cheap, it wouldn’t make sense to invest millions of dollars in machines that can replace a lot of low-skilled workers. But it makes lots of sense in Japan, with its shrinking population and tightening labor market. Once the initial investments have been made and the technology exists, the marginal cost of each robot will fall dramatically. This means that the it will be economical to use the robots even in places where labor is significantly cheaper.
There’s a second dimension to the implications of Japan's robot revolution: Many people have assumed that because certain countries (think: Germany and Japan) face aging and shrinking populations, their growth will slow and their influence will wane. At least in Japan’s case, they could be in for a surprise. After all, given the trends in global demographics, Japan may just be getting to the next stage of history a little faster than the rest of us. That means that what Japan needs today, the rest of the world will need tomorrow. Investing in robot technology can put Japanese companies back where they were in the glory days of the 1980s, when cutting-edge Japanese goods were in high-demand around the globe. Becoming the Silicon Valley of the robot revolution is a good business plan for Japan, Inc.
Finally, the military implications are also significant. A country that leads the world in robots, automation and technology is going to be a significant military power even if it doesn’t have a lot of 18 year-olds in its infantry. By extending its already significant technological edge over China, Japan can compete much more effectively against its giant neighbor in regional power politics than conventional opinion currently allows.
Japan has problems—a huge debt load, the cost (even with robots) of caring for an aging population, hostility from China, poor relations with South Korea, a corporate and bureaucratic establishment that resists innovation, deep pocketed special interests that have bought and paid for legislative allies—but it has assets too. In the 1980s and 1990s the chattering classes ignored Japan’s problems and focused on its assets; since then they have done the opposite.
Don’t write it off the Land of the Rising Sun. If the robot revolution takes hold, a big chunk of the 21st century will be made in Japan.