Can an aging society that has lost its innovation mojo, get it back?
On April 1, Japan will start up the presses to begin printing money—enough money to re-inflate an economy that has been deflationary for two decades -- in order to produce an annual goal of 2% inflation. This is the very public target of the new head of the Bank of Japan, Haruhiko Kuroda. The Wall Street Journal's "Stagnant Japan Rolls Dice on New Era of Easy Money", captures Japan's dilemma.
Here's the rub, as noted by the outgoing Bank of Japan (BOJ) governor, Masaaki Shirakawa: Japan's problem is not just deflation in an economic sense. Japan is facing a much larger demographic crisis. Not only is Japan rapidly aging, but its population is shrinking, reducing demand for everything from cars to home mortgages. How does a society respond to that unique challenge simply by printing money? As Shirakawa notes, no matter how much cash the BOJ pumps into banks, money alone can't jump-start the economy because there aren't enough firms or customers who want to borrow it. Or, who are able to turn cash into innovative products, services and companies.
But the stakes are high for the world as well as Japan. The Japanese economy is No. 3, after the U.S. and China, and a major engine for economic growth and innovation. What happens in Japan will reverberate around the world. But Japan's experiment will be particularly interesting for Asia's other economies that face a similar set of issues — aging populations, decreasing innovation, national identification by race, and the ultimate challenge: what to do when you've finally achieved your goal of catching up to the most developed economies.
The jury is out on Japan's ability to regain its innovative edge. But as any athlete knows, a losing streak is the hardest thing to turn around.
Here at the Center for Sustainable Health, we're watching an "innovation" story unfold with our partnership with the Chang Gung University and Hospital System in Taiwan. They're undertaking a radical transformation of their clinical practice using our Sustainable Health model that focuses on the integration of molecular and behavioral metrics. This case study will be a core focus of our Forum for Sustainable Health on April 4 in Phoenix, AZ.
Written by Michael Birt, Director, Center for Sustainable Health.