The Plus One policy

Japan's rapidly falling population has sparked an anguished debate: should the country open itself u

By mid-century, the UN predicts, the population of Japan will have dropped from nearly 130 million to 100 million. This is the largest decline for any developed nation. Japan is not an aberration, but a trailblazer. How it is coping with a shrinking population is being scrutinised by other countries across Asia and Europe that have embarked on the same journey.

In Japan, depopulation has triggered a debate about national priorities. If the country is to continue with business as usual and pursue industrial growth, then the trend needs to be reversed. Yet many have grown weary of the treadmill of economic competitiveness and are using this new demographic shift as an opportunity to discuss a different vision of Japan’s future.

Most politicians are of the opinion that population decline is economically dysfunctional and needs to be corrected, even if they are not sure how. The deputy chief cabinet secretary, Haku­bun Shimomura, has pointed an accusing finger at Japanese women: if only they would “stay at home and raise their children”.

What alarms Shimomura is that Japanese women have, on average, only 1.3 children each. Today Japan’s fertility average is lower than China’s (with an average of 1.6 children), although not quite as low as Taiwan’s (1.1 children). The corresponding figure for the UK is 1.9; while at the other end of the spectrum, women in Afghanistan, Angola and Liberia have an average of 6.8 children. Since the Japanese have one of the highest life expectancies in the world, the country is facing a withering at one end of the life cycle, but a boom at the other. By 2050, there will be more than three times as many people aged 65 or over as there will be those under 14. It is also predicted that there will be 500,000 ­people aged 100 or over.

The obvious solution is immigration. One can read in the Japan Times of the need to “throw the country open to the millions of poor Asians, Africans and Latin Americans who would certainly come if invited”. However, Japan has no history of being a country of immigration; only about 1.5 per cent of workers are foreign. Even in Tokyo, the figure rises to just

3 per cent. The Japanese myth of racial homogeneity is deep-rooted, insular and very protective. The Japanese look at societies, such as the United States and Britain, where immigrants have settled in large numbers, and see fractured ­societies in which an ill-treated caste of foreign labour fill low-paid jobs. For many, it is not an appealing vision of their own future.

According to the UN, if Japan wants to prevent a fall in its working-age population, it will need to take in as many as 650,000 immigrants every year until 2050. This would mean that by mid-century about a third of the population would be of non-Japanese heritage. Is Japan ready for this?

Another option is to encourage women to have more babies. Small bribes are on offer. Child benefit paid to families is modestly pro-natalist. Local encouragement is also available. In the town of Yamatsuri, parents receive $4,600 (£3,264) for the birth of a child, with an additional $460 a year for ten years. It doesn’t sound much – and it ­isn’t. In fact, from whatever source, state cash for parents remains pal­­try. It is more a symbolic sign of goodwill than a serious form of practical

help. The Japanese may worry

about population decline, but

their efforts to reverse the

trend look gestural and

perfunctory.

Predictably, the government has announced a raft of initiatives to get people breeding. The “Angel Plan” and the “New Angel Plan” were both designed to make having children an easier and more attractive option. The latest idea, the “Plus One Proposal”, is directed towards encouraging families to grow by “plus one”. The scheme aims to create parent-friendly working conditions, with funds to be allocated for the construction of 50,000 new day-care facilities.

Yet these initiatives still leave Japan far behind most countries in western Europe in the provision of “pro-parent” state welfare and employment law. And since European countries are also facing population decline, it seems unlikely that the Japanese government’s belated efforts will turn the tide.

There are other options. Two of the more popular are additional automation in the labour market and wider economic participation among old people. Japan leads the world in both. If Japan wants to reverse its declining population, policy levers are at hand. But it seems what the country is going through today cannot be understood simply as a dilemma about which policies to apply. The issue of population decline has brought to the surface long-suppressed questions about the point and purpose of ceaseless growth.

Increasingly the message from Japan is not about how to buck the population trend, but how to adapt to it. One of the country’s national newspapers, Asahi Shimbun, argues that “from the standpoint of quality of life, this is actually a good opportunity to reassess our growth-­oriented post-Second World War values and ask ourselves how we really want to live”.

Urban planners anticipate the end of suburban sprawl, and the emergence of more compact and greener towns and cities. For the demographer Toru Suzuki, of the National Institute of Population and Social Security Research, Japan’s contraction throws up issues that have for too long been avoided in the rush to compete and consume. “It brings you to a very tough question,” he says. “What is happiness? Can we be happy without economic growth?”

This article first appeared in the 09 March 2009 issue of the New Statesman, Planet Overload

Jeremy Corbyn. Photo: Getty
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Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 09 March 2009 issue of the New Statesman, Planet Overload

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