“Japan’s births fall below 700,000 for first time in 2024, fertility rate hits record low of 1.15—shaking economic foundations” (Nikkei, June 4, 2024)

As reported in the news quoted above, Japan’s falling birthrate has become increasingly conspicuous in recent years. Last year, it slipped below 700,000 for the first time, landing at around 680,000. And what is the average age for childbirth now? It has been rising steadily and currently sits around 30. Reading that prompted me to look up how many babies were born 30 years ago. In 1995, the number was about 1.18 million. Assuming an even split between boys and girls, about 590,000 of the 1995 babies were girls. Fast-forwarding to the present, the number of girls among 2025 babies will be 340,000 (half of last year’s total births of 680,000). Babies are born from women, but 30 years from now, the number of women giving birth will be only about 60% of what it is today. Even with a back-of-the-envelope estimate like this, it is obvious that unless something drastic is done to raise the birthrate, the number of births in this country will keep falling, eventually to a desperate level.

What kinds of future risks will rapid population decline bring? Fewer workers and fewer consumers, for example, could stall the economy. But that is only the start of the concerns. Can we keep public health care and pensions running? Will social order and essential services—such as police, fire departments, and national defense—continue to function?

It does not take much imagination at all to see that the sharp, ongoing drop in births poses a serious risk to our society. However, most people do not think about risks and challenges that approach slowly from the far-off horizon. As a result, such issues tend to stay off most people’s radar. Immediate problems, like the recent spike in rice prices—those get people’s attention. We care about short-term risks because we are the ones directly affected. But when it comes to long-term risks, the benefits of solving them lie with future generations—making it harder for people today to feel invested.

	Problem awareness	Burden	Beneficiary
Long-term risks/challenges	Does not increase	Current generation	Future generations
Short-term risks/challenges	Increases	Current generation	Current generation

 Of course, you cannot wait for long-horizon risks or challenges to show up before acting. But that bearer–beneficiary structure makes it hard to act. Which is why we need leaders with real foresight.

When it comes to this nation’s long-term risks and challenges, it is up to those entrusted by the people—the Ishiba administration and national leaders—to raise the issue and bring it into public view, plainly and directly. Speaking for the country’s leaders:

“We have a responsibility to the Japanese people of the future—to our children, our grandchildren, and those who come after them. There are things we must do if we want to avoid becoming the kind of tragic nation we see in videos or on the news. A sharp population decline will lead to economic stagnation, strain the social security system, weaken our defenses, and shake the foundations of social order. So even if declining birthrates are a global trend, 1) we must do everything we can to raise our birthrate—even a little. And with a smaller population, 2) we must keep the fiscal base strong enough to prepare for what lies ahead. Unfortunately, Japan’s public finances are far from sound. That means we must move quickly to bring the primary balance back into the black. This is what it means to take responsibility for the future—we must respond with policies grounded in today’s reality.”

“We are seeing steady price hikes—rice among them—and real wages are declining. People’s lives are under pressure. With tax revenues fortunately increasing, we may well need to take steps to address prices. But considering the long-term risks we touched on earlier, any move that would reduce tax revenue on a lasting basis would be unwise.”

As I always say, the “short term” and the “longer term” are constantly at odds with each other. Still, whether in government or business, the role of a leader is to stay focused on the long-term tasks—both the ones they aspire to and the ones they cannot afford to ignore—and to push steadily toward achieving them. That said, ignoring short-term concerns is not a realistic option. If a leader fails to deal with the short term, voters or shareholders will push them out—along with any plans they had for the long term. In my view, it is the leader’s job to find a way—somehow—to balance both sides of this contradiction.

I will not go into it here, but I personally think handing out 20,000 yen to everyone is a bad idea. Still, if Prime Minister Ishiba is going to do it, then fine—but at the same time, he must keep pressing the public, insistently, to understand the long-term risks Japan faces, as outlined above. Ishiba needs to repeat it until people are sick of hearing it—until long-term issues finally get the attention they deserve in national politics. And the opposition parties are making it worse by pushing to lower or eliminate the consumption tax. With the Upper House election approaching, both sides are sticking to nice-sounding, short-term pitches. Am I the only one who feels more alarmed by that than by the falling birthrate?

Hirotaka Shimizu
Chairman and CEO
Kamakura Shinsho, Ltd.

Image material：PIXTA