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Global Japan
MAR 15, 2018

G1 is Changing Japan with 100 Actions

By Yoshito Hori

Thought leaders have created a clear agenda to invigorate the Asian nation.

GDP up for seven years in a row. A stock market that’s tripled since 2009. Sub-3 percent unemployment. A job-to-applicant ratio of 1.5 jobs per applicant.

Which booming emerging market is this?

It’s Japan, actually.

Prime Minister Abe and his ministers have done a great job in fixing the economy over the last few years, but for Japan to thrive in the long term it also needs to tackle issues with a major impact on the nation’s finances like health care and social welfare.

When a company is facing challenges, what do the executives do? They often turn to management consultants who can look at the problems with fresh, objective eyes.

The consultants have got the “outsider’s edge.”

You get the same thing in politics.

In every country, there are issues where reform is desperately needed. Paradoxically, elected politicians are often too frightened to tackle these urgent issues head-on. Why? Because they are worried that the public might vote them out for doing so.

It’s precisely with such taboo issues that the outsider has a role to play.

While politicians stay safely in the background, activists and think tanks can propose a reform agenda, questioning the status quo until public opinion becomes receptive to change.

This is what I am trying to do here in Japan.

Since 2011, I’ve been gathering the best ideas from G1 Summit, the annual multi-day conference I run, to create a vision for Japan based on 100 necessary reforms. I published it online as 100 Actions in 2015. 

Modeled on the World Economic Forum at Davos, the G1 Summit is attended by political heavy hitters, including Prime Minister Shinzo Abe, members of his Cabinet, governors and mayors. As G1 operates under the Chatham House Rule of anonymity when discussing sensitive topics, politicians can give their frank take on taboo issues without fear of electoral repercussions.

We’ve also expanded to several conferences a year, including an annual G1 Global Conference held in the fall.

Here’s a sample of six of the 100 controversial reforms derived from our discussions.

Six Actions

• Proactively encourage immigration

Japanese companies are already starting to experience severe labor shortages as the country’s population ages and shrinks. However averse the Japanese may be to immigration, the country needs more working-age people to stay functional. We propose admitting immigrants at the rate of 300,000 people per year.

• Remove the social stigma on unmarried couples

A comparison between France and Japan shows that legally married couples in both countries produce children at roughly the same rate. In France, however, there are also many unmarried mothers (i.e. women with long-term partners who are not officially married, or single mothers) who are having babies. In Japan, the social stigma against giving birth outside of formal marriage stops this happening and suppresses our fertility rate. We propose embracing diverse models of the family unit by making single mothers/fathers and unmarried couples feel welcome in the community.

• Raise the state pension age

Japan leads the world for the percentage of population defined as elderly. Coupled with a low fertility rate, this means that an ever-smaller working population is having to support more and more retirees. This is bad news for the national pension system. People now live longer and healthier lives and can work longer in consequence. We propose raising the age for receiving the state pension to 70 or 75 (from 62 now).

• Make medical insurance fairer

Under the Japanese health insurance system, patients under 65 years old pay 30% of the cost of their medical care, with the government paying the remaining 70%. Patients over 65 get a much better deal: they pay just 10% of the cost (while, of course, consuming healthcare services in far greater quantities). This unbalanced treatment of different age groups puts a heavy burden on the medical insurance system. (Japan’s national healthcare expenditures are already more than 40 trillion yen per year, or more than eight times what it spends on defense!) We propose making the system fairer by getting everyone to pay the same 30% rate, regardless of age.

• Amend the Constitution

Japan’s Constitution was drawn up by the U.S. occupation forces in the immediate aftermath of World War Two. Under Article 9, Paragraph 1, Japan famously renounces war and the threat or use of force as a means of settling international disputes. The problem lies with Paragraph 2 of Article 9 which states that “land, sea and air forces … will never be maintained.” This goes against reality. In its Self-Defense Forces, Japan already has an army, a navy and an air force, and the Constitution should be revised to reflect that fact. We propose reforming the constitution to reflect reality.

• Re-embrace nuclear energy

After the 2011 disaster at Fukushima Dai-Ichi Nuclear Power Station, public opinion in Japan became vehemently anti-nuclear. But with no energy resources of its own, Japan is one of the world’s biggest importers of oil, coal and gas. In a world roiled by climate change, Japan should be minimizing its use of fossil fuels by promoting the use of renewable energy (wind, solar and geothermal) and nuclear power. We propose re-opening Japan’s nuclear power reactors (within an effective regulatory environment) as a low-carbon energy source.

Taboo-busting vision

When we first published these ideas, they were all way too controversial for politicians to touch. Old people, for example, will never vote for anyone who proposes to raise the state-pension age or reduce health subsidies.

But as soon as these taboo ideas were put in the public domain, people moved past their first emotional response and started thinking calmly and logically. Over time they became part of the mainstream conversation—or even public policy.

That’s the outsider’s edge in action.

Whether in business or politics, the most effective tool a leader has is their vision. A vision unites, energizes and inspires people to start moving in the same direction. The vision of 100 Actions that we developed in consultation with Japan’s politicians really shifted the conversation, making it possible to discuss formerly taboo subjects. We persuaded stakeholders with vested interests that sometimes it can be worth sacrificing one’s own privileges for the common good.

Give me your feedback on our ideas to reform Japan. As societies around the world start to age, your country will soon face similar challenges. Japan’s problems are your problems, too.

And what about the outsider perspective? Do you think outsiders can play a positive role, bringing fresh and fearless perspectives to bear politics or in business?

Let me know.