Could we find the reason for Japan's aversion to change and its backwardness in politics, particularly in the Liberal Democratic Party? Yes, we can certainly find it there. If politics does not change, society does not change much either. When politics changes, society undergoes significant transformations. Just look at the United States; every time a president changes, society changes drastically. Policies change too. After President Trump took office, the United States underwent many changes. When the Democrats take over again, there will be changes once more. Similarly, in Korea, as we shift between the ruling and opposition parties, there are tremendous changes when we move between conservatism and progressivism. However, in Japan, politics does not change. It doesn't change. Most of the prominent figures in Japan, such as members of the National Diet who become prime ministers or ministers, are essentially the same people.

These people continue to carry on their family business. The family business is not about politics; it's about continuing the work that our ancestors have done. In Japan, this has solidified into what we call craftsmanship. However, the people who select these representatives are the citizens, specifically the district's National Assembly members. When you go to the area, there is a specific district for these National Assembly members. This district is firmly established. Just like in the past, where there were agricultural fields under the lord, the people who have been here once move together like family. If another National Assembly member comes to this district, they have to compete with these individuals, which is not easy. Another point is that if a father suddenly passes away, one of the children studying abroad comes back to take over. Then, if they take over, this person is in their twenties.

It could be the middle of the term. This person is not prepared at all. Nevertheless, they receive a nomination as a candidate from the party. Why is it inherited from their father? That's what we call nepotism. The most important thing is that in that electoral district, there have been residents who have continuously voted for the member of parliament for a long time. The residents who voted for this person will continue to vote for anyone as long as they are of the same bloodline. It’s not about this person's abilities; it’s about whether they belong to the same lineage. This is what we call hereditary privilege. In Japan, this is referred to as honken shiyu. Thus, Japan still retains many elements of this hereditary system. This makes it quite difficult for Japanese society to function as a democratic nation.

So I call Japan a pseudo-democracy. It has a whitewashed appearance. The way it presents itself looks like a democracy, but if you look deeper, it is quite different from the democratic systems we traditionally understand. Japan still retains a lot of the old, feudal mindset in its elements and systems. Almost everything is dominated by the ruling party members. Doctor, you have spent over ten years around Tokyo and must have met countless Japanese people. Do you think they are a bit different? Do they have a dislike for change, or is there something in their political DNA that makes them more conservative? Is there something like that?

Yes, that's true. There are cases where people just continue doing what they have been doing, and when someone comes up with a new idea, it doesn't get adopted quickly. It's been this way for so long that people don't come up with bright new ideas. They just do what they are told, like zombies. Especially in corporations, they follow orders. When young people reach their mid-twenties, many Japanese youths don't go to the military, so they often get jobs right after graduating from university. When they enter a large company, they typically earn around 220,000 to 230,000 yen. This income is not related to whether they have skills or not; they just receive that fixed salary. Therefore, there is no motivation to work harder or put in extra effort. They just do what they are told and wait for the end of the workday.

You just have to do it. And anyway, in four or five years, my position will rise, and with that, my income will increase. You just have to stick around for a long time. It's all about seniority and longevity. So, there are many discussions about how Japan's stagnation is largely due to this system. Why is that? It's because capable young people are not able to demonstrate their abilities. There’s no reason to do so. If they show their abilities, then performance bonuses and such would follow. In the U.S., the system works perfectly like that. Regardless of age, capable individuals are offered a salary right away, and if there are good results, that will be reflected in the next salary adjustment. If performance is good, the salary goes up, and if it's poor, it can be cut. That's why people work hard.

In Japan, such things do not exist. This is where social reactions occur collectively. So, for example, if I want to improve my work performance, I need to think critically and refine my skills on my own, study more by reading books, and strive to enhance my achievements. When I do this, there are performance bonuses that come next, so I work hard. This creates significant added value for the entire country. This is the kind of society that America is. South Korea, after the IMF crisis, shifted a bit towards a more Western system. Until then, we had largely emulated the Japanese system. If we look back, the British system of lifelong employment was similar to our own hierarchical structure. However, after the IMF crisis, we completely changed.

So, how many people actually stay until retirement? There are many cases where people either quit or get fired along the way. However, in Korea, there are plenty of opportunities to find another job after leaving one. In a way, this situation is somewhat fluid. But in Japan, that's almost not the case. Of course, it is slowly changing compared to the past, and there is some awareness of the issue, but overall, it remains minimal. For example, if I get fired from the company I join, it’s not easy to find another job, so I end up being completely dependent on that job. Because of that dependency, I end up pleading not to be let go. I would say it's fine if my salary doesn’t increase. This is why salaries don’t go up. This is a problematic system—the Japanese system.

In a way, the IMF crisis in our country was truly an opportunity in hindsight. There is a saying that construction is the father of the economy. During the IMF crisis, we broke away from the Japanese-style system of the past and embraced globalization, which was the trend at that time. The IMF demanded that we conform to global standards, and we adapted to all of those requirements. As a result, many systems underwent significant changes. This was immensely beneficial. One of the most representative examples is that during that time, we laid down fiber optic cables, and as a society, we completely shifted towards the internet. Because of that, we have made significant advancements; digitalization has greatly enhanced our productivity and, as they say, has significantly increased added value.

When I talk about you, I wonder where I can start. If you look at the market capitalization rankings in the United States from 1 to 20, back in 1989, when Japan was at its peak, 14 out of the top 20 companies were Japanese. At that time, there were only about 2 American companies and 1 British company. However, currently, there are no Japanese companies in the top 20. Not a single one. Toyota is not there; until recently, it was ranked around 50th, and now it has risen to the 30s. Recently, what contributed to its sales? Toyota sold a lot of hybrid vehicles, which helped it earn a lot of money. Additionally, there was also the impact of the weak yen, which benefited Toyota, allowing it to rise to 35th place. Before that, it was ranked in the 50s. So, Toyota is either at the top or Uniqlo is also quite high in the rankings.

There used to be talk about Toyota being similar to or even ranking first like Uniqlo, but I'm not sure about the current situation. Anyway, I recently heard that Toyota is the only Japanese company in the top 50. This raises the question of why Japan, which once had 14 companies in the top 20, has seen all of them disappear. Most of the companies that have replaced them are American, and they are primarily internet and digital-related companies. This indicates that digitalization and internet-related advancements significantly enhance productivity and value. However, South Korea consistently ranks high in terms of digitalization and e-government on a global scale. While smaller European countries like Denmark or the Netherlands may have high rankings in these metrics, in the grand scheme of things, that doesn't hold much significance.

Japan is currently a mid-sized country, with a population of around 50 million, and it ranks among developed nations, with South Korea positioned higher. But what about Japan? It seems to be either in the middle tier or struggling. So, Doctor, is there a clear indicator that shows the reversal of national power between South Korea and Japan? If we look at Japan's current foreign direct investment and corporate facility investments, we can see that domestic investment has almost come to a halt. When we compare the year 2000 to 2022, it shows that domestic investment has only reached 118, which is about the same level as before, with no significant increases. This means that all investments are going overseas, and money is flowing out of Japan. Therefore, it is hard to believe that the domestic situation in Japan is good. However, the money that has gone abroad does not seem to be returning to Japan effectively.

The money that has been withdrawn, because the profits earned from overseas investments are being reinvested and kept outside. Domestic money is not coming into Japan. So, is that Japanese money or foreign money? However, when calculating Japan's GDP, all of that is included. I see. So, when looking at Japan's current account balance, it appears to be a surplus, but in terms of cash flow, it is actually a deficit. Currently, Japan is in that situation. From this perspective, many domestic small and medium-sized enterprises in Japan are in quite a difficult situation. When we look at foreign direct investment compared to GDP in international comparisons, a report published in 2022 showed that Japan ranks third from the bottom. It's even lower than North Korea. Therefore, Japan's per capita GDP is already lagging behind South Korea and Taiwan.

If we look at the changes in population density and the average population trends in Korea since 2000, the red line represents Japan. It has been steadily increasing. But how about Korea? Anyway, we should consider the steep slope; it’s so steep that it’s difficult to drive up. It keeps rising like this. This is Italy, and Italy is not much different from Japan. But look at the United States. Canada and Germany are similar as well. Do you know why Canada is increasing so much? It's because a lot of immigrants are going there. Most of them are wealthy individuals, and then capable people are moving to Canada. So, from Canada's perspective, accepting immigrants is a huge success. Looking at the labor force participation, Japan's population density is at the bottom. This was around 1985 to 1990, during the bubble economy period. Even at its peak, labor participation was not that high. It's almost similar, but recently it has been declining sharply.

This is because it hasn't been digitized. In fact, until this point, we cannot say that the world has been significantly digitized. However, recently, the world has been rapidly moving towards digitization, yet it still resembles an analog state, which is why it looks like this. This is labor productivity. Earlier, we talked about labor productivity. Regarding wages, Japan and Korea experienced a reversal in 2018. When we look at the per capita GDP of developed countries, comparing 2000 to 2023, we see that while Canada, France, Germany, Italy, the UK, and the US have all increased significantly, Japan is the only country that has decreased. The rest have mostly increased by more than 2.2 times. If we compare Japan, the US, Korea, and Taiwan, this is calculated using the currencies of each country. Here, it is calculated to be 1.11 times, but this is due to differences in exchange rates.

The United States increased by 2.2 times, but how much did Korea increase? It has increased by 3.14 times. Taiwan increased by 2.19 times. Korea has grown tremendously from 2000 to 2023. Currently, Korea's GDP per capita, wages, and productivity are all higher than Japan's. If we take 1995 wages as 105, how much is Korea now? It's around 12.10, while Japan is at 33. There's a significant difference. If we take 1995 wages as 105, Korea is a bit over 300. How about Japan? It’s less than 100. This indicates a decline. Now, look at the current situation. What phenomenon do we see? Korea is on an upward trend, while Japan's growth is stagnant. So, what happens? The gap will continue to widen. Eventually, there will come a day when Korea continues to rise, and on that day...

There is no sudden reason for things to collapse, and Japan will not suddenly rise dramatically one day either. Looking at this, Japan's current prices are low. Because prices are low, a phenomenon occurs: when calculated in terms of GDP, it appears to decrease. When prices rise, the overall GDP feels like it is increasing. Since the total sum of prices is GDP, Japan's current drop in prices contributes to this. It's similar to Vietnam. Everyone will be surprised to see that prices in Vietnam and Japan are currently the same. This is why Filipinos traveling to Japan say that prices are cheaper than in their country. How about Korea? Korea is at this level. For example, the price of a Big Mac in Vietnam...

I went and came back. In Korea, it's 4 dollars, but in Japan, it's 3 dollars. China seems to be doing better than Korea, but here, China is also lagging behind. This seems to vary by year, but anyway, Japan is below average. This is because, when looking at the IT investment levels of each country, the U.S. and Sweden are rapidly increasing. IT investment in Korea is actually at a similar level. People hardly compare anything with Korea. They always compare with Japan, but if you only compare with Japan, it's always a flop. Why do they only compare with that neighboring country, while not even measuring up to Korea? When I see things like this, it really feels misleading. Ah, this is how they create such data, excluding Korea and China, and not comparing with Asia. Recently, there have been a few more instances of comparisons between Korea and China, but that is still limited to a few scholars.

Most scholars still compare it to the Digital Government Index. When compared to the Digital Government Index, Korea is always at the bottom, but I don't know why that is. I wonder if it’s because it’s the Digital Government Index. If you read it, you'll see that the e-government index has ranked first in 2012, third in 2014, and second in 2016. This reflects Korea's current situation. Korea is among the top in e-government worldwide. But what about Japan? Honestly, I can't believe this. I truly can't believe it. Japan manipulates these figures significantly. They manipulate GDP figures as well; I can't trust Chinese statistics, and I also can't trust Japanese statistics. Just look at the digital competitiveness ranking; it’s almost at 32nd place. Anyway, Korea is completely in the upper ranks. Japan, on the other hand, has a different internet usage time compared to the world average.

Look at the amount of time used compared to the number of unicorn companies. In Korea, we can't say there are that many either, but look at Japan. They have less than half, right? Their population is 2.5 times larger than ours, so if we consider the population, they should have at least around 45 or 40 unicorns. However, Japan currently has very few. Now look at China; they have around 170. Of course, they have a large population, which explains it. But look at Germany. Germany has about 8,000, maybe a bit less than 8,000, but that’s still significantly more than Japan. So, when we look at various statistics regarding Japan, it's quite telling. If we look at the average annual salary of IT professionals, how much is it? It's around 30,000, which is similar to China. It's comparable to China. However, the actual monthly income for many workers in China is around 300,000 to 400,000 won, which is the case for most Chinese people. At that time, Premier Li Keqiang mentioned something similar.

The population of less than 100,000 is around 600 million, or something like that. Xi Jinping mentioned that China has entered the middle class, and then Premier Li Keqiang responded with something like, Don't talk nonsense. You can actually see that Li Keqiang has been sidelined. However, when Li Keqiang made those comments, he pointed out that China was still in a serious situation. But how can it be that the average income of IT professionals in China and Japan is similar? I don't even know where Korea stands; it wasn't even included in the comparison. Where is the midpoint? Look at the nominal GDP trend. The red line represents Japan. The other countries are all emerging market economies. They always compare Japan to emerging markets, so what does that mean? Also, take a look at the nominal private investment trend. This shows that investment is lacking. The nominal government investment trend is also at rock bottom. Everything is at rock bottom.

Take a look at this. Look at the number of researchers in private courts in major countries. This is South Korea. This is China, and then this is Japan. It's at the bottom. This is France, this is the UK, and this is the US. Look at South Korea. The number of researchers in private courts is significant, which means South Korea has been investing a lot in R&D. The government drastically cut the R&D budget last year, causing quite a stir. Now, they say they will restore the budget for next year. This indicates that South Korea generates a lot of value through R&D. That's why the number of researchers is so high. This explains why South Korea's technological capabilities are growing so rapidly. The increase in cases of bankruptcy due to a lack of successors is also noticeable. In Japan, they talk about the spirit of craftsmanship, but there are no disciples to pass it on to.

There are no families, and people are saying they don't want to, so despite this being a company of Aljabeckis, ultimately, there is no one to inherit it, leading to bankruptcy. These situations are continuously increasing. This is why the issues of low birth rates and aging populations in Japan are serious. If we look deeper into these matters, it becomes clear that our situation is even more critical. Japan has dropped from being ranked first for four consecutive years to 38th; this is about national competitiveness. According to the survey, Japan is now ranked 38th on an international scale, while Korea is ranked 22nd. There are only three countries in Asia that rank lower than Japan. This is from the IDEM, which shows the global competitiveness rankings. This is the point being made. The International Institute for Management Development announced that Japan, which was ranked 34th two years ago, has now fallen to 38th.

It keeps going down like this. But what about Korea? Korea is ranked 20th. Do you know what the 30-50 club is? It consists of countries with a population of over 50 million and a GDP per capita of over $30,000. Looking at the IDIEM rankings of the seven countries in that club, Korea is in second place. That's how it is for Korea. It is ranked higher than Germany, the UK, and France in terms of competitiveness. We are ranked 20th. Italy is ranked 40th. So, if Korea enters the G7, it is likely that Italy and Japan will be excluded, and Korea will join, along with Australia. However, Australia might not qualify because its population is probably under 50 million. The population of Australia is just over 20 million, I think. Look at the ratio of the minimum wage to the median wage for full-time workers in Korea. It is almost at the top tier. This is France, this is the UK, this is Germany, and this is Japan. So, Korea is moving forward.

It will continue to rise like this. When looking at the real income over the 23 years from 2000 to 2023, it shows that real income has decreased. This is likely nominal income. Young people's future economic insecurity and the low birth rate are decreasing. This is referred to as a vicious cycle. There is economic insecurity in their 30s. As the figures rise, the marriage rate drops. As the burden on citizens increases, the marriage and birth rates decline. The burden on citizens is rising, so the marriage and birth rates are falling. In Japan, various indicators are all declining. This situation is serious. Just think about it. For 30 years, it has been a downward trend. Most indicators either remain flat or decline in Japan. What about Korea? Korea, in any case, continues to rise.

China is also rising significantly, and the United States is incredible. Looking at the global higher education enrollment rates, Japan is at this level, while Korea is at this level. If we consider this to be around 60, then we are at 100. That's a huge difference in enrollment rates. Take a look at the attainment rates; Japan's is only about a quarter of Korea's. Compared to these countries, Japan cannot be compared. In the future, we should compare it to African countries or Southeast Asian countries. We need to compare it with African countries. We need to compare it with African countries. We need to compare it with African countries.

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