Japan’s baby-making stimulus package

The Democratic Party of Japan (DPJ), the country’s main opposition political party and front-runner to take over the Japanese government in the elections to be held on August 30th, has promised a financial stimulus package of a different kind. Designed to address Japan’s increasingly worrisome drop in fertility rate, the DPJ’s stimulus, if enacted, will provide various financial incentives to couples who procreate.

Japan’s impending demographic crisis has long been known about but until now, there has been no real government proposal to make demographic improvements. The commonly accepted fertility rate to maintain the size of a population is 2.1 births per woman. Fertility rates higher than 2.1 will increase the size of a population over time; a rate lower than 2.1 will reduce the size of a population over time. As late as 2005, Japan’s fertility rate was reported as only 1.26 births per woman.

Although developed nations in general tend to have lower birth rates than developing nations, the demographic crisis is not as acute in Western Europe or the United States because immigration policy has been identified as a tool to increase populations over time.

While Japan too has the ability to use immigration policy to solve its population problem, it lacks a demonstrable political will. Japan has a history of maintaining a strict immigration policy and shows no sign of changing in the immediate future. As friendly as the Japanese may be to foreign visitors, its government is infamous for its aversion to immigrants; Japan has one of the most homogenous populations of any country on earth.

Given Japan’s preference for ethnic homogeneity, financial incentives for child-bearing couples may, at first glance, seem like an appropriate solution to Japan’s population problem. The DPJ is currently promising 26,000 Yen (about US $270) per month per child in addition to providing free high school tuition.

This ‘stimulus package’, however, could create incentives for perverse actions. Take for example China’s one child policy, which attempts to do precisely the opposite of what the DPJ says it will attempt. China’s attempt at social engineering, while successful in some respects, has had the unintended consequence of promoting abortions, increasing infanticide, and producing a disproportionate ratio of males to females in Chinese society, problems that only grows worse over time. A DPJ attempt at social engineering could prove equally problematic.

Japan is clearly facing a demographic crisis but the solution lies in immigration policy, not in bribes. Japan must open its borders, not its pocketbook, if it wants to solve this problem. The bleak state of Japan’s economy suggests there might be more efficient uses for taxpayer dollars.