Center for American Progress

What Washington Can Learn From Japan’s Domestic Policy Agenda

What Washington Can Learn From Japan’s Domestic Policy Agenda

The United States should pay close attention to the Abe government’s approach to stagnant wages and women’s economic inclusion, and its rejection of fatalism.

A worker screws a bolt into the hood at a car body manufacturing plant in Tochigi Prefecture, Japan, in 2007. (AP/Katsumi Kasahara)
A worker screws a bolt into the hood at a car body manufacturing plant in Tochigi Prefecture, Japan, in 2007. (AP/Katsumi Kasahara)

Commemorations of the 70th anniversary of the end of World War II have again reminded the world of the extraordinary progress East Asia has made since 1945. Astute observers have also noted the critical role that the U.S.-Japan alliance played in providing the stability necessary for the region to prosper throughout the second half of the 20th century. Today, 70 years since the United States and Japan began to forge a partnership out of the ashes of war—and despite radical changes in the international system—this relationship remains as relevant as ever.

U.S.-Japan cooperation to mitigate the impacts of a changing climate, deter aggression from North Korea, and foster dispute resolution without the use of force will be critical to long-term global stability. Together, the United States and Japan also have an opportunity to shape the development of a rules-based international order in Asia to help extend the extraordinary peace, security, and progress that has defined the region since the end of the Vietnam War some 40 years ago.

Beyond international cooperation, a trip CAP recently took to Japan reminded us of a dimension of our close friendship that is often overlooked in Washington: the value of having a major economic power and fellow democracy with which the United States can share strategies to meet similar domestic challenges, including rising inequality, stagnant middle-class wages, and outdated workplace policies. While the United States shouldn’t presume to tell Japanese leaders which parts of the American experience might inform their own policy decisions, there is clearly plenty the two countries can learn from each other, and U.S. leaders would do well to take note of three particular areas of progress in Japan.

First, as in the United States, there is a strong national consensus in Japan that stagnant wages must rise in order for sustainable economic growth to be realized. Despite massive corporate holdings, Japanese wages have been effectively stagnant for more than 20 years. The results are weak consumption and stubbornly low inflation that drag down the entire economy. This dynamic is looking more familiar in the United States, where corporate profits are at record highs while wages remain stagnant. But Japan’s hands-on strategies to tackle stagnant wages may be working. Prime Minister Shinzo Abe is personally presiding over efforts to forge consensus between management and labor on wage issues. While efforts are in early days and it is unclear whether they will be sustainable, the immediate impact is unmistakable: large corporations have raised wages more in 2015 than at any time since 2004. This kind of cooperation between management, labor, and government is having an impact on major corporations, and it will be important to watch whether small and medium enterprises take a similar path. Harder still will be tracking whether benefits flow to nonpermanent contract workers. Regardless, this tripartite approach of physically bringing together government, management, and labor is an innovative strategy that American policymakers should carefully examine. There is much we can learn from this approach, including from the belief among Japanese business leaders that they have a duty to social responsibility in addition to the shareholders’ bottom line.

Next, while Japan’s track record on women’s workforce participation and inclusion in senior management is weak—Japan ranks 104 out of 142 countries in the 2014 World Economic Forum’s Global Gender Gap Report—the national consensus on rectifying this imbalance is remarkable. Japanese policymakers have crystalized the economic argument for women’s participation in the workforce, and Prime Minister Abe has elevated family policy issues to a top-tier issue under his “Womenomics” agenda. Women’s economic participation is now a critical element of Japan’s national economic-growth strategy, and the United States should pay keen attention to this approach. The program includes more child care centers, tax reform to encourage female labor participation, and public pressure to increase the number of women in leadership positions. U.S. leaders should watch closely to see if this program succeeds. More generally, the United States should follow Japan’s example and focus national attention on policies that respond to the complex realities that many women face at home and in the workplace. Empowering women to balance competing work-family demands will have major implications for strengthening our national economy.

Finally, while some might criticize various elements of Prime Minister Abe’s agenda—such as his determination to ease some self-imposed restrictions on Japan’s defense posture—his administration’s determination to advance bold policy and change how Japan views itself after decades of economic stagnation is laudable. Too often, Americans become fatalistic about the challenges of growing inequality, a shrinking manufacturing sector, or growing national debt—even in the face of evidence from a number of developed countries that progressive public policy can change economic outcomes and lift up middle-class workers. While it is unclear whether Abe’s economic programs will ultimately succeed—and there are reasons to be concerned about his heavy handed tactics toward critics—his more progressive economic policies represent a rejection of fatalism that can be a valuable lesson for U.S. leaders. Clearly, we are not doomed to a cycle of stagnation as long as we make bold policy decisions that will increase wages, sustain good jobs, and empower Americans to work to their full potential.

U.S. policymakers would do well to tackle our own domestic challenges with the same approach as Japan: focusing on the fact that public policy matters. In general, the type of consensus we see in Japan among politicians, senior bureaucrats, big business, and even labor leaders on the biggest issues facing the country—stagnant wages, women’s inclusion, demographics, and innovation—is in stark contrast to the bitter divisions in our system. In the United States, we often cannot even agree on the problems, let alone the solutions. We would do well to take a page out of the Japanese playbook and start seeking common ground between government, industry, and labor as we work to turn a slow recovery into the next age of American opportunity.

Neera Tanden is the President of the Center for American Progress. Glen S. Fukushima is a Senior Fellow at the Center. Brian Harding is the Director for East and Southeast Asia for the National Security and International Policy team at the Center.

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 (Neera Tanden)

Neera Tanden

Former President and CEO of the Center for American Progress

Glen S. Fukushima

Senior Fellow

Brian Harding

Director, East and Southeast Asia