Japanese Face Economic Vulnerability Self-Doubt Has Replaced Bravado As Nation Confronts New Problems

Tumbled from its pinnacle of wealth, sparkling economic growth and boundless confidence, Japan seems stuck in self-doubt.

It is still an industrial giant, and its economy appears to be edging out of a long slowdown. The standard of living remains high. Yet the country that a decade ago appeared poised to own the 21st century now has difficulty seeing beyond the next generation - and what it can see isn’t so pretty.

In a culture where the well-being of one’s children is paramount, the uncertain outlook has many Japanese depressed.

“They’ll have to work harder and harder just to stay in place,” liquor company employee Toshiyuki Hozawa said of his sons during a recent family picnic. “I wonder what it will be like in 20 or 30 years.”

The attitude reflects how Japan’s economic status has changed over the last 10 years, how prospects have dimmed for a nation that inspired awe at home and abroad with its wealth and bravado - and some would say hubris.

“The time of high-speed growth is over,” Hozawa’s wife, Yuko, said as the boys, ages 7 and 3, ran around their picnic blanket beside the Tama River, on Tokyo’s western outskirts.

The couple’s musings are more than matched by a constant drumbeat of pessimism in editorials and commentaries that pound home one message: Japan will be left behind by the rest of the world unless something is done quickly.

“In recent years, a shadow has fallen over the safety and security of Japanese society,” Japan’s Economic Planning Agency said in a recent wide-ranging report on the “national lifestyle.”

Japanese levels of safety and civility still are tough to match. But crime, drug use and gun offenses are on the rise. More people are seeking treatment for depression, and surveys show declines in optimism and job security. Many fear a growing elderly population will soon overburden the younger generation; critics blame flagging national morality for a myriad of problems.

“Society in general has lost hope,” said psychiatrist and writer Kazuo Sakai, director of a clinic in Tokyo. “Japan doesn’t have a religious or political ideology … a positive way of understanding the world.”

Many of Japan’s most powerful institutions are being held up as in need of repair or overhaul, including schools, politicians, the health care system, and even the powerful bureaucracy.

The most glaring challenge is the economy. At the end of Japan’s longest downturn since World War II, unemployment and bankruptcy liabilities hover at postwar highs. The banking system is awash in bad debt; the government is running up a deficit; the stock market is taking a beating. Despite decent growth in 1996, forecasts for this year are less rosy.

Prime Minister Ryutaro Hashimoto is pushing a package of reforms to deregulate the economy to make sure Japan remains a topflight power in the 21st century.

Such a plan, if the government follows through on it, is sure to bring fpainful changes as protected indusftries are forced to restructure. And fthe pain will come at a time when fmany were hoping to reap more fbenefits from decades of hard work.

f”I don’t know if people are fwilling to make the sacrifices that the government is asking them to make,” said Walter Hatch, a Fulbright scholar at Keio University and coauthor of “Asia in Japan’s Embrace.”

A decade after Japan was profclaimed an economic superpower, fpeople like the Hozawas still have fno access to the larger homes and fample free time that their counterfparts in other wealthy countries fenjoy. And it’s not certain they will fanytime soon.

f”I’m 33 years old and I live in an apartment, not a house,” said Toshio Hirokawa, a securities company employee and father of two. “I can’t buy a house yet because I had to take out a loan for a car.”

Some say competitors run a dangerous risk by taking the recent spate of pessimism as a signal to write Japan off. The country remains an economic powerhouse.

And instead of wallowing in their worries, some say the Japanese are likely to respond to recent troubles with renewed vigor.

There already are signs of revival.A Bank of Japan report this month shows business confidence on the rise - but the same report also predicts that confidence will fall in the next quarterly survey.