雅思阅读备考素材：Whose Lost Decade

　　To be sure, its government is a large debtor; its net debt as a share of GDP is one of the highest in the OECD. However, the public debt has been accrued not primarily through wasteful spending or "bridges to nowhere", but because of ageing, says the IMF. Social-security expenditure doubled as a share of GDP between 1990 and 2010 to pay rising pensions and health-care costs. Over the same period tax revenues have shrunk.

　　Falling tax revenues are a problem. The flip side, though, is that Japan has the lowest tax take of any country in the OECD, at just 17% of GDP. That gives it plenty of room to manoeuvre. Takatoshi Ito, an economist at the University of Tokyo, says increasing the consumption tax by 20 percentage points from its current 5%—putting it at the level of a high-tax European country—would raise ¥50 trillion and immediately wipe out Japan’s fiscal deficit.

　　That sounds draconian. But here again, demography plays a role. Officials say the elderly resist higher taxes or benefit cuts, and the young, who are in a minority, do not have the political power to push for what is in their long-term interest. David Weinstein, professor of Japanese economy at Columbia University in New York, says the elderly would rather give money to their children than pay it in taxes. Ultimately that may mean that benefits may shrink in the future. "If you want benefits to grow in line with income, as they are now, you need a massive increase in taxes of about 10% of GDP," he says.

　　Demography helps explain Japan’s stubborn deflation, too, he says. After all, falling prices give savers—most of whom are elderly—positive real yields even when nominal interest rates are close to zero. Up until now, holding government bonds has been a good bet. Domestic savers remain willing to roll them over, which enables the government to fund its deficits. Yet this comes at a cost to the rest of the economy.

　　In short, Japan’s economy works better for those middle-aged and older than it does for the young. But it is not yet in crisis, and economists say there is plenty it could do to raise its potential growth rate, as well as to lower its debt burden.

　　Last weekend Yoshihiko Noda, the prime minister, took a brave shot at promoting reform when he said Japan planned to start consultations towards joining the Trans-Pacific Partnership. This is an American-backed free-trade zone that could lead to a lowering of tariffs on a huge swath of goods and services. Predictably it is elderly farmers, doctors and small businessmen who are most against it.

　　Reforms to other areas, such as the tax and benefit system, might be easier if the government could tell the Japanese a different story: not that their economy is mired in stagnation, but that its performance reflects the ups and downs of an ageing society, and that the old as well as the young need to make sacrifices.

　　The trouble is that the downbeat narrative is deeply ingrained. The current crop of leading Japanese politicians, bureaucrats and businessmen are themselves well past middle age. Many think they have sacrificed enough since the glory days of the 1980s, when Japan’s economy seemed unstoppable. Mr Weinstein says they suffer from "diminished-giant syndrome", nervously watching the economic rise of China. If they compared themselves instead with America and Europe, they might feel heartened enough to make some of the tough choices needed.