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Beyond the usual first world phenomenon of having a low birthrate, one below the replacement of 2.1 children per woman, there are a unique set of factors in Japan which contribute to the withdrawal of Japanese men from dating:
1) Economic stagnation in the past 20 years have resulted in an overtrained, overworked populace that has little time for socialization outside of work circles. If you had to get up at 5-6AM every day to get to work by 8, and couldn't leave till 8PM or later in many cases, wouldn't you feel blasted? I would. I'd probably want to just **** off and call it a night in most cases.
2) Arranged marriages are falling out of fashion. In the past, people worked equally hard, but they had their parents arrange marriages through a professional service who took a guy's preferences and became a matchmaker. They'd never force marriage literally, but yeah, pressure was high. Today though, most parents don't have the ability to force their kids to get married and/or have a philosophical disagreement with the practice. A few of my Japanese friends' parents were arranged/matchmaker-made marriage, and they're all terrible marriages.
3) The Japanese see marriage as a means of establishing a family unit and bearing children. Little else. They of course want to fall in love, be with a person who they admire, long for when they're not there, snuggle with, etc. The same thing happens int he West, we just don't want to admit it - we get with someone new, have lots of sex, fall in love, get married. Then we get into a routine, have sex less often, get kids, have sex even less often, etc. Combine that with spending many hours a day away from the house, many times couples drift apart as people, and it's not unheard of for divorces to happen after retirement, leaving the woman without a financial means of support beyond a stipend and the man with ZERO house skills, many newly single retired men cannot even cook rice.
4) Privacy is lacking. The family unit in Japan usually consists of grandma and grandpa, the eldest son of the house who is the father, the mother, and kids. All in the size of a house which to put mildly, is tiny. Like, 1/2 the size of most American homes. The couple has to specifically set aside weekends where they go to a "Love Hotel" to satisfy their desires. Thus the ability to have sex is lacking. If you're a single guy living at home with the parents or on your own in your apartment, and can just put yourself in your room and **** off, that's much preferable to some men and women both.
With all this on the minds of the young, is it any wonder that both men and women have little desire for interactions with the opposite sex?
Personally I think Japan is overcrowded, and could use both a distribution of people outside of Tokyo and also use less people. How they re-engineer their economy to handle this is the key.