This paper examines how the psyche of "Japan Inc." is its strength and its weakness too. This psyche had initially served
Japan well, but it has now outlived its utility and hence must changed. To change this psyche, the paper
proposes two policy recommendations. One deals with the social roots of the psyche and the other deals with the economic roots. For the social aspect of the psyche, the paper proposes that the Japanese relook and rewrite their history. For the economic aspect, the paper proposes that the Japanese instate a viable
pension system. (The paper recommends the Chilean Pension system along with the reasons). The paper shows that by restudying their history, the Japanese may come out of their myth of being a homogeneous race and thus move forward to assimilate foreigners. The paper explains how this assimilation will be in the interest of "Japan Inc". By adopting a sound pension system, the economic future of Japan will be more optimistic and rid the country of its burden of the 'lifetime employment' system The paper argues that both these measures will help change the adverse demographic pattern of the society to the long-term advantage of "Japan Inc". The paper includes graphs.