> I think there is a very strong on-the-face-of-it argument that they just have too many people and not enough for them to do, economically speaking.

Japan's greatest problem is that they have a geriatric population, coupled with low fertility rates, and an extremely unhealthy work ethic/culture. But, as usual with demographic stuff, the nasty effects won't really appear visible for decades - and by then it may very well be too late.