The European Union, the United States and Japan have complained to the World Trade Organisation saying China is limiting its export of rare earths, minerals vital to the production of high-tech goods. China accounts for more than 90% of global production of 17 rare earth minerals that are used to make goods including hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapour lights, and camera lenses. China has cut export quotas while it tries to build up its own industry to manufacture lightweight magnets and other products made with rare earths.
March 14, 2012
EU, US and Japan issue WTO complaint against China | Irish Examiner
August 1, 2011
"The corrosion of trust, at first aimed at faceless bureaucrats and lawmakers in distant Tokyo, now includes governors, mayors and city councils as well, a potentially unsettling trend because it pits neighbors against neighbors. That trust may also be hard to restore: under pressure from concerned citizens, bureaucrats in Tokyo have expanded their monitoring, but many people doubt that the government’s standards are safe or that officials are doing a thorough enough job of testing."
— Doubting Assurances, Japanese Find Radioactivity on Their Own - NYTimes.com
December 10, 2010
Luc de Brabandere : “Le plaisir est le secret de la créativité”.
http://www.lesechos.fr/management/carre-vip/300436159.htm
L. de Brabandère part 1: Créativité et innovation
envoyé par leblogdetom.
Pourquoi intituler votre ouvrage sur la créativité en entreprise (1), écrit avec Anne Mikolajczak, “le Plaisir des idées” ?
Tout au long des centaines de séminaires que nous avons animés, nous avons compris que le secret de la créativité était bien là, dans le plaisir de brasser des idées. Un séminaire de créativité est réussi et fécond lorsque les participants partagent le plaisir d’être ensembles, de chahuter les concepts, de rire aux situations cocasses qui surviennent.
La créativité est-elle aujourd’hui plus indispensable que jamais ?
Survivre dans les affaires requiert de rester compétitif et de distancer ses concurrents. Une entreprise ne peut y parvenir qu’à la condition d’être capable d’établir une différence avec les autres et de la préserver. Or avec la généralisation des méthodes standardisées et automatisées de management des ressources traditionnelles, seules les nouvelles idées peuvent faire la différence. Elles sont l’ingrédient du progrès, le combustible de la valeur ajoutée et de l’avantage concurrentiel. Dans cette course à la différence, les ordinateurs et des réseaux, grâce à leur puissance phénoménale procurent une aide certaine, mais il ne faut pas croire qu’ils priveront l’homme de son monopole de créativité. Les technologies de l’information et de la communication sont autant facteur de diversité que d’uniformité. Seule la créativité permettra d’échapper à cet immense ” copier-coller ” induit en grande partie par la mondialisation.
On dit souvent qu’il faut réfléchir avant d’agir. Quels processus se produisent avant l’action ?
C’est schématique, bien sûr, mais avant d’agir nous passons par trois stades : la perception d’une situation, l’évaluation des possibilités et le ” calcul ” de la meilleure décision à prendre. Pendant longtemps, on a cru que cette troisième étape était plus importante que les deux autres. Or, tout ou presque se joue dans la première. Alors que ” percevoir ” pourrait être quelque chose de bien simple - on regarde ce qui se passe -, cette démarche se révèle en fait le siège d’une construction de sens qui influence et façonne même les deux étapes suivantes.
C’est là qu’interviennent les fameux ” biais cognitifs ” ?
Dans cette opération de construction subjective de la réalité, nous recourons de manière inconsciente à des règles de pensée empiriques et intuitives, appelées heuristiques. Elles sont indispensables, souvent efficaces même, mais ne sont pas sans risque ni inconvénient. Ces ” raccourcis ” mentaux peuvent en effet se transformer en ” courts-circuits “, altérer raisonnement et jugement, avoir des effets négatifs sur la créativité Ainsi, quand un diagnostic se révèle erroné, quand une décision prise s’avère mauvaise, quand la solution à un problème est boiteuse, il apparaît souvent a posteriori que la cause n’est pas à chercher du côté des informations rassemblées, mais plutôt dans la manière dont le cerveau les a traitées, qu’il les ait sous-estimées ou au contraire surestimées. Le coupable est alors ce qu’on appelle un ” biais cognitif “, une forme d’impôt sur l’efficacité.
Vous qualifiez la ” méthode des scénarios ” de plus bel outil de créativité pour affronter l’incertitude. En quoi consiste-t-elle ?
Quand on ignore ce qui va se passer, il faut envisager ” des futurs “. Il ne faut plus chercher dans le passé l’explication de l’avenir mais percevoir l’avenir comme la raison d’être du présent. Etre créatif, c’est être facilement capable, en toute liberté, de voir autrement le monde. Etre prospectif, c’est se poser la question, en toute responsabilité, de l’avenir du monde. Ces deux qualités, mieux comprises dans leur différence et réunies dans une rigueur méthodologique, peuvent constituer un binôme puissant et une aide précieuse à la réflexion stratégique.
La méthode des scénarios est à la prospective ce que le brainstorming est à la créativité : quatre futurs plausibles mais improbables sont construits pour élargir la perception. Un scénario peut alors être défini comme une ” mémoire d’un futur possible “.
(1) Le Plaisir des idées, Luc de Brabandere et Anne Mikolajczak, Dunod, 228 pages, 29 euros.
November 18, 2010
The Japan syndrome
The biggest lesson the country may yet teach the world is about the growth-sapping effects of ageing
Nov 18th 2010
IN 1979 Ezra Vogel, a Harvard academic, wrote a book entitled “Japan as Number One: Lessons for America” in which he portrayed Japan, with its strong economy and cohesive society, as the world’s most dynamic industrial nation. Three decades later, Japan holds lessons of a less encouraging sort. Economists in the stricken West have been poring over the data on the deflation that it has suffered since the bursting of the asset-price bubble in 1990. Yet deflation may be just one symptom of an even bigger problem that, as our special report this week argues, is squeezing the life out of the Japanese economy: ageing. Unless Japan takes dramatic steps to re-energise its shrinking, greying workforce, its economy will suffer.
Other countries face this dismal prospect too. Although Japanese society is growing older faster than anywhere else in the world, plenty of others are shuffling along behind it. Parts of Europe are ageing fast, and are unwilling to adapt, as recent protests against rising retirement ages in France and Greece attest. Other Confucian countries such as South Korea, China and Taiwan, have enjoyed a “demographic dividend”—a rapidly expanding workforce and falling birth rate—similar to Japan’s in the 1960s to 1980s. With fewer children and elderly to pay for, such countries could plough savings back into economic expansion. As in Japan, relatively few women work after becoming mothers and even fewer immigrants are let in. Such places will look to Japan for how to cope with the economic and social consequences when their manpower starts to dry up. So far, they will find, it is ducking the issue.
Young at heart
Many in Japan shrug off the problem of ageing. That is partly because the elderly continue to live comfortably on their vast hoard of savings. Even though the number over 65 has doubled in 20 years, Japan’s health-care system remains one of the cheapest and best in the rich world. And its economy, though it has now been overtaken in size by China’s, remains home to a huge industrial apparatus with the innovative clout to make life easier for its elderly citizens. Anyway, what with entrenched deflation, high debt and disappointing economic growth, the Japanese have had other things to worry about in the past two decades.
Yet what Japan fails to appreciate is that, as the years pass, its economic ailments are being compounded by skewed demography. Unless the country acts to tackle this, its decline will become intractable—for three reasons.
The crux is in the working-age population, aged 15-64. From a peak of 87m in 1995, it is expected to fall to about 52m by 2050, leaving it close to its level at the end of the second world war. Unless the output of those workers rises fast enough to offset the decline in their numbers, GDP will inevitably shrink; some predict Japan’s output will be smaller than Indonesia’s by the middle of this century. Declining GDP would not, in itself, be much of a worry, provided that output per person continued to rise. The trouble is that living standards are already dropping compared with other rich countries, so Japan feels poorer. And falling output may weaken Japan’s sense of self-confidence and its standing in the world. What is more, Japan has the highest government debt relative to GDP in the rich world. If debt continues to grow as the economy contracts, it will become even harder to bear.
Secondly, a dwindling band of workers will have to support rising social-security payments, as the number of retired people grows. This will strain public finances. Ten years ago each person in retirement was supported by four in work. In ten years that burden will fall on only two workers. Already, the rising cost of caring for the elderly has pushed up the government deficit and the national debt. If Japan’s workers cannot shoulder their burden, the country will find itself unable to honour fully its pension and health-care commitments. In effect, it will be forced to default on its obligations to society.
Thirdly, as the population ages and shrinks, demand will probably weaken. This would lower Japanese firms’ appetite for risk and thus their willingness to invest. In growing markets, companies can afford to risk over-investing, because excess capacity is eventually mopped up. But amid shrinking populations, that logic is turned upside-down. Firms not only need to export more or build fewer factories; they may have to destroy idle ones. It is little wonder that Japanese companies hoard so much of their profit. The long-term outlook in their home market—which still accounts for about two-thirds of output—is uncertain. And yet the more they scrimp on investment, the more joblessness, especially among the young, will deepen Japan’s sense of malaise.
There are ways to overcome these hurdles—ways that would not only ensure living standards do not slip but also make for a more vibrant, inclusive economy. At present, for instance, 62% of working women quit their jobs after having their first child; less discrimination against them in the workplace would encourage them to go on working. Retired people could be coaxed back to work, especially if they could claim their pensions while working. More immigration could help Japan maintain an innovative streak that it risks losing as its workers age. The hardest task will be to raise Japan’s productivity to offset the looming manpower shortage. Deregulation would help, by making it easier to sell services (such as residential care) to the elderly, by freeing up finance to allow them to make better use of their savings, and by encouraging more competition in the domestic economy so that it can withstand the inevitable shocks to external trade.
Get up and go
All this means overcoming cultural taboos—especially in Japan’s hierarchical companies—which for too long have been an excuse for inaction. It also demands strong political leadership, something that Naoto Kan has yet to supply, despite a clamour for fresh thinking when voters ended almost half a century of one-party rule last year. If Japan tackles its demographic problems swiftly, it has a chance of being a model of how to deal with ageing, rather than a dreadful warning.
November 17, 2010
War Clouds Over Taiwan
Beijing’s expectations that Taiwanese will relinquish their separate identity will be disappointed.
By J. MICHAEL COLE
Two years into his term, Taiwanese President Ma Ying-jeou seems to have transformed the dynamics of his country’s troublesome relationship with China. But this détente is only a temporary phenomenon. The risk of war in the Taiwan Strait is actually growing as Beijing’s expectations for a political end to the unfinished civil war rise, and Taiwan’s ability to defend itself against attack withers.
After years of cross-Strait tension under Presidents Lee Teng-hui and Chen Shui-bian, it’s hardly surprising that everyone is breathing a sigh of relief now that the two sides are at least on civil terms. The international business community is taking a fresh look at Taiwan both as an investment destination and, given the linguistic and cultural similarities with China, as a bridge to the world’s second-largest economy.
Underneath this façade, however, lies a dangerous reality: Beijing’s recent “goodwill” toward Taiwan, which culminated in the signing in late June of the Economic Cooperation Framework Agreement, is fully in line with its stated strategy to complete the consolidation of China after a “century of humiliation.” While the Ma administration maintains that the ECFA and other such deals are purely economic in nature and have no political implications, Chinese officials and leading academics are convinced that Taiwan is unwittingly preparing the way for eventual unification.
Beijing is doomed to disappointment, though, because its position on Taiwan is based on a key assumption: The prospect of material gain will eventually transcend politics and be sufficient to win hearts and minds. This is misguided.
For decades a similar philosophy has guided Beijing’s policies in Tibet. The economic development of the Tibetan plateau, it is believed, will eventually convince Tibetans to abandon their desire for self-rule and independence. After more than 40 years of such efforts, however, there is little evidence that they have swayed Tibetans on questions of identity, freedom and religion.
The comparison should not be taken too far. Taiwan, unlike Tibet, is already a developed, affluent society. But despite years of cross-Strait trade and investment, poll after poll still shows that a shrinking number of Taiwanese desire unification with China, while a growing number seek independence and identify as Taiwanese rather than Chinese.
Mr. Ma’s two years in office aren’t enough to prove definitively that these trends will continue. But the experience of Tibet over more than four decades tells us that economic benefits alone are insufficient to influence a people’s sense of identity. In fact, closer contact can even serve to amplify small differences and solidify identities. Many Taiwanese happily do business with China, but for them this does not change the fact that they are Taiwanese, not Chinese.
China’s leaders either know this and hope for a different outcome, or they are still unable to comprehend the dynamics of nationalism in a democratic, pluralistic society. In either case, Beijing is set for a rude awakening when, sometime in 2012 or soon afterward, it pushes for political talks with Taiwan on the island’s future status.
At that point, Mr. Ma will be constrained by domestic political factors as he seeks re-election, and the Taiwanese electorate will not give him the same leeway on political matters that it has on economic issues. If Mr. Ma is re-elected, Beijing will find it increasingly difficult, beyond 2012, to get Taipei to cooperate on politics, sovereignty and unification, leaving military force as Beijing’s sole recourse. The Chinese government has already stated that it will use force if Taiwan tries to put off reunification indefinitely.
In this light, Mr. Ma’s current defense policies look dangerously weak. Last month, Taiwan put off buying Patriot missile batteries and Black Hawk helicopters on offer from the U.S., pleading budget difficulties. The Ma administration’s cuts in its defense budget, combined with Washington’s growing reluctance to sell Taiwan the modern weapons it needs to defend itself, are creating a dangerous vacuum in Taiwan’s military development at a time when the People’s Liberation Army is manufacturing, acquiring and deploying increasingly sophisticated weapons. The PLA continues to target more than 1,500 short-range ballistic missiles at the island, and is close to being able to assert air and sea superiority around the island. The final piece in the puzzle, an amphibious landing capability, is also being addressed.
The longer this situation is allowed to persist, the greater the gap between Taiwan’s and China’s military capabilities will grow. Without a reversal, it may only be a few more years before Taipei finds itself incapable of warding off a Chinese invasion. But that would be just the beginning of its problems. Given that Taiwanese are unlikely to abandon their identity, China would likely have to wage an unconventional conflict to control the Taiwanese population, which could result in years of bloody fighting.
To avoid such a scenario, Taipei, Washington and the international community should make sure that Taiwan continues to have a credible defense to prevent Beijing from launching an attack on Taiwan. The costs of military deterrence are tiny compared to those of a conflict should China miscalculate its ability to overcome the Taiwanese will to maintain its separate identity.
Mr. Cole is the deputy news editor at the Taipei Times. A related editorial appears today.
http://online.wsj.com/article/SB10001424052748704648604575620023484722744.html
November 11, 2010
Why can’t Japan be more like South Korea?
Why can’t Japan be more like South Korea?
Countless commentators both here in Japan and abroad have deplored the insularity of Japanese society. They lament the paucity of Japanese venturing abroad to study, teach or work. Japan’s multinational corporations are regularly criticized for failing to internationalize their corporate management.
The implicit tone of much of this criticism is “why can’t Japan be more like the United States?” The answer is simple. Japan’s is an Old World East Asian society with Confucian, Buddhist and Shinto roots. It’s no surprise it is different from a New World nation founded by dissenting Calvinists from Europe.
Comparing South Korea with Japan is far more logical and useful. Korea and Japan share the same cultural heritage. Korean civilization, and the transmission of Chinese culture through Korea, had much influence on Japan.
The Emperor himself has acknowledged a “kinship” with Korea. In the other direction, the legacy of Japanese colonialism continues to be felt in Korea. Both societies are among the most ethnically and linguistically homogenous nations in the world.
Until all too recently, Korea, once known as the Hermit Kingdom to Westerners, was even more insular and less cosmopolitan than Japan. But in the past four decades, South Korea has undergone a radical transformation. Large numbers of Koreans, from elementary school children to postdoctoral scholars, study overseas. Many in the Korean elite are now global citizens, equally at home in two or more societies. Language ability, not only in English but also in Japanese and Chinese, is impressive. Over 10 percent of National Assembly members have advanced degrees from abroad. In Seoul, one-fifth were educated in the U.S.
Korean businesses have done more than just become global behemoths. They have made large investments in internationalizing their staffs, not only by promoting foreign language fluency but also by making an effort to understand local cultures. They are also making a strong push to bring in foreigners into their core management teams.
There are several explanations for Korea’s successful internationalization. Since its population is less than half of Japan’s, its businesses have a stronger incentive to globalize and its citizens more motivation to learn about the outside world. Twentieth-century history, namely the country’s colonization by Japan, and after 1945 the very powerful influx of American influence, forcibly brought Koreans into contact with foreign cultures.
Nevertheless, Korea’s growing internationalization is also the result of decisions on the part of the government, universities and businesses. There is much in that experience that could be applicable to Japan.
In academia, universities reward professors who publish and teach in English, sending a clear message that scholars must be competitive in the international arena. In contrast, being famous within Japan is often sufficient for Japanese academics. Koreans returning home with prestigious foreign credentials find much better opportunities in Korean universities than their Japanese counterparts, who are often at a disadvantage compared with colleagues who never left the country.
In the corporate world, Korean companies have also undertaken a deliberate effort to bring in foreigners into management ranks. POSCO, Korea’s leading steelmaker, has two Americans on its board of directors. Korean industry took advantage of the demise of the Soviet Empire to bring Russian engineers to work in Korea.
Foreign-born Koreans and foreigners have begun to play important roles in government and academia. The Korean Tourism Organization is headed by a tall German who became a Korean citizen. The previous president of KAIST, Korea’s leading science and engineering university, was Nobel Prize-winning American physicist with no Korean roots. All courses at the university are now taught in English.
For understandable reasons, Japanese often benchmark their country against the U.S. But in many cases, the differences between the two societies are such that importing U.S. models would be like a gardener in subtropical Okinawa looking for inspiration in the flora of Alaska. As Japanese policymakers worry about another round of “Japan passing” and consider ways to more effectively engage the world, they would do well to look to their Korean neighbor for inspiration.
Peter Beck is the Council on Foreign Relations-Hitachi Research Fellow at Keio University. Robert Dujarric is director, Institute of Contemporary Asian Studies, Temple University Japan Campus.
November 11, 2010
Looking back at ‘Japan as No. 1’
Since the best-selling book “Japan as Number One” came out in 1979, the country has suffered through a diminished global presence and been beaten out in international business competition, according to experts who gathered to look back and evaluate the intervening decades.
Despite the downside, the experts agree the country retains positive aspects, including healthy and long-lived senior citizens, a robust food culture and technological prowess. And they say there are still lessons to be learned from Japan.
The book, written by Ezra Vogel, professor emeritus of Harvard University, explained how Japan had developed into the world’s most competitive industrial power and solved internal problems that were plaguing the United States.
More than 10 experts on Japan, including Vogel and former Prime Minister Yasuhiro Nakasone, participated in a recent symposium titled “Japan as Number One Revisited,” staged by the International House of Japan in Minato Ward, Tokyo, on Oct. 27. The house is a private, nonprofit organization incorporated for the purpose of promoting cultural exchange and intellectual cooperation between the people of Japan and other countries.
The experts looked back on the 30 years since the book debuted and considered where Japan should and can be headed in the next 10 to 20 years.
“I was the prime minister at the best time,” said Nakasone, who held the top office from 1982 to 1987.
” ‘Japan as Number One’ was written at that time and it was also in a sense a warning that (the country) would fall down,” Nakasone said. “As the prediction suggested, (the country) is now falling down.”
Vogel agreed.
When he wrote the book, which carries the subtitle “Lessons for America,” “I felt that there are so many good things in Japan… . They had a low crime rate, high educational standards for people in middle school, they had a very high company loyalty, the bureaucrats were making enormous contributions and we had a lot to learn,” Vogel said. “Now we all have a different version.”
On culture and social change, Richard Dyck, chairman of Alphana Technology Co., brought up a recent poll in Newsweek titled “The Best Countries in the World.”
It listed Japan as No. 9 in the overall ranking but the highest among populous nations. Japan achieved its high ranking by being first in health and high in education and economic dynamism.
For quality of life, Japan ranked higher than the U.S. in income equality.
However, Robert Dujarric, director of the Institute of Contemporary Asian Studies at Temple University, Japan, said the nation has only a limited global academic footprint.
In the U.S. and Britain, he said, there are very few Japanese who teach outside of Japanese language and Japanese literature departments, while the number of Japanese students heading overseas has dropped to the point that they are woefully underrepresented compared with other parts of Asia.
In the social sciences, Dujarric noted that Japanese authors are few and far between in the most influential journals.
In business, he said, few Japanese have important positions in either U.S. or European companies, or in international organizations.
English-language ability in Japan is well behind that of other parts of Asia, Dujarric said, adding, “That again affects Japan’s ability to be influential and to be heard on the global stage.”
Acknowledging that Japan is a pleasant country in which to live, he warned that in the future its influence will likely decline because of the shortage of Japanese with a global viewpoint and experience.
Meanwhile, Keio University professor emeritus Sumiko Iwao said Japan had reasons to be proud.
“While of course we have an extremely serious problem in that the number of children is decreasing, Japan has an asset in its many healthy senior citizens,” Iwao said.
She pointed out that Japanese people have been maintaining their health by walking and taking public transportation as well as maintaining their personal hygiene. Japan’s food culture also contributes a great deal to the people’s well-being, she said.
“It is necessary for us to change the perception of old age into a time of opportunity and hope,” Iwao said. “We need to think of ways of work and life matching longer life spans.”
As the symposium turned to the world of business, Yasuo Nishiguchi, a visiting professor at Doshisha University Institute for Technology and former chairman and CEO of Kyocera Corp., said Japanese corporations are being overwhelmed by their foreign rivals.
Nishiguchi said, however, that Japan should not be pessimistic about itself.
Noting that Japan holds a large percentage of patents on liquid crystal display technologies, he said Japanese corporations are highly competitive in terms of technology.
Also, Nishiguchi said, emerging countries will be undertaking large social infrastructure projects as they quickly grow.
Japan and Vietnam agreed late last month to work toward the early signing of a bilateral nuclear cooperation pact, with Japan securing contracts to build two nuclear power plants, paving the way for firms to export atomic power generation technologies to the fast-growing economy.
Referring to these moves, Nishiguchi said there will be tremendous business opportunities for Japan to revitalize its industries.
On politics and government, Gerald Curtis, a political science professor at Columbia University in New York, said Japanese politics has gone through several changes since the publication of “Japan as Number One.”
“Politics that Ezra described in the book doesn’t exist any more,” he said.
There is no longer one-party dominance, nor is there consensus on the country’s goals, Curtis observed. Powerful interest groups such as the medical association and agricultural cooperatives, which aggregated interests and delivered votes to the political parties, no longer have that ability, he said.
Curtis suggested that bumps and bruises are inevitable as a new functioning political system emerges from the destruction of one-party dominance. How effectively and successfully this process will be depends on political leadership, he said.
“(In the) next few years, you are going to have a major generational change in Japanese political leadership,” Curtis said. “Let’s hope that the leaders here will emerge — that will put the creative spin on creative destruction.”
November 11, 2010
Japan still teaching the world
Japan still teaching the world
By R Taggart Murphy
The following remarks were prepared for the forum “Japan as Number One Revisited” held on October 27 at the Iwasaki Koyata Memorial Hall of the International House of Japan in Tokyo. The occasion was an 80th birthday celebration for Harvard Professor Emeritus Ezra Vogel.
I think it was about two years ago, when the full scale of the financial and economic crisis that has now swept the world was becoming obvious, that I remarked at a conference similar to this one that a possible silver lining would be an end to the condescension of the world’s pundits and policymakers towards Japan.
You all remember the various loudly advertised and mutually contradictory formulas for pulling Japan out of its stagnation - inflation targeting, restructuring of the banks with the bad loans - furyo saiken - separated out so that newly recapitalized banks could start lending again, full-bore pedal-to-the-floor fiscal stimulus, not to mention that old standby, complete re-organization of the economy along neo-liberal lines.
What I used to find irritating was not only the smug assurance of those proferring the advice, but the sense they conveyed that the only reason Japan’s policymakers didn’t drop everything and follow whatever it was they were recommending was that policymakers here were stupid or corrupt or in the thrall of incorrect mercantilist doctrine or what have you; not that policymakers here might be subject to the same fears and doubts that assault their counterparts in Washington, London and Berlin, or be subject to similarly immense and countervailing political pressures.
Well, now that unemployment, snowballing debt and tumbling real estate prices seem to have landed the Western world in a vise as tight and unyielding as the one that has trapped Japan’s policymakers for the past 15 plus years, am I right in detecting a bit more sympathy these days for Tokyo?
I gather from news reports that the Fed is tied up in knots over whether or not to announce an inflation target; I would hope there might as a result be the beginnings of some sympathy now for the Bank of Japan’s long reluctance to do so - what happens after all to the credibility of a central bank if it announces an inflation target and can’t reach it?
Americans and Europeans have discovered that it’s not as easy as one might think to restructure from the bottom up a financial sector - not when you’ve got all kinds of pressure groups that are quite comfortable with the way things are, thank you, and are prepared to go to the mat to defend them. And then there was that favorite sport of the Japan critics - mocking the start-and-stop fiscal stimulus that we saw here in the ’90s.
Well, how would one describe the fiscal history of the last few years in the United States? It may be true that Kasumigaseki and Nagata-cho [the heartland of Japan’s central government] don’t have to cope with Republicans, but there are plenty of politically powerful people here too who have long regarded deficit financing as a pact with the devil and see [British economist John Maynard] Keynes as some sort of snake-oil salesman.
Fundamentally, the notion behind all the advice that was so freely dished out to the Japanese - and the condescension behind it - was the idea that decision-makers here operated in some sort of magical policy space, free of political pressures. I don’t think it fair to blame Ezra Vogel for the origins of this idea. But I wonder if his 1979 classic [Japan as Number One: Lessons for America] did help kick-start the notion that somehow decision makers here had gotten it right because they were free of the pressures that beset their Western counterparts. And thus by extension that when things started to go wrong after 1989, it was only mule-headed obstinacy that prevented them from setting things right again.
Now perhaps it is finally becoming clear that Japan’s policymakers have been unable to pull Japan out of its stagnation not because they are obstinate or stupid or in thrall to mercantilist dogmas but because the problems they have to cope with are intractable.
Maybe this is becoming clear because policymakers in the West find themselves confronting a rather similar set of intractable problems. With the dawn of this clarity, perhaps it’s time to revisit Ezra’s original contention - that is to say, that there really were some lessons to be learned from Japan back then, and that, by extension, there are some lessons to be learned from Japan today - and not, I might add, the kinds of “lessons” you hear yapped about so much: how to avoid the so-called “lost decade” as if we in the West were not already well into one of our own.
Let me tease this out a little more. Implicit in much of Ezra’s writing is the notion that Japan had figured out a superior response to the general political and economic conditions that prevailed in the immediate postwar decades - things like a stable exchange rate regime, cheap energy, and pent-up demand that came from the need to rebuild a world that had just come through decades of depression and war.
No question that elements of the formula Japan perfected were copied to a greater or lesser extent by the other economies of East and Southeast Asia - most particularly China - and that that copying got under way just when the formula began to work less well for Japan. The response here when the “Japan as Number One” formula started to break down was to experiment with asset bubbles - something that, until recently, saw Japan come in for a good deal of mocking - but then, what exactly has the rest of the developed world been doing since the 1980s?
Last year, I wrote a long review essay for the Asia Pacific Journal: Japan Focus of Robert Brenner’s The Economics of Global Turbulence. As most of you know, Brenner - the director of the Center for Social Theory and Comparative History at UCLA - is arguably the world’s most distinguished Marxian economic historian. In fact, the British theorist and editor Perry Anderson has written in referring to Brenner’s scholarship, that “as in no other body of work today, Marx’s enterprise has found a successor”.
Brenner argued in a post-Lehman shock new preface for his book that the bubbles we have endured for the last three decades were not, as they are commonly seen, an accidental product of financial shenanigans or policy failures. But rather that they are “the inevitable response of the advanced capitalist countries in coping with a major decline, and stubborn failure to revive, of the rate of profit, finding its fundamental… source in a persistent tendency towards over-capacity in the global manufacturing sector, which originated in the intensification of international competition between the mid-1960s and mid-1970s.”
No prizes tonight for guessing who intensified that international competition, but what makes Brenner so interesting here is that he then goes on to suggest first that the initial response of the advanced capitalist countries to counteracting this phenomenon was Keynesian stimulus, second that like growing insulin resistance on the part of diabetics, Keynesian stimulus has become decreasingly effective over time, and finally that to compensate for this declining effectiveness, governments began to aid and abet banks and corporations in blowing asset bubbles as an alternative way of staving off the political pressures brought on by secular declines in profitability stemming from the systemic creation of overcapacity.
Now the issue is not whether one agrees or not with Brenner’s analysis - I obviously find it compelling - but rather his explicit acknowledgement that the path setter was Japan; that is to say that the mechanisms Ezra described for us all so brilliantly were turned to the blowing of bubbles.
I have argued in my own writing that the bubble economy was a deliberate policy response to the Plaza Accord [of 1985, to depreciate the US dollar in relation to the yen and the deutschemark] and that its origins can be traced as far back as the Tanaka cabinet’s announced intention to redevelop the Japanese archipelago [in the early 1970s].
The plan of course wasn’t specifically to send asset prices soaring to the point where they bore no relation to the cash flows they could generate, but rather as the Japanese government’s own spokesmen admitted, to reconfigure the economy so it became less dependent on export-led growth. I think we would have to acknowledge that so far they have failed, but in the process they may have another lesson to teach us.
That lesson is not that the rest of the developed world should be chary of blowing asset bubbles - it’s a bit too late for that lesson to register. If imitation is the sincerest form of flattery, then Tokyo found itself earlier in this decade with a whole host of flatterers - not just in Beijing, Seoul, and Taipei, but in Washington, Reykjavik, Dublin and Athens, not to mention the halls of Fannie Mae and the corridors of Lehman Brothers. But rather in their efforts to cope with the after-effects of the bubble’s implosion, Japan’s policymakers may yet again have something to teach the rest of us.
I don’t mean to be pessimistic, but just suppose that beginning with Brenner some of the doom-sayers out there are right - that is to say, that we really are facing a whole set of systemic and intractable problems that are simply not amenable to a quick policy fix. What are those problems?
I mentioned declining rates of profit rooted in overcapacity and the desperate attempts to compensate with asset bubbles and orgies of credit creation. You could add a vicious demographic cycle that sees a decreasing percentage of working-age people supporting a growing elderly population. Mounting fiscal debts that should theoretically be frightening but seem not to register on markets for foreign currencies or government bonds even though no realistic scenario exists for bringing the deficits under control - politicians have proven demonstrably unwilling or unable to implement the Keynesian recipe of surpluses in good times to balance deficits in bad.
And thus the snowballing deficits engender so much dread in so many quarters that governments cannot today resort to the one proven method of restarting a stagnant economy: fiscal stimulus.
On top of this, the effectiveness of monetary policy appears exhausted as zero interest rates and bouts of quantitative easing bring on all the visible results of vigorous pushing on a wet noodle, to choose a phrase deliberately. All the while, interest groups hold hostage any government that threatens to reduce their benefits, no matter what the cost to the broader society.
To a greater or lesser degree, these are the policy challenges that face every developed world government - and if certain pundits are to be believed, will soon face the new superpower that seems to be rising on the far shores of the East China Sea. But aren’t these problems familiar to those of us who live here or are otherwise involved with Japan? Indeed, so familiar as to be almost old hat?
It just may be the case, therefore, that “Japan is Still Number One” - or at least out there in front - in figuring out how to manage the aging of society, how to spread the pain when employment levels stubbornly refuse to recover, how to keep things from falling apart when no matter which monetary lever you press, nothing seems to happen, what to do when your currency keeps rising no matter how low you cut your interest rates or how much jawboning you do, how to keep your would-be pensioners/retraites or Tea Party equivalents from destroying the social and political bonds that are needed to maintain some sort of functioning political order.
And that in the workings of the Japanese political economy that Ezra has described for us are still to be found some very important Lessons for America - and for everyone else.
R Taggart Murphy is Professor and Vice Chair, MBA Program in International Business, Tsukuba University (Tokyo Campus) and a coordinator of The Asia-Pacific Journal. He is the author of The Weight of the Yen and, with Akio Mikuni, of Japan’s Policy Trap.
(Republished with permission from Japan Focus.)
Asia Times Online - http://www.atimes.com/atimes/Japan/LK03Dh01.html
October 29, 2010
October 29, 2010
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