Showing posts with label Japan. Show all posts
Showing posts with label Japan. Show all posts

Sunday, May 11, 2014

Maybe Japan is not really lost


Japan’s decline has become such conventional wisdom that you pick up a book like this and immediately expect an explanation of Japan’s “lost decade” (now turning into two decades), a period that coincides nicely with my own career; I first lived in Japan during the Bubble heyday, leaving for good  in the mid-90s, after the Kobe Earthquake and the Sarin Gas Attacks that marked such a pivot in Japan’s history. Like many Japanophiles at the time, I too gave up on the country and found myself studying less and less about the place, switching instead to China, which seemed far more exciting and new. With David Pilling’s new Bending Adversity: Japan and the Art of Survival  (which I found from a Sinica Podcast recommendation) I feel much more caught up.

The title “Bending Adversity” is a rough translation of 災い転じて服となす, which is a great, untranslatable Japanese phrase that you use when suffering hardships. The author, a Financial Times journalist who lived there through much of the 2000s, uses the 3/11 Tsunami as the context for the book, showing the uniquely Japanese way that people there endured the aftermath of one of their worst disasters.

“Japan is a country of good soldiers but poor commanders,” says Shijiro Ogata, one of many first-hand interviews from the book. The cleanup after the tsunami, like so much of what appears to be rudderless Japanese politics, seems to indicate a lack of direction — leadership— that is only made up for by the orderly, well-behaved reaction of individual Japanese, who one-by-one work together to cooperate in ways unthinkable in other countries. Looting and hoarding — seemingly inevitable consequences of disaster anywhere else — just don’t happen in Japan.

But what is the source of unique Japanese, orderly response to adversity? and will it continue? The author provides a nice overview of ideas like nihonjinron, so big back in the Bubble Days when the best-selling book was Ezra Vogel’s Japan as Number One. Then there’s a nice refresh of Japan’s historical rise, including the early victories over China and Russia back in the 1890s, continuing to the triumphs and ultimate tragedy of the War, followed by its unlikely recovery. By the time you get to the Bubble Days, you come away with an understandable awe at how such a success was possible, made even more incredible by the seeming inability to grow again after the early 90s crash.

Reviewing the various responses by Japanese governments since then — from the early, temporary defeat of the LDP in the 90s, to the unlikely rise of Koizumi in the 2000s, you are left with a sense of one dashed hope after another, and a real disappointment that the seemingly invincible country that rose after the Meiji Restoration has disappeared and may never come back again.

Still, behind the raw GDP numbers that show little or no progress in twenty years, and the overtaking by China in the number two spot worldwide, the author reminds us of all that is still great about Japan. If the impeccable design, cleanliness, great food, well-educated and orderly society with the world’s highest life expectance — if that’s a failure, then is it really so bad? Many parts of Japanese society have been restructured, with a greater awareness of the simple things in life, beyond the dreary economic numbers. As the author points out, Nelson Rockefeller, who died in 1979 one of the wealthiest and most powerful men in the world, had no iPhone or internet or any of the wonderful day-to-day luxuries that any Japanese person, living in a peaceful and generally cooperative society can take for granted. 

What I realized while reading this book is that maybe, instead of being “lost”, the last few decades are really how Japan has found itself.

Wednesday, December 18, 2013

[book] How Asia Works by Joe Studwell

Long-time journalist Joe Studwell (The Economist, Far East Economic Review, etc.) and now "mid-career PhD at Cambridge University” (what I’d love to do!) has thought about Asia for decades and concluded that three “interventions” are behind the successful Asian economies:
  1. First, maximize output from agriculture
  2. Next, direct all investment and entrepreneurs toward manufacturing
  3. Meanwhile, tame the financial sector to focus capital on intensive small-scale agriculture and on manufacturing development

Using examples from Japan, Korea, Taiwan to prove his point, and counter-examples from Thailand, the Philippines, and Malaysia, he shows in detail how government policies built on land reform helped struggling poor countries develop economies built on full employment through agriculture and the “garden-level” productivity that comes when people do everything by hand, without machines.  Countries without land equality couldn’t breed the light manufacturing that comes from the demand created by farmland product surpluses.

With rising surpluses from agriculture, successful governments targeted industry, but with an important caveat: only if the products were competitive internationally. This way, even if your officials are corrupt (inevitable), their money has to come from success in other countries. Selling natural resources breeds corruption because the gains all go to whoever controls the resources; in export-based manufacturing, corruption is useless unless a developed economy buys your stuff.

All the while, successful economies tame the banks to ensure their interests are aligned with both agriculture and industry.

One interesting aside that got my attention is how little education matters:

  • 55% of Taiwanese were illiterate at the end of WW2 and 45% remained in 1960.
  • S Korea literacy in 1960 was lower than 2010 Ethiopia
  • Meanwhile, Philippines has the highest university-educated students in SE Asia and places like Cuba have some of the highest literacy and university engineering grads in the world.

So far so good, and I liked his overall analysis.

But generally I found him overusing the term “market failure” and underusing the equivalent danger “government failure” (aka public choice). Like the similar analysis I didn’t like from Martin Jacques, I have the following thoughts:

  • His argument would be more persuasive if he analyzed all countries that apply his formula. He touches on India, but what about Africa, southern and eastern Europe, South America, etc.? (Note that he deliberately excuses Singapore and Hong Kong from his analysis because they don’t fit his thesis).
  • Culture plays a role, perhaps the biggest role. Japanese or Koreans would have been successful under a lot of different development models. They are driven people, with a deep level of pragmatism that you can’t ignore. There is a contrast between these people and other cultures. There just is.
  • State-directed capitalism, of the form this author likes (i.e. “not driven by free market ideology”), may be good at helping your country win in a basic industry (steel or cars). You know the road map, you know how to measure success.
  • Japan, the example I know best, has plenty of successes that were not driven by the state. Honda and Sony are the classic brands that thrived in spite of government inattention.
  • Predictability and stability are good attributes for the state, and here again Korea and Japan and Taiwan have some advantages. Governments can change, but the overall sense of drive is hard to kick out (it’s that culture again)

I have much more to say about this (check out this review by John Williamson, the man who coined the term “Washington Consensus” that Studwell pans) but overall I thought the book was well-written but with much to dispute.

 

Thursday, February 07, 2013

Comparing China and 70’s high-growth Japan

Interesting chart via Financial Times Alphaville from a presentation by C.H. Kwan at Nomura's Institute of Capital Markets Research:

The right-hand column (ICOR – incremental capital output ratio) shows how extremely unproductive China’s capital is compared to Japan, South Korea and Taiwan during their transformational expansions. And that Chinese capital productivity has actually worsened in recent years:

China-capital-output-ratio-crop-Nomura-ICMR

It's hard to look at the Chinese government's approach to development and wonder how that can be a sustainable way to grow. When 48% of the economy is capital investment, much (most) by centralized, all-powerful bureaucrats, the word "bubble" seems too bland to describe the inevitable crash.

Sunday, January 20, 2013

LINE and more Facebook/Twitter Asian Competition

Before you start to think Facebook will take over the world, look again at new competitors emerging in Asia, including this one originally from Japan and now boasting more than 100 million users.

LINE has everything you'd want in a mobile app: free text and voice (and probably soon, video), cross-platform versions (iPhone/Android/WinPhone, Mac/PC), and plenty of cool features like a way to sign in to your desktop using your phone (perfect for situations, like at an internet cafe, where you don't want to risk typing your password into a key logger).

Think of it like a cross-platform version of iMessage, or Path, or even Skype. There are numerous in-app purchases, including "stickers" that are apparently must-have for serious users. 

The competition, internationally, for mobile and social apps is just unbelievable, and don't expect it to lighten up any time soon.

LINE screen shot

Feel free to add my to your contacts:  my username is 'sprague'.