A Bit of Politics

Happy New Year! I know it’s a little late for that, but people have been in such a good mood since the holiday that I want to keep it going. Legends of the fall and winter’s tales are on the way, but first I have just the thing to read between timeouts of playoff games: a long essay about the Japanese economy! Go Colts!

I’ve mentioned before that Barack Obama is kind of a big deal here. He’s the no-nuclear weapons president, and this is the no-nuclear weapons country. A ten foot-tall portrait of him drawn voluntarily by our students sits in the rafters of our gym. They ran for student council with slogans like “Yes We Can!” and “Change.” Everyone in Japan knows these words, and well they should, because Obama’s influence brought not just change in the Tensui Junior High School Student Council, but change in the entire country! On August 30th, the opposition Democratic Party of Japan (DPJ) took the reins of power, winning a landslide election over the Liberal Democratic Party (LDP) which had nearly uninterrupted control of Japanese politics ever since MacArthur went to Korea.

By and large, the people don’t care about politics or talk about it. It’s a rich man’s sport. Ex-Prime Minister Taro Aso was related to seven past Prime Ministers as well as the Emperor. New Prime Minister Hatoyama may come from the long-tormented opposition, but he is related to three past PMs himself, including one of the founders of the LDP, the previous ruling party, not to mention a Speaker of the House in the 1800s. Some call his clan the Kennedys of Japan. My host family’s family rule includes the injunction “don’t join any political parties (because it will get you in trouble).” My 24-year old supervisor, Akaishi, says that to get high enough in politics to be on TV, you have to be a weirdo or a crook. So such a dramatic movement in such a passive political climate was stunning. It was a once-in-a-lifetime event.

I mentioned a few times last year that people hated Taro Aso. He made a plethora of errors organizationally, diplomatically, and grammatically. You might have noticed one such catastrophe: his Finance Minister got sloshed at the G-8, cashed out of the administration, financed a one-way ticket home after the 8-30 elections, then became so distraught that he bought the farm. But in normal circumstances, he’d simply be replaced: there have been 27 Prime Ministers in the last 62 years. There are more past and present faction leaders within the Liberal Democratic Party than there are dishes in a conveyer belt sushi restaurant. But this time, the people decided everything on the menu was rotten, and they walked out. The LDP’s M.O. was winning, not advancing a particular philosophy, so they’re totally confused about what to do when they aren’t governing. Good riddance. The guys in the new party are young – my eye told me the average DPJ candidate was 20 years younger than the average LDP candidate – and fresh. And even if freshness equals foolishness, there’s finally some accountability. As good as my personal circumstances have been, it’s hard to ignore the country’s structural problems.

Japan is the second-largest economy in the world, but it hasn’t had robust growth since its asset bubble burst 20 years ago. China’s GDP will soon officially surpass it. The ‘90s were called “The Lost Decade.” The government is now deeply in debt, having already shored up the banks after the 1990 crash and funded many stimulus projects in the interim. Its debt is 200 percent of its GDP, by far the highest rate in the industrialized world (US and the European democracies are scattered around the 100% mark). However, this debt is domestic, owed to Japanese people themselves, but about 20% of state revenues have gone towards interest payments throughout the past 20 years. Any state-funded solution would exacerbate that problem. The birth rate has cratered at 1.34 children per woman (2.1 being the replacement rate), and immigration is held low, so the population is declining and aging faster than any in the world. It’s also the most expensive country on the planet. How did this happen?

Let’s start with the local. I live in Tensui, a town of 6000, which was recently merged into Tamana, a city of 60,000. The Japanese love their small towns as much as John Mellencamp loves Seymour, Indiana, but there’s nothing for them to do here. The Chinese, Autralians, and Americans stock our grocery stores: 60% of calories come from imported food. Some farming families are proud enough and successful enough that their bright children stay home to continue the business, but most others take up another occupation.

There are really small businesses here – printing shops, bookstores, a sporting goods distributor catering to team uniforms for schools – but nothing that grows and pulls people in against gravity the way Nike did for Portland, Under Armor for Baltimore or Gatorade for Barrington, Illinois. Partially this is because businesses work so closely with the government that it just makes more sense to establish in Tokyo from the start.

The better the city, the better the job, and the farther it is from here: Kumamoto (pop. 600K) is 30 minutes away; Fukuoka (1.4M) is 80; Osaka (3M) is 4 hours out; Tokyo-Yokohama (20M) is 8. Every year, there are more empty desks and empty classrooms, and even empty school buildings.

If you don’t want to work in the fields or for the local convenience store, you throw in your lot with City Hall. You’re protected from the market: this year, public employees of Tamana City have had their pay cut by 0.3 percent. You advance on time served, starting at $30,000 a year and topping out at over $100,000 with mandatory retirement at age 60 and a pension in perpetuity after that.

With so many public servants at work, we are very well-served. The roads are small, but they’re well-maintained. Pot-holes and other annoyances are quickly fixed. Construction work is done at night so less people are inconvenienced. The water is cleaner here than in America. I’ve never heard of power or water outages. I grew up in a wealthy American suburb which built all manner of strange and wonderful public works, such as lifelike statues on Main Street sidewalks that frighten tired teenage drivers, but my Japanese city of the same population, in one of the poorest areas of Japan, has a much bigger local budget.

But there’s also a lot of official paperwork in Japanese life. Teachers are writing reports and sending lesson plans to the Board of Education, taking trips to other schools for educational research classes and speeches, and putting official red stamps on documents for each student every single day. Every week we get bulletins from the BOE. As for me, after driving in Japan a year with my international license, I had to go get a Japanese license. It took me three tries to pass the driving test (I must have been really dangerous before!), and each time, I had to take a day off of work, drive an hour and a half to the License Center with my supervisor, check in, wait an hour for lunch, then eat it and go out to the track for the 30 minutes we’re allowed to walk the course. Then I waited another hour, took a 10-minute test, did some papers, and returned home. When you do City Hall business, things go smoothly, and you feel like you’re being productive, but what are you actually producing? As an American, it seems like things could stand to be a little less organized.

The City Hall brigades devote more and more of their resources to the elderly. Municipal bulletins have tons of cute cartoon demos of older people calling the city for help with health and safety problems. They’re the one group that won’t budge from the countryside. It’s all they know and sometimes all they can afford. Like America, there is a Social Security system here. More than 60% of the elderly entirely depend upon it for their income, and they paid into it their whole lives. But the elderly make up 22% of the population, and they’re living longer than anyone has ever lived, and their numbers are growing. To wit:

JAPAN IN 1950: 84 mil; 35.4% ages 0-15; 59.6% ages 15-65; 4.9% ages 65 and older
JAPAN IN 2000: 126 mil; 13.5% ages 0-15; 64.5% ages 15-65; 22.1% ages 65 and older
JAPAN IN 2050 (proj): 95 mil; 8.6% ages 0-15; 51.8% ages 15-65; 39.6% ages 65 and older
Source: Statistics Bureau, MIC; Ministry of Health, Labour, and Welfare

Foreigners are jealous of the Japanese national health care system. It is pretty nice: for 6% of our salary, we get a 70% co-pay on everything, and there aren’t many frauds or hypochondriacs to bloat overhead. My routine visit to the dentist cost me $18. I saw an elderly woman pay for her own cleaning with pocket change. But according to the statistics, that 6% payroll tax covers only 30% of actual health care costs. The city and the state cover half, and another 20% come from a separate payroll tax on businesses.

The elephant in the room is that my city is already unsustainable. 70% of Tamana’s local budget comes from the national government, which means income and corporate taxes, which means the urban middle and upper class. The ten big cities are holding the countryside up like Atlas. The elderly farmers in the rice fields, hunching their backs a little lower each day, are admirable, but they are subsidized, much to the chagrin of my businessman friends. My old supervisor likes to needle me about how much I’m costing the city, but even my salary is subsidized: the Ministry of Culture, Education, Sports, and Technology in Tokyo covers 75% because I’m part of a national foreign exchange program.

Privately, the people living in Tokyo have to be unhappy about shouldering municipal welfare, but like Social Security and health care, this municipal welfare is a third rail. All three programs protect the less fortunate; cutting these programs would free up a load of money, but it would literally bring the problems they address closer to home. Returning the countryside to the forest gods means moving their parents out of the only homes they’ve ever known.

Besides, the countryside has a lot of clout. Since Confucius, farmers have had a higher social status than tradesmen and merchants. Country life is revered and romanticized: our literature book includes pictures of plants and birds common to each season, because you need to memorize these to understand the metaphors in Japanese high culture and poetry. Hayao Miyazaki (Totoro, Princess Mononoke, etc.) uses nature so well in his films that they’ve saved some landscapes from being altered by public works projects. Finally, like American Senate and even The House, countryside voters are disproportionately represented: though the Japanese constitution says House seats should be spread evenly among the population, voters in some country districts get 3 times more representation for their vote than citizens of some city districts.

Now for the problem of high prices. After traveling in Asia this summer, it became abundantly clear that Japan is the most expensive country in the world. Thanks to the strong yen, the two most expensive cities on the planet are Tokyo and Osaka. Taiwan is also an island, and it’s really close and it’s technically poorer, but even in Taipei everything costs half as much as it does here in the Japanese countryside. My 60-minute train home from the Fukuoka airport cost as much as a 4-hour train from end to end in Taiwan. Dinner money in Taiwan buys snacks in Japan. A tiny mom-and-pop stand in a podunk Japanese festival will charge $3 for a small bag of French fries cost $3 and $4 for an ear of roasted corn. For every work party, I have to pay $30-50 for dinner. A taxi from my home to the train station costs $30. Rent here in 6000-man Tensui starts at $500 a month. I have friends paying $700 a month to live in an 80-story high-rise in the middle of Hong Kong. Even Yokohama Chinatown is expensive: all the cheap baubles and greasy food are cleaner than the average Chinatown’s goods, and they also cost ten times more.

People get by, but that’s the extent of it. They can’t save money, which is what they’d do in a normal economy, and they rarely travel. I stopped talking about my trips because people would respond with “Wow, you must be rich!” Even if you live responsibly and don’t make big purchases, small things chip away at your wallet until it’s empty. Spending $100 in a day is just too easy. When I go to the ATM, every other week, I take out five 100-dollar bills. Like in America, more and more families have both parents working. And when people work here, they work overtime. With time and money pressures as they are, it’s logical that families are so small.

How did things get so expensive? Goods here are high-quality, but that’s only part of the story. The bigger problems are the corporate tax, mercantilism, and the friendships between the state and big business. The federal government subsidizes about 6000 businesses. The new ruling party is holding televised hearings to decide which businesses they should keep supporting and which they shouldn’t. Their biggest head case now is Japan Airlines, designated too big to fail but doomed; its desks are overstaffed, and every plane of theirs I’ve taken was an 80% vacant jumbo jet.

The state gives, but it also takes away: Japan has the highest corporate tax in the world. Companies from large to small have to raise prices to keep their profit margins healthy. To protect its investments, Japan puts up high tariffs or blocks foreign companies from entry altogether. I have never seen a Western car here because import taxes are so high. These taxes weaken the competition, which would otherwise drive down prices. Protected companies with weak or redundant models can stay afloat, which may explain why Japanese workers are statistically less productive than their American counterparts despite working countless hours of uncounted overtime, having much more continuity of profession, and never ever goofing off on ESPN.com.

Friendship between the top levels of state and business is common: “amakudari,” or descent from heaven, refers to senior bureaucrats retiring and taking positions in the industries they once regulated. My favorite current political-economic relationship is the one between current Prime Minister Yukio Hatoyama and his mother, Yasuko Hatoyama, the daughter of Shojiro Ishibashi, founder of the Bridgestone Corporation, a multinational rubber conglomerate. She has donated tens of millions of dollars to Yukio’s party, and when running against fundraising limits, she has instead paid her son for “business consulting.”

Since the Japanese economy’s bubble burst in 1990, the state has funded several infrastructure and public works projects to stimulate the economy. So, about that…Ichiro Ozawa, the leader of the new guys (DPJ) for a decade, at the cusp of becoming Prime Minister, had to take a lower position in the Cabinet instead because of a brewing fundraising scandal. He was taking payments from Nishimatsu, a construction firm in northern Japan to steer stimulus projects, including a dam and a hospital, in their direction. His chief of staff is taking the blame in the courts, but everyone knows something’s fishy. He was in the rump party! How much has this happened over the Lost Decade? How many taxpayer-funded bridges were built in the wrong places by ineffective companies?

Why does the country remain so prosperous despite all this? It’s a very interesting balancing act. We say in America that the efficiency of capitalism makes up for the selfishness the players. In Japan, the basic goodness of the people overcomes the inefficiency of the system. They’re honest and responsible. When you say “You did good work today,” you can really mean it. I don’t know what the word for “cheating” is because it has never been uttered or been a problem during my time here. People work well in groups, and they frequently praise each other’s work. Office politics are less debilitating: a show like “The Office” wouldn’t make as much sense here. Criticism is rare, and when given it’s private and indirect. It’s assumed that you’re doing your best, so you’ll notice your errors and correct them yourself. People are entitled to fifteen vacation days a year, but they usually only take seven, often using one or two hours at a time for a personal errand like going to the bank or the doctor. Because people focus so much on doing things the “right way” here, and they don’t cut corners for results, scandals and structural failures are relatively rare, and Japanese manufacturing is the envy of the world. This place is full of Productive Members of Society.

Too productive, even. A friend of a friend worked at a biomedical engineering firm that literally lost one or two scientists a year to overwork. It’s called “karoshi,” and the government keeps statistics of it. The casualty list for 2007: 147 workers died of strokes and heart attacks, 176 committed or attempted suicide, 208 fell seriously ill, and 819 claimed mental illness with 205 of those given compensation. Toyota has responded by limiting employees to 360 hours of overtime a year.

A big advantage Japanese companies have over their rivals is low turnover. Repetition is the best form of training, and change and movement take away time you would be spending doing work. A line from “Avatar” reminded me of the traditional relationship between employers and employees: “Once you mate, it’s for life.” Job retention rates, tenure length, and correlation of salary with tenure are the highest in the world. 30% of Japanese males work for the same company their entire lives. The Japanese unemployment rate is 5.2%; the New York Times attributes this to firms A large number of Japanese people work in the same profession, for the same company, their whole lives. In 1977, the average American had had twelve jobs from age 16-60; the average Japanese had had just five. There were twice as many Japanese with over 15 years of tenure (36%) as there were Americans (18%). In 1969, 89% of the workforce was full-time, regular employees! Japan’s numbers have come a little closer to the US’s in the last 20 years, though – to the consternation of the old guard.

Some companies literally have life employment plans for college graduates, telling them when they can expect promotions, when they’ll have a little less responsibility so they can get married and have children, and when to retire. It’s very difficult to leave a profession and come back to it. Some of my young English teacher friends want to work in America for a little while, but if they broke contract with the Board of Education, they probably couldn’t come back, so it’s better for them to stay put. It’s also very difficult to get fired. In Japanese, it’s called “kubi-kiri.” It means “neck-cutting,” or decapitation. So they don’t like to do it.

We Americans think of collapse as something that occurs swiftly and decisively – Manhattan sinking into the ocean, the Statue of Liberty blowing up, all “2012” or “Dr. Strangelove” or “Planet of the Apes.” Maybe it goes back to Rome obliterating Carthage and God wiping out Sodom and Gomorrah. But the whole Japanese system is set up to protect against collapse, so such a dramatic event as a loan default by the national government (Argentina) is inconceivable. Instead, things get slower and slower, and quieter and quieter, as more and more energy is required just to keep things where they are. Imagine one or two percent growth with one or two percent less people every year for eternity. In a way, you get your wish because nothing changes dramatically for the worse. It only hurts if you were accustomed to growth and new life before, as the elderly were when they grew up. Hence there is a note of regret in their otherwise placid voices and content faces when they talk to me about the past or the future.

Akaishi, my supervisor, is kind, hard-working, and honest. We all love him. He sees all the problems I do. He’s giving his life to City Hall because he loves his town, and this is how he can stay there. The Mizumotos, my host family, have showered kindness after kindness on me. They are bound to this land. The 2-year old grandson, Yuu, is going to be a big strong farmer, they say. Just look at how big he is already and how much he loves those oranges! A part of me wants to come back here twenty years later, find my old friends right where I left them, and how their lives have improved. But everything is changing so fast. What if it’s better for this whole place to return to nature? So instead of wishing for my friends’ and families’ wishes to come true, I’ll just wish for their health and happiness.

Explore posts in the same categories: Business, Japan, Politics

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