Why Didn't the Japanese Make Better Use of its Conquests?

The Wichita bureau has been thinking again:

I think it is pretty well established (or at least commonly believed) that Japan lost WWII because of logistics and the US’s industrial base was much bigger (and better mobilized). That got me to wondering: Japan had over run much of N. China from the 30s on and had been in much of Korea since 1905. It had a huge army still in Manchuria after the war ended.

It had lost a major battle with the Russians (led by Zhukov) in a Cannae like envelopment - a technique he used against the Germans. So it hadn’t pushed into Siberia or tried to take Vladivostok. They also controlled SE Asia (rubber, tin and some oil) and the Dutch East Indies (oil).

But it had a huge part of the most industrialized part of China. Why didn’t it wring more military equipment and stuff out of the Chinese? Were they so poorly organized? Were the Chinese keeping them so busy that they couldn’t build an industrial base? Didn’t they have the capital base to do it?

They fought the war with the equipment that they started with - and developed little new in the way of guns or planes. The army that Zhukov captured was largely equipped with old stuff - WWI era guns and little heavy stuff. And poorly clothed. (the victory on the eve of the German invasion made Zhukov's reputation with Stalin).

To which I respond:

Most interesting and I never gave it any thought before but I suspect has something to do with the fact that they were such bloody awful conquerors. They did everything they could to demean and alienate the new subject peoples. Lots of yellow faces were glad to see Japanese coming because they were not white faces. What they got was torture and humiliation. Like the Germans in Russia but entirely unlike the British (and before them, the French) in India--who built everything on co-opting the locals and collaborating with local elites. ... 

Possible second thought: Japanese war/social machine is steady and stable but moves extremely slowly. Slow to get in gear. And slow to get out: Japanese have been in trouble since 1990 but the machine keeps grinding as if there was nothing wrong

So, what are we missing?

Japanese Wallets

I remember reading somewhere that the reason Japanese suffered such privation in the Tokugawa was their high standards of cleanliness and public health.  Slovenly Europeans enjoyed (ahem) high levels of dirt-related disease (think cholera) and and so high levels of infant mortality, leaving the clean and lean Japanese with more survivors to feed.

People are contradictory but Japan has long struck me as one of the most paradoxical countries in the world.  How could a country with a shiftless and irresponsible government (but there is plenty of competition) enjoy such high levels of personal integrity and social solidarity?  Don't know, of course, but it does mean I am not particularly surprised by this story, as recounted  by Aaron Cohen over at Kottke:

This is a nice story for the afternoon. During the cleanup process following the earthquake and tsunami in Japan, citizens have turned in tons of wallets containing $48 million. 5,700 safes washed out to sea in the tsunami have been recovered containing another $30 million. Most of this has been returned to the owners. This is the type of story that makes me say, "Please don't be fake, please don't be fake," as I click submit.

He's right to be skeptical; always be skeptical.  But I'm more inclined to believe this one than most.

The Yen is Where?

Let me get this straight: Japan suffers the worst catastrophe since the Second World War and the yen goes up?  That doesn't make sense to a lot of people.

It does make sense to Bob McTeer, and he undertakes to explain:

The enormity of the disaster and size of the move up by the yen does put into greater relief what I consider a common misconception about the relationship between the strength of a country’s economy and the strength of its currency. The conventional wisdom seems to be that a strong economy produces a strong currency and that a strong currency produces a strong economy. Not only does this week’s Japanese example run counter to that simplistic notion, but so does the Japanese example over the past two “lost decades” when the Yen nevertheless remained strong.

The United States experience highlights the other side of that misconception. Our economy has performed much better than Japan’s over that period yet the dollar went from weak to weaker. After the initial shakedown period, and until recently, the new Euro seemed to draw strength from an underperforming European economy.

I don’t consider these examples exceptions to the rule. I just think the rule is wrong. It is certainly not the way I learned it when I studied exchange rates in school. In the first place, the demand for the dollar, for example, is reflected in credits in the U.S. balance of payments (above the line). The supply of dollars on the foreign exchange market is reflected in debits (above the line) in the balance of payments. The exchange rate is determined by the balance of these debits and credits. I mention this obvious point to call your attention to the fact that exchange rates are discussed on cable TV without any reference to the balance of trade, the current account balance, or the overall balance of payments. It’s like trade and investment relationships are irrelevant to exchange rates. The level of interest rates compared to that of our trading partners is about all that is mentioned.

Many factors affect exchange rates, but I learned that the most important factor was relative rates of income growth. Domestic growth adds to our demand for imports; foreign growth adds to their demand for our exports. Therefore, other things equal, if we grow faster than our trading partners, it weakens our currency. If foreign growth is greater, it strengthens our currency. This is the exact opposite of what we usually hear, which is a positive relationship between growth and currency strength.

Oh, goodie, now I can trade and get rich Probably not, says McTeer. "[T]rying to outguess the [foreign exchange is] a crap shoot in most cases," he says. 

More First-hand Japan

My friend NVJ (cf. infra) favors us with the email he sent home to the family from Tokyo just after it all started last Friday:

Ok, so you know I'm in Tokyo, and Tokyo got hit by a massive earthquake. It happened at 2:46 here on Friday. How do I know the exact time? I had just ended my lecture at the University of Tokyo when the building started to shake. I joked to the audience that it was God telling me to stop talking, but then shakes got stronger. After cracks began to appear in walls, and panels began falling out of the walls, we all filed out the building in a fairly orderly fashion.

Out in the common area, we could see trees shaking when there was no wind, felt the ground moving as if we were standing on thin mud over marble, and saw antennae on buildings swaying. After the first quake, we decided to go back in (about 60 people attended the lecture), and got about 15 minutes into the next lecture when the first aftershock hit (the first quake was 8.9; the aftershock was 7.1 -- all of my Japanese hosts, who are more or less used to earthquakes, said it was the worst series of quakes they had ever felt). We then left the law building for good and went to the reception in a modern hotel (where, in typical Japanese fashion, we continued the seminar over drinks and food!)

We then learned that all trains and subways were shut down. Imagine a city of 15 million (in a metropolitan area of 35 million) in which most of the workers take public transportation, and they cannot get home. (Many slept in their offices overnight). So after the reception, we decided to walk back to the hotel in darkness and temperatures of about 45 degrees. We joined a stream of people, six across, drudging our way back. All over the city it was as if snakes made of people were slithering down every street and alley in every direction at a dead crawl. All the cabs had gone home. Only buses seemed to be working. (yet all electricity and, to a certain extent, the Internet and mobile phones, were working, although phones usually brought forth a busy signal)

We then thought we were lucky and were able to catch a bus, crammed in like sardines (actually worse), which went about 1 mile in an hour and a half. Traffic was from hell. We then got off and resumed walking to the hotel. Another 45 minutes.

I then found that all the hotel elevators had been shut down, and we were told that it would be 2-3 hours before we could get to our rooms. (the hotel is is the 7th through the 19th floors of a skyscraper) They were undertaking a safety check of each room. Well, it was only 90 minutes later, but I had to stand the whole

My room is fine, but the pictures were askew, and I can tell from the wrinkled paint in the corners of the room that some shaking went on here. The restaurant in the hotel is serving only cold food as they are not allowed to use gas (but they did manage a warm soup in an electric cooker).

So for now I'm safe, all electricity works most of the time (as does the Internet), and all my stuff is intact. Aftershocks which rock the room and sway the drapes happen every few hours. Looking forward to leaving on Monday, but fine for now.

NVJ sneers at my cracks about Tokyo food prices. He says it's cheaper than Von's. Ah, but there was a time when the dollar got you 300 yen. 

Another First-Hand Report

My friend  NVJ is safe at home:

Just back from 6 days in Japan. Quake hit just as I was concluding my presentation at a conference at the University of Tokyo. Friday was weird, but calmingly weird. Imagine a city of 35 million with no public transport, upon which most people rely.

Saturday and Sunday were spent returning to normal. Crowds buying goods in Ginza on Sunday and the basements of department stores -- where they sell lots of food (bento boxes, sushi, fruit) had lots to sell at decent prices.

Transport crunched a little when I left on Monday, but still got the airport, and plane still took off.

Maybe only a country like Japan could take this. But my Japanese hosts, who had seem lots of earthquakes (as have I) were visibly shaken at this one.

Lots more stories, but add one to the list of "in Tokyo, at least, relative calm."

 "Lots of food...at decent prices."  I suspect maybe he was in Jakarta.

Japan Update

Just read some first-hand on-the-ground email from Japan, which I don't have permission to quote, but which can be usefully summarized.  The key point is that, whatever you see on CNN, a lot of Japan is actually something like close to normal.   Tokyo is open for business as for the heavily populated industrial heartland to the south; also (more of a surprise to me) the far north island of Hokkaido.  They're having aftershocks and they're being told they will face rolling power outages but (another surprise?) they haven't started yet.

And the nukes--boy, the nukes.  Still too early to guess how that will play out.   I grant that my first thought was--oboy, as a political program, nuclear power is dead.  Well, maybe.   I can't really blame the networks for showcasing nukes over the weekend; nobody wants to underestimate the threat of a nuclear disaster.  But if it turns out that the Japanese somehow dodged a plutonium bullet here, I wonder if maybe nukes will come charging back stronger than ever.  Like the stock market "crash" of 1987 which taught a generation of traders that market busts don't matter (sarcasm).  

Update to update:  well, you pays your money .... link.

Japan Debt

I can hear the noise machine wheels begin to turn already as they gear up to din it into us how the Japanese calamity is just one more reason why we have to cut Headstart/NPR etc. Japan's debt is already the highest of any country but Zimbabwe (they will remind us) and now they will have to rebuild and oh dear we don't want to go there.

Narrowly speaking, they are right. At twice GDP, Japan's debt is way too high and no we don't want to go there  (we're still under one times GDP, but  climbing). But there is one central fact about Japanese debt that doesn't (I think) get sufficient attention. That is: 95 percent of Japanese debt is owed to other Japanese. For the US, the figure is more like 75 percent--much lower, if you recognize that a goodly chunk of that debt is money the US government owes to itself.

That extraordinary high level of domestic debt--coupled with a correspondingly gasp-inducing level of private savings--is Japan's blessing and its curse.  It is partly tied up with the way Japan has been so adept at pushing its fiscal problems under the table (so as to "save face"(!)).  But it is also part and parcel of the Japanese sense of "we're all in this together," together with an extraordinary impulse to make things work.

I don't mean to glamorize here.  Japan certainly is (not to put too fine a point on it) rich in contradictions--the nastiest of conquerors, isolationist and xenophobic, second to none in violent porn.    But even before this week, the Japanese had already suffered the worst nuclear calamity in human history.  And recovered with an energy and resiliency that put all the rest of us to shame.

Fun fact: principal foreign holders of US public debt: the Japanese.

Zero Tolerance

Number of Japanese nuclear plants in crisis: two.

Number of nuclear plants in Japan, total: 55.

Unfortunately, we are in a field where 96 is not a passing grade. 

Live from Japan

Streaming live video by Ustream

HT BoingBoing.

Remember the Titan?

As you contemplate the prospect that the (Chinese, Indians, Brazilians, whatever) are about to eat our lunch, you might want a bit of long-view perspective:

TWO decades ago Japan accounted for 14% of the global economy. It is now worth just 8%. In 1988 eight of the top ten companies by value, and eight of the top ten banks, were Japanese; today none makes either list.

Link. The same account reports that Japan's population is forecast to fall to 100 million by 2050; it is now 127 million.

Kurosawa's Idiot

Well, here's a surprise. Following up on the Chez Buce readaloud of Dostoevsky's Idiot, Mrs. Buce turned up a film version from a surprising source: Japan, specifically in the work of the great (or formerly great) Akira Kurosawa.

Surprising to me, at least, and I suspect I am not alone. It's early Kurosawa and doesn't seem to me much like the films you associate with K--Rashamon, Ran, Seven Samurai. The difference goes right down to the root of style: K's Idiot is a straightforward, leisurely and linear piece of storytelling, a lot more like Ozu than the K we know (helped mightily along by the presence of Setsuko Hara, who worked so often with Ozu, in the lead role).

For my money, I'd say that K accomplishes something here that seems to elude so many directors: he takes a "classic," and instead of turning it into a mere visual aid, he refashions it into a film which--without in any way betraying the substance of the original--winds up more forceful and convincing than its source.

Well yes, the source, the source. No doubt about it, D's Idiot is an extraordinary work, fully worthy to be discussed in the same breath as Karamazov or Crime and Punishment. But it's a mess: it begins with some of the best writing D ever brought off, but then it descends into the mere shambolic as D tries desperately to figure out just what sort of project he has in mind. Surprisingly, it ends well (many, perhaps most, good novels end worse)--ends well enough to make you forget and forgive the uncertainties and blind alleys of the middle.

K pares it all down. He tightens up the plot, jettisons much of the uncertain middle, and refashions it all into a single convincing story line. He's aided by a superb cast (Setsuko Hara not least among them). It's long; it takes patience (though apparently it is not nearly as long as K wanted--go here). And there is this caveat: I'm really not sure how well it would work with a reader who hadn't already tangled with D's original. Probably here as with so many films made out of good novels, part of what the viewer brings to it is the stuff in mind from having read the book. That's undoubtedly true here also, sauced with the consideration that D has refashioned it into a structure rather more sturdy than its original.

The Mikado: Culture Gap Question

Mrs. Buce is in the other room watching a Netflix production of The Mikado. It sounds lovely, and it prompts me to ask a question that crossed my mind a couple of years back while traveling in Japan. That is: do the Japanese watch The Mikado? What do they make of it?

Ushikawa Doesn't Want to Scare You...

If you believe Haruki Murakami, Japan has the politest thugs. Here is Ushikawa in The Wind-up Bird Chronicles, trying to enlist the cooperation of Mr. Okada:

This is just between you and me, Mr. Okada, but I have to confess I really admire you. No flattery intended. This may sound odd, but you're basically a really ordinary guy. Or to put it even more bluntly, there's absolutely nothing special about you. Sorry about that, but don't take it to the wrong way. It's true, though, in terms of how you fit into society. Meeting you face-to-face and talking with you like this, though, I'm very, very impressed with you--with how you handle yourself. ... I like guys like you, Mr. Okada, who've done it all on their own. ...

You can't keep it up forever, though. You're going to burn out sooner or later. Everybody does. It's the way people are. In terms of evolutionary history, it was only yesterday that men learned to walk around on two legs and get into trouble thinking complicated thoughts. So don't worry, you'll burn out. Especially in the world that you're trying to deal with; everybody burns out. There are too many tricky things going on in it, too many ways of getting into trouble. It's a world made of tricky things. ... I used to do risky stuff for a living. If I had kept it up, I'd be in jail now--or dead. No kidding. ... ... So these little eyes of mine have seen a hell of a lot. Everybody burns out in this world; amateur, pro, it doesn't matter, they all burn out, they all get hurt, the Ok guys and the not-OK guys both. That's why everybody takes out a little insurance. I've got some too, here at the bottom of the heap. That way, you manage to survive if you burn out. If you're all by yourself and don't belong anywhere, you go down once, and you're out. Finished.

Maybe I shouldn't say this to you, Mr. Okada, but you're ready to go down. It's a sure thing. It says so in my book, in big, black letters about two or three pages ahead: 'TORU OKADA READY TO FALL.' It's true. I'm not trying to scare you. I'm a whole lot more accurate in this world than weather forecasts on TV. So all I want to tell you is this: There's a time when things are right for pulling out. ...

So let's stop feeling each other out, Mr. Okada, and get down to business. ... Which brings us to the end of a very long introduction, so now I can make you the offer I came here to make. ...

--Haruki Murakami, The Wind-up Bird Chronicle 453-4 (Jay Rubin Trans. 1997)

Off Again (with Optional Vacation Assignment)

Off to play with some grandchildren. Back Sunday, or maybe Saturday night. Meanwhile, the reader is invited to consider whether the "lost decade" in Japan was such a bad thing. Sure, the real estate market tanked and the Nikkei now stands somewhere around 25 percent of its all time high. Yes, the banks, with the backing of the bureaucrats, kept sloshing money around on the ludicrous pretense that they were making good deals.

But for the ordinary working stiff, not a lot changed. Japanese are notoriously careful with their money--still one of the highest savings rates in the world, and they more or less plugged along as they always had.

You do have to wonder where in the devil all that money came from. But in the end, was it such a bad thing?

H/T Joel, who pushed a version of this idea on me a couple of months ago.

Citizenship Buyouts

Freakonomics is freakenout about a Japanese solution to the downturn-- citizenship buyouts:

The program applies only to unemployed people of Japanese descent who were born abroad but now live in Japan (they’re known as nikkei). The plan pays out-of-work nikkei $3,000 to return to their country of origin, not to return until economic conditions improve in Japan.

Okay, set aside the fact that it isn't really a "citizenship buyout:"--just a jerry-built whangdoodle to get get some folks off the unemployment rolls. And set aside cheesiness: $3,000 wouldn't be much more than the price of a plane ticket back to, oh, say, Brazil (where, I surmise, most of these most of these nikkei come from). Still they're going to have to explain to us why they call the idea "weird." In a world economics is supposed to explain everything, is it (a) "uneconomic" or simply (b) inexplicable?--and if (b), isn't it time to concede that maybe economics does not explain everything. The Canadians and others have been doing buy-ins for years. Why not just do the same thing only multiplied by minus one?

Fn.: Doesn't help that they dress the piece up with a cross ref to an earlier piece in which they evidently fell for a subtle cross-cultural prank.

Skip the Louis Vuiton, Bring on the Cabbage Soup

Must-read of the day is the Times piece on Japanese frugality, accessorized here with sapient comments from Yves Smith. I must say--I was in Japan last fall and had not the least sense of a country in distress. I wasn't in any private homes, but my experience (too) was that people looked busy and well appointed--to all appearances, prosperous, except maybe they aren't.

Update: Dean Baker is not impressed.

Trade Him for Larry Summers

How come nobody on this side of the pond can explain the current uproar quite so well as Martin Wolf? Here he is comparing the US now against Japan in the 1990s:

The bad news is that the debate over fiscal policy in the US seems even more neanderthal than in Japan [in the 1990s]: it cannot be stressed too strongly that in a balance-sheet deflation, with zero official interest rates, fiscal policy is all we have. The big danger is that an attempt will be made to close the fiscal deficit prematurely, with dire results. Again, the US administration’s proposals for a public/private partnership, to purchase toxic assets, look hopeless. Even if it can be made to work operationally, the prices are likely to be too low to encourage banks to sell or to represent a big taxpayer subsidy to buyers, sellers, or both. Far more important, it is unlikely that modestly raising prices of a range of bad assets will recapitalise damaged institutions. In the end, reality will come out. But that may follow a lengthy pretence.

Yet what is happening inside the US is far from the worst news. That is the global reach of the crisis. Japan was able to rely on exports to a buoyant world economy. This crisis is global: the bubbles and associated spending booms spread across much of the western world, as did the financial mania and purchases of bad assets. Economies directly affected account for close to half of the world economy. Economies indirectly affected, via falling external demand and collapsing finance, account for the rest. The US, it is clear, remains the core of the world economy.

As a result, we confront a balance-sheet deflation that, albeit far shallower than that in Japan in the 1990s, has a far wider reach. It is, for this reason, fanciful to imagine a swift and strong return to global growth. Where is the demand to come from? From over-indebted western consumers? Hardly. From emerging country consumers? Unlikely. From fiscal expansion? Up to a point. But this still looks too weak and too unbalanced, with much coming from the US. China is helping, but the eurozone and Japan seem paralysed, while most emerging economies cannot now risk aggressive action.

Last year marked the end of a hopeful era. Today, it is impossible to rule out a lost decade for the world economy. This has to be prevented. Posterity will not forgive leaders who fail to rise to this great challenge.

Shorter Martin Wolf: there is no Plan B.

Japan: A Great Refusal?

I can't quite figure out whether to file this one under "Japan" or "Testosterone Poisoning" or just "Marketing Hype," but Michael Zielenziger's Shutting Out the Sun sketches an arresting picture of a generation hikikomori--young people (mostly men) in Japan who simply turn off, tune and drop back, typically to the spare bedroom. They aren't (that is to say) street thugs or party animals or obsessive gamesters--they re just Japanese Bartelbys, declaring "I should prefer not to." (wonder how that sounds in Japsanese?).

Zielzinger was a foreign correspondent in Japan for a while and for all that appears, a pretty good one. He (or is agent) is smart enough to realize that one more account of Sport and Travel in the Far East is not likely to fly off the bookracks. There is thus an inevitable tendency to suspect that he is overselling to grab shelf space, but maybe not: there is a Wiki page on hikikomori with a fair number of independent references, i.e., not just echo-chamber cites back to Zielenziger himself. But then, the independent references do not inspire total confidence. For example, we have here a citation to one Tamaki Saito, a psychologist who is said to have coined the term, and to have estimated that it afflicted 20 percent of all male adolescents, or one percent of all Japanese society--a number he later admitted he pretty much spun out of his own gizzard. There is also, I suppose, the related problem of defning when something becomes a "pathology:" hikikomori may belong beside Asperger Syndrome, where it is not at all easy to distinguishs the truly afflicted from the merely seriously annoying (e.g., my colleagues at a faculty meeting, or the Buce family at a holiday dinner).

Pearl Harbor Story

H/T Tom McMahon: link.

Footnote: Something I never knew about until just lately--the Japan-Brazil connection. Evidently lots of Japanese moved to Brazil back when we wouldn't take them. More recently, a lot ohave gone back to Japan, not least at the behest of Toyota, who recruited them to work in Japanese Toyot plants.

Oh, That 40

Perusing a list of popular Japanese words and phrases (HT, MR) I come upon:

14. Arafo (アラフォー): “Arafo” — a word coined to refer to females between the ages of 35 to 45 — is an abbreviation of “Around 40,” which also happens to be the title of a popular TV drama that depicts the worries and conflicts of the Arafo generation, particularly with respect to career, love, marriage, childbirth and child rearing.

And here I thought it was waist size...