It took an earthquake, tsunami, and nuclear disaster to reveal how little the West understands the land of the rising sun. (This article first appeared in the June 2011 edition of the American Conservative.)
TOKYO. The art of reading between the lines is useful anywhere but particularly in Japan, where so little of what matters is ever entrusted to words. Having lived in the country since 1985, I claim to know. So I reflexively looked for a hidden meaning when, in an unprecedented move, television networks broke away from scheduled programs to broadcast a special message from Emperor Akihito on March 16.
Ostensibly he was merely extending his sympathy to thousands of victims of the March 11 earthquake and its aftermath. But at a deeper level, the broadcast seemed to offer reassurance on the unfolding disaster at the Fukushima nuclear power station. The implicit message seemed to be that the radiation hazard was manageable, at least so far as those of us in Tokyo were concerned. After all, there was the head of state, sitting calmly in his palace just a couple of miles from my office in the Shiba district of central Tokyo.
Though scaremongering about the radiation threat was then at its peak (particularly in the American media), he was saying — without saying — that he wasn’t taking the first plane out.
The emperor’s “body language” was hardly the only thing that guided me, of course. But it helped and in the end both he and I – and countless other Tokyoites who held our ground – seem to have been vindicated.
That said, I have a lot of sympathy for the “sissies” in the Tokyo foreign community who temporarily baled out, particularly those with small children. Things were, to say the least, more than averagely “inscrutable” even by Japanese standards. Governmental dissembling, not to mention outright mendacity, is even more prevalent in Tokyo than in most other world capitals. For knowledgeable foreign residents such as LewRockwell.com blogger Mike Rogers, the parallel that immediately came to mind was officialdom’s notoriously slow response to the horrific Minamata mercury poisoning case of the 1960s. In the circumstances, and given that nuclear radiation poses a special threat to children, foreign parents can hardly be blamed for taking a better-safe-than-sorry approach.
Although it seems strange to think of any good coming out of the crisis, there is this to be said that it has suddenly provided some useful correctives to Western thinking about Japan. Most obviously, as visiting big-foot American television reporters have been surprised to discover, Japan is hardly the open Western-style democracy it has been portrayed.
Western observers are also discovering that the Japanese economy is not quite the irrelevant has-been they had assumed. To say the least, as shortages of Japanese-made components and materials cause cascading shutdowns in the world manufacturing supply chain, Japan has suddenly emerged in an interesting new light. As I have shown in two books, on the measures that matter to Japanese leaders, Japan quietly continued to power ahead even after the Tokyo stock market crash of the early 1990s. The most important measure, of course, is exports, particularly exports of advanced manufactures. While the attention of Western observers has been elsewhere, Japan’s exporters have not been resting on their oars. Rather they have performed so strongly that Japan multiplied its current account surplus more than five-old between 1990 and 2010! In the same period, America’s current account balance also multiplied five-fold – its current account deficit, that is. The two developments are opposite sides of the same coin. Japan’s key strategy has been to acquire “chokepoints” – monopolies or at least strong oligopolies – in countless producers’ goods, often highly advanced products in which the United States was formerly the world’s leading or only source. The result, as is now very belatedly becoming clear in Washington and elsewhere, is that Japanese manufacturers have achieved the sort of global supply chain dominance enjoyed by American manufacturers at the height of American economic power in the 1960s. Though producers’ goods are invisible to the consumer, they are vital to the global economy – so vital indeed that without them the modern world literally would not exist.
Clearly there are multiple communications problems between Japan and the outside world, and we will discuss the economic and political ramifications in detail in a moment. First, however, let’s consider the more elemental matter of how the Japanese government has been communicating with its own citizens during recent crises.
Technically Japan’s emergency information processes are probably the world’s most sophisticated and they seem generally to have functioned well in the first hours after the March 11 earthquake (that is, before the nuclear issue took center stage).
I was in my office on the 11th floor of a building in the Shiba district of central Tokyo when the whopper hit. My wife, with whom I share the space, happened to be out but two of her employees were there to share the experience. Like other life-long Tokyo residents, they are earthquake connoisseurs but March 11 was different.
Things started gently enough but, within a few seconds, the building was swaying violently. The first and most frightening episode probably lasted no more than three minutes but felt much longer. The motion was like a drunk’s staggering gait — somehow both rhythmic and erratic at the same time.
Normally, earthquakes in Japan are felt mainly as a quick jab that subsides before you can think. On this occasion, however, I had more than enough time to consider whether things might get much worse. I looked around and wondered which bit of furniture, not least my wall-to-ceiling bookshelves, might go flying.
Then there was our dog Kuro, a normally self-assured fellow of mixed ancestry who insists on being taken to the office – a ten-minute walk from our apartment – every morning. Dogs, I have noticed, seem particularly spooked by earthquakes and even minor ones send Kuro into hysterics. It was my job to calm him down or at least keep him away from heavy furniture.
The minute the shaking subsided, my colleagues emerged from under their desks to turn on the television. In common with millions of other residents of eastern and northern Japan, they tuned to the national broadcasting company, NHK, which functions as Japan’s central nervous system in transmitting all earthquake-related information the moment it is available. Although the jolting was so severe that the memory will probably stay with us the rest of our days, it was immediately obvious that we in Tokyo had been relatively lucky. For those close to the epicenter, located nearly 200 miles to the north, the experience had – to say the least — been a couple of orders of magnitude more destructive.
A vast network of ingenious systems snapped into action to shut off power grids, gas flows, and bullet trains. As the disaster expert Richard Gordon noted in Britain’s Independent newspaper, in Japan even the doors of fire stations are preprogrammed: on the first hint of a tremor, they open automatically, thereby enabling fire engines to make the fastest possible exit if the earthquake turns out to be serious.
After every Japanese earthquake one immediate task is to assess the risk of a tsunami, which the authorities gauge almost instantly via countless sensors, many of them mounted on buoys in the sea. The warnings for the coast to the north of us were the highest on the Japanese alert scale – but as we now know they did not seem to be dire enough for many residents, who perhaps having become inured to false alarms in the past, failed to get to higher ground in time.
Within minutes several media helicopters were already out over the Pacific racing to meet the wave. Soon enough we were seeing live pictures of the approaching deluge. Viewed from above while it was still far from land, there was little hint of what a killer it would turn out to be, though it probably already then stood more than 20 feet high. Its eventual height on crashing ashore depended on the immediate topography and in some places, I was later astounded to hear, it rose to more than 100 feet – equivalent to an eight-story building. (For those of us in Tokyo there was little to fear because, though we live and work in low-lying areas within a mile of the sea, Tokyo bay’s notably narrow entrance forms a secure natural barrier against most tsunamis.)
Where the public information system began to go off the rails was in dealing with the nuclear situation. Already by the evening of March 11, the authorities disclosed that the Fukushima reactors were in trouble but the news at first received little attention. As the problems worsened, however, comparisons to Chernobyl soon became common currency, particularly in the Western media. Not only did the authorities seem incapable of authoritatively slapping down the Chernobyl comparison but their shuffling stance and confusing statements fed the panic. It did not help that the chief executive of the power company was missing. He was said to be ill but an alternative explanation, posited by, among others Tokyo’s cynical foreign banker community, was that he might have committed suicide. In the event it seems he was genuinely ill but, given memories of the mendacity surrounding the Minamata affair, his absence powerfully fanned fears in the foreign community.
Adding to the unease were foreign press reports that, via the so-called amakudari system, the power company and the Ministry for Economy were in bed together. Amakudari literally means “descent from heaven” and it describes a tradition whereby top bureaucrats take up lucrative second careers in key private sector companies – often the very companies they spent most of their lives regulating. The system looks much like the Washington revolving door; but a key difference is that whereas the revolving door is considered a large blot on American democracy’s copybook, amakudari plays a central, fully accepted, role in how Japan works.
Amakudari was authoritatively described in English as far back as 1974 by Chalmers Johnson, so it should hardly have come as much of a surprise. It is part of a peculiar industry-bureaucracy nexus that long ago gave rise to the soubriquet Japan Inc. In recent decades, however, the Japan Inc concept, with its implication of state/private sector collusion in “targeting” global industries (and often adopting none-too-gentle tactics in running foreign competitors off the road), has become unpopular abroad. The image, though not the reality, has therefore been consigned to the memory hole, as Tokyo has sought to persuade foreign observers of its sincere commitment to a deregulated Western-style approach to economic policymaking.
Although visiting reporters were understandably spooked by the power company’s hand-in-glove relationship with the bureaucracy, in one sense amakudari is more innocent than it appears: while Americans assume it greatly compromises the regulatory process, it actually reflects more an essential unity of purpose between the regulators and the regulated. It has to be understood in the context of a nation that, though nominally a democracy, continues to be run the way it has always been – by a special cadre of elite, frankly authoritarian bureaucrats. The concept of separation of powers is almost as alien in Tokyo as in Beijing. Japanese bureaucrats are so powerful that they can generally expect deference even from the corporate honchos who are their titular bosses in their second careers. Certainly the primary function of amakudari is to bend corporate Japan to serve the bureaucratic elite, not the other way around. The corrupting influence of amakudari is tempered moreover by a key safeguard in that individual bureaucrats are not permitted to negotiate with future employers. Negotiations are controlled by the ministries, thereby minimizing the temptation for regulators to pander to future employers.
As for my own efforts to divine what was going on, amakudari hardly entered the picture. I take it for granted that most of what is said in public in Japan about sensitive issues is at best nonsense, irrespective of who is doing the talking or with whom he is connected. Instead, in common with millions of Japanese citizens, I often find non-verbal signals a more rewarding indicator of what is going on.
I was impressed, for instance, by the fact that in my neighborhood – we are in embassy-land just round the corner from the Italian and Australian embassies – none of my elite Japanese neighbors had fled, not even those with young children. As many of these people are either insiders themselves or have relatives who are, that seemed to bode well.
In any case I had a special advantage over most Japanese: foreign sources. While hysterical reporting proved the norm in the foreign media, there were exceptions, most notably the BBC which aimed for a modicum of balance and truthfulness. I was particularly impressed with several BBC interviews with sane-sounding experts in faraway Europe. More than Japanese experts, they were likely to offer genuinely independent views – and certainly they stood to suffer much more obloquy if they were later discovered to have knowingly misled us.
The British government’s statements were also a calming influence. Both the British ambassador David Warren and the British government’s chief scientist Sir John Beddington were quick to post advisories rejecting the Chernobyl parallel. (For the purposes of this article, I later corresponded with a retired Russian nuclear scientist who has strongly confirmed their thinking. In his opinion there was never any significant risk to health in Tokyo, where one of his children happens to live. He suggests that, though the Fukushima design entailed some risk to the local environment, such as the way nuclear waste was stored, that risk was a calculated one that was probably justified on economic grounds. A former senior manager at a once highly secret nuclear warhead plant in Seversk, he judges that the Japanese authorities have unlucky, rather than negligent, in that the tsunami was worse than anyone could reasonably have expected.)
Another factor for me – and undoubtedly for many Japanese – was, of course, the emperor. There was always the possibility that he was engaging in some terrible ruse and that the impression that he was speaking from Tokyo was false. But that seemed very unlikely, no least because it would have done terrible long-term damage to the imperial institution if Japanese citizens later felt they had been misled. What was clear was there was no compelling reason to do the broadcast (he did not do one after the Kobe earthquake of 1995, after all, and his previous broadcasts had always been scheduled ones on auspicious national occasions such holidays). The betting was that he was indeed in Tokyo and that he would not have stayed had not his bureaucratic minders felt pretty sure it was safe.
Complex triangulation of this sort is constantly necessary in Japan to determine “real reality,” as opposed to the multiple fake versions constantly visited on us by a manipulative elite. Though it is only at times of crisis that Japan’s “inscrutability” becomes widely apparent abroad, the fact is that ludicrous contradictions – not to mention blatant mendacities – normally go unchallenged in Japanese public life.
A basic problem is the Japanese press. Pace all self-congratulatory blather in the United States during the Cold War, the Americans did not succeed in introducing a free press after World War II. The Japanese press is muzzled when it is not self-censoring. And that leaves the Japanese establishment – the real Japanese establishment consisting mainly of unelected bureaucrats – to make things up as it goes along.
Thus Japanese press conferences, for instance, far too often are exercises in kabuki in which reporters willingly — even enthusiastically and proudly — take the establishment’s side in asking planted questions.
Meanwhile the Western press generally does not have the language skills to take a firm line with Japanese sources. In any case it is excluded from most Japanese press conferences, which are not only Japanese-only affairs but are restricted generally to a small coterie of establishment media.
For foreign correspondents, it all adds up to one of the most exasperating assignments in the world. Indeed generations of foreign correspondents have tacitly admitted defeat. By default, they go with the flow and write what everyone else writes, often in the full knowledge that it is nonsense. Except at times of crisis, when things are at sixes and sevens, what everyone else writes is what suits the authorities.
One thing is certain: Japan is back on the American press’s radar. Already there has been a remarkable change of tone at the central Tokyo premises of the Foreign Correspondents’ Club of Japan. Before the earthquake, the club had for more than a decade assumed the lugubrious atmosphere of a traditional English seaside resort in winter. By contrast in the weeks since the earthquake, there has been a “happening” feeling reminiscent of the news-rich days of the late-1980s bubble.
The club’s pre-March 11 hangdog look reflected, of course, a perception that the Japanese economy “no longer matters” – that in the wake of the Tokyo stock market crash of 1990 Japan had been permanently hobbled by a series of bizarre economic ailments. Already by 1992, major Western news organizations had begun paring their operations and within a few years the quality and seniority of correspondents being sent in were generally falling. Then came the rise of the internet and with it savage budget cuts in many traditional media organizations. For Tokyo bureaus, that meant an ever greater reliance on local hires, whose coverage often openly panders to the authorities’ propaganda wishes. Finally came wholesale shutting of bureaus, including those of such erstwhile mainstays of traditional American print journalism as Time, Newsweek, Fortune and Business Week.
The irony is that had foreign correspondents been reporting competently all along, Japan would never have slipped from view. It has been clear that the Japanese authorities have deliberately emphasized the negatives and fostered a general impression of economic malaise in an effort to deflect Washington’s attention from Japan’s constantly rising trade surpluses. The theme has been strongly promoted by various Tokyo-based foreigners who operate rather openly as propaganda surrogates for the establishment. One redoubtable Tokyo-based British securities analyst a few years wrote a whole book entitled The Irrelevance of Japan, for instance. Another, also British-born, wrote a similar, but even more absurd one entitled Can Japan be Saved?
Now suddenly it turns out that Japan’s economic death has been greatly exaggerated. As the author and long-time Japan watcher William Holstein points out, recent Japanese logistical disruptions have demonstrated in particular just how vital Japanese-made inputs are to the United States. He comments: “The intense scrutiny given to Japan has revealed that nearly every global supply chain that supports major American companies runs through Japan at some point. General Motors could not make pickups in Louisiana for a while because it was missing parts from Japan. Apple was facing interruptions in its ability to make iPhones and Boeing was worried about its suppliers of carbon composites.”
In reality anyone with access to international trade figures could have seen all along that Japan’s problems were vastly overblown. Although in former times hardly any aspect of the Japan story received more attention than the trade figures, these have long been notable for their absence in most press discussions. Even last year’s record current account surplus of $194 billion – the second highest in the world after China’s – received virtually no coverage. By comparison the surplus in 1990, the last year before the great Tokyo real estate crash, totaled a mere $36 billion.
Japan’s economic strength has also been unmistakably apparent in currency markets: all malaise talk to the contrary, the Japanese yen has risen against all major currencies in the last two decades. Against the U.S. dollar, the rise has been a stunning 65 percent.
Of course, the earthquake and its aftermath have posed an unprecedented challenge to Japanese policymakers – but it is a short-term one and should be largely rectified by the autumn. Although some damaged factories may take months, even years, to repair, in the case of most of the affected products other sources of supply exist within Japan and emergency efforts (such as round-the-clock shift-working) are now being implemented to ramp up production in those factories that came through undamaged.
In truth the earthquake’s knock-on impact in the global manufacturing supply chain testifies to a historic divergence in the economic strategies of the United States and Japan.
Whereas in the last two decades the United States bet the farm on postindustrialism (the so-called new economy of computer software, entertainment, and finance), the Japanese made a clear policy decision to stick to their knitting in ever more advanced manufacturing. Largely overlooked in the West, they chose to concentrate more and more on _producers’ goods_, which though invisible to the world’s consumers are critical to the global supply chain. And the result is that with the Americans now largely gone, the Japanese enjoy almost unchallenged supremacy in the most advanced areas of high-tech manufacturing. In many cases indeed Japan is the world’s only source of the sort of highly purified materials and miniaturized components that have driven extraordinary global progress in the quality and quantity of consumer products in the last twenty years.
A particularly interesting example of Japan’s manufacturing chokepoints is semiconductor-grade silicon. Because of earthquake damage to some of Japan’s production facilities, the American press has finally woken up to Japan’s leadership in this crucial material. (Broadly speaking the ever more highly purified silicon needed in the semiconductor industry is as important today as steel was a century ago. Quite literally the global electronics industry would not exist without it.) But even now the press is hardly up to speed. Reports put Japan’s global market share at a mere 60 percent. Not true. Its share is nearer 100 percent. Goldman Sachs analysts are aware of no non-Japanese factories producing highly purified semiconductor-grade ingots. The press’s figure refers not to production of the silicon material itself but rather to “wafering” – the term for a separate and less sophisticated task of turning silicon ingots into wafers (the main processes are slicing the ingots and polishing the resulting slices).
Japan’s chokepoint strategy has not only paid off in the trade balance, but it sustains millions of highly competitive, super-high-paid factory-floor jobs. High wages are made possible by the fact that many producers’ goods lend themselves to ever more capital intensive and knowhow intensive production — and thus the Japanese have been able to stay well ahead of such hungry competitors as the Chinese and even the Koreans and the Taiwanese.
The specially high degree of knowhow intensity in Japanese manufacturing these days has been almost completely overlooked in the West, yet it is the single most powerful factor driving the story. When economists hear the word “knowhow” they still think mainly of factory-floor skills. While such skills are important, of vastly greater importance these days is high-level proprietary production knowhow incorporated into the settings of sophisticated production machinery. Such knowhow is often acquired only by arduous trial and error. Factory managers may have to go through countless test runs trying out various combinations and permutations before hitting on the perfect settings that maximize the highest yield of saleable product. (Yield is a crucial consideration because in many areas of high-tech manufacturing the difference between perfectly tuned machines and those that are off may be the difference between a yield of 90 percent saleable product only 10 percent. Think of this as a bit like tuning a piano. You can’t get great music without first making sure the piano is professionally tuned.)
While such high-level knowhow can be extremely expensive to acquire, the good news is that, in contrast with factory-floor knowhow, it is far easier to keep secret. Indeed in many cases it can be withheld from competitors for years if not generations. Moreover it is a saleable product in itself. Thus when the Japanese move up to a higher level of production technology they often sell their previous technology to others, typically the Koreans or the Taiwanese.
Although the economy – the real economy of prodigious export success, that is – is obviously a major reason why the West should pay more attention to Japan, there are many other reasons, not least the often complex relationships (far more complex than is generally understood in the West) Japan has with China and other East Asian neighbors. For someone like me who has lived 25 years in Tokyo, Japan bristles with unexploited reporting opportunities. Moreover for anyone who really wants to understand how the world works and where it is headed, Tokyo is a far more vital listening post than, say, London, Paris, or Berlin (not to mention Hong Kong, Singapore, or New Delhi) and still these days ranks broadly as important as Beijing.
Will the West maintain its interest once the current problems are overcome? Holstein, author most recently of The Next American Economy and a former president of the Overseas Press Club of America, does not hold out much hope. “The American media’s coverage of international events is increasingly spasmodic,” he says. “Here we are in Haiti chronicling a devastating earthquake, then the media leaves. Here we are in Egypt celebrating democracy and here we are in Japan describing the amazing hardships facing survivors, then the media leaves. CNN flew Anderson Cooper to Egypt and then it flew him to Japan. The big names parachute in, and then they leave.”
Eamonn Fingleton is the author of In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the Key to Future Prosperity.