November 21, 2002
From the desk of Jane Galt:It's Not Us -- It's the Foreigners!
Consider these paragraphs from a WSJ editorial on Japan's banking crisis, which is worsening to the point where it looks like they may actually do something about it. Unfortunately, it has been worsening, and looking like they may actually do something about it, for ten years, so I wouldn't get too excited. The Japanese have proven extremely adept at staggering along without major change.
But I was speaking of the editorial:
Naturally, ordinary Japanese are going to ask who's to blame, and Japan's vested interests have already managed to deflect attention onto a scapegoat: the Americans. The declines in stock prices are the result of foreigners selling Japan short, this thinking goes. Reformers must be in the employ of vulture capitalists who want to wreck Japan Inc. so they can pick over its bones.It's not a sophisticated story, but it bears thinking about. Two months ago the State Department quietly convened some Japan experts to look for signs that the country might repeat the history of the 1930s, when militarists exploited unemployment and thwarted national pride to take over the government. The U.S. academics didn't see much indication of that happening today.
What I found remarkable in these statements was not the possibility that Japan was going to revert to the 1930's (although the fear is not as odd as it seems. . . Japan's economic crisis seems so like our own in the Great Depression in many ways, that it's hard to look at the country without thinking of the 1930's) What struck me was how like they are to the responses of developing countries during the 1998 fiscal crisis, when it was those madcap foreigners, determined to destroy the stalwart people of [Malaysia/Thailand/Etc] who were the source of the problem, rather than hog-wild spending and a speculative boom. It seems a little odd for a developed, highly educated country like Japan to be making statements that sound as if they've joined the same club. Posted by Jane Galt at November 21, 2002 9:04 AM | TrackBack | Technorati inbound links
"It seems a little odd for a developed, highly educated country like Japan to be making statements that sound as if they've joined the same club."
I truly don't want to start a round of Japan-bashing here: BUT: why should the sort of attitude you cite here come as a surprise? Despite the superficial patina of modernity/Westernization/development/international integration which characterizes contemporary Japan; there are still many less-attractive facets to Japanese society and culture which have not changed much since, say, the 1930's. Mostly, a deeply inbred insularity and exceptionalism, for which "chauvinism" is the politest euphemism.
Even a cursory study of Japan should evidence that "nationalistic" attitudes still lurk beneath the surface - and, as the history of this century shows, (in Japan and elsewhere) economic hard times tend to to bring a lot of things to the surface that are better off staying buried.
And, unless I am misreading CW, Japan hasn't really faced REALLY hard economic times yet.
Here's another angle:
To what extent do you think you would not hear the same thing here in America if the economy's health deteriorated badly?
Look at some of the Euro-bashing we get now, for about as much cause. Look at some of the anti-immigration and anti-NAFTA debates of our recent past, or the arguments made for the steel tariffs this year.
Or, if you like symmetry, consider the response of your average American and your typical TV newscast to Japan, Inc. in the 1980s.
I'd say that blaming others is not unique to the third world or to non-Western cultures. It tends to happen when times get tough, because it is a natural human response (who likes to blame themselves?) to adversity. And it happens here too.
Funny thing is, Veblen predicted this kinda behavior. Back around 1915, he made an argument (concerning Germany, natch) that you cannot have economic growth in a feudal state past a single generation--essentially, that there'd be this amazing boom, then stagnation, then nationalism.
Of course, Japan isn't feudal anymore. There's a huge difference between the Japan of today, where career is decided by performance on astonishingly difficult college exams requiring rote memorization of topics that offered little practical value, and the Japan of then, when leadership was by decided by performance on astonishingly difficult Confucian state exams requiring rote memorization of topics that offered little practical value.
Japan today is a million miles away from where anybody was back in the great depression. The idea there's any comparison is, well, a Michael Moore size whopper.
At the worst of the Depression, in 1933, the U.S. unemployment rate WAS 25%! Today in Japan, the unemployment rate is 5%-6%. Any comparison of the two is laughable in the extreme.
Jay: the word for what ails Japan is not "insularity," it's cowardice. They're certain that the foreigners could easily destroy them, so they must be kept at arm's length.
Jim: In the seventies, when Japan was kicking our ass, our response was "What do we have to do differently to get back on top?" We had a vigorous debate about whether we should immitate them, and how much. Have they had anything comparable?
We should take some assurance from the mass of data on investment flows available today that makes the blame game difficult. While the Japanese-in-the-street may not know where to look, it is easy enough for scholars and journalists to see who the big sellers of the Nikkei are. Short-selling is still tougher to do in Japan than the US or UK and is unlikely to be a whopping problem in reality.
It will also be hard to hide the connection between coming pension fund cash-outs and Nikkei performance from a public that is highly sensitive to its own demographic problems and the problems inherent in retiring in a society with too few workers and a wretched record on pension fund performance.
There may be jingoist efforts to make us the devil in Japan's problems, but there are the protections that grow out of an informed society working for us.
The phenomenon of the Japanese blaming outsiders for difficult decisions is hardly a new phenomenon in the post-WW2 era. It's called "gaiatsu" (literally "outside pressure") and is invoked fairly frequently. Maybe it's just "blame the silly Americans" syndrome expressed another way, but (a) it's still done to get things done and (2) exporting domestic dissent is hardly a new idea.
Oh, and Japan's unemployment rate isn't calculated the same way as the U.S.'s and is generally considered to be a seriously underestimated, to the tune of 3-5% (depends on who's doing the measuring and the current circumstances). It's also been estimated that roughly 5% of the current workforce is being paid to do effectively nothing, due to employer reluctance to let workers go. Add those numbers up, and you get 15%, which should give significant pause to pretty much anyone.
Stephen: When Japan was kicking our asses, it is true that one of our responses was "What do we have to do differently to get back on top?" But if you've forgotten all of the other responses, you're missing the whole story.
As for internal debate in Japan, here is a web site with a section devoted to it. Articles in that section have titles like:
- Japan's Financial System in Need of Radical Surgery
- Financial Reform and Tax Reform for Economic Revitalization
- Japan's Tail-Chasing Economy
- Current Confusion in Japan's Economic Policy
They are written by government ministers, academics, and economists.
Like us the Japanese have blamed others for their problems, and like us they have also looked within. Any society as large as Japan's or ours will have both finger-pointers and self-criticizers in it.
While certainly not praiseworthy, a little xenophobia in Japan's situation is neither odd nor unique. This beam is in our own eye too.
It's right to criticize that kind of talk, but I think it's incorrect to determine that it arises from some deep societal flaw. It's human nature.
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