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David Wagner

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Report from Tokyo: A Mindset of Normalcy

Posted: 05/11/11 02:42 PM ET

The "Japan miracle" has been the study of Japan specialists for centuries. How a nation with almost nothing in the way of natural resources could rise to become a global power fascinates even watchers today. But recent events have shown that it will take new and innovative thinking for Japan to stay relevant in the decades to come.

One does not have to go back too far in recent history to see that the Japanese miracle has been unraveling for decades. A twenty-year economic decline, officially starting with the bursting of the economic bubble in 1989, was followed by the 1995 Kobe earthquake, which showed that even modern Japanese cities can crumble. "Japan-bashing" in the 1980s subsequently led to "Japan-passing", a phenomenon that is picking up speed.

The tragedy of Fukushima is only adding to a sense that Japan is the place one used to seek for overseas assignments. Now young businesspeople prefer China or India where the economies are booming. And Japan is being left behind.

Japan's problems are immense. A declining population, lack of natural resources, the most indebted nation in the world, a declining savings rate -- the list is long. Add to this the fact that Japan was ill-prepared, both in terms of advanced planning and response to the earthquake, tsunami and Daiichi nuclear facility, and one can see that Japan needs to take a hard look at how it can not only rebuild the region but reinvent itself for the future.

Talk about what to do in the Tohoku region is happening and there are many discussions taking place. One is to turn the 20-kilometer area surrounding the Daiichi nuclear facility into the world's largest solar panel collection to generate much-needed electricity. Another is to make parts of the Tohoku region a "tax-free zone" where businesses that relocate to the region have an incentive to do so. Still another is to locate robotic plants there which need few human beings to operate. These discussions are needed. Whether they will lead to anything remains to be seen.

But what Japan needs now is for its populace to return to a mindset of normalcy. One of the first things that must happen is for Japanese to spend money again. This does not mean spending more than normal, but simply returning to a normal lifestyle.

Of late, the country has preferred to mourn the tremendous loss of life and displacement through "jishuku" or self-restraint. In so doing, it is reasoned, the nation can show its empathy to those who have suffered.

Jishuku comes in many shapes and sizes. Refraining from enjoying normal social activities is one way. Another is to minimize electricity use given the decline in available power generation due to the Daiichi facility going off-line as well as the recent suspension of operation of the nuclear plant at Hamaoka.

As dire as things are, there are signs that Japan can bounce back. Even with these sources of power no longer available, generation capability from newly-purchased turbines are expected to fill the gap this summer. Plans are also underway for reconstruction with over one million homes expected to be built in coming years.

The best way for Japan to heal is to become an engine of growth again. Respecting the tragedy can and must lead to a return to a normal life now. My guess is this will happen in coming months.

David Wagner is Director of Crisis Communications for Country Risk Solutions, a political risk consulting firm based in Connecticut. He has lived and worked in Japan for 25 years.

 

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