Just as the success of Toyota Motor was a symbol of Japan's confidence on the world stage in the 1980s, the automobile company's recent troubles are symptomatic of a nation withdrawing from the world, as I noted this week in a Newsweek article. Avoidance was the Japanese public's initial reaction to Toyota's recent acceleration problems, which resulted in 34 deaths and nearly 10 million recalled cars worldwide. The reaction is typical of a modern Japanese culture wrought with victimization and self-doubt over questions of national identity.
In all likelihood Toyota's slump in sales will recover and the whole episode will fade in the public's memory, blending with many other product recalls in recent history. "Management will correct the problem. Toyota Motors' sales will bounce back; most consumers will soon forget this latest news cycle and remember why they bought the Camry, the Corolla, and the Prius," said Paul Scalise of Temple University in Japan. But Toyota's problems are an essential part of understanding Japan's zeitgeist today. The car company's troubles have compounded Japan's already sour mood. Interviews I have conducted in Japan over the past several years increasingly cause me to wonder: Is Japan giving up?
Toyota not only had a special place in Japan in terms of the country's identity of quality craftsmanship, it will have a short-term impact on Japan's reputation and economic reverberations in its manufacturing sector. Even more, the company's problems partly originated from characteristics that are seen as uniquely Japanese. Culture can change, but the story has further damaged Japan's spirit, which is vulnerable from decades of economic doldrums and China's rise.
Some of the blame for Toyota's woes has been placed on the Japanese value of consensus-building, face-saving, and keeping outliers to a minimum. "The nail that sticks out, gets hammered down," it is often said in Japan. The public relations response was also plagued by Japanese cultural characteristics, such as open communication hampered by formality and a general avoidance of conflict. Toyota's problems may have simply come from the company's over-expansion, increasingly global operations, and cost-cutting, but the cultural explanations are felt in the Japanese discourse. "Japanese companies are generally reluctant to speak in public, both on positive as well as negative issues. This imposes a real cost on their ability to interact with foreign investors, businesses and customers," noted Keith Rabin, an Asia-focused business consultant, echoing a sentiment that appeared in recent Japanese newspaper editorials.
All of this comes against a depressed national mood of in Japan as China is expected to overtake Japan as the world's number two economy this year--a symbolic phenomenon with primarily psychological consequences. At New York University, a Japanese student approached me a few weeks ago after a class I teach to tell me the critical lesson on Japan the other students should remember: "Japan must give up and admit that it is number two in East Asia." What is the origin of this defeatism?
Patrick Cronin, of the Center for a New American Security, recently published an article in Foreign Policy, identifying a link between Toyota's troubles and Japan's global profile. He also sees Toyota's problems serving as a symbol for Japan's malaise. "Toyota's debacle comes at exactly the wrong time for Japan. For the past 20 years, Japan has been in decline: declining population, receding competitiveness, slipping power in Asia. Social strain abounds. Throughout this period, Toyota was seemingly the exception, steadily growing, finally overtaking GM to hold the chalice of number one," Cronin told me. "It was a symbol of the one thing Japan did the best: make things. Now, the dream lies shattered."
"Unless Toyota can repair the damage, however, the Japanese people are left looking at the future through a glass darkly," Cronin continued. "What the Toyota crisis demonstrates is a tight connection between economics and security, and that both are in turn sensitive to the national psyche. If the Japanese continue to doubt their technological prowess in the face of a rising China, especially given Japan's demographic disadvantages, how will they ponder their future geostrategic role and circumstances in the Asia-Pacific region? Soft power loss equals a loss of hard power, and Japan's influence vis-a-vis rising China has been devalued by this blight to a sterling reputation."
A morbid manifestation of this darkness is in the country's suicide rate. It has topped 30,000 per year for 12 years; this means about 100 people per day or one person every 15 minutes will kill him or herself in Japan. Despite government efforts to stop suicide, by funding hotlines for example, the rate has recently increased and is expected to rise. The rate is double that of the United States and second only to Russia among the rich G8. On the other side of the equation, the country's birthrate is the lowest in the world and significantly below replacement, owing partly to a disinterest in sexual intercourse as well as gender inequality. A study conducted by Japan's Family Planning Association found that one-third of couples surveyed have effectively "given up on sex" due to fatigue or boredom with the act, and researchers were surprised that the trend is actually expected to get worse. A 2006 study by the University of Chicago found that Japanese report the lowest sexual satisfaction among the 29 nations polled. According to an Asia-Pacific Sexual Health and Overall Wellness survey last year, Japan ranked lowest in satisfaction of the 13 Asian countries surveyed.
As a consequence of low birth and migration rates, the country's population is predicted to fall from 127 million to 95 million by 2050, creating unparalleled demographic pressures. At 229 percent, Japan's debt-to-GDP ratio is the highest in the developed world as is its level of public debt. It is unclear how Japan, given its poor fiscal health and expected worsening debt burden, is going to provide for a rapidly aging population and a growing proportion of poor.
The country's apathetic attitude is epitomized by a new generation of arasa and arafo (those in their 30s and 40s) and sugomori (nesting) people who prefer to stay at home, seek bargains online, and soshoku-kei danshi (grass eating-men) who avoid going out, taking risks, or trying to find a career for themselves. Even Japan's Olympic hope Miki Ando played it safe and downgraded her triple-triple jump combination in the figure skating competition in Vancouver. More dramatic is the presence of the hikikomori or shut-ins who have given up on social life and number about 3.6 million, according to the Minister of Internal Affairs and Communications Kazuhiro Haraguchi, citing a Japanese nonprofit. This figure is far larger than the previous estimate of 1 million by renowned Japanese psychologist Tamaki Saito. In Shutting out the Sun, author Michael Zielenziger points to hikikomori as well as high rates of suicide, low marriage and birth rates, and low levels of sexual relations among adults to argue that Japanese who have begun to think outside the rigid conformity of Japanese society have made a rational choice to stay home and avoid social life.
While many fund managers are pessimistic about the Japanese economy for the long-term, some are bullish on certain Japanese equities, calling them undervalued. Paradoxically, the companies that are forecast to do well have given up on the Japanese domestic market and have expanded abroad. Successful Japanese companies will either target foreign markets in the United States, China, and Europe or will act as a "gateway" to business in a booming Asia.
A promising strategy for Japan as a whole would be to act as a bridge between the West and East, but that assumes Japan's political relations with the West are harmonious. Unfortunately, the ruling Democratic Party of Japan has decided to complicate its relationship with the United States by reexamining the location of a military base in Okinawa. Meanwhile relations with Australia have moved into rocky waters over Japan's whale hunting; over which Australia has threatened to take Japan to the International Court of Justice.
It would be absurd to give up on a country purely on the basis of its national mood. In fact, Japanese manufacturing output has risen, GDP is picking up, exports have grown their fastest in 30 years, and the trends I have described will all be familiar to any Japan watcher. Moreover, Toyota's sales surged 48 percent last month in Japan. But I have never seen the mood bleaker. Let's hope that this new low provides a rock bottom from which Japanese optimism can rebound.
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The only solution to this problem is the one America has used - immigration. The Japanese are reluctant to allow large numbers of Chinese to move to Japan. The Japanese, after all, are more racist than t-baggers.
Russia and Japan face serious issues in the next 20 years. Russia's low birth rate is linked to vodka and it is possible that it will correct itself. Japan's is structural, and deadly.
The decline in real estate value is not a single issue item either.
How Japan manages its immigration is its business and in fact Japan is much less draconian in allowing permanent residency than say China, Korea or India. We have written Japan off many times in the past to our chagrin and I am reluctant to do so now. Just as I am reluctant to write the US off.
However, little things would help - the kinds of things that remove burdens of labor and oblgation from people. One place to start is to actually allow people to use the vacation time they collect. Get them out of the house, the office, and out of town.
It's difficult to raise a family, get married, or move out when a tiny apartment costs all the wages that one gets from a job 2 hours away by train. Or to drive through $30 of toll roads by car.
I'm not sure that a girl who sees obasan riding around on a bicycle with 2 kids on it is something they would enthusiastically aspire to.
Likewise, I'm not sure that a boy who sees oyaji working 10 to 12 hours a day without the train ride is something they would aspire to either.
The present situation -- both economically and politically -- (here) has at a minimum weakened that view which then leads to a need to come up with a new direction/goal/objective. That is not so easy. What do they do? Follow China? Hmmmmm. Anyway at minimum in my view it contributes to the aimlessness and lack of a direction you speak of.
The Japanese are a fatalistic lot and the malaise that is depicted in this article is perhaps a reflection of that. There is no longer any real dynamism that drove the generations of the 1950's and 1960's to look forward to, only an emphasis on entertainment and trying to get enough sleep on Sunday to recover from the hard 60 hour a week slog and the attendant crowded commutes.
As for Japan hitching its wagon to China, That is also futile. Aside from the farming community being up in arms over how the importation of cheap Chinese foodstuffs has hurt them, China, for good reason, will always be suspicious of Japan's motives and so that newfound interest in a close relationship with the Chinese is likely to go unrequited.
As far as Toyota goes...I drive a Honda, lol.
On the other hand, China could end up making some of the same mistakes. They are off on a real estate buying spree in the U.S. at a time when real estate values here are still in the process of descending toward the bottom and won't really bring any return on investment for maybe as long as a decade.. Japan's similar shopping party blew up in their faces.
And this is something that is perhaps wrong with countries where land is perceived as scarce for a burgeoning population. They react by buying more land overseas because they can't see how real estate cane be a loser. And they get burned.
the current rumor is that there will be an official japanese visit to nanking and a reciprocal chinese visit to hiroshima. the signal these visits would send are revolutionary for the region.
china is already a much larger export market for japan than the usa. the market is not near its potential in terms of size and revenue. it will eventually dwarf the usa market. as i postulated, the usa market will remain important but not as critical.
china has approached japan to establish a yuan/yen trading region including the asean countries. this will allow all the countries to detach themselves from dollar hegemony
the security pact will have to be renegotiated at some point. the disagreement over the okinawa marine base is broadcasting a change.
all of this will happen in the next generation. in my mind the question is whether it will happen peacefully. if it does the world will be divided into three economic zones--euro, asia and the americas.
i wouldn't count japan out. my thesis is that they will successfully hitch their wagon to china while maintaining an important relationship with the usa. its biggest obstacle now is the dollar dependence of the current economy. the recent overtures by china to create a regional currency trading vehicle to help cross asian trade are, ironically, the peaceful version of the greater prosperity vision of an imperial japan.
my anecdotal reports are that hatoyama's recent baby making incentive program may actually be working.
the admission that japan must accept its number 2 status in asia has always been considered inevitable. accepting its reality will decide the path japan will take in the 21st century. i don't think the japanese are giving up. i think they are looking for a definitive new direction given their reality. i think the decision has been made and the usa will be the loser.