Poor Little (Rich) Japan

By James Fallows

This summer my wife and I went back to the suburban neighborhood outside Tokyo where we'd lived and sent our children to (Japanese) public school during the late 1980s. Its name was Utsukushigaoka, 美しが丘 in Japanese, which literally meant "beautiful hills" and figuratively had a connotation like "Pleasantville" in American real estate terminology.  As I explained in this short article and accompanying slide show, we were struck by two things: how much richer our former neighbors and their entire country had become in the intervening decades; but also how different, more cautious, and more inward-looking the political and cultural mood of Japan seemed now than in those "Japan That Can Say 'No'" days.

The title the article ended up with in the magazine was "Japan Surrenders," which many readers wrote to me to complain about. (On various grounds -- that it was dismissive of Japan, that it ignored the country's continuing core-economic success, that the current more cautious mood was actually a sign of maturation, etc.) I don't write headlines, since I lack that part of the magazine-staffer's brain. But I thought this one accurately conveyed part of the contrast I was presenting -- Japan's more tentative political/cultural mood, not to mention its projected substantial population decline -- and shouldn't be seen as suggesting that the country was in dire economic straits.

Yesterday's New York Times had a long article that presented Japan as a failure in about every aspect, including the economic. For instance:

"For nearly a generation now, the nation has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought in the global economy."

"Little more than an afterthought" -- but one that, until only months ago, was second only to the United States in total economic output, and whose level of production and wealth per person is still nearly ten times greater than China's, the country that has just overtaken it in gross-output terms. When we lived in Japan, Toyota had a dream of being the biggest car manufacturer in the world. Now... And on through a long list.

The Irish writer Eamonn Fingleton has lived in Japan nonstop since the 1980s and has argued through that time that the Western press has been too quick to write off the enduring strengths of the Japanese industrial and export system, as part of "trend" stories about its obvious failures and stagnation in other areas, notably political decision-making and reform. Fingleton has just laid out his contrary case for understanding Japan's strengths and weaknesses here, as a critique of the NYT piece. Sample:

>>Take the only significant statistic cited [by the NYT]: Japan's GDP in 2009 was supposedly the same as in 1991 -- $5.7 trillion in both cases, allegedly. In reality, as a check of the World Bank's website will immediately confirm, the correct number for 1991 was a mere $3.45 trillion -- and the figure announced at the time by the Tokyo authorities was actually even lower. The Times seems to have overlooked the fact that the yen was worth a lot less in 1991 than it is now. It is actually up 65 percent against the dollar since 1991 and fully 69 percent since 1989.

In its only reference to Japan's trade performance, the Times states: "Its [Japan's] once voracious manufacturers now seem prepared to surrender industry after industry to hungry South Korean and Chinese rivals." The truth is that Japan multiplied its current account surplus more than three-fold between 1989 (the last year of the Japanese stock market boom) and 2008 (the last year before the present global slump). In the same period the US current account deficit ballooned sixfold!<<

Read and judge for yourself. The broader point is that while there may be a few relatively small countries that can be classified as "failures" across the board, big complex societies are always a mix of strong and weak points, and the prevailing Western view of Japan goes way too far in (self-congratulatingly) dismissing it as an utter "failure." Picture below, of a new coffee shop / brewpub in our old neighborhood, on a sunny Saturday in June, proves nothing but is a little atmospheric touch (click for larger).
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While you're at it, be sure to check William J. Holstein's recent series of posts based on a return visit to Japan, where he worked for many years as a reporter. One that takes exception to a (different) NYT "Japan has failed" piece is here; another about understanding Japan is here; and an index here. Lots to consider.

UPDATE: Via Andrew Sprung, a reminder of a Gideon Rachman column last year which made a similar point -- that Japan's "failure" is in many ways one to envy. The column is on a protected site, but it was on August 31, 2009, and it concluded this way:

>>Some of [Japan's] efforts to deal with an ageing society are positively unnerving. The country has led the world in developing robots as companions for the elderly.... These include a "snuggling Ifbot" that, according to press reports, "lives in an astronaut suit, chats about the weather, sings and plays games".

It is best not to laugh. As the US and Europe struggle to come to terms with the aftermath of a bubble economy, rising public debt and the retirement of the baby-boom generation, they should look to Japan with respect. It may be the future.<<

This article available online at:

http://www.theatlantic.com/international/archive/2010/10/poor-little-rich-japan/64722/