Can Japan Keep Pitching?

By Peter Galuszka

(Last of a series)

TOKYO, Japan — “Technology is like water, it runs down hill.”

My old Japanese friend and I are chowing down on delicious fried oysters and sashimi in a downtown Tokyo restaurant. We had just had drinks at the Foreign Correspondents Club Of Japan which offers a spectacular, 20th floor view of  the city, including parts of the Ginza shopping district.

My journalist friend’s comment is at once wistful and annoyed. He’s sick and tired of hearing about the Chinese “miracle” when much of the technology that the Chinese have used is  from Japan, the U.S., Germany or other more advanced nations.

I agree with him. I have been skeptical hearing about the wonders of the Middle Kingdom since it became fashionable when I was a middle-ranking editor on the international desk of a business magazine in New York back in the late 1980s and early 1990s. Although I am not a China hand and know little about the country, I keep noting that for every high speed train, there’s a high speed train crash that the government wants to cover up. Many Chinese products have the taint of intellectual property or brand theft. The miracle of millions of skillful, hard-working laborers churning out products for export doesn’t shed light on one-sided currency exchange rates or the labor conditions in which those products were made.

Not that long ago, Japan seemed to be where it was happening. Back in the 1980s, the buzz was that the Nipponese onslaught was moving from cars and consumer electronics to snapping up choice Manhattan real estate and buying big movie houses, controlling our media.

Alas, the real estate bubble in Japan hit and a “lost decade” of deflation followed. Japan is still staggering from it. Economists faulted the country for not taking enough steps to reconfigure the old “keiretsu” structure of big banks, government organizations and trading agencies all working towards common industrial policy and trade goals. Too slow to change, Japan was trapped and paid the price.

China faces the same pressures. It is, after all, a communist dictatorship that has ultimate say on all political, economic or civil rights issues. The plus is that it can make decisions quickly at least big decisions. It has the finances to build quickly and invest heavily in the U.S. This is an irony for conservative Americans who tout China because they  want to make money from it, but somehow forget that it stands for all of the things they loathe, such as big regulation, government oversight and spending.

My friend and I would like to see a return to the old days when Japan led Asia with close cooperation from Washington. Despite the horrors of World War II, it seemed a natural fit.

That idea, however, unravels the minute I step into a taxi. The drivers are invariably grandfatherly men in black suits and white shirts. They will take credit cards for the ridiculously expensive rides to the hotel. They must bow and hand you scrap after scrap of paper. Ditto trying to find an ATM that will issue a foreigner cash. Most ATMs work only with Japanese banks. And while the subway and train systems are fast and efficient with extremely courteous staff, they seem unnecessarily complex and old. At my mostly-Japanese hotel, when they serve a tasty breakfast buffet, they actually play elevator music from the 1960s, including (believe it or not), Mantovani. I sip my soup listening to “Born Free.”

Indeed, Japan’s biggest problem is not spirit or smarts. It is age. Demographics are against it. Japan has the largest percentage of elderly of any advanced country. About 21 percent of the population is older than 65 years old. It has always been hard for foreign firms to crack the Japanese market, but some now shun it because the population is getting too old. Meanwhile, national champions such as Sony or Toyota seem as ancient as a Madonna CD. In the latter case, a shameful breakdown in quality tarred the once-popular car maker.

Can Japan keep pitching? Can the U.S.? Both long-time allies face similar challenges. My guess is yes, but not until the current Asia set-up
changes once more.

8 Responses to Can Japan Keep Pitching?

  1. Peter steps up to the plate.
    He stares at the mound.
    Here comes the pitch.
    He swings.
    It’s a long fly ball to deep left field.
    Going, going …
    Oh, the left fielder made a miraculous catch!
    He’s out.

    It was a great article until you got to the age part and forgot that China’s “one child” policy has left it with a replacement rate under 2.1 (the standard for level population).

    Looks like that central planning thing-y may have run a bit amok.

    Maybe we can persuade the illegal aliens who cross into the United States to sneak into China instead.

    I wonder what the Chinese would do if they caught millions of people living illegally in China? Probably execute them.

    From the economist …

    http://www.economist.com/node/18651512

  2. Groveton,
    Excuse meeee. I am writing about aging in Japan, not China. That’s a separate topic.

    PG

  3. Peter:

    Thought you might like this …

    http://www.economist.com/node/21531521

  4. Shameful quality? One of my Toyota’s has 150,000 miles on it, and has her to have its first repair. It still has the original brakes, since it uses the electric motor for braking.

  5. I don’t know what the “right” amount of population is for any country – but we do know this – there are places in the world where there are more people than resources to keep them health and from starving to death.

    It’s not unlike a herd of deer that is far too big for the habitat they are populating.

    the one-child policy is odious and draconian – no question about it.

    but it is also dumb to have more kids that a couple or a nation can afford to pay for.

    47% of taxpayers in the US pay no Federal taxes. Do you know why?

    a family of 4 with an income of $50,000 pays no income taxes and many, in fact, receive money back from the govt (other taxpayers).

    do you know why?

    read here: http://finance.yahoo.com/news/Nearly-half-of-US-households-apf-1105567323.html

    ” The expanded child tax credit provides $1,000 for each child under 17. The Earned Income Tax Credit provides up to $5,657 to low-income families with at least three children.”

    note that these are CREDITS – not deductions – these apply even when the tax liability is ZERO.

    so we have a policy in this country of essentially saying that most people with kids do not have to pay Federal Income Taxes.

    think about that policy for a moment. Is it a dumb in the opposite manner than the one-child policy?

    when we have a 1.5 trillion annual deficit and we spend more on DOD and Homeland Security than we take in – in income taxes… what does that mean?

    what does it mean when the fastest growing budget cost in both the Fed and State budgets is – MedicAid ?

    So people with kids are not only not paying taxes – they are getting dollars back on the Federal Income taxes – AND they are receiving entitlements – from MediAid/Schips/food stamps/housing vouchers etc

    …. because we have an explicit policy that people with kids will not have to pay taxes and are at the same time entitled to taxpayer-funded food, shelter and medical care.

    don’t take this rant the wrong way.

    I am not anti-kid. But I AM anti-dumb-policies…. that cause structural debts…

  6. “Excuse meeee. I am writing about aging in Japan, not China. That’s a separate topic.”.

    True, although you were writing about low birth rates in Japan without noting the same think in Japan’s critical neighbor.

  7. Hydra:

    “there are places in the world where there are more people than resources to keep them health and from starving to death.”.

    Yes. There are many parts of Virginia where there is no reasonable view of the economic future which will support the existing population.

  8. re: “supporting the existing population”

    you’ve got it confused again Groveton.

    It’s one thing to have more people than you can feed from the land they live on.

    It’s another when there is enough food but they do not get an education sufficient enough for them to get a job – that does exist.

    The one-child policy of China and the defacto low child demographics of Japan allow them both – to EDUCATE their kids so they can compete for 21 st century jobs.

    We choose to not do that – and then blame the parents of the kids for our own failures to ensure that all kids actually get a world-competitive education at least equivalent to what kids in other industrialized countries get.

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