- BRIAN
DEER: JAPAN FEELS THE SQUEEZE
Page 1
The
Sunday Times (London) August 7 1994
By
Brian Deer, Tokyo
On the day,
late last June, when Japan got its fourth prime
minister in less than 12 months, Tokyo and its
adjacent cities were rattled by a quake. It was
strong on the Richter scale - 5.3 - and for a moment
the nation's capital paused to assess this natural
event. Eyes flicked to the safety of doorways, and at
main railway stations the ultra-reliable shinkansen
bullet trains that hurtle along the spine of this
Pacific archipelago were held past scheduled
departure times as the earth thumped and buildings
trembled.
The
shaking stopped, however, in a matter of a few
seconds, and the epicentre was way offshore.
Sophisticated anti-quake devices intended to protect
Tokyo's international markets and business centres,
barely had time to kick into action before the ground
again became still. Across the warren of high-density
housing and clusters of modest skyscrapers that make
up the metropolitan area, life cheerfully resumed its
hurried rhythm with a sense of renewed hope. It was
not the Big One that has long been expected and,
thankfully, some tectonic pressure had been relieved
along subterranean faults.
If
only other shifts in Tokyo that day were half as
reassuring. On the parliamentary scene, Tomiichi
Murayama, the 70-year-old chairman of the country's
Social Democratic Party, emerged to take the
premiership - sending a shudder through those who
wanted to see change in the world's second biggest
economy. Meanwhile, on the financial markets, the
mighty yen (already so absurdly overvalued that it is
severely eroding competitiveness) continued its
relentlessly upward drift against both the dollar and
the pound. Unlike the shudders of geological
rearrangement, human affairs seemed uniformly bad.
Until
less than a year ago, when Japan's conservative
Liberal Democratic Party (LDP) finished an
astonishing 38 years in office, people said the
country was like a one-party state. Now, in a mood of
profound soul-searching provoked by the first
home-grown economic slowdown since the war, the prime
minister's office has become like a karaoke bar:
almost anybody can get up and sing. Succeeding three
more substantial occupants, Murayama was a virtual
unknown before assuming the post and, amid the
primetime jungle of game show television, had
impressed the electorate most effectively to date as
"that guy with the bushy eyebrows".
His
appointment was all the more striking in that it
appeared to lack any principle. At face value,
Murayama was a man of the Left, but in order to take
the reins in parliament, he was obliged to form a
coalition with the right-wing LDP. A poacher turned
gamekeeper, and worse. Within days, he packed his
cabinet with conservatives and signalled that his
party's long-standing programme would be
unceremoniously junked. Over recent weeks he has made
a string of jingoistic statements, proposing a firmer
status for the armed forces, the singing of the
national song in schools and for the controversial
"rising sun" Hinomaru flag to be
restored to widespread use.
But
street vox-pops and public opinion surveys revealed
no sense of unease. In this culture embedded in
residual Taoist philosophy, Buddhist and Shinto
religion and Confucian ideology, the Western logic of
Aristotle et al simply doesn't apply. That a
man could spend his entire adult life as a socialist
and then form a right-wing government just went to
show that Japanese thinking is situational rather
than dogged. In Japanese thought, something can be
and also not be, at the same time. Here,
"yes" or "no" can mean the same
thing, or sometimes mean nothing at all. So nobody
much took it as an unchallengeable fact that things
were the way they appeared.
The
political system itself is perhaps the best example
of this perceptual illusion. Part of the lack of
concern over Murayama's side-switching stems from the
universal feeling that an incumbent prime minister is
not truly important to Japan. Like the traditional bunrakyu
puppet theatre, politicians may be what you see, but
they are worked by invisible hands. Manipulating from
beneath and behind is an elite corps of
crypto-Confucian bureaucrats, whose fingers have long
tugged every lever.
Having
more in common with the old Soviet central planners
than Western public servants, the authority of the
people who hold such posts has no parallel outside
the East. After the new prime minister made a
statement in which he was ambiguous about Japan's
claim to a seat on the United Nations security
council, for instance, the chief foreign ministry
mandarin publicly corrected him - unthinkable in,
say, the US or Britain. It is an authority, moreover,
that extends beyond politics to business, social
affairs and even the arts.
In
business, the bureaucrats intervene as if presiding
over nationalised industries. Japanese law is often
drawn vaguely, leaving huge scope for administrative
interpretation. Through elaborate planning
arrangements, civil servants step in to ensure that
unprofitable enterprises do not go to the wall, but
are defended until fit again. And with the corporate
bosses of household name corporations, they conceive
national plans that, through Japan's international
influence, are global in their economic impact.
This
all-pervasive involvement by the unelected, moreover,
is not just a matter of style. "These
bureaucrats are running the whole show and will
continue to run the whole show," Masao Kunihiro,
a member of the San Giin - parliament's upper
house - and an ally of Murayama's, explained to me
last week. "Some of them say, almost
shamelessly, 'Elected officials are nothing but a
bunch of passers-by. How could we entrust to them the
fate of the nation?'"
Unlike
the earthquake, a symptom of movement, Murayama's
rise to the karaoke mike, then, was not taken
as evidence of a shift. But if Japan remains
politically in a state of lockup, worrying pressures
continue to build. The rising yen, which surged to a
post-war high at the new prime minister's ascension,
has reached the point where exporting industry may no
longer be able to compete. This drift (mainly caused
by huge trade surpluses with the West), moreover, is
not a temporary phenomenon - a mere blip on the
business chart. In 1971, one US dollar would have
bought you 360 yen; in 1985, it would have bought
245; and on July 12 just 97.
The
strains that such rates are creating are hard to
exaggerate - as is their long-term impact on
international affairs. Mirroring the export price
rises, the strength of the Japanese currency is
causing capital to flee the country as businesses
that for years were able to absorb the rising costs
of domestic production rush to switch investment
elsewhere on the Pacific rim. For the price of a
couple of coffees in a Tokyo hotel there are people
in China, South Korea or Vietnam who would gladly
work all day.
Such
thoughts are ominous for the new prime minister, but
they bring smiles of relief in Washington. Last year,
the United States' trade deficit with Japan stood at
a staggering $60.4 billion - $10 billion greater than
in 1992, and although both President Clinton and
Lloyd Bentsen, his treasury secretary, have denied
that the administration has sought the yen's rise,
its strength may produce a historic moment for which
Washington has long been waiting. For not only could
the currency pressures cut Japan down to size, but
they could win for the West a secret battle to
advance the American Way.
According
to six of the Group of Seven biggest economies, the
solution for Japan's problems is simple: set the
market free. Similar currency shifts and capital
movements have, after all, occurred in other
developed countries without earth-shattering
consequences. If Japan took serious steps to open
itself to imports, they say, domestic prices could
fall and relieve some pressure on the yen. If Japan
cut costs, restructured industry and shed surplus
labour, productivity would benefit. And, above all,
if the bureaucracy took its fingers off the levers,
no end of reform might ensue.
It's
an approach, however, that assumes that Japan is
either just the same as a western economy - or,
inasmuch as it may be different, that it ought to
find a way to make itself more similar. After the
collapse of communism, doesn't the argument for
American liberal capitalism seem unassailable, if not
inevitable? In the resurgent US, moreover, where even
the once-ailing General Motors just posted record
profits, where Silicon Valley has bounced back to
supremacy in high tech, and where talk of Japan as a
future number one is now laughed at by entrepreneurs,
there seems to be only one model of economic
organisation for the way the whole world will go.
But
here comes the snag: Japan is different and doesn't
want to be the same. Under the watchful eye of
its ruling bureaucracy, and with the support of
corporate and political power brokers, it isn't
really a market economy at all, at least as we would
know one. Despite its membership of the Group of
Seven, its familiar products and its men in western
business suits, this is a culture, it mustn't be
forgotten, that works along alternative lines.
Whether
those lines will survive, much less find emulation
elsewhere, however, is the of the great current
issues of world affairs. In the same way that the
massive geological plate movements need relief
beneath the Pacific, so Japan needs remedies to ease
the tension, or it risks facing a terrible shock.
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