AMPONTAN

Japan from the inside out

Archive for August, 2010

Arbeit macht frei

Posted by ampontan on Tuesday, August 31, 2010

THE ASSOCIATED PRESS offers a barely coherent report by Anita Chang on a meeting in Beijing last weekend between Chinese leaders and a Japanese delegation that included several Cabinet ministers. The Japanese side had several complaints. Here’s one of them:

Japanese Foreign Minister Katsuya Okada called for “transparent policies” governing workers in China, saying the labor disputes that halted work at dozens of factories were troubling to Japanese companies.

What labor disputes, what policies lack transparency, and why are they troubling to Japanese companies? Ms. Chang didn’t say.

Premier Wen Jiabao said it was all Japan’s fault:

“Labor disputes are occurring at some foreign companies, where there is a problem of relatively low wages. We would like (Japan) to address this issue,” Wen told Japanese officials, according to a news release by Japan’s foreign ministry.

In fact:

The Chinese delegation at the meeting said the strikes were to be expected because wages had been frozen for two years to help companies ride out the economic crisis, Japan Foreign Ministry spokesman Satoru Sato told reporters at a briefing late Saturday. The Japanese were “not so satisfied with this explanation, we still think this is very important to Japanese companies operating here,” he said.

Ms. Chang concluded:

The widespread strikes were rare for China but the government permitted them, apparently trying to put more money in workers’ pockets as part of efforts to boost consumer spending.

What this report doesn’t tell us, but the result of Googling too many articles to count did:

* Strikes are against the law in China.

* Despite their illegality, strikes and other labor disputes have been common in China for a while, Ms. Chang’s reporting to the contrary. In fact:

“Every month there are hundreds of strikes,” says Chang Kai, a labor-relations professor at Renmin University of China in Beijing, who advised the Honda workers. “What the government is concerned about is whether it can control these strikes or not.”

* The officially sanctioned outlet for labor complaints in China is an arbitration process that has broken down due to the sheer volume of cases.

* The situation has escalated to the point that some are now describing it as the open revolt of labor.

* The All-China Federation of Trade Unions is the only authorized labor union in the country. It is affiliated with the Communist Party.

* Chinese workers complain that the union usually sides with management instead of the workers and does not help them in negotiations. At a Honda plant, there was a brawl between the striking workers and the union leaders, after which the workers referred to the union as “the mafia”.

* The recent strikes have usually, but not always, occurred at foreign-owned plants rather than Chinese-owned enterprises.

* The Chinese government allowed the media to play up the strikes against the foreign companies, but clamped down on coverage when events threatened to spin out of control.

* At a Taiwanese-owned electronics plant earlier this summer, there were no strikes but a string of suicides over sweatshop working conditions (Seven days of work a week for more than 10 hours a day)

* The Japanese companies seem to have paid the minimum wage, but in the case of the auto workers, the minimum wage was not enough to allow the workers to buy an automobile.

* The Japanese and other foreign companies are following the lead of the Chinese authorities in its labor relations. That’s to be expected in a country with a heavy-handed government that determines whether foreign-owned companies can operate at all, and the conditions under which they operate.

* If dealing with the officially sanctioned union exacerbates problems with the workers rather than resolves them, who are the Japanese and other foreign companies supposed to deal with?

* The Japanese companies already started increasing worker wages as a result of the strikes, before Premier Wen’s “suggestion”.

* Chinese authorities informed the workers at one Japanese plant the salary of workers at the same company’s factory in Japan. The workers demanded the same salary. Had they thought about it, they should have realized they were demanding to become unemployed. If a Japanese company has to pay Japanese-level wages, there’s no reason to operate a plant in China.

* The primary reason for the unrest is a labor environment created by a Chinese government deathly afraid of giving its population too much freedom but desperate for the revenue the foreign companies generate.

* The Chinese government is now using the unrest as an excuse to have the overseas private sector operating in that country foot the bill for a consumer stimulus measure rather than reform its own labor laws.

*****

How much longer will it be before the internal contradictions of the Chinese system cause its collapse?

As one of the above-linked articles notes, the Chinese are considering an experiment that would allow strikes in certain situations. When the Chinese people inevitably get a taste of what they want, won’t they also inevitably find their regime intolerable?

And if this is what the AP thinks is journalism, why do they even bother?

*****

At the same conference, the Japanese also urged China to relax its recently imposed export controls on 17 rare earth metals used to produce components in computers, cell phones, and other high-tech products. Try this article in The Telegraph:

Beijing set off shockwaves in early July when it announced a 72pc reduction in rare earth exports over the second half of this year. The country has acquired a near monopoly, with 97pc of global output after under-cutting the rest of the world with Mongolian ores in the 1990s. The sudden cut-off since July has drastically restricted supplies to the rest of world.

Premier Wen’s reply defied logic in a single bound:

China would not stop exporting rare earth, but the tightened restrictions were necessary to address overdevelopment and the smuggling problem.

Ambrose Evans-Pritchard explains in the article that rare earth metals are not rare, but scattered and expensive to extract. The long-term solution to this problem is obvious: allow the free market system to operate with a minimum of interference. The private sector will develop the technology and the means to make it cheaper and easier to extract the metals in the same way that it allowed oil to be developed.

In 1977, U.S. President Jimmy Carter warned that “we could use up all of the proven reserves of oil in the entire world by the end of the next decade.”

Twenty-five years later, there was enough oil around to last for a century and a half.

The Club of Rome produced a study called The Limits to Growth in 1972 that declared the world would run out of gold by 1981, mercury by 1985, tin by 1987, zinc by 1990, petroleum by 1992, and copper, lead, and gas by 1993.

They should have consulted Julian Simon first.

Assuming that the obstacles created by the Luddites in control of the American government and influential throughout the developed world can be disposed of, the Chinese restrictions guarantee that rare earth metals will eventually become cheap and plentiful outside the country (or cheaper and plentiful substitutes will be found). The Chinese will have wound up killing the goose that lays their golden eggs.

But the disagreements at the recent conference highlight a more critical problem:

How is one to deal with a country that combines the worst aspects of 18th century imperialism, 19th century capitalism, and 20th century Marxism–particularly when it is the largest country in the world? Their system is unsustainable, but how much trouble will they cause the rest of us before it unravels?

Afterwords:

* This is another indication that a tilt by the DPJ government toward China and away from the United States does not necessarily mean it will roll over for the Chinese.

* This also indicates it will be a long time before anyone can realistically consider the possibility of a functional East Asian entity, which might be beside the point by the time it is feasible.

Thanks to RD for The Telegraph link.

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Posted in Business, finance and the economy, China, International relations | Tagged: | 6 Comments »

Letter bombs (10): Living in the past

Posted by ampontan on Tuesday, August 31, 2010

IN RESPONSE to the Update: Americans still ugly post, commenter Paul channels his inner conquistador and suggests that Japan should be in perpetual fealty to the United States:

Yeah, they should pay for it. They should pay to move the troops and the (Futenma) base. Any one remember how the US ended up there anyway?

Don’t hit someone and then complain when he sits on your head.

One would have thought the Americans might have found a more comfortable seat for their cellulite butt after 65 years than the Japanese head, but that doesn’t seem to be the case.

Many other Americans have had the same idea, among them Edwin O. Reischauer. He was the American ambassador to Japan from 1961 to 1966 and the man perhaps most responsible for creating scholarly interest in East Asia in that country.

George R. Packard, Reischauer’s special assistant during his service as ambassador, spoke at a symposium in Tokyo in May this year. Mr. Packard related something that Reischauer told him a few years before his death in 1990:

I never thought that the American military would stay this long in Japan, at such strength.

And that was more than 20 years ago.

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Posted in Letter bombs, Military affairs, World War II | Tagged: | 12 Comments »

Excellent question

Posted by ampontan on Tuesday, August 31, 2010

JOSHUA STANTON at The New Ledger asks an excellent question:

If South Africa was suspended from participation in the World Cup and the Olympics for three decades for expressly political reasons, then why does FIFA insist on the principle of the separation of sport and politics to justify the continued participation of North Korea in the World Cup?

He also passes along this priceless nugget from ESPN.com on the North Korean team’s secret weapon.

North Korean manager Kim Jong-Hun reportedly gets coaching advice directly from the country’s diminutive dictator via an invisible cell phone. According to ESPN.com the coach has claimed he gets “regular tactical advice during matches” from Jong Il “using mobile phones that are not visible to the naked eye. . . . Jong Il is said to have developed the technology himself,” coach told ESPN.com

Mr. Stanton also has a blog at One Free Korea.

Posted in North Korea, Sports | 1 Comment »

Mere happenstance

Posted by ampontan on Monday, August 30, 2010

WHAT IS IT about Japanese politics that creates so many coincidences? No authoritative studies have been made, but chance occurrences remarkable for their interrelatedness seem to arise more frequently in the Japanese political environment than in any other.

Yet another one materialized over the weekend involving Sengoku Yoshito, the Chief Cabinet Secretary of the Kan Cabinet and the man whom many suspect is keeping that Cabinet functioning.

Recall that Mr. Sengoku has long been an opponent of Ozawa Ichiro, who announced that he plans to challenge Mr. Kan for the party presidency next month. Stories are circulating that Mr. Ozawa told Mr. Kan he wouldn’t run if the latter would remove certain Ozawa enemies from the Cabinet, starting with Sengoku Yoshito. Rumor has it that Mr. Kan declined.

Well golly, here it is less than a full week later, and a story just happens to pop up that Mr. Sengoku is involved with some questionable financial dealings of his own:

Chief Cabinet Secretary Yoshito Sengoku said Sunday that he saw no problem with political entities he controls giving money to a company run by his eldest son, because the funds were paid as fees for handling some of the entities’ activities.

Sengoku, the top government spokesman and Prime Minister Naoto Kan’s right-hand man, told reporters the three political bodies paid a total of ¥3.2 million, or ¥100,000 per month, to his son’s real estate management company for two years and eight months until last December.

What a coincidence! And here’s another one!

The three political bodies are based in a room in a building in Minato Ward, Tokyo, together with the the offices of Sengoku’s lawyer and his son.

One of these days, I’m going to have to write a monograph on the subject.

Update: Mr. Ozawa, Mr. Kan, and Mr. Hatoyama are scheduled to meet this evening for discussions. Everyone assumes that Mr. Ozawa will again set forth his terms for not running against Mr. Kan. These are likely to include the replacement of the Cabinet members who displease him and ceding control of the party to Mr. Ozawa.

If Mr. Sengoku decides that he should step down and take responsibility for those fund transfers to a company coincidentally controlled by his son, the reason should be apparent.

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Posted in Politics | Tagged: , | 2 Comments »

Update: Americans still ugly

Posted by ampontan on Sunday, August 29, 2010

TO TAKE AS READ the version offered in some corners of the American media and commentariat, the American treaty partners in Western Europe and Northeast Asia have the munificent Uncle Sam expend its blood and treasure for their military defense while the ungrateful layabouts spend the money thereby saved on lavish domestic social welfare schemes. They work themselves into various shades of righteous indignation about the unfairness of it all, and often use it as an excuse to flatter themselves for their geopolitical altruism.

Well, they have a point–some of those joint defense arrangements really are unfair.

Take the ongoing question of Futenma, the Marine air base in Okinawa. (Take it, please, as Henny Youngman might have said.) There is an agreement to move the Marines to Guam, but that will require the construction of facilities to house them.

Plans call for the Japan Bank for International Cooperation to lend $740 million to the United States to build water supply, sewage, and power supply systems for the new base in Guam. The mission of the bank, which is wholly owned by the Japanese government, is to promote economic cooperation between Japan and foreign countries. It was the Export-Import Bank in a previous incarnation.

In other words, the Japanese are using one of their primary financial institutions for providing ODA to lend Americans money to help build a new base for American troops on American territory.

In fact, the Japanese are assuming the liability for $6.09 billion of the $10.27 billion it will cost to move the 8,000-9,000 grunts to Guam.

A total of $438 million of the loan in question would be allocated to build the sewage facilities and be repaid by utilities fees on Guam. But now the Guam government says it won’t be responsible for those liabilities, and the U.S. government can’t come up with a definite repayment schedule. The Japanese are naturally thinking about delaying the provision of funds.

But the Americans want the money anyway. Now. They also won’t guarantee the repayment of the rest of the loan either.

You can read about it in this Kyodo report, thereby giving you a leg up on those in some corners of the American media and commentariat who never will read it. Kyodo’s Japanese-language report is slightly different, saying that the Japanese government’s assumption of the costs is an option they haven’t discarded yet.

Other Japanese reports provide further details on this development:

The Pentagon has said the transfer of the Marines could be delayed until 2017 from the current target of 2014.

The problem, as the Japanese reports explain, is that the environmental impact statements won’t be ready by 2014. Therefore, the Japanese government has unofficially offered to sweeten the pot with an additional loan, though some in the government are opposed to that.

Here’s how the Kyodo story closes:

The planned JBIC loan is structured to have the Japanese government cover it if it goes sour.

If it “goes sour”? The United States government would default on a loan from a foreign bank providing ODA financing to pay for a Marine base on Guam?

The phrase The Ugly American was popularized in 1958 after a novel of the same name by Eugene Burdick and William Lederer became a best seller. Marlon Brando starred in the movie. It was a fictionalized description of American behavior in Southeast Asia based on actual experiences.

Still ugly after all these years.

Incidentally, a supporter of Ozawa Ichiro in the DPJ presidential contest says that a Prime Minister Ozawa would insist on moving the Futenma base out of the country.

It might be educational to hear his reaction to a report that the Americans were demanding the prompt provision of loan funds to move their own troops to American soil, without a promise of repayment.

It would surely include some colorful expressions that aren’t in the standard Japanese language textbooks.

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Posted in Government, International relations, Military affairs | Tagged: , | 8 Comments »

Maneuvering on a multicellular level

Posted by ampontan on Saturday, August 28, 2010

The Democratic Party is essentially the same as the Liberal Democratic Party, so they’ll be tranquil when they put up with their differences to avoid a civil war, or when they’re forcibly held in check. Once a fight breaks out, however, the situation will spin out of control.
- Watanabe Yoshimi, Your Party president

I would go so far as to say that, for the political objectives I want to achieve, it would be better not to become prime minister
- Ozawa Ichiro, in a self-published 1996 interview

THE FIRST TIME Ozawa Ichiro disappeared from public view for a few weeks was in July 1993. He emerged with an eight-party coalition that became the Hosokawa administration, the first non-LDP government since 1955. That and the subsequent Hata administration lasted a combined 11 months.

Just before evaporating a second time after the ruling Democratic Party’s poor showing in the July upper house election, he told the media that “anything could happen”. Once a drama queen, always a drama queen.

In happier times

As we’ll see later, some unusual things almost did happen, but after Kan Naoto refused an offer he couldn’t accept, Mr. Ozawa chose to go bare-knuckle with the prime minister for the DPJ presidency. During his seclusion, he stayed in several hotels in the Tokyo area for private meetings with politicians from all the parties and the leaders of large interest groups, such as Koga Nobuaki of Rengo (the Japanese Trade Union Confederation), to examine his options and to count the votes.

Regardless of what people think of Mr. Ozawa, everyone will stipulate to this: He is capable of conceiving options that elude everyone else and making those options a reality. Take it for granted that he has counted the votes.

The other numbers he can count are what some estimate to be JPY three billion in a personal political kitty with perhaps the Hatoyama family fortune and an emergency fund that Rengo has saved for a rainy day in reserve. Japanese law does not limit how much can be spent on a party election, and the Japanese tradition of fishing politicians often involves baiting the hook with wads of yen. There is also one more number to consider—he is 68 years old, and this will be his last chance to shape Japanese politics. The only things he hasn’t left to chance are the calculated risks.

So, for a quick review:

In January 2009, the DPJ under the leadership of Ozawa Ichiro overtook the LDP in public opinion surveys at last to become the leading party in Japan. The polls somersaulted again shortly thereafter when an Ozawa aide was arrested in connection with a political funding scandal. Following a few months of soba-opera, Mr. Ozawa and then-Secretary General Hatoyama Yukio accepted responsibility for their malfeasance by trading jobs.

Mr. Hatoyama became prime minister in September. By the end of the year, the bottom began to fall out on DPJ support again when the public discovered that (1) The DPJ had no business leading a government (2) Anyone picked at random from the phone book would have made a better prime minister than Hatoyama Yukio, and (3) More Ozawa and Hatoyama aides were arrested for more political funding scandals.

With his party facing decimation at the polls in July, Mr. Hatoyama showed some public spine for the first time in his life by taking Mr. Ozawa with him when he resigned. Mr. Hatoyama then said he would retire from politics after his lower house term expired.

But his replacement, Kan Naoto, forgot the sandbox factor in politics. He made a point of telling Mr. Ozawa in public to zip his lip and appointed well-known Ozawa detesters to the key posts in his Cabinet. The new Kan-Sengoku-Edano troika saw their chance to get rid of him for good and use that for their advantage it in the election. It almost worked. But Mr. Kan stuck his other foot in it by botching the election campaign.

Therefore, just three months after being shown the door, Ozawa Ichiro, the former:

  • Secretary-general of the LDP
  • Secretary-general of the Japan Renewal Party
  • Secretary-general and president of the New Frontier Party
  • President of the Liberal Party, and
  • Secretary-general and president (twice) of the DPJ

…will run for party president a third time with the backing of Hatoyama Yukio, who isn’t going to resign from the Diet after all. They’ve faced off in a DPJ presidential election once before, and Mr. Ozawa won handily.

People overseas think Japanese politicians are disposable. Meanwhile, the Japanese public would like nothing better than to get rid of these guys for good.

Machinations early

After the upper house election, Japanese politicians started doing what they do best—hashing out Byzantine alliances in hotel suites and the private rooms of exclusive restaurants.

Mr. Ozawa began his series of entre nous meetings with everyone except the Kan clique. Those close to the prime minister complained that Mr. Ozawa didn’t return his calls, but those close to Mr. Ozawa said he didn’t receive any. Either or both could be lying.

Maehara Seiji

Secrecy spawns rumor, and some of the rumors about the people whom Mr. Ozawa met were quite delicious. For example, former DPJ head and current Land, Infrastructure, and Transport Minister Maehara Seiji has long been part of the anti-Ozawa camp, and even openly flirted two years ago with some prominent LDP members. Nevertheless, the story arose of a possible rapprochement, with Mr. Maehara being sounded out to run against Kan Naoto. The go-between was said to be Inamori Kazuo, the founder of Kyocera, KDDI, and the Inamori Foundation, as well as a Rinzai Zen Buddhist priest. He is connected with both men. (Both he and Mr. Maehara are based in Kyoto.)

One reason it might make sense is that Mr. Maehara is closer to the political center than the leftists now in control of the DPJ, and he wants to be prime minister too. At the same time, a story began circulating of a backstabber in the Kan Cabinet, and all fingers pointed immediately to him. Another report had him meeting with former Prime Minister Koizumi Jun’ichiro, which ignited speculation that Mr. Ozawa was exploring the option of a grand coalition between some elements of the DPJ, the LDP, and smaller parties.

But Chief Cabinet Secretary Sengoku Yoshito and DPJ Secretary-General Edano Yukio are members of the same group/faction within the party, so Mr. Maehara’s support for someone other than the prime minister would mean the end of his support group in the party. He might also have been swayed by Mr. Sengoku’s promise that he would be the next prime minister, which was another delicious rumor.

Sengoku Yoshito

The chief cabinet secretary has options of his own, and he wants to be prime minister too. One story had him obtaining a promise of money supplied by the Finance Ministry to fish long-time Ozawa loyalist/pit bull Yamaoka Kenji, but he came home with an empty creel. That did not go down well with Mr. Ozawa. There were also whispers of a Sengoku overture to Nakagawa Hidenao of the LDP, though what an old Socialist and a Koizumian would have in common isn’t clear.

Ozawa Ichiro

Mr. Ozawa sounded out former Foreign Minister Tanaka Makiko, the daughter of his patron Tanaka Kakuei, for a possible run as prime minister in July, but she passed. She instead encouraged him to run, but he said there wasn’t enough time to put a candidacy together. He is said to have changed his mind about Ms. Tanaka as a surrogate when she blabbed about the content of their meeting to reporters. Omerta is part of the Ozawa code, too.

Ozawa's back

Remember that Mr. Ozawa had a deal in place with former Prime Minister Fukuda Yasuo of the LDP two years ago for a grand coalition. That was another option he explored, and it still isn’t off the table, either as head of the DPJ or at the head of a new party if he loses and leaves. There are an estimated 30 Ozawa diehards in the DPJ out of the roughly 160 in his group; if he managed to take 100 people with him and struck a deal with some people in the LDP and the smaller parties, the DPJ government is over. The new coalition would pass a no confidence motion, triggering a general election.

Mr. Ozawa knows that the Kan/Sengoku/Edano wing of the party wants him out, and he’s also heard the tasty tidbit that they were ready to kick him out had one of the prosecutors’ review panels decided it would have been “appropriate” to prosecute Mr. Ozawa, rather than their judgment of “inappropriate not to prosecute”.

The grand coalition talk of two years ago was brokered by Yomiuri Shimbun publisher Watanabe Tsuneo and LDP elder statesman Nakasone Yasuhiro, who sees in Mr. Ozawa the best chance to achieve one of his own ambitions, which is to rewrite the Japanese constitution.

Sharp-eyed observers have noticed that the Yomiuri and Sankei newspapers on the right have toned down their Ozawa bashing. The Ozawa camp confirmed rumors that their man had met with some senior LDP party members even during the upper house campaign. Yet another rumor circulated that some of the visitors to the Ozawa hotel suite included Fukuda Yasuo and former Prime Minister Mori Yoshiro.

There were even whispers that Mr. Ozawa went fishing for Your Party head Watanabe Yoshimi, as unlikely as the prospects for success would seem to be. Your Party Secretary-General Eda Kenji will have nothing to do with the man, but the story gave some people pause because Mr. Ozawa almost fished Mr. Watanabe’s father Michio from the LDP to replace Hosokawa Morihiro more than 15 years ago.

Machinations late

19 August

Hatoyama Yukio conducts a political seminar every year during the summer at his Karuizawa villa. This year’s seminar was held just as speculation about Ozawa Ichiro’s intentions started to peak. More people than usual showed up—160, which accounts for just under 40% of the party’s Diet membership. They included Mr. Ozawa, for his second visit ever, and his ally Koshi’ishi Azuma, head of the DPJ upper house caucus. An estimated 70 to 80 were from the Ozawa group, while about 40-50 were from the Hatoyama group.

The newspapers ran photos of the three grinning amigos, drinks in hand. Mr. Ozawa was serenaded with shouts of “kiai” (fighting spirit). Some observers insisted Mr. Ozawa would not run, but that episode alone should have given them pause. And they really should have reexamined their assumptions when long-time Hatoyama associate Hirano Hirofumi, the chief cabinet secretary in the Hatoyama administration, also publicly urged Mr. Ozawa to make it a race.

23 August

Mr. Kan held a meeting of his own with the DPJ’s first term Diet members. He raised a few eyebrows by telling them he wanted to create a “forward looking approach” that included Mr. Ozawa—just a few months after telling Mr. Ozawa to put a sock in it and appointing his enemies to key party positions.

24 August

Four people are said to have met in a private room in the New Otani Hotel in Tokyo–Hatoyama Yukio, Hirano Hirofumi, Ozawa Ichiro, and Hidaka Takeshi, a former deputy secretary-general of the party and the son-in-law of Hirano Sadao, a retired politician who is the closest of Mr. Ozawa’s associates.

Here’s a mix of rumor and fact as to what happened:

Mr. Ozawa ran down the numbers for Mr. Hatoyama and showed him that he would win the election with Hatoyama support. Mr. Hatoyama wanted to avoid an election brawl because he thought it would split the party. He also realized the party might split regardless of who won.

According to one story, the generalities of which have been partially confirmed, Mr. Hatoyama acted as a go-between and called Mr. Kan on the spot to report the numbers. He offered the Ozawa deal: You can stay as prime minister, but tell your friends Sengoku Yoshito, Edano Yukio, and (probably) Finance Minister Noda Yoshihiko they’ll have to go. The new Cabinet would have an Ozawa ally as secretary-general (perhaps Yamaoka Kenji) and perhaps a Hatoyama ally as chief cabinet secretary. Mr. Kan would be allowed to stay on until next spring. He would then be replaced by Ozawa for a year, followed by someone else, perhaps Maehara Seiji.

25 August

Mr. Hatoyama and Mr. Kan met. Another version of the story says that this was the meeting at which the Ozawa deal was offered.

At the news conference afterwards, Mr. Hatoyama said:

I told him what Ozawa Ichiro was thinking, and that if he wanted his cooperation, he would have to ask for it very seriously. We didn’t come to any conclusions…Mr. Ozawa is not taking the idea of the so-called shift away from Ozawa (in the party) in good humor. The explanation that it was just for party unity is not satisfactory.

There’s an even wilder story that lends credence to the idea of a grand coalition. Foreign Minister Okada Katsuya and MLIT Minister Maehara Seiji could stay in the Cabinet, perhaps with different portfolios. They would be joined by former Finance Minister Yosano Kaoru of the Sunrise Party (ex-LDP member), former Health Minister Masuzoe Yoichi of the New Renaissance Party (ex-LDP member), and former Financial Services Minister Kamei Shizuka of the People’s New Party (ex-LDP member whose party is still in the DPJ coalition). The possibility of New Komeito joining the festivities was also discussed. The possibility of Fukushima Mizuho’s Social Democrats joining wasn’t.

Mr. Kan, to his credit, turned the offer down. No one knows exactly what he wants to do, but becoming another Ozawa puppet isn’t part of it. The most he would offer in return is to appoint Ozawa Ichiro as a “senior advisor to the party”, which translates as “old guy who used to be important but isn’t any more”.

26 August

After a morning meeting with Hatoyama Yukio at the latter’s office, Ozawa Ichiro held a news conference and announced he would run for the party presidency with Hatoyama support. Mr. Hatoyama later confirmed it. Considering the circumstances when Mr. Ozawa joined the party, he said, it was for the greater good.

When a reporter asked about his previous, sphinx-like support for Kan Naoto, he answered:

I said that in the sense that it was natural as one party member to support the prime minister who has acted as the head of the government.

What’s in it for him? After his national humiliation, he gets to play kingmaker again in the party he created with his mother’s money. He might also be foreign minister in an Ozawa Ichiro administration. Other people would formulate the policy, while he would get to meet exotic people and travel with his trophy wife to exotic places and talk about yuai all day long.

Then there’s the sandbox factor again. Some people say he doesn’t like Mr. Kan very much.

The election

It’s mostly a fight between punks. It’s even worse than the faction battles of the old LDP…I’m going to be fed up with having to watch this for the next three weeks.
- Watanabe Yoshimi

This is going to be a cutthroat election…It will probably be very difficult for the DPJ to conduct their own affairs (during the campaign)…It’s also possible this will provide an opportunity for a political realignment.
- Sonoda Hiroyuki, secretary-general of the Sunrise Japan Party

This will be the 14th DPJ presidential election since the party was founded—an average of one every 10 months—but it’s only the second to allow the votes of party members and supporters. The latter two groups are differentiated by the amount of money they spent to buy the privilege. Anyone over 18 can be a supporter for JPY 2,000 (about $US 23.55), and the DPJ website says that foreigners are eligible to be both party members and supporters. Thus, though their votes could be counted in units of parts per million, foreigners will have a say in who becomes the next prime minister of Japan.

The Big O: I am the one I've been waiting for

The breakdown of votes goes like this: the ballots of the 413 DPJ Diet members count two points each, for 826. The votes of all sub-national assembly members will count for 100 points in the aggregate. The aggregate for the party members and supporters is 300 points, for a total of 1,226.

The other inclusive election was in 2002, when there were four candidates. Kan Naoto won the most votes among Diet members, but Hatoyama Yukio won the election with the votes of local prefectural assembly members.

Kan Naoto has run in eight of the previous 13 elections. He’s won four and lost four.

Ozawa Ichiro is said to be strong among all those groups, particularly among the upper house Diet members and in the prefectural legislatures. The man has spent a lot of time on retail campaigning on the rubber sushi circuit. He’s also assigned quotas to the members of his group to round up votes among the party members and supporters, after dividing the country into blocs. They started work as soon as Mr. Ozawa made his announcement.

Ishiba Shigeru, now of the LDP, was a member of the New Frontier Party when Hata Tsutomu and Ozawa Ichiro ran for party president in 1995. He remembers that a large volume of ballots from supporters appeared for counting at the last minute. All of them had only “Ichiro” written on them in the same handwriting. When he and some other members heard the story, they went to look for the ballots, only to find they had already been thrown out.

Who’s going to win this time? Making predictions for anything in Japanese politics is a silly way to kill time, especialy when ballot box-stuffers are running, but this election reminds me of some advice an old man gave me years ago: Never bet against the New York Yankees in the World Series. Substituting Ozawa Ichiro for baseball’s evil empire is a fair comp. And as long as we’re betting on form, here’s another tip: Take the block in the office pool that has his administration lasting less than a year and collapsing in rubble.

The weekly Shukan Post has already made up its mind. Here’s one of their headlines on the cover of the 6 August issue:

“Ozawa Landslide: Already Kan’s only choice is to submit”

Why Kan?

Because he’s a steady hand on the tiller of the ship of state? Let’s pause for the laughter to die down.

There aren’t many reasons to vote for Mr. Kan unless you like desiccated social democrats/political activists who sold out what remained of their principles to the bureaucrats of the Finance Ministry to stay in power.

He offers no coherent policy, no political skills, and he’s unlikely to be in office this time next year even if he wins. The only reasons to vote for him are negative rather than positive, and that’s exactly how his supporters are selling him.

Party poster girl Ren Ho, who is in the anti-Ozawa camp, gives her reasons for supporting the prime minister:

I welcome the party president election itself in September, but if there is a new prime minister, there would normally be a dissolution of the lower house and a general election.

She’s only just started her second term in the upper house, but that’s some serious gall she’s got working. If the election of a new prime minister requires a general election, Mr. Kan should have already called one after replacing Hatoyama Yukio in June–particularly after the upper house election defeat. But she didn’t stop there:

There will be a policy review of the special account at the end of October, and that will have a big impact on it. One reason I support the prime minister is to minimize the effect on the policy review.

She’s the minister in charge of policy reviews, so she should already be directing a continuous policy review. But she’s afraid a mid-September election will interfere with the TV coverage of her star turn six weeks later. If reviewing policies were her intention, based on her previous three or however many there were after the first one, she could have a report on the desk of the prime minister by 1 September so he could give it to the Finance Ministry for approval.

The Asahi Shimbun took her first argument even further in an editorial. They claimed there was a new principle in this age of change in governments that prime ministers should be replaced only through general elections. Where did this new principle come from? From the backside of the editorial writer on the day he wrote the piece.

Another reason to oppose Ozawa Ichiro is his identification with money politics in general and the possibility that he could still be prosecuted for political fund scandals. Said Foreign Minister Okada Katsuya:

It would be strange to have as party president and prime minister someone who could be indicted. Changing the national leader so many times in a short period is a problem for the national interest.

Showing some gall of his own, Minister of Internal Affairs and Communications and Ozawa toady Haraguchi Kazuhiro responded:

We should not make statements that stray from the fundamentals of democracy. The principle of presumed innocence is the principle of democracy.

To which Mr. Okada retorted:

The presumption of innocence is an issue of the law. Discussing issues of political ethics is in a different dimension.

And yes, both of these men are in the same party and in the same Cabinet at the same time. Isn’t the nation in good hands?

Why Ozawa?

Yamaoka Kenji counts two reasons. Here’s the first:

We’re going to go into the (local) elections next March with a half-baked executive branch. We must select a person with powerful leadership capable of conducting politics that ‘Puts the peoples’ lives first’.

He later added:

The people’s conclusion in the upper house election was to say no to the Kan administration, but then (the Kan supporters) claim we can’t keep changing prime ministers. But is maintaining the status quo responding to popular will? We should stabilize the political base with a new system and a new face….To resolve the crisis, increasing numbers of people are calling on Ozawa Ichiro.

That last thought leads into the second reason:

The (leader) must be a man who can work with the opposition to create a stable government. If the budget negotiations come to a standstill with the Diet in gridlock, it is possible the lower house will be dissolved and a general election held next spring…Mr. Ozawa would be the suitable party leader to pass the 2011 budget and related legislation in the gridlocked Diet.

Stagnation is a word the Japanese often use to describe contemporary political conditions. After entropy had its way with the LDP, the people finally turned to the DPJ. But the electorate’s worst fears were realized once the DPJ formed a government—they were not ready for prime time, and as presently constituted, never will be. At least the LDP prime ministers during their endgame were marginally competent—the two DPJ prime ministers have been a post-adolescent spacehead and a man for whom hangover is the default state of sobriety.

The LDP hasn’t learned its lesson, and as a group, probably never will. As one freelance journalist commented, they’re like horse manure floating down the stream (i.e., going with the flow and naturally breaking up).

The reason people will vote for Ozawa Ichiro, other than the universal factor of sucking up to power, is because they think he’s a man on a white horse who will end the stagnation—by sheer force of will, if necessary—and get things done. You know, make the trains run on time. How can the demoralized resist? He’s the only person with a chance to lead a government capable of putting together the votes to ensure that important legislation, however that is defined, passes. He’s also the only person with the cojones not to care what other people think.

Some might find ad hoc coalitions for each issue appealing, while others will find a grand national coalition more to their taste. Even Kan Naoto has referred to it indirectly. On the 16th, he compared the current situation to the gridlock between the two major parties in the 1930s:

I wonder if we will be able to provide functioning politics by trying to trip each other up. This demands party politics that transcends ruling and opposition parties.

During an interview in a recent issue of the weekly Shukan Gendai, first term DPJ MP Okuno Soichiro thought a “national salvation cabinet” would be the solution.

We’ve already seen the rumor of a potential national salvation cabinet put together by Mr. Ozawa during his summer vacation.

The danger here is the same danger with all broad coalition governments: The voters can’t throw the bums out. The bums are so dysfunctional they create alliances of convenience to facilitate their own interests, rather than the interests of the nation at large or of its people. Few politicians anywhere are capable of making that distinction under the best of circumstances, and a grand coalition means they will ignore that distinction altogether.

The people have very clearly told the politicians–repeatedly–what they don’t want them to do. But here, as elsewhere, the politicians are too dense or too self-interested to listen, and some of them are so befuddled they’re willing to walk into a cage and hand Ozawa Ichiro the key.

What happens?

This is a time-limited party that will vanish in 2010.
- Hatoyama Yukio on the DPJ during a 30 August 1996 news conference

If Kan Naoto wins

The past is prelude. The suffocation intensifies with the downside risk that he, Mr. Sengoku, and Mr. Edano slip in some social democrat ugliness before they join the LDP in breaking up as they float down the stream. He kept on Justice Minister Chiba Keiko despite her election loss, and she favors creating a Japanese version of Canada’s execrable Human Rights Commission. And the dependency on the Kasumigaseki bureaucracy will grow worse.

If Ozawa Ichiro wins

Lordy lord.

An Ozawa victory gives the mass media a gold-plated “Go directly to hog heaven” card. It will turn a “free, for all” democracy into a free-for-all. There will be a national political fistfight both egged on and refereed by the mass media.

Because one possible benefit of an Ozawa administration would be an effort to tame the Kasumigaseki bureaucracy, the faceless elites will do everything in their considerable power to bring Mr. Ozawa down. After former Prime Minister Hashimoto Ryutaro displeased the Finance Ministry, for example, a severe credit crunch just happened to emerge by some quirk of coincidence. It’s dreadful to imagine what they might try to pull off now.

Will he be indicted? The 16 August edition of the Yomiuri Shimbun offers the consensus of opinion of the reporters covering the Tokyo prosecutors. They think he’ll skate.

But if Mr. Ozawa becomes prime minister, that issue will be moot. Here’s Article 75 of the Japanese Constitution:

The Ministers of State shall not, during their tenure of office, be subject to legal action without the consent of the Prime Minister. However, the right to take that action is not impaired hereby.

A Prime Minister Ozawa is not likely to consent to his own prosecution. Hey, it’s worth a shot. Jacques Chirac seems to have gotten away with it.

The opposition (and some in the DPJ) will demand that he testify in front of the Diet to explain how his political funds management committee could buy real estate with suitcases full of cash. Mr. Ozawa understands that the opposition will not allow Diet business to proceed until he appears as a witness. He’s gone through multiple grillings with prosecutors, so at least he’s had the time to get his story down.

That’s unless there’s a grand coalition, in which case they’re all in it together and won’t care if the Communists and Social Democrats are uncooperative.

Here’s a safe bet: There will be record low support ratings from the public. Mr. Ozawa understands that, too. One of his supporters said that even 0% was fine. He suggested the media puts too much weight on the polls, and the numbers will rise once an Ozawa Cabinet starts producing results.

There is another possibility—that he will break precedent and not serve as prime minister during his term as DPJ president. He might be able to skip out on Diet testimony that way, and anyone he selects as prime minister will surely not consent to his prosecution.

Most politicians accumulate power to implement policy, but Ozawa Ichiro is the reverse. He implements policy to accumulate power, and most any policy is fine by him. He’s fond of using a play on words in Japanese to say that campaign pledges are convenient because they can be easily replastered.

What policies would he support? Let’s take the word of Haraguchi Kazuhiro in an interview in the 4 September Shukan Gendai:

We should sincerely reflect on our failure to uphold the manifesto. There is a move to amend the manifesto in view of the upper house election results, but for us the manifesto itself is structural reform, so that is not what we should do…If there is to be a change of government, we should reexamine the Cabinet decision to set a ceiling on expenditures at JPY 71 trillion and Japanese treasury floatations of JPY 44 trillion in the 2011 budget.

The interviewer noted that the Kan Cabinet is also having second thoughts about those budgetary limits.

The centerpiece policies in that original platform included the child allowance, subsidies to individual farmers, and free expressways, not all of which were fully implemented, but all of which are unnecessary drains on the public treasury.

There was one tax break in the manifesto—eliminating the gasoline surtax. Mr. Ozawa himself ordered Prime Minister Hatoyama to forget about that one last December.

In other words, if you think the economy is bad now, wait until you see an Ozawa administration. The Finance Ministry might not stop them, either. Picking up the pieces and gluing them back together when it’s over gives them more power down the road.

That manifesto also called for the reversion of Japan Post to state control rather than continue with privatization.

Here’s Haraguchi Kazuhiro again:

There are many reformers in the LDP we can work with…They’re the ones who think the people’s rights should be guaranteed in Japan Post.

He later explained to reporters that by reformers, he meant the people who ran against privatization in 2005.

Since the announcement of his candidacy, Mr. Ozawa has already visited the head of the national postmasters’ association. Who do you think those men will be pressing their local DPJ Diet members to vote for?

While secretary-general, Mr. Ozawa also arranged matters so that budgetary requests from sub-national governments came directly to his office rather than to Diet members or the bureaucracy.

Thus, an Ozawa administration will be characterized by money politics with no transparency and blatant schemes to buy off voters, overseen by a man who demands such discipline that he has long been known in political circles as a fassho yaro, or fascist bastard.

And don’t forget he’s going to cock a snoot at the Americans every chance he gets. He’ll even find ways to create a few chances on his own.

If anything good comes of it, Komori Yoshihisa of the Sankei Shimbun describes what it will be:

If he becomes prime minister, it will touch off a large political realignment. The DPJ would very likely split. That would enable the serious politicians of the DPJ and those of the LDP to come together to form a new force….We can expect most Japanese to be fiercely opposed. The Cabinet support rate will fall through the floor. An administration of that type cannot possibly last long. But during that short period, Prime Minister Ozawa will awaken the people’s awareness of proper government.

Sight is quarterly magazine dealing mostly with political topics, with about half of each issue focusing on one topic. Here’s the headline on the cover of the Spring issue:

Thank you, Ozawa Ichiro, we are now going to graduate.

Not quite yet, alas. But they will.

As the Italian Communist Antonio Gramsci observed, “The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.”

What we’re seeing now is the inevitable morbid symptoms. The old will die and the new will be born.

Afterwords:

The English-language media got a free reach-around when Mr. Ozawa held forth on Americans and the British among other topics of interest during a political seminar earlier this week. He was reported as saying that Americans were unicellular (i.e., simple-minded) and weak in the head, though he was pleasantly surprised they elected Barack Obama.

To be accurate, what he said was that the Americans had unicellular “aspects” (or tendencies, depending on how it is translated). Not exactly sweetness and light, but not a blanket condemnation either. Such much for unicellular translations.

Unicellular is also a good word to describe their coverage. Most seemed to think it was a gaffe for some reason, or perhaps they desperately wished it were so. There are about a half-dozen skyrocketing story lines in Japanese politics right now, but that was the one that got them all excited.

It would have been a gaffe if he slipped and said something he didn’t mean to say. I suspect he said what he meant and doesn’t care what Americans think. He might have even said it on purpose.

Mr. Ozawa lives with the knowledge that he’s under the media microscope in Japan 24/7. That focus has intensified since his resignation as secretary-general in May, and has gone into hyperdrive since the upper house election.

He made the statement during a political seminar at which everyone with a press credential was present, including the Japanese version of the Pocatello Idaho Weekly Shopping Gazette. He knew it would be his most closely watched political speech of the year (so far) because people thought he might announce his political intentions. (He didn’t.)

It would have been a gaffe if it hurt him politically.

Do I really need to finish that thought? It wasn’t even mentioned at first in the Japanese sources. It was reported here only after the overseas media noticed, and only because they noticed. The story is already dead in Japan.

One of the more hysterical Australian newspapers thought this might swing the DPJ election to Kan Naoto.

Aren’t they precious?

There’s an old proverb common to China, Korea, and Japan about the frog at the bottom of the well who thinks he knows the world. Mr. Ozawa does bear a resemblance to a frog, and that is a deep well he’s croaking in, but as a long-time American resident of Japan who has witnessed the behavior here of his countrymen for more than quarter-century, I also see where he’s coming from. So do many East Asians, from the northeast to the southeast, but that will fly over the media’s head too.

Meanwhile, the current American president thinks, among other things, that the Showa Tenno (Hirohito) signed the Japanese document of surrender at the end of World War II on board the battleship Missouri, that the Americans liberated Auschwitz, that the Austrians speak some language called “Austrian”, that people in Japan bow and shake hands at the same time, and that his own name is derived from Swahili, even though it is derived from Arabic. But the American mass media has swept all those under the rug. They’re suck-ups to power too, and their swoon is particularly delirious whenever the Democrats find someone who can pass for an alpha male.

There are lots of frogs at the bottom of lots of wells, all over the world.

I’m not a Christian, but Matthew 7:1 works fine for me here.

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Japan’s latest political ephemeron

Posted by ampontan on Wednesday, August 25, 2010

Prime Minister Kan should cut his belly and apologize, not only to the people associated with the Democratic Party, but also to the people. But what is this? He is going to run again for party president without reflecting on his mistakes. Whose fault does he think the upper house election loss was? I want to tell him to take responsibility.
- Koizumi Toshiaki, DPJ Diet member and party official

There are 15 broods of cicada in the United States that lay eggs in the soil which remain dormant for periods of 16 or 17 years. They hatch in May, live for six weeks, lay the next generation of eggs, and die.

Think of that as a metaphor for Kan Naoto’s career as prime minister. He’s wanted to climb that greasy pole to the top since his early 20s, 40 years ago, and now it’s beginning to look as if his days at the Kantei will be as brief as the lifespan of a red-eyed cicada. Even if he were to win reelection as the Democratic Party president in the mid-September ballot—which is not a lock—few expect him to last much longer than next spring.

In short, Kan Naoto has become the latest irrelevancy in the greater scheme of Japanese politics, and he has no one to blame but himself. His administration was born dysfunctional, and the only reasons party members support his continuance in office have nothing to do with him—indeed, they’re mostly in spite of him. He resembles nothing so much as a hunched old man driving his car 20 mph below the speed limit on an expressway with both trembling hands gripped tightly to the wheel.

Chief among his problems is that he projects the personal and political strength of a red-eyed cicada with slightly less noise. His weakness since assuming office has astonished more than a few people. Former Defense Minister Ishiba Shigeru of the opposition Liberal Democratic Party watched him on election night last month and was reminded of a man waiting on his own death. Mr. Ishiba remarked:

I thought, you’re already dead. It makes me very uneasy that a husk of a man whose spirit has departed is the prime minister.

Those sentiments were not expressed as an opposition pol looking for political advantage, and he was not alone in wondering what had happened. Nakagawa Hidenao, an elder statesman of the LDP, was also taken aback at Mr. Kan’s state. He thought the Kan Naoto of the 1990s who served as Health Minister would have been a formidable opponent, but that Kan Naoto no longer exists.

Mr. Ishiba joined the growing chorus of those lamenting that he is not of prime ministerial caliber after all:

He’s very good at finding fault with others, but he seems to have absolutely no beliefs of his own.

Members of his own party are disgusted by his refusal (and that of Chief Cabinet Secretary Sengoku Yoshito and DPJ Secretary-General Edano Yukio) to take responsibility for the upper house election defeat, as the quote at the top of the post illustrates. None of them resigned after failing to cement their hold on government and losing their chance to rule without a coalition. At the least, Mr. Edano, the man directly responsible for the election campaign, should have been replaced.

The prime minister also doesn’t seem to know what to do with himself. Said LDP Diet member Hayashi Yoshimasa during the post-election Diet session:

It is difficult to sense the prime minister’s determination…I question whether Mr. Kan has the resolve or any leadership.

One observer summed up the current government as being “like a school play”. Complaints are growing that the prime minister is shirking his responsibilities. He’s sometimes refused to appear for the now-expected daily off-the-cuff press conferences, he’s put off the resolution of the Futenma base question—the issue that ended the term of his predecessor, Hatoyama Yukio—he cancelled an appearance at a Keidanren seminar at the last minute, he refused to meet a visiting youth group associated with the four Russian-occupied islands that Japan claims, and he’s sending Mr. Hatoyama abroad to chat up foreign leaders.

This is the classic behavior of a Japanese prime minister in his last days of office.

Doubts about a prime minister’s leadership would be fatal in normal times, but his party lacks a majority in the upper house, and few people think he has the ability to manage a divided Diet. Journalist Ito Atsuo quotes a Finance Ministry official as saying that the process of formulating next year’s budget will be “hell”. None of the ministries want their bloated budgets cut. Mr. Kan’s DPJ support comes mostly from the party’s left, and maintaining government spending is in their DNA.

Iijima Isao, former Prime Minister Koizumi Jun’ichiro’s right-hand man, told the weekly Shukan Gendai that he thinks it’s 90% likely Mr. Kan will not survive the budget process next March, assuming he’s still the prime minister.

DPJ Vice-President Yamaoka Kenji, an Ozawa Ichiro ally of long standing, agrees:

Without a majority in the upper house, the enabling legislation for the budget won’t pass. We’ll have to (make a trade) with the opposition parties to pass the 2011 budget in exchange for dissolving the lower house (even if Mr. Kan is reelected.)

Mr. Sengoku and Mr. Edano, Japan’s version of the postmodern left, are propping up Mr. Kan to keep the DPJ in power and avoid a lower house election for as long as possible. After decades in the political wilderness, they’re naturally loath to give up the opportunity to install their agenda. Some would have it that Mr. Sengoku is actually the man running the government, both out of personal ambition—he also wants to be prime minister—but also out of necessity. Mr. Kan is not popular within the party, as people dislike his short temper and tendency to hector those who displease him. There are also rumors that Mr. Sengoku has to assume more responsibility because Mr. Kan’s alcohol consumption (specifically sweet potato shochu) is out of control. One source even used the word “alcoholic”.

The following is a look at what has passed for policy in the Kan administration in its brief lifespan.

Fiscal policy

The government has begun receiving initial spending proposals for next year’s budget. Mr. Kan claims that politicians, and not the bureaucracy, formulated those proposals.

That’s not the story of Deputy Finance Minister Ikeda Motohisa, himself a member of the Kan group in the DPJ:

It was presented as being determined by politicians for form’s sake.

In other words, the politicians rewrote what the bureaucrats handed them.

Pity the fool who thinks the DPJ is serious about breaking up the administrative state and seizing control of the government from the civil servants at Kasumigaseki.

And pity the fool who thinks Mr. Kan has a clear-headed idea about the consumption tax. Consider:

1. He apologized to the DPJ MPs for his “careless” remarks about raising the consumption tax, which contributed to the party’s defeat in the upper house elections.

2. Shortly thereafter, he said that “discussing” a tax increase is inevitable because tax revenue is falling and social security costs are rising:

This must be discussed regardless of party affiliation.

3. Shortly after that, he said he wasn’t going to think about the consumption tax just yet. One panel in the government and another in the party is “discussing” the issue, so he’ll leave the decision up to them:

I presume there will be many opinions.

4. But shortly after that, he said he wants to start negotiations about the consumption tax with other parties “by the end of the year at the latest”.

Meanwhile, Mr. Kan is disposed toward another Keynesian stimulus package, though the government can’t make up its mind about that one, either.

Pity the taxpayers. He should rather be disposed toward avoiding a stimulus and taking the same path to economic recovery as the Germans.

More recently, it was reported that the prime minister told Finance Minister Noda Yoshihiko “to keep a close eye on the markets”. Translation: One of the Finance Ministry’s men in the Kantei suggested that the Prime Minister’s office issue a press release to make it appear the two men knew what they were doing while leaving the market monitoring to the ministry.

Mr. Kan does act as if his eye is on the economic sparrow. With the Japanese economy battered by deflation, the Nikkei average on the Tokyo Stock Exchange this week slid below the 9,000 level for the first time since 18 May 2009. Meanwhile, the yen reached a 15-year high against the dollar and an eight-year, nine-month high against the Euro. Mr. Noda refused to comment about Japanese intervention to halt the rise, so the yen rose still more.

Mr. Kan took action. He called the Bank of Japan governor on the phone. They agreed to cooperate. No use jumping to conclusions before the Finance Ministry issues its instructions.

Here’s something to keep an eye on: How long will it be before someone gets the bright idea to suggest that Japan’s balance sheet be repaired with the JPY 120 trillion in the national pension fund? After all, that’s how they’ve cooked the budget books in the U.S. The government borrows and spends the accumulated Social Security surplus while counting it as revenue instead of debt.

National Strategy Bureau

One of the intractable problems of Japanese government is curbing the bureaucratic usurpation of political power. That problem was created during the long years of LDP rule, and when in opposition, the DPJ vowed to deal with it. To that end, they included the following in their platform for the 2009 lower house election:

“We will establish a National Strategy Bureau directly under the supervision of the prime minister. It will create a national vision for a new era and formulate the outlines of a budget under political control.”

They managed to create the entity once they formed a government, but downgraded it from a “bureau” to an “office”. The first director was current Prime Minister Kan Naoto, who complained he had too much time on his hands.

Nevertheless, the DPJ listed the office among its achievements in its platform for this year’s upper house election.

Since the election, however, it’s been downgraded yet again. Chief Cabinet Secretary Sengoku referred to it as a “think tank” for the prime minister.

Said Hara Eiji, a former bureaucrat and aide to Watanabe Yoshimi when the latter was the minister for reform in the Fukuda administration:

The National Strategy Office is a nuisance for the Finance Ministry. That it has been reduced in size and significance means that the Kan administration has become largely reliant on the Finance Ministry…It was supposed to achieve political control of the government…but it is an egregious turning back of the clock to an older system of the 90s in the Kaifu and Takeshita administrations before the Hashimoto reforms.

From Eda Kenji, secretary-general of Your Party:

It is a declaration that the creation of the budget will be under the direction of the Finance Ministry. They’ve always been opposed. For them, the creation of a National Strategy Bureau deprives them of the authority to put together a budget.

From Maehara Seiji, the Minister of Land, Infrastructure, and Transport:

The question arises: Just where is this political led-government?

The Mainichi Shimbun reminded its readers that the National Strategy Bureau was the centerpiece concept of the DPJ government, trumpeted as the symbol of the disassociation with the bureaucracy and political control. They editorialized:

Thus ends one chapter in the Japanese democracy of the 21st century. We can almost hear the voices of those saying that if we’re going to choose politicians without a strategy, elections are pointless and we might as well draw names by lot.

Yayama Taro, a long-time commentator of the right, switched sides last year to support the DPJ in the election because he thought the LDP was incapable of change. He also observes that the absence of civil service reform and increasing revenue from the consumption tax is straight from the Finance Ministry playbook.

After the deluge of criticism, Mr. Kan said he might resubmit legislation to upgrade the office.

Pity the fool who waits for it.

Agriculture

Japan has fretted for years about the depopulation of rural areas and the younger generation’s aversion to the agrarian life and lack of interest in receiving family farms from their parents. Sixty percent of the farmers are aged 65 or older, and only 16% of farm households are engaged in agriculture as a full-time occupation.

The LDP under the Abe administration pursued a program of encouraging consolidated large-scale agribusiness, and they reduced subsidies to individual farmers. The DPJ opposition under Ozawa Ichiro’s leadership exploited that opening and promised to restore those subsidies to individual farmers as a legal vote-buying scheme. With most farmers past retirement age in a normal occupation, it amounts to a double-dip pension.

Having created the highest budget and largest deficit in Japanese history, DPJ officials now say they plan to expand the scope of their subsidy program in the 2011 budget. This year’s subsidies were paid to rice farmers. Next year they want to spread the pork to growers of wheat, soybeans, beets, and buckwheat (for soba).

They say they want this program of direct subsidies for “healthy farm management and raising self-sufficiency in food production”.

Pity the fool who swallows that line.

This brings to mind the advice of classical historian, political commentator, and former farmer Victor Davis Hanson:

Do not farm. There is only loss. To the degree that anyone makes money farming, it is a question of a vertically-integrated enterprise making more in shipping, marketing, selling, packing, and brokering than it loses on the other end in growing. No exceptions. Food prices stay high, commodity prices stay low. That is all you need to know. Try it and see.

The Futenma air base in Okinawa

The DPJ’s insistence on reworking the agreement with the Americans to move the Futenma air base and Hatoyama Yukio’s incompetence in dealing with the issue is one of the primary reasons Kan Naoto is prime minister today.

In May, the Hatoyama administration agreed to find a new location for the base and make a determination on the construction method by the end of August. Mr. Kan has assigned the task to a minor Cabinet official while he plots his reelection campaign.

Pity the fool who thinks anything will happen by the end of this month.

Civilian control of the military

Last week, Mr. Kan and Defense Minister Kitazawa Toshimi met with the uniformed leadership of the Self-Defense Forces. Before the meeting, the prime minister told Mr. Kitazawa:

I was reviewing for this meeting yesterday, (and found that) the (defense) minister is not an SDF official.

Here’s Article 66 (2) of the Japanese Constitution:

The Prime Minister and other Ministers of State must be civilians.

After 30 years in the Diet, he just found out?

Later on, during the meeting, he told the officers:

When I was reviewing the law yesterday, (I saw that) it reads, the prime minister has the ultimate authority over the Self-Defense Forces. So with that awareness, I want to hear your opinions and carry out that role.

During a news conference after the meeting, one of the officers tried to brush it off by suggesting Mr. Kan was just joking.

Self-Defense

Some wonder why Japan “punches below its weight” in international affairs. Kan Naoto has answered their question again.

Mr. Kan said that he has no plans to change Japan’s official constitutional interpretation prohibiting the country from exercising the right of collective self-defense. He added that the government will maintain the principles of not possessing, producing, or allowing nuclear weapons on Japanese territory.

In his annual Peace Declaration earlier this month, Hiroshima Mayor Akiba Tadatoshi used his annual two-day window of opportunity while in the media spotlight to call on Japan to reject the American nuclear umbrella and work for worldwide nuclear disarmament. But Mr. Kan said that Japan required nuclear deterrence:

I think that nuclear deterrence continues to be necessary for our nation at a time when there are unclear and uncertain factors…We share strong hopes for nuclear disarmament but there is reality that nuclear arms and other weapons of mass destruction are spreading.

In fact, Mr. Kan issued a statement:

Japan, the only country to have suffered an atomic bombing, has a moral responsibility to take the lead in achieving a world without nuclear weapons. We will stress the importance of nuclear weapons reduction and nonproliferation to the heads of state of all governments, including those with nuclear weapons. We will uphold the Japanese constitution and maintain the three non-nuclear principles to achieve the elimination of nuclear weapons and eternal world peace.

As long as Japan refuses to engage global thuggery and cringes under the American nuclear umbrella as if it were a geopolitical hemophiliac, strikes the moral pose of nuclear disarmament to nag the man holding the umbrella, and talks about a nuclear-free world and eternal peace as serious options despite having Russia, China, and North Korea as neighbors, it will always punch below its weight in world affairs. Those who think otherwise are recommended to try some books on evolutionary biology. Only the powerless think soft power is effective.

At least some in the LDP, including former Prime Minister Fukuda Yasuo, hinted that Japan should consider having nuclear weapons of its own, if only as self-protection. If that step were ever taken, watch how quickly the country would start punching its weight in world affairs.

The National Anthem

Hirosawa Katsuei of the LDP challenged Mr. Kan in the Diet over a report that the prime minister didn’t want to sing the national anthem during a radio program. The program in question was the 31 May 2002 broadcast of the late-night Mikki Yasukawa no Asa Made Shobu on RF radio. Mr. Hirosawa himself often appeared on the show.

Yasukawa, who died in January, stood and sang it with all the guests at the start of the broadcast. His son told Mr. Hirosawa that other people on that particular episode told him Mr. Kan refused to sing it or to even stand up when he was a guest. Former diplomat and current pundit Sato Masaru later claimed he heard the same story from Yasukawa himself. A male staffer working for the program at the time came forward to state that Mr. Kan didn’t even want to stand until Yasukawa suggested it, but he finally did without singing.

Mr. Hirazawa now says he has a copy of a tape recorded on 31 January 2003 in which Yasukawa tells a guest:

Mr. Kan was on this program. When I said, ‘OK, let’s sing’, he answered, ‘What? Sing the national anthem? I don’t want to.’

Since the radio station saves tapes for only three months, the story is impossible to confirm. When confronted in the Diet, Mr. Kan denied it and demanded proof.

It belongs to the category of stories that people would tend to believe regardless of its veracity. Mr. Kan’s background is as a left-wing activist, and they usually don’t have time for things like national anthems. Because Mr. Kan is almost certainly a republican and doesn’t want to publicly admit it, he uses the excuse that the anthem was associated with the Imperial house when that was made a matter of state for a dark period of several decades that ended 65 years ago.

Entertaining terrorists

Kim Hyeon-hui was one of two North Korean agents responsible for blowing up Korean Air Flight 858 in 1987 and killing 115 people. Ms. Kim was apprehended, sentenced to death, pardoned by President Roh Tae-woo, atoned for her sins, and is now living in South Korea. She said that the order to destroy the plane came directly from the “Dear Leader himself, Kim Jong-Il. Handwritten, that is…”

Ms. Kim came to Japan for a four-day visit last month to meet with family members of those Japanese abducted by North Korean agents. While in training in North Korea, she studied Japanese under Taguchi Yaeko, one of the abductees. The North Korean government claims Taguchi died in 1986, but Ms. Kim told one of Taguchi’s sons during his visit to Seoul that she thinks she’s still alive. She also met with the family of Yokota Megumi, who was abducted when she was a junior high student and whom the Pyeongyang government also claims is dead. Yokota’s mother was disappointed to find out only that her daughter liked cats.

The circumstances of Ms. Kim’s visit to Japan are unusual. After her pardon, she seems to have operated a restaurant that went bankrupt and is reportedly still in debt. Some claim the Kan government paid her from JPY 20-30 million to come to Japan. She was flown in on a chartered aircraft and stayed at Hatoyama Yukio’s villa in Karuizawa. The South Korean government asked that she be given some recreational time, according to National Public Safety Commission Chairman Nakai Hiroshi, so the government gave her a helicopter tour of Tokyo.

Allowing a convicted terrorist to enter Japan is technically against the law, but the DPJ overlooked that. One critic likened the gaffe to the American government allowing an al Qaeda terrorist to visit Camp David and get a helicopter tour of Washington.

Moveable holidays

Casting about for some policy that would boost consumption, the DPJ now wants to overhaul the national holiday schedule and stagger holidays by region. It would reduce by four the number of three-day weekends, specifically created to wean people from their workaholic ways. The government would mark off five different regions and give them five-day holiday periods in the spring and fall at different times.

The idea is to boost tourism and allow greater access to the national transport system during the holidays. For example, one expressway had a traffic jam about 50 kilometers long during the mid-August holiday period.

Nakata Akita, executive director of Tokyo Shoko Research, warned this could cause bankruptcies for small businesses if banks are closed on different days throughout the country:

Small-business owners often cut their finances close, so a day can make a big difference.

That doesn’t begin to address what would happen to independent business people—such as me. I live in Kyushu, and my primary clients are in Tokyo and Osaka. The five-day holiday periods would be different for all three regions.

Yes, it does seem this government will do anything to avoid reducing public sector expenditures, doesn’t it.

The DPJ presidential election

Two years ago, the DPJ taunted their LDP opponents by saying the party was sailing in a mudboat that would fall apart before it could cross the river. But it only took them 11 months in power to launch a mudboat of their own. They’ve already had one spectacularly inept administration fail and replaced it with a pickled has-been staggering from one issue to another on the shoulder of his chief cabinet secretary. They know he’s a loser they’ll have to replace before he starts to get really embarrassing, but installing another prime minister so soon will make it difficult to produce excuses for failing to call a new lower house election.

Mr. Kan is so far the only declared candidate in the upcoming party presidential election, and some seem to think he’s got it in the bag. Perhaps he does, but a whole mess of chickens are going to have to hatch before the counting starts, and no one will be happy to write his name on their ballot. Since the end of May, he’s botched an election, dithered over decisions, confused everyone about his positions du jour, and brought his party–again–to the verge of a civil war that could cause it to splinter. It’s almost as if he and his other allies on the left in the party were determined to conduct an old-fashioned purge of Ozawa Ichiro, whom they’ve never cared for and only tolerated because he taught them how to win elections.

Just three months ago, Prime Minister Hatoyama Yukio and party Secretary-General Ozawa Ichiro resigned over the public’s revulsion at their conduct of the nation’s business and the stench of their money scandals. Now the latter is poised to challenge Mr. Kan in the DPJ election while the former is trying to play the role of party kingmaker.

Pity the Japanese public. They can’t both lose. One of those two has to win.

Afterwords:

Many people have been surprised to see the Kan Cabinet’s approval rating climb from 35% post election to 45% despite the lack of postive factors. That’s caused some to wonder what’s up with the polling techniques, and others to wonder what’s up with the Japanese people. Perhaps there’s a simple answer—It’s summer vacation and few are paying close attention. Otherwise inexplicable poll rises sometimes occur in similar situations in other countries during lulls in the news cycle.

It’s not as if Prime Minister Kan did anything to recover that level of support.

Here’s Watanabe Yoshimi on the phenomenon:

It’s because there’s no one to take his place. He is supported for none other than the negative reason that the continual change (of prime ministers) is, in fact, Japan’s shame.

Here’s an idea from former DPJ lower house member and current Nagoya Mayor Kawamura Takashi, one of the wild and crazy guys of Japanese politics: Reduce the consumption tax by one percentage point. He insists it’s the only way to downsize the national government. A post about Mr. Kawamura’s behavior in Nagoya is another one I need to get around to soon.

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Stimulate supply, not demand

Posted by ampontan on Monday, August 23, 2010

FOLLOWING LINKS on the Internet can lead to serendipitous discoveries. Getting clicky last night popped up the Super Economy site written by a Kurd/Swede who goes by the name of Tino.

Tino usually focuses on the American economy, but he takes a look at Japan in a post from 23 May this year. The post may be three months old, but don’t let that stop you from reading it–he says what a lot of people in Japan aren’t willing to say, and his advice is not time-dependent. The title is Japan’s Problem is Supply, Not Demand, and Tino thoughtfully includes several charts. His first argument:

Japan has simply not been growing slower than other advanced countries once we adjust for demographic change.

After presenting some statistics, he concludes:

Between 1990-2007, GDP per working age adult increased by 31.8% in the United States, by 29.6% in EU.15 and by 31.0% in Japan. The figures are nearly identical!

Then he takes on Paul Krugman, which these days is like shooting fish in a barrel:

Next, to Krugman’s point that the problem is “policy makers… doing too little” (by which he means spending too little). Japan has been running Krugman-Obama sized deficits averaging about 5% of GDP for a decade and a half…Krugman is simply dogmatic when he claims that Japan’s policy of massive deficits failed because the deficits were not large enough(!)

That leads to his next point:

Krugman is obsessed with demand, and ignores the (usually) far more important factor, which is supply.

(A)djusting for population, Japan has simply not been doing that badly in growth terms. Their problem now is their debt, which they have thanks to Keynesian policies. Capacity utilization is high in Japan, including a low unemployment rate. Stimulating demand just won’t do it when the problem is supply. If Japan wants growth they have to go for supply factors, including hours worked.

He adds in an update:

Japan also illustrates the problem of over-zealous, imprudent Keynesianism. If they had not undertaken massive deficits in the 2000s (when there was no need, and perhaps not even opportunity, for policies aimed at stimulating demand rather than supply) they would have had dry powder now. There is no guarantee that two crises cannot come within a couple of decades. Instead, the Japanese state is immobilized by their fiscal past.

Here are some other ways to stimulate supply:

  • Reducing taxes
  • Reducing unemployment benefits
  • Raising the retirement age
  • Facilitating bankruptcy, particularly of companies that are deemed “too big to fail”
  • Expanding the labor force with large-scale immigration

The idea is to bring down the prices of products purchased with discretionary spending that people usually avoid because they’re too expensive. In other words, stimulating supply ultimately stimulates demand.

The last of the five methods would not necessarily benefit Japan, and might cause serious cultural problems. Very few countries are emotionally equipped to assimilate large numbers of immigrants; places such as the United States and Canada are exceptions. Further, the larger the influx of immigrants, the more likely the immigrants will refuse to assimilate.

This should have been clear from the European example, but short of starvation or immediate threats to their safety, the elites that push immigration will always choose a desktop theory over reality. In this case, the desktop theory is, “Imagine there’s no countries, it isn’t hard to do…imagine all the people, sharing all the world.”

Prime Minister Kan favors stimulus of demand, and is not at all interested in stimulating supply. His policies (or more accurately, those of his economic tutors) will not succeed in the long run.

Afterwords:

The comments to Tino’s post are also worth reading.

Word hasn’t filtered into Japan, but Paul Krugman has become the economist’s equivalent of the bearded nut on the sidewalk. A lot of people are now entertaining themselves with the game of shooting the ideas of a Nobel laureate full of holes, and Mr. Krugman obliges by puffing himself up into a larger target.

Here’s how I stumbled across Tino. The charts alone should be of interest.

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The arithmetic of the ruling class

Posted by ampontan on Friday, August 20, 2010

FOR A NATION such as Japan with a traditionally thrifty population, one wouldn’t expect that debt would remain an intractable problem. Ten years ago, attention was focused on the colossus of non-performing debt held by financial institutions. Now, however, attention has shifted to the gargantuan public debt incurred by the Japanese government.

Funabashi Yoichi

Funabashi Yoichi, the editor-in-chief of the Asahi Shimbun, wrote an op-ed for his newspaper headlined Japan’s Bond Market Has Become Ticking Bomb. It’s a curious piece of work. Mr. Funabashi clearly sees what might cause the explosion, but he might as well be the third blind mouse when he offers a solution.

He starts by dubbing Japan a “debt superpower”:

Over the course of a year, the Japanese government issues 160 trillion yen in government bonds, which works out to 500 billion yen worth of bonds on a daily basis. This is all happening even though Japan has not recently lost a war, nor has it been hit by a natural disaster on the scale of the Great Kanto Earthquake. Japan has become a debt superpower because of years of throwing money at various problems, coupled with the effects of deflation.

He’s evenhanded when it comes to placing the blame. In addition to implicitly criticizing past Liberal Democratic Party governments, he also fingers the current Democratic Party government:

This fiscal year’s budget called for the issuance of 44 trillion yen in government bonds despite projected tax revenues of only 37 trillion yen. The last time the budget had more debt than tax revenues was in fiscal 1946, the year after Japan’s defeat in World War II.

Some have downplayed the severity of Japan’s public debt problem because most of the creditors are Japanese. For example, the largest creditor is:

(T)he Japan Post Bank Co., which holds more than 150 trillion yen ($1.74 trillion) in government bonds…Other major bond holders (include)…Japan Post Insurance Co. with 70 trillion yen.

To these he adds private sector financial institutions and life insurance companies. The result is a structurally unsound edifice:

While this situation could be described as a government bond bubble, there is none of the fervor that is commonly associated with an inflated economic bubble….Funds are flowing to government bonds through a process of elimination that leaves investors with no other advantageous alternative to place their money. The funds now held by Japan Post Bank and Japan Post Insurance have for many years been included in the structural framework for public finance. Life insurance companies and commercial banks are unable to shake off the “convoy mentality” ingrained through financial regulations.

He demonstrates one reason that excessive government involvement in the economy results in distortions which make the cure worse than the disease:

Rather than lend to companies, Japanese banks continue to buy up bonds that have the backing of the government.

The suggestion that domestic ownership of government debt shields Japan from the problems and turmoil in such countries as Greece is also curious. Perhaps it does, but it also creates another problem. Overseas investors can sit on their wallets if they decide the latest tranche of debt is an unwise investment, thus sending a critical signal to the market. Domestic investors, however, don’t have that luxury—particularly Japan Post.

Speaking of Japan Post, Mr. Funabashi names names and provides a sketch of what could go wrong:

The biggest risk factor will probably be Japan Post Bank. This is because 80 percent of the funds it has accumulated have been placed in government bonds. Depositors can withdraw their Japan Post Bank savings at any time. If the bond market should collapse, a huge amount of Japan Post Bank savings would likely be withdrawn. All those institutions are heavily dependent on government bonds. If bond prices should fall, there is the strong possibility…that all those institutions would simultaneously try to sell off their bonds.

Despite having had such a clear view of the road, he unexpectedly veers into a collision course with the nearest tree.

As some Japanese do when advocating a proposal, he starts by citing an overseas authority to provide justification in advance:

Last month, the International Monetary Fund, in its annual report about Japan, “underscored the urgency of credible fiscal adjustment. The key challenge is to bring down public debt to more sustainable levels.”

If credible fiscal adjustment is urgent—and everyone knows that it is—the key challenge is to make the government STOP SPENDING money that doesn’t exist and creating money of the mind that future generations will have to pay for.

We all know what’s coming next:

The IMF recommended that Japan gradually raise its consumption tax rate from the current 5 percent to 15 percent over a 10-year period from the next fiscal year.

In other words, both major parties committed the crime, but the public is going to have to do the time.

He never explicitly states that Japan must take the IMF’s recommendation, but then he uses the phrase, “rebuild its fiscal condition”. In Japan, that’s code for “tax increase”, so everyone knows that’s what he thinks should happen.

Meanwhile, other people might have some recommendations of their own on what the IMF can do with its recommendations.

Until now, the low consumption tax–as compared with rates in other advanced economies–was viewed as a strength that allowed Japanese to shoulder more of a tax burden.

How lucky for Japan.

However, if as a result of the July 11 Upper House election, the ruling Democratic Party of Japan gets cold feet about the consumption tax, the situation will change.

Yes, he’s suggesting that the government should ignore the clearly expressed will of the rabble people and confiscate their money anyway.

As in the EU, some people here seem to think election results can be ignored until the ruling class gets the results it wants.

The markets will be mercilessly checking for discipline in the fiscal 2011 budget and the effectiveness of the government’s growth strategy.

That might be easier said than done. Before they can check on the government’s growth strategy, they have to find it first.

Of course, if the government didn’t create make-work projects for itself, they wouldn’t have to think up ways to vacuum up so much of the people’s money and suck the life out of the economy. They wouldn’t even need a growth strategy. The private sector would handle it for them. (cf. Adam Smith)

Not long ago, some politicians were aggressively dealing with these problems. One reason the Koizumi administration staked its survival on the privatization of Japan Post was to allow the captive purchaser to invest its funds in other instruments instead of buying the bonds that allowed the profligates of government to spend their way into vertigo.

But the current DPJ government—before the 2009 lower house election—allied with a single-issue splinter party to roll back that privatization. The idea was to create a coalition to get bills passed in the upper house until they won an outright majority of their own in the 2010 election. But they were as successful at that as they were in creating a credible growth strategy.

Of course the DPJ also had the support of the postal workers’ union. In a private sector environment, the workers might actually be asked to put in a full day of work.

But which newspaper was it that supported the election of the DPJ in 2009?

It’s no longer the mid-19th century when Japan desperately needed to modernize after more than two centuries of isolation. In those days, the mostly rural or small-town public needed access to such new-fangled things as safe bank accounts and life insurance policies at the government-run post office.

Those conditions don’t obtain any more. In a few years more we won’t even need post offices.

And which party was the one to pass the first budget since 1946 with more debt than tax revenues?

The one Mr. Funabashi’s newspaper supports.

Which party bloated that budget by eliminating income tax deductions for children and moving to a system of direct government cash payments for child allowances? Which party insisted this program was needed to help improve the low birthrate, when it won’t? Which party assured the public that it could easily find the revenue to pay for the program, when everyone knew before the election that they couldn’t?

The one Mr. Funabashi’s newspaper supports.

Which party implemented a legal vote-buying scheme by including subsidies to rice farmers in its historically dreadful budget last year? Which party plans on enlarging that scheme to other farmers and fishermen in the next budget?

The one Mr. Funabashi’s newspaper supports.

Funabashi Yoichi has a BA from the University of Tokyo and a doctor’s degree in law from Keio University. He was a Nieman Fellow at Harvard University and a fellow at the Brookings Institution. He’s won the Suntory Prize for Social Science and the Humanities and a half dozen other awards. He’s written more than 30 books and edited more than a half-dozen others.

Maybe that explains why he can’t put two and two together.

Or why he doesn’t want to.

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Three guesses and the first two don’t count

Posted by ampontan on Thursday, August 19, 2010

UNIVERSITY OF TOKYO economics Prof. Ihori Toshihiro writes in the 18 August edition of the Yomiuri Shimbun:

There are more public employees at the sub-national level than at the national level. Some of those employees, such as drivers for state-operated transport and janitorial and sanitation workers, have higher salaries than their counterparts in the private sector. Reducing the personnel costs of sub-national public employees would result in savings estimated to range from five to 10 trillion yen.

The largest support group for the Democratic Party is Jichiro, the All Japan Prefectural and Municipal Workers Union, and for them, this is a sanctuary. How will the government proceed?

Their choices:

1. Bring public sector salaries in line with private sector salaries. Some estimates have the public sector earning 40% more than the private sector in Japan.

2. Raise taxes—including the consumption tax, income taxes on higher earners, and the inheritance tax—during a deflationary period and pretend that using it in “the right places” will create growth.

Chief Cabinet Secretary Sengoku Yoshito, the de facto head of the Kan administration, is also the leader of a Diet group affiliated with Jichiro.

Which do you think the DPJ government will choose?

Based on the impact that choices made by people with a similar political philosophy have had on the American economy, how much worse will economic conditions in Japan then become?

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Yamasaki Hajime on the Koizumi reforms and Your Party

Posted by ampontan on Wednesday, August 18, 2010

A RECENT ARTICLE in the English-language press claimed that Japan is about to enter its “third decade of stagnation”. How quickly they’ve forgotten the events of the five years and five months of the Koizumi Jun’ichiro administration. Mr. Koizumi also confronted a severe economic crisis, as major Japanese banks and security companies were either going bankrupt or merging to avoid bankruptcy, and there was an enormous overhang of non-performing private sector debt.

Under the watch of Mr. Koizumi and his financial guru Takenaka Heizo, most of that debt was safely unwound, government debt was reduced, and the latent popular desire for political and governmental reform was made manifest. His reform program was so popular he won the second-largest majority in Japanese postwar history in the 2005 lower house election and left office with a 70% approval rating.

It was no surprise that the old guard in the Liberal Democratic Party would try to roll back those reforms, but few foresaw that the putative reformers of the Democratic Party would be even more reactionary by halting the privatization of Japan Post for little more reason than to gain power through a coalition with the New People’s Party, an LDP splinter group opposed to privatization.

Since Mr. Koizumi left office, many in the mass media and in politics have succeeded in spinning the Koizumi reforms as having been detrimental to the country.

An advocate of those reforms, economic analyst and university professor Yamasaki Hajime, draws some parallels between Mr. Koizumi and Your Party and makes some pointed observations about the Koizumi reforms in Diamond Online. Here it is in English.

*****
Isn’t the obvious lesson to be learned about the people’s will from the upper house election the reaffirmation of the Koizumi course?

The Democratic Party’s losses were too great to allow Your Party to hold the critical votes in the upper house, but they did win 10 seats. In addition, the former so-called Koizumi Children of the Liberal Democratic Party, including Katayama Satsuki, Sato Yukari, and Inoguchi Kuniko easily won seats. Combining those results with the popularity of Mr. Koizumi’s son, Koizumi Shinjiro, suggests there is a certain amount of sympathy for the Koizumi program.

Kaneko Masaru of Keio University has a different different opinion and is critical of Your Party. As an illustration, here is one of his tweets on Twitter.

Your Party’s positions are just a complete rehash of Koizumi’s structural reforms. Their content calls for a reduction in the number of legislators and public employees, deregulation, and cutting the corporate tax. That will lead to growth? They favor devolution and small government. What’s new about that? They’ll look for hidden financial reserves and set an inflation target. Give me a break. If they think it’s so easy, why don’t they try it and see?

Elsewhere, he said, “The media is unable to sum up the failures of structural reform based on the facts.”

Judging from these statements, Prof. Kaneko’s premise is a factual awareness that Japanese social and economic conditions worsened because of the implementation of the Koizumi structural reforms.

To be sure, it is important to sum up the structural reforms. Well then, let’s view this as a problem of factual awareness and ask to what extent the Koizumi structural reforms were implemented.

In brief, I would suggest that the structural reforms were declared, but not put into practice.

This is easy to understand by looking at the subjects Prof. Kaneko raises. Certainly all of these cases were cited long ago, so they are not fresh. But were they actually implemented and their results confirmed?

The number of legislators in the Diet has not been reduced since the days of the Koizumi administration. There has been a slight decline in the number of public employees, but the pace of that decline is slow. Indeed, this has been replaced by an acceptance of amakudari (retired bureaucrats being employed by quangoes). The administrative corporations should have been eliminated or privatized, but almost all of them survive under a different name. There has been no major reduction in the number of public employees, who in a broad sense earn their livelihoods from the state budget.

There has been absolutely no large-scale deregulation that would allow efficient use of the airwaves or the corporatization of medical institutions. Japan is also far behind other countries in lowering its corporate tax rate.

To be fair, let’s cite those areas in which progress has been made. Public works projects have been substantially reduced. This is directly connected to the decline of local economies. Despite the reduction in public works projects, it is not possible to improve conditions in regional areas because there has been no progress in devolution for budgets or political authority.

The privatization of Japan Post was the issue on which Koizumi Jun’ichiro staked the most political capital and on which he won a landslide victory in the general election of 2005. The pace of privatization was so slow, however, that it is now being rolled back.

The people involved with each of these reforms must have had an extraordinarily difficult time of it, so I don’t mean this as a blanket criticism of all of them, but while Prime Minister Koizumi brought forward these objectives, his execution left something to be desired. One criticism frequently used during his term of office was that he left everything up to others. Mr. Koizumi’s words were inspirational, but by leaving the actual work to the bureaucratic organizations, all his reforms were deboned due to the skillful sabotage of the bureaucracy and their stalling tactics.

To borrow the explanation of Your Party President Watanabe Yoshimi, the three weapons of the bureaucracy are leaks, pejorative, and sabotage. The effect of skillfully controlled sabotage has been stunning. This effect has continued into the Democratic Party administration, as seen with the emasculation of the proposed National Strategy Bureau.

The biggest reason for the lack of progress of the Koizumi structural reforms was that Mr. Koizumi put off the reform of the civil service personnel system. In brief, Mr. Koizumi did not pick fights that he thought he might lose. Some might think that wise, but others might think that pathetic.

Ultimately, would not the proper recognition of reality be that few of the reforms were carried out?

When marshalling opposition to policies in the future, it will be important to have an understanding whether the structural reforms were implemented and failed, or whether they were not implemented.

I maintain that they were not implemented.

Assuming that to be true, wouldn’t the deregulation and reduced public sector (public employee) involvement in the economy propounded for structural reform be part of significant policy measures? There are more than a few supporters of structural reform in the Democratic Party. From their perspective, the LDP talked structural reform, but did not deliver. In the LDP itself, there are likely to be people who believe that now more than ever is the time for structural reform. While both of those groups probably have different opinions on the ideal level of income redistribution, they should be in accord in regard to the conduct of government and the economy in the immediate future.

If they could form a consensus on how to reform the civil service system, how to slash corporate taxes, and how to liberalize labor regulations, it would enable the citizens to have a clear political choice.

Watanabe Yoshimi would probably agree with all of these reforms, and Kamei Shizuka of the People’s New Party would probably oppose them. Who would the members of the two major parties follow? If this is not clearly identified, and the distortion both inside and outside the parties continues, the current stagnation will become locked into place and the flow of economic vitality overseas will not end.

Afterwords:

* Japanese language sources refer to Kaneko Masaru as a Marxian economist.

* Social Democratic Party head Fukushima Mizuho, representative of the Japanese scorpion left, also drew parallels between Your Party and Mr. Koizumi.

* Nonaka Hiromu, chief cabinet secretary in the Obuchi administration, thinks he sees Takenaka Heizo lurking behind the scenes in Your Party.

* In Yoron no Kyokkai (The Distortion of Public Opinion), Sugawara Taku writes:

All the data indicate that the post-Koizumi course of the LDP was a mistake. Public opinion rejected the readmission of the postal privatization rebels to the party, and urged the Abe administration to correct their course. It was clear that the 2007 LDP defeat in the upper house election was not due to the Koizumi structural reforms. The data show that the idea that Aso Taro was a popular figure among the people was laughable. The party pursued a course in opposition to that indicated by the data, so their defeat in the general election (of 2009) was completely in accord with predictions.

* The word that Mr. Sugawara used that I translated as “laughable” was funpan (suru). The closest literal translation would be “spewing rice”. It’s a shame there isn’t a good English equivalent.

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Enough bubbles to take a bath

Posted by ampontan on Wednesday, August 18, 2010

THE MASS MEDIA does its customers a disservice by presenting all the news as if they were covering a sporting event. Yesterday, the English-language print media was filled with stories declaring that China’s economy had at last grown to become the second-largest in the world, surpassing that of Japan. One newspaper said it had “seized” second place (as if economies can seize anything), while another reported that it had captured the “second-place crown”.

Perhaps they should be forgiven, for it’s obvious they know not what they do. Many people, more often on the left than not, view the dynamics of national economies as a zero-sum contest–as if they were spectators at a baseball, football, or hockey game. The economists remind us that the potential for win-win is always there, but few people listen.

I’ll have to edit the part of the About section at the top of the site that refers to Japan as having the world’s second largest economy, now that they’ve been relegated from the equivalent of the Global Economy Premier League. But maybe not today.

As Gordon Chang points out in Forbes , the Chinese property market has become the 500-lb bubble in the middle of the room. When it pops–and you know it will–investors will take a bath so large the media will be inundated with water sports stories 24/7.

Mr. Chang’s piece is subtitled, Why 64.5 million apartments in China use no electricity. He explains:

There were, a few months ago, 64.5 million urban flats that showed no electricity usage for six consecutive months. That’s one in four city apartments, enough housing for some 200 million people. The value of vacant apartments held by speculators is about 15% of gross domestic product. Beijing’s bank stress tests assume a 60% fall in property prices. In fact, official statistics show that property price increases slowed in July.

And there is more bad news for the residential market. Property developers, who are already building 20 million flats, have company. Local governments are constructing another 20-30 million, and other government agencies and companies are also building housing for employees.

In any other country, developers would be slamming on the brakes. In China, they are hitting the accelerator.

In other words, this is not merely a bubble, it is an effervescence of animal spirits. As in all bubbles, the investors act as if the principles of economics no longer apply:

Chinese leaders, in the months ahead, have an impossible task. They must keep powerful property developers happy, not alienate hundreds of millions of Chinese who think they should be able to own their homes, and somehow repeal the law of supply and demand.

A review of history is in order, and here would be a good place to start:

February 1637, Dutch guild of florists announced that futures contracts in the international trade in the tulip bulb futures investing market would be treated as options.

As a result:

Tulip bulbs were being sold from one party to another – many times over – before it was ultimately delivered. Payment for bulbs were not due until they were actually dug from the ground in the summertime. This was termed by the Dutch as windhandel, or “wind trade”.

“Wind trade” sounds as good a term as any for more than 60 million unused and unaffordable apartments with perhaps as many as 40 million more on the way.

But they’ll ignore history. The bubble merchants always do, and the bubble always breaks. This time, one wonders how many people will care which economic squad is at the top of the table in the aftermath of that collapse.

Afterwords:

Other people, including Mr. Chang, have been warning about this bubble for a few months now, as we saw here, in a tale of Potemkin villages, unsold automobiles being parked on lots, and the world’s largest shopping mall that is 99% vacant. That would inflate the size of a national economy, wouldn’t it?

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Posted in Business, finance and the economy, China | 4 Comments »

Matsuri da! (114): Angels with dirty faces

Posted by ampontan on Tuesday, August 17, 2010

PARENTS LIKE TO THINK of their children as little angels—until they misbehave. Then they’re more likely to think of them as little devils.

The parents of young boys in Chikugo, Fukuoka, however, set aside one day a year during the O-Bon holidays to turn their sons into demons and made a festival out of it. O-Bon is a Japanese Buddhist custom in which the spirits of departed ancestors return to the family altars once a year, usually in mid-August. The folks in Chikugo take that opportunity to present the Hisadomi Bonzunahiki, held this year on the 14th. Here’s what happens: they round up the imps, paint their bodies black, dress them in straw skirts called mino, and tie some more straw around their heads with the ends loose to resemble two horns. Then they have the lads march around town with a 400-kilogram rope 30 centimeters in diameter and 20 meters long. If that doesn’t keep them out of mischief during summer vacation, nothing will. There were about 50 this year, and they covered roughly 3.6 kilometers in between their start and finish at the Hisadomi Kumano Shinto shrine.

This didn’t start as a Shinto festival, but it’s become an event that reflects the intersection of Buddhism with Shinto throughout Japanese history. It dates from 1626, when the ceremony was conducted marking the completion of the main building at the Tokuzui-ji, a local Buddhist temple. There is the story of the Buddhist saint Nichiren using a rope to pull his mother out of hell, where she had fallen, and the parishioners mimed the act. The Bonzunahiki (Bon rope pull) didn’t become a regular event until 1643, however. It was revived after two straight years of severe plagues and bad harvests left many dead, especially children. It’s been held every year since then, and was designated an intangible cultural property of the prefecture in 1996.

The boys don the black and straw so they can play the part of the guardians of the boiling cauldrons of hell. It’s so hot down there they work without much clothing, and the soot from the fires blackens their bodies. (It’s a wonder the straw doesn’t catch on fire, too.) The idea was that they could pull the spirits of the dead up from the netherworld for consolation, if only during O-Bon.

Though it’s nominally a Shinto festival, the Buddhist origins of the Bonzunahiki haven’t been forgotten. The organizers make a new rope every year, and the process involves suspending the rope from a beam inside a building. The beam used is not in the shrine, but one in the Kan’non temple on the western corner of the shrine grounds instead.

All this probably flies over the boys’ heads. One fifth-grader participating for the first time said he thought it was a lot of fun to get painted black. They also surely enjoyed getting hosed down to wash off the gunk and the sweat after carrying the rope through town.

After all, it’s hotter than hell this time of year in Japan!

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“…trusting in the justice and faith of the peace-loving peoples of the world”

Posted by ampontan on Sunday, August 15, 2010

China’s military expansion is a threat. Politicians desirous of peace should say what should be said.
- Haraguchi Kazuhiro, Minister of Internal Affairs and Communications

HERE’S a sentence I suspect few of us thought we’d ever read:

“Japan is building its first military base overseas since the end of the Second World War.”

But it’s true. And they’ve got an excellent reason, too:

Japan is spending $40 million to build a base in Djibouti (on the northern border of Somalia), for its military personnel supporting the anti-piracy patrol. Most Japanese military personnel in the area are at sea, in warships. But now they have a place ashore to for supplies (sic) and maintenance facilities. Japan also has maritime patrol aircraft in Djibouti. All this is to help protect Japanese maritime trade, which is considerable. About ten percent of the merchant shipping passing through local waters is carrying Japanese goods (either exports, or raw materials imports.)

Not only did few of us expect to read it, it’s likely that fewer still thought they’d read it absent any international hand wringing. Shouldn’t this have been fodder enough for the other nations of Northeast Asia, the commentariat class, and the academic foreign policy wanks to gum over for months while warning of resurgent Japanese militarism? Every time a member of the Japanese Cabinet drives within a block of the Yasukuni shrine, the Chinese and the South Koreans crank up the propaganda sirens, yet they haven’t objected to the MSDF base at all.

There’s an excellent reason for the absence of Chinese objections:

In the Gulf of Aden off Somalia in East Africa, about 12,000 kilometers away from Japan, Captain Takanobu Minami, commander in charge of antipiracy measures for the Japanese Maritime Self-Defense Force (MSDF) met Senior Colonel Zhang Wendan, deputy chief of staff of China’s South Sea Fleet, aboard the Chinese missile destroyer Guangzhou on April 28….According to Minami, the MSDF officials were led into a meeting room aboard the ship, where a small Japanese national flag and a Chinese counterpart of the same-size adorned the table.

It wasn’t a courtesy call:

The Japanese and Chinese officials talked about their escort activities in the region and exchanged information on pirates for about an hour over coffee, including what military formation the escort ships should adopt and what measures can be taken to protect vessels that are not capable of traveling fast. In exchange, Zhang and other Chinese officers came aboard the MSDF escort ship Onami on May 23 to discuss further about their missions.

And it wasn’t a Japanese idea, either:

Both meetings were held at the request of the Chinese Navy, which contacted the MSDF through international radio equipped for antipiracy information.

Contrast that with events on the other side of Asia. Coinciding with the hands across the Persian Gulf approach was the growing tension between the two countries in the East China Sea:

Friction occurred in April between Japan’s Maritime Self-Defense Force and the Chinese Navy as a fleet of 10 Chinese naval vessels, including two submarines, three frigates and three destroyers, sailed south and then north between Okinawa and Miyako islands. On April 7-9, the fleet carried out training exercises, including helicopter flights, in the middle of the East China Sea. On April 8, before the fleet reached the line linking Okinawa and Miyako, a Chinese naval helicopter, at an altitude of 30 meters, flew within 90 meters of the 4,650-ton MSDF destroyer Suzunami. The MSDF said there was a danger of a collision because the top of Suzunami’s mast rises 40 meters above the sea.

And:

On April 10, the Chinese naval fleet passed the line between Okinawa and Miyako islands while sailing south. On April 21, as it was returning north some 500 km off Okinawa Island, a Chinese helicopter twice circled the 3,100-ton MSDF destroyer Asayuki at a distance of a mere 90 meters. This time, Japan lodged a protest with the Chinese embassy in Tokyo on the same day. Before the incident, the Chinese naval fleet had conducted training exercises west of Okino Torishima Island, Japan’s southernmost island. On April 22, the Chinese naval fleet, returning north, was seen passing between Okinawa and Miyako islands.

The general policy of the Democratic Party-led government in Japan is to tilt away from the United States and toward China, but this nautical saber rattling was too much even for them:

Foreign Minister Katsuya Okada on Wednesday defended Japanese Self-Defense Forces’ monitoring of Chinese navy vessels that sailed near Japanese southern waters earlier this month in response to Chinese criticism of the move the day before…Tokyo has lodged a protest with Beijing over what it sees as “dangerous” approaches by Chinese ship-borne helicopters on April 8 and 21 toward Japanese destroyers, which were deployed for surveillance of the Chinese vessels.

That rubbed the Chinese fur in the wrong direction:

On Tuesday, Chinese Ambassador to Japan Cheng Yonghua criticized Japan for “following” the vessels “for quite a long time,” telling a press conference in Japanese, “I think such a thing would be a betrayal of mutual trust.”

What mutual trust would that be? No one trusts the Chinese, and the Chinese don’t care what anyone thinks.

Just the day before, the Chinese delivered a diplomatic message through analysts talking to a print media surrogate:

Tokyo should talk to Beijing about its proposed strategy to scour the seafloors near China’s Diaoyu Islands for rare metals, as any unilateral move on its part may likely “trigger a clash” between the Asian neighbors, analysts told China Daily on Monday…

The Chinese threaten military action over a maritime mineralogical expedition, but some people still think an unresurgent Japanese militarism is a matter for concern.

Under (a) new strategy (on securing undersea resources), Japan is keen to explore the seabed within its exclusive economic zone (EEZ), an area that extends 200 nautical miles (370 kilometers) offshore or to the half-way points to neighboring countries, according to Kyodo. The areas to be explored cover 340,000 square kilometers (136,000 square miles) of the East China Sea and the Pacific Ocean, it reported.

China claims indisputable sovereignty over the Diaoyu Islands and adjacent islets. Japan too regards the Diaoyu Islands as its own territory. The two countries also hold disputes on overlapping claims of their extended continental shelf in the East China Sea where both countries have oil-drilling platforms.

Isn’t the following sentence more than a bit reminiscent of Germany talking about Central Europe in the 1930s?

“As long as it does not breach any law, other countries should gradually get used to it,” Jin added. (The increased Chinese military presence)

It would have been easy to identify the source of the article without mentioning the name of the media outlet. The author called them the Diaoyu Islands rather than the Senkakus, even though they are in the possession of Japan. There is no mention that the Chinese have been siphoning off natural gas as if through a straw from a site four kilometers away from what the Japanese consider the boundary of their EEZ. The Japanese are developing oil and natural gas resources on their side of the line. This line, incidentally, is drawn midway between Okinawa and the Chinese coast, but the Chinese claim rights to all the maritime territory as far as the Okinawa Trough, some distance east of that line.

Need I mention that the Chinese refuse to take the dispute to the International Court of Justice? The Chinese are reasserting their traditional self-image as the hegemons of all they survey. Who is the International Court of Justice to cast judgment on them?

There’s even a Chinese Journal of International Law to convey their own legal determinations to the rest of the world–regardless of the incongruity of the juxtaposition of the “Chinese” with the idea of “international law”.

This dispute is the likely reason for the naval pas de deux:

Japan has told China it will appeal to an international maritime court if Beijing starts gas production in a disputed field in the East China Sea, a Japanese newspaper reported on Monday.

If anyone still takes Reuters seriously, the next sentence alone should disabuse them of that notion:

Tensions mostly stem from Japan’s wartime occupation of China.

Those lingering wartime tensions continued into May this year:

On May 3…another incident occurred…when a Chinese 1,690-ton marine survey ship stalked the Japan Coast Guard’s 3,000-ton survey ship Shoyo for three hours and 45 minutes in what Japan claims to be the Japanese side of the median line demarcating the exclusive economic zones of the two countries in the East China Sea — about 320 km northwest of Amami Oshima Island. Beijing rejected Japan’s protest, saying the waters where the incident occurred belong to China.

The Japanese impertinence and intransigence would be enough to exasperate anybody!

Still, the Chinese justification for their behavior was not without its comic aspects:

The Chinese Foreign Ministry’s spokeswoman, Jiang Yu, said the Chinese ship was acting within its rights. “It’s totally legitimate for a Chinese maritime survey vessel to undertake law-enforcement activities in these seas,” she was quoted as saying by China’s official media.

Considering the size of their military forces, ethnic ego, and nuclear weaponry, the Chinese can be surprisingly whiny:

Chinese Ambassador to Japan Cheng Yonghua expressed strong displeasure on Tuesday with the recent monitoring of a Chinese navy fleet by Japan’s Maritime Self-Defense Force in the sea off the Japanese coast. “While there are various neighboring countries around China, only the Japanese Self-Defense Force vessels hounded (the Chinese ships) from the beginning,” the ambassador said at a lecture hosted by Kyodo News in Tokyo.

You’ll never guess what diplomatic card they tried to play. Well, maybe you can:

At Tuesday’s lecture, Cheng alluded to the presence of anti-Japanese sentiment among Chinese people given Japan’s wartime aggression against China, asking Japan to imagine how Chinese nationals would feel if only the SDF was monitoring a Chinese fleet.

It might be more appropriate to imagine how Japanese nationals would feel now that the Chinese were exhibiting the behavior of a latter-day moustachioed paperhanger promising that the Sudetenland would be his last territorial claim.

There are even echoes of the Cold War:

Against a background of increased friction between Japanese and Chinese ships due to the Chinese Navy’s expanded activities in international waters near Japan, Japan’s Foreign Minister Katsuya Okada and his Chinese counterpart Yang Jiechi agreed in a May 15 meeting in South Korea on the need to establish a hotline mechanism to avert problems at sea. A similar agreement was made three years ago, but little became of it.

Did little become of it because no one was at home whenever the Japanese called?

This Chinese explanation should cover all the contingencies:

“In order to defend China’s territory and sovereignty, and secure its maritime rights and interests, the navy decided to set its defense range as the Yellow Sea, the East China Sea and the South China Sea,” Xinhua reported. “This range covered the maritime territory that should be governed by China, according to the U.N. Convention on the Law of the Sea, as well as the islands in the South China Sea, which have been its territory since ancient times.”

And that has been the rhetoric of international thuggery since ancient times, tarted up with a reference to the UN.

The Taiwanese aren’t helping matters, either. At the end of May:

Taiwan expressed regret Saturday at Japan’s intention to expand its military airspace identification boundary to include all of Japan’s westernmost islands, saying it will not accept the decision. The Foreign Ministry said in a statement that Japan acted unilaterally in a manner that infringes Taiwan’s sovereignty.

How dare the Japanese include its own territory in its defensive perimeter.

Here’s the nature of the infringement of Taiwanese sovereignty:

Japanese Defense Ministry officials said Wednesday they plan to extend Japan’s Air Defense Identification Zone — now along the 123 degrees east longitude line — to include Yonakuni Island, Japan’s westernmost territory and the closest to Taiwan, as well as waters to the island’s west.

The line is a national defense perimeter within which aircraft must provide flight details to aviation authorities before entering. Failure to do so can prompt interception by the military.

What makes the Taiwanese think this is an infringement of their sovereignty is their claim on some of the same islands in the area. Would their response have been any different had the Japanese told them about it first? Unlikely–to the Chinese, Greater China is Greater China, no matter where they’re from.

*****
The transparency of the Chinese motive for waving the bloody shirt of Japanese militarism should be obvious on the face of it (though it was enough to stump Reuters). Anyone who thinks the Chinese (and the South Koreans) are concerned about contemporary Japanese militarism for any reason other than as a weapon to deflect attention from the pursuit of their own advantage in the region, either in the East China Sea or the Sea of Japan, has not been paying attention. Indeed, in view of the Chinese naval expansion far beyond the levels required for national defense—as if anyone were going to attack them—the identity of the real militarists in the region should also be apparent.

Really, if the Chinese were that concerned about Japanese militarism, would they be doing this?

Along with the fall of the U.S. dollar and the rise of the Japanese yen in the foreign exchange markets, China has bought more Japanese yen and euro assets. In June, China largely increased its holdings of Japanese government bonds worth about 5.3 billion U.S. dollars. Since 2010, China has cumulatively bought 20 billion U.S. dollars of Japanese yen financial assets, nearly five times the amount bought in the past five years.

Because events are likely to proceed along this path for the foreseeable future, it would be instructive to revisit the background to the adoption of Article 9, the Peace Clause of the Japanese Constitution. Here’s the text for reference:

Aspiring sincerely to an international peace based on justice and order, the Japanese people forever renounce war as a sovereign right of the nation and the threat or use of force as means of settling international disputes.
(2) In order to accomplish the aim of the preceding paragraph, land, sea, and air forces, as well as other war potential, will never be maintained. The right of belligerency of the state will not be recognized.

Now, here’s what Douglas MacArthur wanted the clause to say. (The italics are mine.):

War as a sovereign right of the nation is abolished. Japan renounces it as an instrumentality for settling its disputes and even for preserving its own security. It relies upon the higher ideals which are now stirring the world for its defense and protection.

However:

The “even for preserving its own security” language was apparently deleted by the Government Section because the Section’s deputy chief, Col. Charles L. Kades, felt every country was entitled to self-preservation. (Kades was close to MacArthur.)

The Japanese Diet accepted the article on 3 November 1946. Not that they thought they had much choice:

The Japanese government was reportedly shocked at the breadth of the Article, but felt that there was little they could do to oppose the Occupation’s version since MacArthur had personally pushed for its adoption.

(The preceding three quotes are from a 40 page pdf file. Use the search function to find them in the document.)

It should also have been apparent long before now that Article 9 of the Japanese Constitution is a dated relic from an age that no longer exists, was espoused by people whose perspective is no longer relevant, and whose continued existence is counterproductive.

In 1945, that might have been understandable, even assuming one fell for the “peace-loving Soviet people” routine (or was treacherous enough to promote it). Today, that attitude would be inexcusable for anyone other than a junior high school girl.

But the circumstances of the modern age present a different set of problems. Even though Japan has a security treaty with the United States, some Japanese have wondered if the Americans would really come to their defense if attacked–and that was before the presidency of Barack Obama, whose behavior suggests he’d prefer to be the head of the Non-Aligned Nations Movement.

Then there is the omnipresence of the mass media, the presumption of its servant-mandarin class that they are the ones to define the parameters of political debate, their preference for drama of any kind over substance when defining those parameters, and the inevitability that politicians will choose their careers and the perquisites of office rather than take a strong and principled stand. All these factors make it unlikely Japan will be able to rid itself of an obsolete Article 9 absent a clear and present danger.

It’s time to apply the original viewpoint of Charles Kades to all of Article 9. It doesn’t have to be amended—just ignored. Self-defense is neither an act of war nor of belligerency, nor is it a means of settling international disputes. It’s the only way to ensure self-preservation.

This is a start. Could anyone, in seriousness, accuse the Japanese of rattling sabers of their own, especially considering the lack of urgency?

The Defense Ministry is considering dispatching the Ground Self-Defense Force’s border security and coastal monitoring units to some islands in southwestern Okinawa Prefecture in about five to eight years in response to factors such as activities in the area by Chinese naval vessels, senior ministry officials said Monday.

The ministry is considering reinforcing surveillance around Japan’s western border as the Self-Defense Forces is only sparsely dispatched in areas to the west of Okinawa’s main island, but the move is likely to draw protests from China and Taiwan as the units would be placed close to islands disputed by the three sides.

The plan involves deploying several hundred GSDF members in charge of border security to Miyako and Ishigaki islands and about 100 members for coastal monitoring to Yonaguni Island in stages, the officials said.

To consider the Japanese a threat to anyone’s security, much less that of its neighbors, is to point the telescope in the wrong direction, look through the wrong end, and pretend the world hasn’t changed in more than half a century.

It could also be hazardous to the health of a large part of a globe. One doesn’t have to think of a response as self-defense. It’s closer to public hygiene instead.

Afterwords:

Sometimes the Chinese approach resembles the Big Bad Wolf dressed in Grandma’s clothes reassuring Little Red Riding Hood. Try these excerpts from an op-ed in a Japanese newspaper by Song Xiaojun, a military commentator with China Central Television, a former communications officer of the Chinese navy, and the co-author of the book, “Unhappy China”:

Talk about the “Chinese threat” appears to be escalating. This is most likely due to a lack of communication and understanding between the people of the two countries.

As any country starts to industrialize, its volume of trade grows. As a result, since security of sea lanes becomes increasingly important, countries have tended to rely on military muscle to ensure that everything proceeds safely.

This is what European countries and the United States have done. Why then does China become a target of criticism when it tries to do the same?

In proportion with China’s economic development, its imports of resources have surged. It is only natural for the Chinese navy to protect the country’s sea lanes.

“Unhappy China” indeed.

Perhaps Mr. Song should have read Dale Carnegie’s How to Win Friends and Influence People. Remember, this next part is for a Japanese audience:

But even as China’s influence grows, it has no intention of resorting to colonialism or expansionism as practiced by the former Imperial Japanese Army.

And:

The Japanese people should not forget that the Chinese people still hold a grudge against them over Japan’s past military aggression. It is not easy to erase memories of large-scale massacres of Chinese by the Japanese army.

Especially when the Chinese government goes to such lengths to keep those memories alive, including the public construction of more than 100 war museums.

By making a fuss over the “threat” of China’s naval forces, Japan runs the risk that anti-Japanese sentiment will flare up again. The two countries should take time to improve their bilateral relations.

In other words, if you get upset at our belligerence, it’s all your fault. It’s hard to believe the Chinese think anyone in Japan will fall for this.

But then they shift to the real villain:

The greatest factor standing in the way of East Asia’s integration is the presence of the United States. As long as the United States maintains its military and economic presence in the region, it will be difficult to create the kind of East Asian community advocated by former Prime Minister Yukio Hatoyama.

Why would the Chinese assume that most Japanese are interested in that kind of East Asian community? And it’s hard to believe the Chinese think…wait, I already said that. But that doesn’t make it any easier to believe.

Have you caught the historical irony? The Imperial Japanese wanted to drive out the Western colonialists and create a Greater East Asia Co-Prosperity Sphere. The imperial Chinese incessantly reference Japanese behavior of a bygone era–and want to drive out the Western colonialists and create a greater East Asia co-prosperity sphere.

And guess who the Chinese are offering as guarantors of the New World Order:

If the United States is unable to serve as the “world’s policeman,” China is ready to take its place. Why shouldn’t China take on the role of the world’s top cop?

It’s hard to believe the Chin…somebody stop me!

But really, why shouldn’t the Chinese assume that role? After all, they have much more experience in the role of “top cop” than the Americans:

In its 5,000-year history, China for more than 2,000 years maintained its grip on East Asia based on the Confucian thought of governance by virtue. During that time, order was maintained centering on China.

“Grip”? Was something lost in the translation, or is it just difficult for the Chinese to keep up the charade for more than three minutes at a time?

At one time, Japan was the dominant influence in East Asia, with strong U.S. backing. Even if China establishes itself as a superpower, it will not seek to attain hegemony over the region, like the United States.

“All the better to grip you with, my dear.”

For this reason, Japan should quit worrying. China will aim to establish a community in which members are equal.

In other words, “get used to it”.

It is no coincidence that this op-ed appeared in the Asahi Shimbun, whose editorial stance forms a global triumvirate of useful idiots with the New York Times and The Guardian.

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Posted in China, History, Imperial family, International relations, Military affairs, World War II | Tagged: | 7 Comments »

Stolen fair and square

Posted by ampontan on Saturday, August 14, 2010

PRIME MINISTER Kan Naoto announced earlier this week that the Japanese government would “hand over” the Uigwe, records of the royal protocols of the Joseon dynasty, to South Korea. The Japanese governor-general of Korea took them to Tokyo in 1922, and few people knew of their existence or whereabouts until 2001.

As this detailed article on Historynet.com explains, however, the return of items such as these is not as cut and dried as one might think, particularly for older relics. An additional complication is that international law has been hazy on this issue until recently.

The article notes:

Over the past two decades, globalization, changing attitudes, and the spread of both international law and civil lawsuits have emboldened aggrieved nations to demand the return of cultural property seized by enemy forces decades or even centuries ago, and a few holders of these spoils have complied. Five years ago, Japan returned a Korean monument on the centennial of its theft during the Russo-Japanese War; three years before that, Italy returned a 3,000-year-old obelisk taken during Mussolini’s invasion of Ethiopia.

But:

The fact is, there is no legal or customary basis to demand the return of anything plundered prior to the turn of the 20th century. Doing so successfully is ultimately a matter of public relations, of convincing whoever possesses the object that giving it back is the right thing to do.

“There’s no source of international law that clearly goes back before the late 19th century, and there’s no [international] statute of limitations that would get you back to the 15th, 16th or 17th centuries,” says Patty Gerstenblith, director of the Center for Art, Mu­seum, and Cultural Heritage Law at the DePaul University College of Law. “There are examples of things being returned from long ago, but they were done on a cooperative or moral basis, not a legal one.”

Also:

Repatriation becomes a more confusing undertaking for objects seized in the early 20th century, a period for which legal remedy is uncertain, but possible. This “gray period” spans the time between the Hague Conventions of 1899 and 1954, a half-century in which the wartime plunder of cultural objects went from being frowned upon to being explicitly forbidden under international law.

As to the Uigwe:

The picture is further complicated in the early part of this period because most of the world was under colonial rule. For the colonized, this often felt like a belligerent occupation, particularly when independence movements were crushed with military force. But if a now independent nation seeks the return of objects allegedly plundered during such occupations, a former imperial power can easily dismiss a suit on the grounds that at the time the colony was, legally speaking, its own sovereign territory. Under such circumstances, claimants can turn only to the court of public opinion.

The French wound up with the originals of the Uigwe in the 1860s, and the absence of international law applicable for the time likely explains their insistence that they retain ownership and have only “loaned” them to the Koreans. The items in Japanese possession are copies. Meanwhile, were the Japanese of a mind to be ungenerous, they could claim that taking the Uigwe to Tokyo was merely a shift of the items from one part of the country to the other.

Meanwhile, here’s a Yonhap article about the Uigwe with more details about the items in Japan, but it does not examine the issues with the French.

Afterwords:

Lest my fellow Americans begin to think that “we wouldn’t do anything like this”, here’s another excerpt from the article:

American forces took the three bells from a church tower on the central Philippine island of Samar during the Philippine-American War, fought primarily from 1899 to 1902 (although the Moro Rebellion phase lasted until 1913). For the past 13 years, the government of the Philippines has pressed for their return, so far without success.

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