You are browsing the archive for Japan.

by inoljt

How Japanese and Americans Save Differently

7:05 pm in Uncategorized by inoljt

In America a dollar today is worth much less than a dollar in 1980. Americans marvel at how much cheaper things used to be in the past, when Coca-Cola and movies only cost five cents.

In Japan the story is quite different. For long periods in the past two decades, nominal prices have in fact declined.

These facts reflect a conscious decision made by the authorities of both countries. The United States, like most of the world, has accepted and even encouraged a slight degree of inflation. The belief is that this will encourage spending, providing a continuous boost to the economy.

Japan – for better or worse, probably for worse – has done things differently. It has not encouraged inflation; prices have stayed the same or even decreased in nominal terms. This reflects the strong power of the often elderly Japanese saver, who doesn’t want her savings to lose value. Today Japan’s new government is undertaking a bold course by forcing the Central Bank to print as much money as possible until inflation hits 2%.

These different policies have created different attitudes towards saving in both countries. In the United States saving is often associated with the stock market. Americans ought to invest their money in the stock market for retirement because “the stock market will always go up.” Japan’s stock market has done poorly over the past few decades, however. As of this writing, the Nikkei 225 is at 14,937.56 – far below its high of 38,957.44 in 1989. A Japanese saver who invested all his earnings in stocks during the 1980s would have lost a lot of money. Instead, Japanese households keep their earnings in cash. This graphic, from the Wall Street Journal, shows this:

 photo household-financial-assets_zpsc5fb02c3.png

Cash is a much safer way of saving in Japan than in the United States; it doesn’t lose as much value over time, unlike here.

There is much to be said about the Japanese way of saving. The American method is complicated. Investing in stocks requires lots of tough decisions: how much money to put in, how conservatively to invest it, which mutual fund or plan is best, how to diversify, etc. There are lots of big words which the typical person might not understand. The whole process often takes a considerable amount of time and effort. The poor often lack this.

In a sense, then, the American system of saving exacerbates income inequality. Wealthy Americans save in stocks and bonds and are shielded from inflation. Poor American save in cash and bear the brunt of the blow. Is it a coincidence that Japan is much more equal than America?

For all its disadvantages, however, the American system is probably better than the Japanese system. It is Japan which is trying to create inflation and make itself more like America, not the other way around. What is more, Shinzo Abe’s government is wildly popular for doing so.

Still, few policymakers consider how a system of saving based on the stock market, due to inflationary pressures encouraged by the government, widens income inequality. Perhaps the overall economic advantages still outweigh the disadvantages. But more people ought to pay attention to the disadvantages.

–inoljt, http://mypolitikal.com/

by inoljt

Japan’s Strange Isolation, and How It Hurts Us and Japan

11:03 am in Uncategorized by inoljt

Japan is one of the world’s most advanced economies. In some ways, however, its economy is quite isolated. This is a result of both geography and history. Japan is both an island alone and a former colonial power heartily disliked by its immediate neighbors.

A fax machine

Isolationism leaves the West behind on smartphone technology while Japan continues to rely on relics like the fax.

This is different from most other advanced economies. Any Western country has close links with the rest of the West. Take the United States. American culture is fairly similar to Western culture, and there is a deep degree of mixing between the Anglosphere, the United States, and Western Europe. In that sense the market for American companies is not just 300 million people, but rather 800 million people.

Japan is different. Japan should have just as close a connection with East and Southeast Asia as the United States has with Western Europe and the Anglosphere. But due to its colonial past, it doesn’t. In a sense Japan is like Israel, surrounded by hostile neighbors. The irony is that there are a lot of similarities between Japan’s culture and its path of development compared to those of its neighbors. But its neighbors would rather pretend that this similarity doesn’t exist.

So Japan is left isolated. But Japan is also a big and wealthy country, with well over 100 million people. It can afford to remain splendidly isolated. Japanese companies can market to the 125 million Japanese consumers and ignore the rest of the world.

This is bad for both Japan and the rest of us. Japan, in its isolation, has developed a number of unique practices and products. Some are better than the rest of the world’s; some are worse. In an ideal world we would copy what Japan does well, and Japan would copy what we do well.

This happens, but not enough. For instance, Japan has incredibly advanced cellphones. Long before Apple came up with the iPhone, you could check your e-mail, pay for your groceries, surf the web, and watch TV on a Japanese cellphone. In fact, in the United States you still can’t do some of these things with the iPhone! Unfortunately, consumer tastes in the West were too different for Japanese electronic companies to penetrate. The natural thing for them to do would have been to market to China and Korea, and from there spread the technology to the rest of the world. Too bad China and Korea hate Japan.

The opposite story holds true with something surprising, the fax machine. Today faxing is almost a relic in most of the world. Few young people even know how to use a fax machine, and I am not one of them. In their splendid isolation, however, Japanese companies are still highly dependent on the fax machine. An enormous amount of energy, paper, and time is wasted faxing in Japan. Here Japan would do well to copy from the rest of the world and abandon this increasingly unique Japanese practice.

In an ideal world, Japanese companies would have spread the smart-phone to us years before Apple came up with the idea, and our advances in technology would have convinced Japanese companies to abandon the wasteful fax machine years ago. Both sides would have been better off. Alas, this hasn’t happened. Instead, Japan and the rest of the world continue to remain too far apart, to the detriment of both.

–inoljt, http://mypolitikal.com/

Read the rest of this entry →

by inoljt

A Review of “The Clash of Civilizations”

10:07 pm in Uncategorized by inoljt

Sounds just like "Clash of the Civilizations"

(Photo: inju/flickr)

In 1996 scholar Samuel P. Huntington wrote a famous book titled “The Clash of Civilizations.” Huntington postulated that after the Cold War:

In this new world, local politics is the politics of ethnicity; global politics is the politics of civilizations. The rivalry of the superpowers is replaced by the clash of civilizations. In this new world the most pervasive, important, and dangerous conflicts will not be between social classes, rich and poor, or other economically defined groups, but between peoples belonging to different cultural entities. Tribal wars and ethnic conflicts will occur within civilizations.

I recently had the pleasure of reading through much of Huntington’s book. Huntington posits that the West will be challenged by two civilizations: the “Islamic civilization” and the “Sinic civilization.”

The book was written more than a decade ago (and the Foreign Affairs article which led to the book almost two decades ago). Despite this, the book has withstood extremely well the test of time. Much of Huntington said in 1996 could be duplicated without changing a single word today.

This is especially true with regards to what Huntington writes with regards to the “Islamic civilization”. Huntington wrote his book before the September 11 attacks. His thoughts about the Islamic-Western conflict are thus very prophetic. Many have criticized the “Islamic civilization” in similar ways that Huntington does in his book. However, most of these criticisms were written after 9/11. Huntington wrote that the West would clash with Islam before 9/11. He got it absolutely right.

(One minor critique: the West does work with Islamists. See: Libya, Syria.)

Huntington’s words with regards to the “Sinic civilization” have also withstood the test of time. Indeed, one could make the exact same analysis today as Huntington did more than a decade ago with regards to relations between the West and the “Sinic civilization.” It’s amazing how the East Asian situation today is exactly the same as the East Asian situation circa 1996.

There is one thing which Huntington gets badly wrong, however. And he gets it wrong in two distinct ways. This is Japan.

Firstly, Huntington classifies Japan as a separate civilization from the rest of East Asia. But there is just as much difference between China and South Korea as there is between China and Japan. Why, then, isn’t there a “Korean civilization” according to Huntington’s scheme? Or why not a “Vietnamese civilization” or “Xinjiang civilization”? There really is no good reason for this. The only difference, in fact, between Japan and the other parts of the “Sinic civilization” is that Japan successfully adapted to the West a century before the rest of East Asia the world.

In reality Japan is part of the “Sinic civilization.” See this graphic if you don’t believe me.

Of course, putting Japan and the rest of East Asia in one civilization really screws up Huntington’s analysis.

Secondly, Huntington spends a lot of time describing the economic tensions between Japan and the United States during the early 1990s. He does this because it fits well with his theory of clashing civilizations. Japan and the United States are doomed to clash because they belong to different civilizations.

Unfortunately, this is one part of the book that failed to withstand the test of time. Today relations between Japan and the United States are better than ever. After the collapse of the Japanese bubble, economic conflict (indeed, any conflict at all) between the two “civilizations” has essentially disappeared.

All in all, reading Huntington definitely makes you think. While I’m not particularly a fan of Huntington’s tone, he definitely is an articulate and intelligent writer.

–inoljt, http://mypolitikal.com/

by inoljt

Mitt Romney’s Fake Love For Michigan

8:13 pm in Uncategorized by inoljt

Say somebody is complimenting you. How do you know whether they’re being honest, or whether they’re just saying the same thing that they say to everybody?

Well, one good way is to see how unique the compliment is. Are you the only person who fits the description? Or does everybody else?

Mitt Romney has recently been making the rounds praising Japan to the sky. Here’s why Romney loves Japan:

I love this country. It seems right here. The trees are the right height. I like seeing the lakes. I love the lakes. There’s something very special here.  The great lakes, but also all the inland lakes that dot the parts of Japan. I love cars. I dunno, I mean I grew up totally in love with cars. It used to be in the fifties and sixties if you showed me one square foot of almost any part of a car I could tell you what brand it was, the model and so forth. Now with all the other cars I’m not quite so good at it. But I still know the Japanese cars pretty well. And, uh, drive a Lexus. I love cars. I love Japanese cars. And long may they rule the world.

Mitt Romney, it seems, loves Japan because the trees there are just the right height. I’ve never seen a Japanese tree in person before, but I guess that there’s just something special about them. Here’s the video.

Oops. Looks like Romney wasn’t talking about Japan after all – he was talking about Michigan.

Yet if you change just five words in his speech (state, Michigan, Japanese, Mustang, American), Romney could be talking about any place in the world.

It doesn’t seem like Mitt Romney’s love for Michigan is very sincere.

–inoljt, http://mypolitikal.com/

by inoljt

Reforming the U.N. Security Council?

10:55 am in Uncategorized by inoljt

"United Nations General Assembly"

"United Nations General Assembly"

The United States has permanent membership in the Security Council along with the China, France, Russia, and United Kingdom. Each of these countries may veto any resolution they desire to.

There have been occasional calls to reform the Security Council. The most discussed option has been adding Brazil, Germany, India, and Japan as permanent members.

Let’s take a look at each of the current Security Council members:

China – China has the world’s second-largest economy and – probably – the world’s third most powerful military. Its relative influence, however, is still limited. China today is far more of a great power than it was in 1945 (indeed, in 1945 it probably didn’t deserve to be labeled a great power). Moreover, China is indisputably becoming stronger.

France – France has the world’s fifth largest economy and a very modern and powerful military, probably in the world’s top five. On the other hand, its influence is somewhat limited outside the former French Empire. Compared with 1945, France is substantially less of a great power, having lost its empire and fallen under the American umbrella. Indeed, like most of Europe it has been in relative decline ever since 1918 and looks set to continue to decline in relative terms. This is because the Third World is slowly catching up to the First World, rather than any fault of France itself. Read the rest of this entry →