Posts Tagged ‘Japan’
“To overcome a desperate situation, make a complete turn in one sudden burst”*…
Rupert Wingfield-Hayes, the BBC’s Tokyo correspondent, on the riddle of Japan…
This is the world’s third-largest economy. It’s a peaceful, prosperous country with the longest life expectancy in the world, the lowest murder rate, little political conflict, a powerful passport, and the sublime Shinkansen, the world’s best high-speed rail network.
America and Europe once feared the Japanese economic juggernaut much the same way they fear China’s growing economic might today. But the Japan the world expected never arrived. In the late 1980s, Japanese people were richer than Americans. Now they earn less than Britons.
For decades Japan has been struggling with a sluggish economy, held back by a deep resistance to change and a stubborn attachment to the past. Now, its population is both ageing and shrinking.
Japan is stuck…
His diagnosis and his prognosis: “Japan was the future but it’s stuck in the past,” @wingcommander1 in @BBCWorld.
* Japanese proverb
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As we ponder progress, we might recall that it was on this date in 2011 that three reactors at the Fukushima Daiichi Nuclear Power Plant exploded and released radioactivity into the atmosphere a day after the 2011 Tōhoku earthquake and tsunami.
The radiation releases forced the evacuation of 83,000 residents from towns around the plant. The meltdown caused concerns about contamination of food and water supplies, including the 2011 rice harvest, and also the health effects of radiation on workers at the plant. Scientists estimate that the accident released 18 quadrillion becquerels of caesium-137 into the Pacific Ocean, contaminating 150 square miles of the ocean floor.
“‘I wish it need not have happened in my time,’ said Frodo. ‘So do I,’ said Gandalf, ‘and so do all who live to see such times. But that is not for them to decide. All we have to decide is what to do with the time that is given us.'”*…
A couple of weeks ago, (Roughly) Daily took a look at the fall of neoliberalism. What’s to come? The estimable Noah Smith has a suggestion…
For years now, I’ve been thinking about what the next big organizing principle of U.S. political economy will be. By “political economy” here I mean the type of economic policies we carry out, and the ways that we expect those policies to reshape our economy. This will be the first in a series of posts laying out my predictions for what the new paradigm will look like.
From the late 1970s through the middle of the 2000s, our organizing principle was what some people call “neoliberalism” — deregulation, tax cuts, free trade, and the shift of the welfare state towards in-kind benefits and work requirements. The reasons we went down this road were complex, and the results were mixed. This replaced an earlier paradigm that people called “the New Deal”, which started to emerge during the Great Depression but really solidified during and just after WW2. That paradigm involved large-scale government investment, heavy regulation, high taxes, social insurance, and the encouragement of a corporate welfare state.
Ever since the financial crisis and the Great Recession of 2008-12, we’ve been looking for a new organizing principle. Obama didn’t really try to give us one; with the exception of Obamacare, he was mostly focused on crisis recovery and damage control (stimulus, financial regulation, boosting the welfare state incrementally along largely neoliberal lines).
But everyone knew a new paradigm was needed. The question was what it would be…
[After carefully considering, then sadly rejecting climate change as a candidate…]
So if it’s not climate change, what will be the thing that forces us to come up with a new policy paradigm? If it’s not the moral equivalent of war, perhaps it’ll be the threat of actual war…
“The War Economy,” Part 1
In a second post, he elaborates on how the U.S. and its allies might stack up against a “New Axis.” He dives into relative demographicc, economic, and social strengths, concluding…
I can’t say whether or not the New Axis is the most formidable military competitor that the U.S. and its allies have ever faced. The original Axis was certainly fearsome, and the USSR had tens of thousands of nuclear weapons ready to roast the world at the touch of a button. But I think that the comparisons above show that the New Axis certainly represents an economic competitor like none the U.S. and its allies have ever faced. And the reason is simply China. Russia is mainly a gas station with nukes. But China has three things going for it:
- China has far, far more workers than the original Axis or the Soviet bloc.
- China has advanced manufacturing technology that probably rivals the original Axis in relative terms, and far exceeds the Soviet bloc.
- China has the world’s largest manufacturing cluster, making it the “make everything country”, which neither the Axis nor the USSR managed to be.
He continues…
This is simply a unique situation in modern history. The Industrial Revolution began in Europe and spread to the U.S. and the East Asian rim. The aftermath of WW2 saw central Europe and the East Asian rim incorporated into a U.S.-led alliance that dominated global manufacturing in a way that the communist powers could never threaten. Now, with the rise of China, world manufacturing is divided roughly in two.
Much of the War Economy in the U.S. (and its allies) will therefore be about rediscovering the manufacturing capabilities they neglected during China’s meteoric rise…
“The War Economy, Part 2: Sizing up the New Axis“
The Brookings Institute recently published its own (and very resonant) assessment of U.S. readiness, “The Sources of Societal Competitiveness.” And Nathan Gardels followed with a trenchant reminder that consensus on national security is a double-edged sword…
In the end, the enduring vitality of any country must be built primarily on the wherewithal within, not on the shaky foundation of menacing adversaries without. George Kennan, architect of the containment strategy against the Soviet Union, understood that lasting vigor comes from the inner confidence of a nation that thrives on its own terms and doesn’t rely on enemies to hold it together. External threats may spur a welcome renewal, but it will remain fragile if that becomes its purpose.
Kennan believed correctly that the West would ultimately be victorious in the Cold War not on some battlefield but through the organic strength of a robust society that no adversary could match.
The same perspective applies today with respect to the challenge of assertive autocracies, especially China. The most important contribution democracies can make to fostering more freedom in the world is to demonstrate through their own institutional integrity and innovations how a governing consensus can be reached by non-authoritarian means.
“When Domestic Unity Is Built On Foreign Enemies“
We live in interesting times. Eminently worth reading all of the links in full.
* J.R.R. Tolkien, The Fellowship of The Ring
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As we return to first principles, we might recall that it was on this date in 1945 that the Japanese Foreign Ministry sent telegrams to the Allies (by way of Max Grässli at the Swiss Department of Foreign Affairs ) announcing that Japan would accept the Potsdam Declaration. The surrender of the Empire of Japan was announced by Japanese Emperor Hirohito on 15 August and formally signed on 2 September 1945, bringing the hostilities of World War II to a close.
“Who is to say plutonium is more powerful than, say, rice?”*…
In the late 19th century, a mysterious illness plagued the upper reaches of Japanese society…
In 1877, Japan’s Meiji Emperor watched his aunt, the princess Kazu, die of a common malady: kakke. If her condition was typical, her legs would have swollen, and her speech slowed. Numbness and paralysis might have come next, along with twitching and vomiting. Death often resulted from heart failure.
The emperor had suffered from this same ailment, on-and-off, his whole life. In response, he poured money into research on the illness. It was a matter of survival: for the emperor, his family, and Japan’s ruling class. While most diseases ravage the poor and vulnerable, kakke afflicted the wealthy and powerful, especially city dwellers. This curious fact gave kakke its other name: Edo wazurai, the affliction of Edo (Edo being the old name for Tokyo). But for centuries, the culprit of kakke went unnoticed: fine, polished, white rice…
The fascinating tale of kakke, and of the determined doctor who found a cure: “How Killer Rice Crippled Tokyo and the Japanese Navy,” in @atlasobscura.
* N.K. Jemisin
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As we opt for brown rice, we might recall that it was on this date in 1937 that Marcel Boulestin became the first “television chef” when he hosted the first episode of the first TV cooking show, the BBC’s Cook’s Night Out. A successful chef, restaurateur, and cookbook author, Boulestin helped popularize French cuisine in the English-speaking world (and was an important influence on Elizabeth David, and in turn, on Julia Child).
“Americans consider the United States an exceptional nation; so do the Chinese people think of their Middle Kingdom”*…
Each of the last five years, Dan Wang, a Canadian-raised, U.S.- (college) educated technology analyst living in Shanghai, has written a year-end letter. This year’s missive recounts a long bicycle trip through China, explains why Cosi Fan Tutte is (he argues) Mozart’s best opera, and shares the best books he read in 2021 (including one of your correspondent’s all-time faves, Vernor Vinge’s A Fire Upon the Deep). But mostly, he ruminates on China and on its relationship with the U.S…
Internet platforms aren’t the only industries under suspicion. Beijing is also falling out of love with finance. It looks unwilling to let the vagaries of the financial markets dictate the pace of technological investment, which in the US has favored the internet over chips. Beijing has regularly denounced the “disorderly expansion of capital,” and sometimes its “barbaric growth.” The attitude of business-school types is to arbitrage everything that can be arbitraged no matter whether it serves social goals. That was directly Chen Yun’s fear that opportunists care only about money. High profits therefore are not the right metric to assess online education, because the industry is preying on anxious parents while immiserating their children.
Beijing’s attitude marks a difference with capitalism as it’s practiced in the US. Over the last two decades, the major American growth stories have been Silicon Valley (consumer internet and software) on one coast and Wall Street (financialization) on the other. For good measure, I’ll throw in a rejection of capitalism as it is practiced in the UK as well. My line last year triggered so many Brits that I’ll use it again: “With its emphasis on manufacturing, (China) cannot be like the UK, which is so successful in the sounding-clever industries—television, journalism, finance, and universities—while seeing a falling share of R&D intensity and a global loss of standing among its largest firms.”
The Chinese leadership looks more longingly at Germany, with its high level of manufacturing backed by industry-leading Mittelstand firms. Thus Beijing prefers that the best talent in the country work in manufacturing sectors rather than consumer internet and finance. Personally, I think it has been a tragedy for the US that so many physics PhDs have gone to work in hedge funds and Silicon Valley. The problem is not that these opportunities pay so well, rather it is because manufacturing has offered dismal career prospects. I see the Chinese leadership as being relatively unconcerned with talent flow into consumer internet and finance; instead it is trying to fashion an economy in which the physics PhD can do physics, the marine biology student can do marine biology, and so on.
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An important factor in China’s reform program includes not only a willingness to reshape the strategic landscape—like promoting manufacturing over the internet—but also a discernment of which foreign trends to resist. These include excessive globalization and financialization. Beijing diagnosed the problems with financialization earlier than the US, where the problem is now endemic. The leadership is targeting a high level of manufacturing output, rejecting the notion of comparative advantage. That static model constructed by economists with the aim of seducing undergrads has leaked out of the lecture hall and morphed into a political justification for only watching as American communities of engineering practice dissolved. And Beijing today looks prescient for having kept out the US social media companies that continuously infuriate their home government.
A willingness to assess foreign imports as well as a commitment to the physical world combine to make me suspect that Beijing will not be friendly towards the Metaverse. Already state media has expressed suspicion of the concept. If the Metaverse will exist in China, I expect it will be an extremely lame creation heavily policed by the Propaganda Department. Xi’s speech on common prosperity in October noted that: “The rich and the poor in certain countries have become polarized with the collapse of the middle class. That has led to social disintegration, political polarization, and rampant populism.” The Metaverse, which represents yet another escape of American elites from the physical world, can only exacerbate social differences. It is too much of a fun game—like cryptocurrencies—played by a small segment of the population, while the middle class dwells on more material concerns like paying for energy bills. It might make sense for San Franciscans to retreat even further into a digital phantasm, given how grim it is to go outside there. But Xi will want Chinese to live in the physical world to make babies, make steel, and make semiconductors.
The Chinese state has long placed greater value on resilience over efficiency, which has dragged down its performance on metrics that economists care about, like return on equity. In my view, that is as often an indictment of the economic profession. The US focus on efficiency has revealed the brittleness of its economy, which has neither the manufacturing capability to scale up domestic production of goods nor the logistics capacity to handle greater imports. Decades of American deindustrialization as well as an aversion against idle capacity has eroded domestic manufacturing….
Since the US government is incapable of structural reform, companies now employ algorithm geniuses to help people navigate the healthcare system. This sort of seventh-best solution is typical of a vetocracy. I don’t see that the US government is trying hard to reform institutions; its response is usually to make things more complex (like its healthcare legislation) or throw money at the problem. The proposed bill to increase domestic competitiveness against China, for example, doesn’t substantially fix the science funding agencies that are more concerned with style guides than science; and the infrastructure bill doesn’t seem to address root causes that make American infrastructure the most costly in the world. Congress is sending more money through bad channels. That’s better than nothing, but the government should attempt to make some bureaucratic tune-ups.
The US is ahead of China on the sort of mathematical economics that win Nobel Prizes. But China is ahead of the US on the actual practice of political economy. One study I enjoyed this year noted that the Chinese government sends more jobs through state-owned enterprises to counties with greater labor unrest. I wonder how different the US would look today if the government did more to help workers. The US critique that “China stole the jobs” looks instead like a critique of its own economic system. China’s main activity was to invest in domestic competitiveness, thus becoming attractive to American firms, which relocated operations there. Meanwhile, the federal government did little to help disaffected workers at home. If there was a problem with this arrangement, fault should be on the US government for failing to restrain its firms or retrain its workers…
There’s so much more– including an acute look at (at least some of) the risks that China faces and the weaknesses (many self-inflicted) with which they have to cope: “2021 Letter,” from @danwwang. Eminently worth reading in full.
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As we take stock, we might recall that it was on this date in 1941, in the midst of the China resistance to the Japanese invasion during World War II, that Chiang Kai-shek ordered Mao Tse Tung’s Communist Party New Fourth Army disbanded on January 17, and sent it’s commander Ye Ting to a military tribunal. It was the end of any real cooperation between the Nationalists and Communists.
Mao quickly reorganized the force under a new commander and continued to fight the Japanese– though as guerillas, independent of Chiang Kai-shek’s command. When Japanese surrendered and withdrew, the Nationalists and Communists turned on each other.
“Gentlemen, you need to add armor-plate where the holes aren’t, because that’s where the holes were on the airplanes that didn’t return”*…
Allied bombers were key to Britain’s air offensive against Germany during the second world war. As such, the RAF wanted to armour their bombers to prevent them from being shot down. But armour is heavy – you cannot reinforce an entire bomber and still have it fly. So statistician Abraham Wald was asked to advise on where armour should be placed on a bomber.
After each wave of bombing, every returning aircraft was meticulously examined and a note was made of where each aircraft had sustained damage by the Germans. The image [above] conceptualises what Wald’s data might have looked like visually.
So what was Wald’s advice? Where should armour be added?
He essentially advised the RAF to add armour to places where you do not find bullet holes. Wait… what?!
Wald wisely understood that the data was based only on planes that survived. The planes that did not survive were likely to have sustained damage on the areas where we do not observe bullet holes – such as around the engine or cockpit…
Making better decisions: one of the most prevalent– and insidious– forms of selection bias, survivorship bias, illustrated: “How to armour a WWII bomber.”
See also: “How to avoid being duped by survivorship bias.”
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As we think clearly, we might send productive birthday greetings to W. Edwards Deming; he was born on this date in 1900. An engineer, statistician, professor, author, lecturer, and management consultant, he helped develop the sampling techniques still used by the U.S. Department of the Census and the Bureau of Labor Statistics.
But he is better remembered as the champion of statistically-based production management techniques that first gained traction in post-WWII Japan, where many credit Deming as a key ingredient in what has become known as the Japanese post-war economic miracle of 1950 to 1960, when Japan rose from the ashes of war onto the its path to becoming the second-largest economy in the world– through processes shaped by the ideas Deming taught. In 1951, the Japanese government established the Deming Prize in his honor.
While his impact in Japan (finally) brought him to the attention of business leaders in the U.S., he was only just beginning to win widespread recognition in the U.S. at the time of his death in 1993.
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