Matt Yglesias

Change Coming to Japan

Japan is kind of an odd duck among the world’s democracies in that they have most of the trappings of parliamentary democracy, but when all is said and done the same party always wins. Since 1955, the Liberal Democratic Party has consistently held power except for one brief 11 month spell during which an opposition coalition controlled things. But today that’s changing as the opposition Democratic Party of Japan has swept to a clear win in parliamentary elections and already controls the upper house. Yukio Hatoyama will take over as Prime Minister.

One consequence of this prolonged period of one-party rule is that the LDP is not an especially ideological political party. It’s essentially a “party of government” patronage machine that contains diverse factions and different points of view. The Democratic Party, consequently, is more of a generic umbrella opposition grouping than a clear ideological alternative. Thus the Democrats are riding in on a tide of public discontent, but don’t seem to have articulated much in the way of a policy agenda beyond the obscure issue of bureaucracy reform. The thing that strikes outsiders about Japan is that they should probably let more immigrants in but no Japanese people seem to like that idea.

Hostess Clubs in Japan

Courtney at Feministing points to a New York Times article on “hostess” clubs in Japan where, to be simplistic about it, basically you pay a premium to have young women flirt with you and also to an enlightening roundup of expert commentary on the issue.

Meanwhile, in a rare instance of core requirements paying off, in college I fulfilled my foreign cultures slot with what turned out to be an extremely interesting class taught by an anthropologist about contemporary Tokyo. One of the things we were assigned was Anne Allison’s book Nightwork: Sexuality, Pleasure, and Corporate Masculinity in a Tokyo Hostess Club. It’ll be a bit outdated by now, but it’s highly recommended. Allison is a trained and skilled academic who went undercover and worked as a hostess and is very skilled at blending her reporting with theoretically informed analysis.

In a related vein, I also highly recommend The Great Happiness Space: Tale of an Osaka Love Thief, a documentary I saw three years ago at SilverDocs. It’s about a (relatively rare) club where the genders are reversed and female clients are catered to by male hosts.

Robot Attacks Aren’t Just for Comedy

Balsta, Sweden (wikimedia)

This is mostly being played as a joke around the intertubes but obviously deadly accidents are a real issue in any industrial setting:

A Swedish company has been fined 25,000 kronor ($3,000) after a malfunctioning robot attacked and almost killed one of its workers at a factory north of Stockholm. Public prosecutor Leif Johansson mulled pressing charges against the firm but eventually opted to settle for a fine. “I’ve never heard of a robot attacking somebody like this,” he told news agency TT.

Notwithstanding Johansson’s lack of previous knowledge, but this sort of thing has happened before. Japan, where they have the most robots, is the world’s leader in robot-related accidents and even former Prime Minister Koizumi has been attacked. But this has happened in the United States and U.K. as well. On net, however, the evidence is pretty clear that the advance of robotics is making industrial accidents less common rather than more common if only because it involves fewer human beings doing work in dangerous industrial settings.

Climate Angle in Japan’s Election

One of the quirks—well, really, the quirk—of Japan’s political system is that the same party basically always wins. But it looks like that just may change. Prime Minister Taro Aso had been seeking to avoid calling an election because polls indicate the Liberal Democratic Party will lose, but after facing some local setbacks he’s decided to go call one raising the prospect that the opposition Democratic Party will take over. Brad Plumer says there’s an important climate angle here:

The likely winner of the election, the Democratic Party of Japan, isn’t exactly a “liberal” party in the American sense of the word. But it is quite a bit greener than the LDP—or at least it has been in opposition. Earlier this year, when Aso’s government announced a goal of cutting greenhouse-gas emissions 15 percent below 2005 levels by 2020, the DPJ criticized the targets as much too weak, calling instead for a 30 percent cut from 2005 levels.

Brad also offers a link to this article on robots getting laid off in recession-ravaged Japan. That seems like the kind of thing likely to lead to a robot rebellion.

Back to the Land in Japan

Hiroko Tabuchi has an interesting article in the New York Times about an element of Japan’s economic recovery program that aimed at getting unemployed young people to go work on farms. Low-immigration Japan, after all, winds up with a shortfall of agricultural workers even while the recession creates large-scale unemployment in metropolitan areas.

Of course one can’t help but wonder if it wouldn’t be smarter instead to try to tackle some of the structural issues in this area. Like all developed countries, Japan has agricultural protection policies that don’t make much economic sense. But my understanding is that Japan is the outlier in terms of going further than the United States or Europe does to try to prop up an agricultural sector that’s ill-suited to today’s realities. The ability of a structural labor shortage to coincide with high levels of unemployment seems to me to mostly just illustrate the point that the distortions involved in this make the Japanese economy less resilient than it otherwise might be.

The Need for Eurostimulus

Lest you think my concerns about Jean Claude Tricet’s too-tight monetary policy are just more left-wing lack of thrift, check out Megan McArdle agreeing with me. Meanwhile, as Felix Salmon observes the Europeans aren’t just being laggard on the monetary policy front. Laggards on monetary policy are naturally going to be laggards on fiscal policy, too. The issue, as best one can tell, is primarily Germany where they’re paranoid about inflation. German sluggishness about this is triply damaging. First, Germany is one of the world’s largest economies. Second, Germany has a huge current account surplus, so they’re much better-positioned to do stimulus than is (say) the United States. And third, Germany’s central position in Europe makes it difficult for Europe’s small countries (who collectively add up to a pretty major economy) to engage in any meaningful stimulus absent Germany leadership.

Kevin Drum remarks:

I don’t have any brilliant suggestions for getting Europe to become a little more proactive on the let’s-avoid-another-great-depression front. Just one more job for the Obama economic team to work on, I suppose. Maybe someday Treasury will actually hire someone besides Tim Geithner and we can start pushing on this a little harder than we are now.

I think it’s important to move beyond dry wit and really ring the alarm bells on this. The economy is very global, and it’s extremely difficult to see it pulling short of a depression if the European Union and Japan are twiddling their thumbs. Beyond that, if there isn’t meaningful global coordination of stimulus efforts then protectionist pressures are going to become harder-and-harder to resist in China and the United States to prevent free riding. That, in turn, would buy some short-term assistance at the cost of really hobbling the prospects for recovery down the road. Under the circumstances, it really would be nice if we had an Undersecretary of Treasury for International Affairs. In the past, the job has been held by such figures as Lawrence Summers and Timothy Geithner, so they must know some people who work in this field. And it would also be nice to see the President and the White House team more focused on this. They seem primarily interested in doing domestic political battle with the GOP over their budget proposal, which is understandable but they need to recognize that their political prospects are closely tied to the fate of the global economy and for better or for worse Trichet, Angela Merkel, Taro Aso, Nicholas Sarkozy, and Hu Jintao are more relevant to this than is Rush Limbaugh.

On a related note, a hobbyhorse of mine over the past couple of years has been the relative neglect of Europe in foreign policy conversations. There’s not that much thrilling bloodshed in Europe, but the immense wealth and productive capacity of the E.U. nations means that, in practice, the everyday lives of Americans are more impacted by political events in Europe than by events in Baghdad or Teheran.

Japan’s 20 Years in the Dolrums Highlights Need for Effective Recovery Policies

I think a lot of people have the intuition that if you see a bubble followed by a bust and a recession, that the recession is sort of “making up” for the bubble and then soon enough things will snap back onto the righteous middle path. But as Felix Salmon observes this isn’t a real mechanism:

One important lesson, here, is that it’s foolish placing much faith in mean-reversion. There’s still a feeling out there that, yes, we had a few years of bubble and exess, and surely that bubble needs to be popped, but then we can get “back to normal”. Well, it’s been 20 years in Japan since its bubble burst, and it seems further away from recovery than ever.

And note that the only reason Japan’s been able to stabilize its economy after their initial downturn is that there was sufficiently robust consumption growth outside of Japan for the Japanese to have a robust export sector. Now that non-Japanese growth is gone, and they’re looking at a annualized GDP shrinkage of over 12 percent. The Germans, who’ve had a similar-but-not-as-severe situation of slow domestic growth plus robust exports are in a similar situation. The moral of this story is that there’s no extra economy outside of the planet earth that can help stabilize us with export-led growth if the U.S., Japan, China, and the E.U. all fall into simultaneous deep recession. That’s the bulk of world output right there, and everyone else will see the value of the commodities they export drop to nothing. There’s no law of nature that says these problems need to correct themselves—policymakers in the key countries need to do the right thing, and really they all need to do it, or else the whole pattern of global growth really could go L-shaped.

AEI Scholar John Makin Calls for Bank Nationalization

This is mostly interesting because of the source’s institutional affiliation:

“I think they know how big it is, but they don’t want to say how big it is. It’s so big they can’t acknowledge it,” said John H. Makin, an economist at the American Enterprise Institute, referring to administration officials. “The lesson from Japan in the 1990s was that they should have stepped up and nationalized the banks.”

Instead, the Japanese first tried many of the same remedies that the Bush administration tried and the Obama administration is trying — ultra-low interest rates, fiscal stimulus and ineffective cash infusions, among other things. The Japanese even tried to tap private capital to buy some of the bad assets from banks, as Mr. Geithner proposed.

Yes, that AEI. It’s worth noting, as well, that Makin specifically lists the Japanese economy as one of his areas of specialty. One prominent line of argument I’ve heard against a “Swedish” solution to the financial crisis is the observation that the Swedish financial system was much smaller than the U.S. one, in virtue of the small size of the overall Swedish economy. I think this has some force. What worked in Sweden may not work in the United States. Japan, however, is much more a big economy like the United States. And what we have from there is a cautionary tale which shows that whether or not nationalization can be made to work in a big economy, half-measures definitely can’t.

Policy Solipsism: Broadband Policy Edition

If you ask me, one of the most disturbing trends in American public discourse is the incredibly provincialism and solipsism of a lot of our policy debate. The idea that other countries are doing better than we are in various ways is totally off the radar. Instead, when foreign countries are mentioned at all you get stuff like this:

“We have fundamental philosophical differences. We’re in an era of unfunded liabilities,” said John Culberson , R-Texas. “This stimulus is really a Trojan horse. It’s part of a plan that would turn the United States into France.”

France! A country so impoverished that its citizens are fleeing in droves, washing up on our shores desperate to experience the good life as it’s lived in suburban Houston.

I was reminded of that by this post from Tim Lee pointing out that broadband internet access in the United States is a lot better and cheaper than it was nine years ago so he “can’t get too upset about the possibility that in 2018 Americans might be limping along with 2 gbps broadband connections while the average Japanese family has a 20 gbps connection.” I, for one, am pretty upset about that possibility. The United States isn’t a poor country dealing with some objective shortfall of national resources. And yet across a whole variety of dimensions—from broadband speed to train quality to the cleanliness of streets to life expectancy to the crime rate—we fall far short of standards that are reached elsewhere. What we do have, on the other hand, is the richest multi-millionaires in the world. And an awful lot of people’s first instinct is to try to explain these things away or explain why it would be impossible to bring some of these quality of life features to the United States.

It seems to me people would do better to get more upset.

The Rise of the Machines

Rob Farley teams up with Josh Keating to demonstrate that the robot threat will come from the east:

And don’t let yourself become complacent with the thought that these are “good” robots either. As Chris Fabri observed yesterday:

Don’t you people read Asimov? Robots are bad for humanity, even when they are an apparent positive, and not bent on our destruction. I’m going to call it “Fabri’s Wager:” Either you 1.invent robots and they turn on you, destroying civilization, or you 2. invent robots and they eliminate the need for humans to do anything, thus effectively destroying civilization. So clearly, we should not create robots.

Exactly. Beware robots. Of course Steve Sailer thinks it’s great that Japan’s full of robots — it’s an alternative to immigration.

Big in Japan

I don’t know much about investing. I’ve generally felt that the twin pearls of wisdom that you can’t beat the market (and shouldn’t try) and then equities go up in value over the long run were good enough for me. Recent events, have, however, drawn my attention to the sad case of the Japanse stock market that appears to call at least one of these principles into question:

Megan McArdle wrote yesterday:

The Nikkei peaked at 38,915.87 on December 29, 1989. For years, it’s been a watchword warning to people who say “in the long run, stocks always go up”; in the past two decades, it has struggled back towards 20,000 several times, but never anywhere near its former peak. Today, it went even further, falling to a 26-year low. The yen has been strengthening fast against the dollar and other currencies, which is very bad news for Japanese exporters.

But, really, where does this leave the idea that stocks go up in the long-run? The weird thing about it is that though one knows Japan has had some rough economic times, the situation hardly seems as cataclysmic as the stock trends make it out to be. It’s not as if the country’s been bombed into smithereens or suffered wars and revolution. People aren’t starving in the streets. Japan’s citizens continue to enjoy some of the highest living standards in the world. They’re number eight on the UN Human Development Index. They’re ahead of France, Germany, Italy, and Spain in per capita GDP. They have the longest life expectancy in the world. In the greater scheme of things they’re doing fine. And yet the stock market — not so much.