Peter Tasker on Japan

[Mulboyne]

[Captain Japan]

Seeing Taro's post on Carrefour reminded me of some comments from old Japan hand Peter Tasker.

And let's not forget Tasker's Samurai Boogie.

[Mulboyne]

Here is Peter Tasker's response to Bill Emmott's piece. Again. no links.

[SIZE="3"]Japan's Assertion in the US-China Equation -- Yasukuni & Whaling [/SIZE]

I would like to comment on Bill Emmott's excellent piece on Japan and add a few thoughts of my own. I agree with Bill that the disasters and disappointments of the "lost decade", as the Japanese call the 1990s, are not a default setting for Japan nor a useful guide to the future. Rather they resulted from a perfect storm of collapsing asset markets, policy paralysis, external shocks, and outdated financial practices. Since many of the specific factors that contributed to Japan's long malaise have either run their course (asset deflation) or been remedied (mark-to-market rules, stricter bank supervision), it is reasonable to expect sustainable improvement in Japan's economic performance from now. Indeed it is a measure of how low expectations have fallen that Bill's well-balanced views are taken as outspokenly optimist here in Japan.

If Japan's economic fundamentals do improve along the lines that Bill describes, then its global presence and self-confidence will recover as well. What does that mean for the overall balance of power in the region? Here I'd like to offer a few thoughts for discussion:

• Firstly, there will be a change in Japan's relationship with the US from protectorate status to active ally; and
  
• Secondly, the Japanese diplomatic posture will shift from unquestioning acceptance of the global consensus to prickly self-assertion.

In both cases the driving force is the rise of China.

The recent controversies about Yasukuni Shrine and whaling are examples of what to expect. Many foreign observers are bewildered by what they see as Japan's squandering of soft power resources (international goodwill). In my view, Japan is using these small symbolic issues in a rational way that will serve its long-term interest in the geopolitical poker game that lies ahead.

US-JAPAN RELATIONSHIP

Japan has not been confronted by any strategic choices since the end of the second world war. For the first five years it was under US occupation. After that, until the end of the Cold War, it benefited from an unspoken bargain with the US. In return for a security umbrella and access to the richest consumer market in the world, Japan provided the forward bases which allowed the US to confront the Soviet Union's Pacific flank.

All this should have changed with the collapse of the Berlin Wall, but Japan's economic difficulties gave it little breathing space to deal with wider strategic issues. Only now Japan is waking up to the new world in which it finds itself and becoming aware that it has options which it never had before -- and that the US has those too. Thus the ambiguity and tension of the Japan-US-China triangular relationship.

Some nationalists, such as Governor of Tokyo, Shintaro Ishihara, favour a Japanese Gaullism which would take Japan out of the US alliance. Others have favoured an Asia-first strategy which would prioritize economic ties with China.

My view, as outlined above, is that the congruence of interests between Japan and the US is now so strong that the relationship will strengthen considerably over time. This congruence has two key aspects -- economic and geo-political.

Economically Japan and the US need each other. Japan has a structural surplus of savings which finances a significant portion of the US current account deficit. This surplus has been a fact of life for the past twenty five years and will remain so for the foreseeable future.

In the 1980s, Japan's trade surplus was much larger than its current account surplus, as there were constant deficits on invisibles. Last year the trade surplus accounted for just half of the current account surplus; the rest is financial income, mainly coupon payments on Japan's stock of US bonds. It is almost impossible for the Japan's current account surplus to disappear without massive appreciation of the yen sufficient to drive the trade account into deep deficit. This would not be in the interests of the US or Japan and is, in my view, despite the dire warnings we have been hearing for more than a decade, most unlikely to happen. Furthermore, the Japanese government, with the approval of influential politicians of all parties, is about to implement a multi-year programme of tax hikes and expenditure cuts which will maintain, perhaps even increase, the savings surplus. In effect, Japan and the US have been operating a monetary union. When US interest rates were super-low in 2003/4, it was successfully defended by the Japanese ministry of finance, without a peep from the US authorities. Now that US interest rates are back to sensible levels, private sector capital flows have resumed normal service.

The strategic aspect of the US-Japan relationship is simple -- the need to balance and/or constrain the rise of China. We all hope that China's rise will be peaceful, but history tells us that a) countries in a headlong rush to development have intense boom-bust cycles, and b) political stability is tested in the bust phase, not the boom. Japan's own experience has taught it something about this subject. The Chinese political system may morph into a variation of the soft totalitarianism that accompanied the development of other east Asian economies. Then again it may not. It is too close geographically for Japan just to close its eyes and hope for the best.

Prime Minister Koizumi's decision to drive a tank through the peace constitution and send troops to Iraq is a foretaste of what is to come. Although the polls show that opinion is evenly divided on the issue, Koizumi's popularity remains high and, unlike Tony Blair, he has suffered no discernible political damage. In the coming years Japan will revise its constitution to increase its strategic latitude, increase military co-operation with the US, and alternate between good cop and bad cop in its profile towards China. The public, particularly the younger generation, will support these changes.

YASUKUNI & WHALING

Prime Minster Koizumi is usually credited with turning round the Japanese economy, but blamed for frittering away international goodwill on peculiar obsessions, such as his repeated visits to Yasukuni Shrine, where war criminals are enshrined and a newly-built museum promulgates a decidedly partial account of Japan's role in the second world war.

My view is the complete opposite. Koizumi's economic policies are not greatly different from what was served up by predecessors such as Ryutaro Hashimoto, who was prime minister in the late 1990s. Initiatives such as privatization of the Post Office have been wildly over-hyped, and anyway have made no contribution to the current economic recovery.

Where Koizumi has been a genuine innovator is in his diplomatic posture. No previous Japanese leader, not even the nationalistic Yasuhiro Nakasone, dared to confront the international consensus in the way that Koizumi has over Yasukuni. And what for? For nothing, on the face of it. Even his closest ally, the US, appears uncomfortable with the issue, to the extent that Japanese prime minister was denied the opportunity to address the Congress on his recent visit to Washington.

But that is exactly the point. Koizumi has sent a message to the world that the old post-war Japan, which nodded and smiled and did as it was told, has gone for good. To China the message is slightly different: it says the era of apologies and ODA cheques is well and truly over. At the same time he has created a diplomatic card for future use, if and when needed: we will scrap Yasukuni when you apologize for the crimes of communism; cut off support for North Korea; and stop your subs coming into our waters.

It is unclear whether these are conscious calculations on Koizumi's part, or whether he is merely surfing the zeitgeist. But he has surely sensed that in a world of strategic rivalry and tension, a reputation for nerve and defiance is much more valuable than a reputation for pusillanimity. Visiting Yasukuni is a low cost way of making the point. Having the occasional plate of whale sashimi -- slightly fatty for my tastes -- is another!

[Greji]

[I]Here is Peter Tasker's response to Bill Emmott's piece.
[SIZE="3"]Japan's Assertion in the US-China Equation -- Yasukuni & Whaling [/SIZE]

I had the pleasure of meeting him on an occasion, quite a few years back and he still remains one of my favorates among the legitimate "Japan hands", with a pretty dependable view on what is ongoing.

Did you work with him in your previous life, Mulboyne? He was in and around your old area quite a bit.

I first took notice of his expertise in the Dead Fukuzawa Society. There were a lot of talented people on that board, but I always thought he out distanced the vast majority of them.

Not too shabby, for a broker/banker wanker!

[Catoneinutica]

Tasker: "Koizumi has sent a message to the world that the old post-war Japan, which nodded and smiled and did as it was told, has gone for good."

Morita and Blinky wrote "A Japan That Can Say 'No'" about 15 years before the advent of Koizumi. But really, everyone - except, apparently, Tasker - understands that Japan has been saying "no" to the outside world since at least 1603.

Japan's autistic-child-like outbursts of misdirected nationalism have simply become more pronounced under Koizumi. It seems to have become a giant uyoku sound truck.

[Mulboyne]

I do know Peter Tasker and I think he's avoided the trap a lot of Japan hands fall into by making sure he keeps his knowledge current. He has been generally more accurate, and for longer, than other commentators.

Having said that, I'm not sure I follow him on the Yasukuni/whaling line even if his thoughts about regional politics are reasonable. As Catoneinutica points out, Japan has been saying "no" for a while - "no" to foreign imports being the main area. They may have said yes to ODA requests and picked up any tab that the US has presented them with but their interests in both are clear.

Also, Tasker thinks Koizumi gets too much credit for economic reforms which resulted from policies begun by previous Prime Ministers. By the same argument, I wouldn't credit him for Japan's stance on whaling and votebuying at the IWC since this also predates Koizumi by some time.

It may yet turn out that there is some political gain possible with these positions. Usually, however, when a nation takes on international opinion, it is because there is domestic capital to be made. The evidence of recent polling doesn't really indicate that Japanese want to eat whalemeat or want visits to Yasukuni to continue.

[aljones15]

for what it's worth, according to an article in the economist, the japanese attempts at deregulating whaling are only for non-endangered whales i.e. they're trying to allow whaling of populations that are well above qoutas.

p.s. the economist japanese blog has had a few more decent tidbits and the economist also ran an article on the japanese marriage boom and the market for "foreign ministers" that's worth reading.

all articles are behind a subscription wall
whaling article:
http://www.economist.com/displaystory.cfm?story_id=E1_SDGQQDS
marriage article:
http://www.economist.com/displaystory.cfm?story_id=E1_SDQTTRJ

also of note, immigration to Japan has increased and the country is now gaining more immigrants than losing them. I geuss a lot of teachers are becoming ministers are making big bucks.

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A

[Mulboyne]

[Mulboyne]

[Ganma]

I like this line. So true!

Japanese politics has come to resemble karaoke night, with a succession of forgettable performers each taking a brief turn on stage.

[Mulboyne]

[Fullback]

There are some of the usual vectors in this piece. One, people and society are always to blame for government "budget deficits," and two, Japan must "...concentrate on exiting deflation."

He's wrong, but Keynesians have always been, and will always be, wrong.

Who is buying these low interest bonds? The Bank of Japan. That's like me paying off my credit card debts with "Fullback" yen I just printed up on my Epson printer.

Why must Japan concentrate on exiting deflation? Deflation is the only saving grace for most Japanese these days. It hurts the bankers and those who make nothing, provide no service or contribute nothing to society as a whole - the financial carnival hucksters who trade paper.

Japan has failed to halt deflation for decades because it cannot be stopped. It's the natural order of the market because the price for everything that has fallen in price is artificially high from market collusion and market poisoning from government manipulation.

Inflation is the greatest thievery ever devised by the banks. The only people who tout inflation and call for impossible-to-obtain "growth" are the parasites of the financial industry. And the writers who parrot the party line.

[legion]

There is truth in what you say but deflation also puts downward pressure on people's wages. B to B suffers from deflation and they pass on the pain by cutting staff and wages. This in turn puts pressure on the shops to lower prices.