Disaster profiteers

A few days after the devastating earthquake and tsunami destroyed cities and killed thousands across northern Japan, I got a note through LinkedIn from an acquaintance in Canada that seemed innocuous enough.

"Hi Alex,

I and a friend in China would like to supply the Japanese government with goods for their relief effort. I wondered if you have any Japanese government contacts who can either contract with him directly or steer him in the right direction."

At the time, I was touched at the number of emails I was receiving from friends around the world who knew my connection to Japan and wanted to help the hundreds of thousands of people whose homes had been destroyed and were now huddled in shelters without adequate food, heat or medicine.

The Canadian's response to my email saying I would do what I could to help was straightforward. He looped in his friend, whom we'll call Kevin, in China, and outlined what they might be able to provide: blankets, food, all "on short notice". That should have been my first clue - of course it's on short notice. These are donations to a disaster zone.

Then Kevin wrote.

"Hi Alex,

i can provide both canned and bulk packed food stuffs. as for the logistics i need to get a better idea of the conditions of the ports as well as the airstrips in the affected zones, if necessary i can go myself to asses this. as for the issue of the jammed roads i can assist with the arrangements and logistics for temporary landing zones for aid helicopters and coordination of air drops, as well as work out a means of opening the roads and coastal shipping channels so that we may move supplies through and around japan. As [the Canadian] mentioned i am available on short notice to meet with Japanese authorities, i can be in japan by early evening if necessary so that we can begin to coordinate our part for the relief effort."

I was a little taken aback by Kevin's note - he needs to "get a better idea of the conditions of the ports"? didn't he have a television? - but this still didn't set any alarm bells ringing. As I had done with other requests, I sent out a note to a network of friends in Japan and the US asking for contacts in Japan who could help facilitate what sounded like a generous donation of much-needed supplies, from China no less. I even introduced him to a Japanese businessman friend who had found a way to donate the products his company made and get them up to the quake zone.

Kevin then emailed my friend:

"Hi Daisuke,
>>
>> firstly i would like to commend you on your tremendous efforts thus far,
>> it is rare to meet people such as yourself and i only wish it could have
>> been under better circumstances. If you will be willing to work with me,
>> and help put me in contact with the right people to organize large scale
>> shipments of supplies to Japan i can also assist you with the logistical
>> aspects of distributing the goods to all the victims. first i must come to
>> japan to asses the status of the air strips, roads, and ports: i will need
>> your help to gain permission from the local authorities to travel to these
>> areas. at the same time i can arrange for fast shipments of goods such as
>> blankets, clothes, shoes, batteries, flashlights, and raw dried foodstuffs
>> such as rice, red beans, and dried corn. I will need your assistance with
>> finding out the budget for these supplies as well as arranging the
>> contracts etc. depending on the status of the ports and air strips i will
>> determine the quickest way possible to get goods into the country. if you
>> will be able to help me arrange a meeting with some of the coordinators of
>> the relief effort i can be on the next flight to japan. once in japan i
>> will be able to better coordinate the air drop sites as well as the
>> alternative routes for getting supplies to victims in all areas. please
>> feel free to contact me any time day or night ..."

It was only with this email that Kevin's real game became obvious to me. Kevin and the Canadian saw the earthquake as a perfect business opportunity for their sourcing company. Though they clearly had no experience in selling goods into a disaster zone (if they did, they never would have asked me for help) they were perfectly happy to monopolize the time of local officials, the military and others who were working around the clock to help - all in order to make a quick buck. This, while people who actually knew what they were doing were rushing to get donations to the affected areas.

When I wrote Kevin to ask if this was his intention, he insisted that he was not trying to make any money at all, but that this was "billions of dollars worth of supplies" that needed to be paid for, and the Japanese government had the money. He even thought this a good moment to plug his own business. "now," he wrote, "i am able to get the cheapest prices and the quickest ship dates ...".

Yes, after a decade and a half of writing about business, even having spent time working with hedge fund managers, I was still surprised at the complete absence of a moral calculus here. I told Kevin and the Canadian that I was only helping people who were making donations, not trying to profit from disaster.

A week later, I received an email from the Canadian with the subject line "You are right". As an elected local official, he said, he proposed a fund-raising event to offer donations to Japan. Would I be interested to help?

Would you have helped him?

State in statis: Japan

In Osaka again for Yomiuri's Wake Up Plus!, and once again the topic of the hour is Japanese politics. I suspect most people's eyes glaze over at those two words (with good reason - Japanese politics have almost no international relevance anymore) but as often happens, I have lots more to say that I didn't get to say on the show.

Today's debate focused on the tough year ahead for the Kan administration. It's hard to find people who say nice things about Naoto Kan and his team - even the show's makeup artist was furious. Kan is trying to push through several hard policies at once: a tax hike to cover mounting social insurance costs, entry into the free trade agreement known as the Trans-Pacific Partnership (TPP) and the agricultural policy changes it will necessitate, and a cabinet reshuffle. And of course amendments to the alliance with the US.

The things that struck me about the debate is how infrequently Japanese politicians (including members of the administration) use numbers to justify their policies. There is so little persuading the public here compared to the US - politicians and cabinet ministers all appear to be talking to each other, rather than to the public. And nobody uses numbers to explain precisely what the costs and benefits of a program (like TPP or the consumption tax hike) are.

Another thing that stands out is how Japan's frequently changing administrations (Kan's most recent cabinet reshuffle was in September last year) take a toll on the country, both domestically and internationally. Domestically, constant change contributes to a commonly held public perception that all politicians are equally corrupt and useless. Internationally, these changes make Japan harder to read and more irrelevant. If there are different people in power all the time, how can Japan craft a solid vision on any foreign policy issue and make its voice heard overseas?

The last thing that everyone - even politicians themselves - seem to agree on is that Japanese politics doesn't attract the most promising members of society. Smart, ambitious, public-minded Japanese people these days don't go into politics. They go into business. Politics has such a bad reputation - and so demonstrably doesn't change anything that ails Japan - that clever young people don't even consider it as a career.

Sometimes I wonder whether Japan doesn't need a crisis (domestic or abroad) to wake up to the size of its problems. I wouldn't wish a major crisis on any country, but for a state in stasis, a wake-up call might be just what Japan needs to save itself.

Japan's Pentagon Papers

I'm in Osaka for Yomiuri TV's Wake Up Plus! again, and the theme of the hour is the posting on You Tube by a member of the Japanese Coast Guard of the entire video of the September collision between a Chinese fishing trawler and a Japanese Coast Guard boat.

Yomiuri TV is playing a central role in this story, because the Coast Guard member, who is male and 43 but whose name is not yet public, recently called YTV and told his side of the story before coming clean to his boss. The Coast Guard member (whom I'll identify by the handle he used on You Tube, sengoku38) is now in his second day of questioning, though he has not been arrested.

There are lots of issues wrapped up in this story, but a few thoughts:

1. This story has the potential to become Japan's Pentagon Papers. While Americans and Europeans are familiar with WikiLeaks, Japan hasn't had to contend with this kind of leak before.
2. If I were a Japanese potential whistle-blower, this event would give me a degree of confidence. My hope is that there will be a trickle-down effect in other areas, such as companies and government organizations, where Japanese come forward with evidence of misconduct.
3. Acting against point two is that the Japanese public, from what I can tell, is not entirely supportive of sengoku38. Many of the people YTV found on the street were critical of sengoku38's decision to release secret information (though some questioned why the video itself should have been a secret).
4. There are a lot of contradictions in the Japanese government's response to the collision, as the lovely Takenaka Heizo, who sat to my right, pointed out. They arrested and detained for two weeks the captain of the Chinese trawler, and insisted they had grounds to do that. Then they set him free, all the while insisting they had video of the event that would make the situation clear. Instead of showing this video to the public, they showed a brief portion to Diet members. Now they are questioning for two days the man who has from the beginning said he posted the video on You Tube. How could there possibly be two days worth of questions in this situation?
5. Whether or not sengoku38 is arrested appears to be a political decision. The Kan government is watching public opinion closely. There is no consensus among lawyers and other academics I have seen interviewed on whether sengoku38 broke laws.

Initially, I felt this story was another distraction, another example of Japanese politicians playing domestic games with international consequences. To a certain extent, I still agree with that, but I am more in favor of a rigorous domestic debate about this story. As Jeff Rosen, a professor at George Washington University and an expert in this area, put it to me in an email overnight: "I hope this case will provoke widespread reflection in Japan about the values of free expression versus the government's interest in avoiding embarrassment in foreign policy: in practice, plugging leaks is difficult today, even if the Japanese government wants to take a hard line."

This will not be the last time a Japanese person leaks politically sensitive information to You Tube. A new era has begun, a little later in Japan than elsewhere.

The mummification of Japan

I'm in Osaka this weekend to appear on Yomiuri TV's Wake Up Plus, that rare beast: an intelligent TV show. The story of the moment in Japan is the nationwide hunt for missing centenarians, following the discovery of a modern-day mummy in his bed, 30 years after his death. Officials suspect that a relative did not notify the government of his passing in order to receive the man's benefits.

For the moment, the debate in the Japanese media (including Wake Up Plus) is focused on three main elements: the government's failure to detect which of its benefit-receiving citizens are living and which are dead; the Japanese tendency to leave family matters to the family; and the fact that Japan's privacy laws hinder investigations into this kind of fraud. To me, the tenor of the debate itself reflects Japan's self-flagellating tendency to blame the government and politicians in the first instance.

The fact is that these missing pensioners are a reflection of how deeply and painfully Japan's long stagnation has affected its oldest and youngest citizens. Trite as it sounds, I'll recount a conversation I had with a taxi driver here in Osaka yesterday: at 65, he receives about US$1200 a month in pension benefits from the government. His rent accounts for half of this, and after utilities, his cell phone bill and food, there isn't much left. So he continues to work as a taxi driver, taking home about $1800 a month. (One might wonder how he is allowed to work while receiving public benefits, but the benefits, like the minimum wage, were not meant for people to depend on entirely, I believe.) $36,000 a year isn't bad by global standards, but consider that this man might live for another 30 years and this is as good as it will get for him. While he is clearly putting money aside for his retirement, he expects he will have to move into a smaller apartment when he retires. This is not the fancy globe-trotting retirement that I, at least, had imagined for Japan.

While we hear much talk about China getting old before it gets rich, Japanese people are getting poor before they get old. Younger Japanese will not receive the $1200 a month that that taxi driver gets; they will likely receive much less.

Putting aside the fact that pension fraud is a crime, one larger issue behind these missing old people and their mummified remains is that younger Japanese need to rely on their parents' retirement benefits because the economy is not providing sufficient job opportunities.

Every trip to Japan is more depressing than the last these days; I stay in hotels that will, without the help of big spending Chinese tourists, likely lay fallow, listen to music from pianos that play themselves, pass through ghostly tourist districts designed for a wealthier country. Japan is no longer the country it once was. Policymakers in other rapidly aging countries (and those that struggle to create new jobs, like the US) should take notice.

Beyond grass-eating men and meat-eating women

I've been doing some research on Japanese social trends, and came across a fascinating article that I thought was worth sharing. The piece, by the astute social commentator Maki Fukasawa (who coined the term "grass-eating men"), is in Japanese, so I will summarize it here.

Fukasawa's piece, part of a column she does for Nikkei BP's Associe, a smart Japanese website aimed at working women, is ostensibly about the gap in male and female views on marriage, but it covers a lot more territory that has relevance to anyone interested in the Japanese economy. (As an aside, why are so many women's sites in America so trivial and fluffy?)

It won't be surprising for anyone who has been to Japan and been served tea by a female secretary before meeting with a male executive that Japanese women earn, on average, just over half of what men make. What was new to me was that Japanese women's average income peaks in their early 30s at just under US$34,000, and falls for the rest of their lives. By their early 50s, women are earning just US$30,000. Japanese men, by contrast, see their income rise over the same period. Men's income peaks in their early 50s at more than twice what women the same age earn, at almost US$75,000. Unsurprisingly, women represent just 10 percent of Japanese managers, compared with more than 40 percent in the US, according to Fukasawa.

These data reflect the "M-pattern" of Japanese female workforce participation, which climbs in their 20s, falls in their 30s and picks up again in their 40s. Lest you think that this is changing, Fukasawa reminds us that the M-pattern has been in place, essentially unchanged, since the 1980s. While clearly women in many countries struggle to balance work and home life, Japanese women are handicapped in their advance in the workforce by local prejudices (many carried by women themselves) but also the ridiculous shortage of nursery school places. There are 20,000 children on waiting lists for day-care centers in Japan. Only 28.5 percent of women with children under three work; by the time these kids are 6, 48.2 percent of their mothers work.

And I'd be willing to bet that many of those women aren't working full time. Women, like young men, are much more likely to be on non-staff contracts. Women accounted for 30 percent of Japan's non-staff workforce in the 1980s. Today, they account for more than 50 percent. I suppose you could argue that this reflects a higher total workforce participation for women today.

Fukasawa argues that these data support why men and women in Japan are so far apart on marriage. Women, including the "meat-eating" hunter women Fukasawa talks about, are very keen to get married, but men are shying away from this rite of passage. (This might explain why 25 percent of first children in Japan are conceived out of wedlock, according to Japanese government data, and why wedding planners now cater to pregnant brides, something that would have been unheard of as a business model a decade ago.)

The problem isn't hidden, Fukasawa says. It's obvious. That's why women care so much more about marriage - it's their best shot at financial security. And it's why men, concerned about being laid off, are even more reluctant to get married, since that means supporting another person (and likely a child as well) economically for the rest of their lives.

Japan vs China, take one

I've been in Shanghai and Tokyo this week giving speeches and presentations, and moving between these two cosmopolitan but very different cities has left me with plenty of food for thought. To start: while Japan has in many ways become an easier place for foreigners to navigate than it was a decade ago, it still has a long way to go. For example: unless you have a business here that can keep a mobile phone contract rolling over every month in someone else's name, you have to rent a phone on arrival at the airport. To get a local mobile number as a foreigner in Japan, you have to have a foreigner registration card. (By contrast, in China, like most of the world, you just show up, buy a local SIM card, and pop it in your phone - in China, SIM cards are sold at newspaper kiosks on street corners.) I'm going to go out on a limb on this one and blame Japanese bureaucrats for this situation. Another problem: Japanese banks, not so friendly to foreign cards. American friends visiting Tokyo this summer could not believe how difficult it was to find an ATM machine that would accept their cash cards. Because I used to live here, I know where the Citibanks are, so I don't normally spend much time thinking about this problem, but it's silly. It's much easier to find a place to withdraw money in Shanghai than Tokyo. Finally, getting paid for services rendered in Japan without a Japanese bank account is not easy. Like a street performer, I am paid in cash for my speeches and TV appearances. Wiring overseas is too complicated at Japanese banks, or so my clients tell me. Banking and telecoms, two service industries that should, in theory, be more international in the country with a longer experience with capitalism and global commerce, illustrate perfectly how Japan has been happy to keep itself at arm's length from the rest of the world. Granted, accessibility to foreigners is not a perfect index for measuring a country's prospects - but how could being more open to skilled foreigners be a bad idea for Japan?

Japan's herbivores

I'm interested in Japanese youth - particularly how they consume (see my Atlantic piece on that subject), but also how they think. The social changes in Japan are fascinating right now - young Japanese I talk to have a completely different approach to life than their parents. What kind of country does that create? Is it one where people are more free to pursue whatever lifestyle they want, where they feel less judged not following the traditional path of cram school-university-job-marriage-children-30 years of long hours-retirement? I'm also interested in how this generation is pursuing more inwardly-focused hobbies - a lot of online games, of course, but also Japanese traditional crafts, and domestic travel rather than the status-trip to Honolulu. One Japanese man told me that he and his friends have no interest in holding down regular jobs - their parents will support them, and any extra money they need they can earn easily, by working at convenience stores or in Japanese pubs. Another swathe of young Japanese earn their keep by selling manga to each other in Akihabara and elsewhere. Anyway, I've written a piece about part of this phenomenon for Slate here. I'd be interested to hear your thoughts. (Image by Robert Neubecker courtesy of Slate.)

Thoughts on China from Japan

I've been speaking to Japanese groups (a company, a government agency, and a group of ordinary people) this week and have found some comments from the audience really interesting. After my presentation, one man asked a really great question: when will most ordinary Chinese feel as concerned about these issues - of occupational disease, for instance - as you do? He argued that Japan was only able to deal with its own occupational diseases that resulted from its rapid industrial growth when a majority of ordinary Japanese outside the factories became concerned about their fellow Japanese suffering from these horrible diseases. When will more Chinese start to care enough about this to demand better conditions in factories? Another question came from a man who was concerned about product safety, in particular the safety of China's food exports. He said he understood that improving the food supply chain would take time, but he asked: while China works on this problem, what should we do? We can't afford to wait for safer food. My view was that one thing Japan could do was to offer to share more of its experience in regulating and inspecting the food supply chain (of course, Japan, like every other country, doesn't have a perfect track record in food safety). Another thing we can all do is to press companies to be more up front about exactly where our food and other products are coming from, and under what conditions they are made. Still, the question remains about China's path toward resolving these issues.

Congressional testimony and The Swan

I'm in Osaka this weekend to appear on Yomiuri TV's Wake Up! tomorrow morning. My wandering around the business district near my hotel this afternoon produced lots of thoughts about Japan (do I really need three people doing my hair simultaneously in a country with relatively high wages?) but more on that later. Back in my hotel, in between watching snatches of a Japanese version of The Swan (where it's okay for the host to tell a fat guest who was bullied into adulthood for her weight and looks "don't you think you should just lose some weight?"), I have realized I never posted my Congressional testimony before the US-China Economic and Security Review Commission. In case you missed it in the last sentence, here it is. More on Wake Up! tomorrow after I finish the show.

Niseko!

This is totally unrelated to China, manufacturing, or anything else I normally write about here, but I had to post this picture. This is me and Colin in Niseko last week.

Japan's downward spiral

Tamamoto Masaru, a senior fellow at the World Policy Institute, has a great op-ed in yesterday's New York Times. He argues that Japan has become a pyschological mess, touching on some of the issues that have most fascinated me recently - the country's failure to develop its own vision of its future, the reliance on Western models, the deeper malaise affecting ordinary Japanese. The point he makes about people's reliance on government to solve their problems is one that I hear often from Japanese friends, and one that came up in my conversation with a taxi driver in Sapporo over the weekend (I know, the taxi driver conversation is such a cliche, but this guy was unusually interesting, I swear). I've posted a link about this on my LinkedIn page and got a surprising amount of interest, so to summarize his argument: Hokkaido's financial resources have been severely depleted - remember Hokkaido Takushoku Bank, which went bust 12 years ago). Companies from the main island of Honshu that had branches in Hokkaido are shutting them down in this recession. And pillar industries like agriculture and commercial fishing are not faring well. The government's response for years has been to launch big expensive projects, particularly in tourism, but in this man's opinion, they never followed up effectively. They left them half-done. What is needed, this man said, was private investment, good corporate leaders who have a vision and are motivated to follow through. This lack of leadership is certainly something I remember from my days in Japan. And it's an interesting comment as people hope for public spending to arrest, if not reverse, the global economy's spiral.

Companies: Employment is your #1 job

I'm in Tokyo this week, and it's fascinating to see how the Japanese are responding to the global economic downturn. This morning, one of the Japanese Sunday morning talk shows was focused on the social consequences of Japan, Inc's decision over the past several years to reduce labor costs. With nearly 40% of Japanese employees now working in non-staff jobs (including my graceful, thoughtful new doctor friend, Sugiyama Saiko), Japan has broken the social contract it once had with its workforce. The businessman they interviewed on the show said emphatically that Japanese companies, under pressure from globalization, had started to care too much about shareholders, but that this era was now over. Companies needed to care about their employees, their customers AND their shareholders, he said. A primary duty of a company should be to employ people, he said. I have never known Japanese companies to care much about their shareholders, but in this era of mass layoffs, when our consumption-driven model has collapsed into a paradox of thrift, it's certainly food for thought.

The rise of factories that can say no

Ahead of Nikkei BP's publication of The China Price's Japanese language version in late November, NB Online, the online version of the excellent magazine Nikkei Business, is running a series of articles about the situation on Chinese factory floors today. The first story, which focuses on the rise of Chinese factories that can say no, soared to the "Most Read" category on their website on the first day of publication and remains there today. Read or at least see the story - and check out an extremely unflattering photo of me - here.