What Hope Means in Japan These Days

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[Kyoto] – Frustrated by a system that has trapped them in decades of low to no growth, an entirely new generation of Japanese may be working with the most precious of all resources – hope.



They're taking matters into their own hands and going around the traditional Japanese way of doing things.



That's good.



The so-called "Lost Decade" is now entering its 3rd lost decade following 8-10 separate bailout failures, depending on how you count the various initiatives over the years.



Growth remains a paralyzed version of its former self with the nation's GDP roughly the size it was in 1990.


Worse, many Japanese companies like Panasonic and Sony, once at the vanguard of innovation, now find themselves scrambling to keep up with clever rivals who have taken the lead and who now threaten to push them out of the global industries they once dominated for good.



Combined public, private and corporate debt now approaches 500% of GDP.



Roughly 35% of the working population here remains trapped in arubaito, or part- time work. T hat's a far cry from the vision of lifetime employment that once dominated the corporate landscape.



Some, like Tadashi Yanai, who founded and heads the Japanese brand Uniqlo (pronounced yu-ni-klo), are deemed "young thinkers" bent on change through the sheer force of will and the economic means to bring it about. Yanai is actually 63 years old.

Speaking Truth to Power

Others are truly young, like Osaka's controversial mayor, Toru Hashimoto. At 43, he's as frank as they come in the staid world of Japanese politics where change is nearly impossible to come by.



To give you an example of what I am talking about, consider Hashimoto's recent observation that the Japanese political system is "crap." Not "difficult," not "worth consideration," not deserving of "careful thought," as would be the traditional ways the hyper- polite Japanese have expressed their opinions — but "crap" as in the four- letter variety.


When I first came to Japan in the late 1980s, such remarks would be unthinkable and the person who made them immediately banished to the fringes of Japanese society. Yet, Hashimoto is the mayor of Japan's third largest city. That, too, would have been unthinkable only a few years ago.

What's more, he's gathering allies like Tokyo Mayor Ishihara Shintaro, who stunned Japan a few days ago by resigning immediately to form a new "true conservative" political party in the interest of reformation in the upcoming December elections.

The firebrand Ishihara wants to ally with Hashimoto and another maverick named Watanabe Yoshimi, who heads "Your Party."

If you're tempted to frame this in terms of Western political elections, which require years of lead up and campaigning, don't. This is a very serious development and presents a real challenge to the status quo.

Imagine, for example, the Tea Party suddenly having one-third or more of the U.S. Electoral College votes two months before the presidential elections. That would truly be a game changer.

Or Ross Perot in his heyday teaming up with Ron Paul to play "outside the rules" by presenting a unified plan for smaller, decentralized government, fiscal responsibility, and newly revised international policies…and having a huge swath of the American voters immediately line up with them, leaving the Democrats and Republicans on the sidelines.

Here in Japan, third- party players can do something the long- dominant Liberal Democratic Party can't — actually speak in clear, well-articulated terms. Effectively, they play the role of spoiler by forcing the major parties to come to them on their terms and prompt action for the same reason.

Like our own, traditional Japanese politicians are trapped in a morass of ineffective politics bent on ensuring survival rather than the benefit of its citizens.

If Hashimoto, Ishihara and Watanabe can reach an agreement, there could be a sea change here come December with newly localized policies, changes in centralized spending, reduced central government,and foreign policies that are probably very independent of the United States.

Hope and Change in Japan

Japanese of all ages I have talked with recently in my neighborhood sense that change won't be immediate. But they are very excited by the fact that things have gotten so bad that there is actually change itself.

Younger Japanese like my niece, Natsuko, are willing to buck the system that would otherwise trap them were things not so challenging by pursuing careers with a decidedly international focus.

Today, there are tech incubators blossoming and the once overwhelming stigma of failure is falling by the wayside. My friends Masao and Hiro have both left traditional corporate Japan and are risking it all with their own ventures.

Independent thinking is being encouraged , even if only begrudgingly at the moment. Nails that stick up are no longer hammered down, to paraphrase a traditional Japanese saying that highlights the historical need to be like-minded.

Older executives like Yoshichika Teresawa, who recently retired from JETRO, Japan's external trade resource organization, are seeing a new wave of entrepreneurship take hold outside Japan's traditional corporate structure. He's cautiously optimistic that the "young people" will be able to make change where "we couldn't" politically.

I asked him what he meant by that, to which he replied, the "serious economic conditions we have lived with since the 1990s may finally be forcing change not only in the business community, but in the Japanese mind and political process, too."

And what does he think about Hashimoto's assessment that Japanese politics are "crap." Ever the gentleman, he looked at me with a wry smile and added, "not unlike the United States, eh?"

Then he added, "Henna-hito ni narimasu" (meaning roughly, we Japanese need to become "strange" by embracing new thought and discarding the previously staid old practices that haven't worked).

Indeed. Some things don't need translation.

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About the Author

Keith Fitz-Gerald has been the Chief Investment Strategist for the Money Morning team since 2007. He's a seasoned market analyst with decades of experience, and a highly accurate track record. Keith regularly travels the world in search of investment opportunities others don't yet see or understand. In addition to heading The Money Map Report, Keith runs The Geiger Index, a reliable, emotion-free guide to making big money and avoiding losses, and Strike Force, which aims to get in, target gains, and get out clean. In his weekly Total Wealth, Keith has broken down his 30-plus years of success into three parts: Trends, Risk Assessment, and Tactics – meaning the exact techniques for making money. Sign up is free at totalwealthresearch.com.

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  1. steven | November 2, 2012

    Japan is centered around the rice field; which does not necessarily support one man, one vote. A rice district may have one representative for their area. A district around Tokyo may have 10 times as many people with one representative. This has helped the LDP retain its power base.
    Rice is almost sacred in Japan. Japanese rice is considered by many Japanese to be the best rice in the world. It does taste different than other rice and is better for sushi. As a result, the price has sometimes been several times the price of rice in the world market. By resticting imported rice or keeping the price artificially high, the rice farmer is rewarded for his poitical support.
    If Japan redrew its voting districts, it might force politicians to change their priorities.
    Japanes women are extremely well educated. Their talents are underutilitized. This is a talent pool that could be more efficiently utilitilized.
    Japanese defer to their seniors. This does not foster creativity. Some new companies are breaking out of this mold. Until more do, they can continue on the same economic trajectory.
    Japananese companies followed the ideas of Demming to create enormous growth in the past. They need a new Demming to push bottom up innovation rather than top down; to maximize the use of their human capital and to push for redistricting. One major Japanese company recreated itself by retraining most of its employees to move into new business area. This model can be copied.

  2. H. Craig Bradley | November 2, 2012

    JAPAN'S BANKING MALISE DIFFERS FROM U.S.

    The President of Veribanc, Inc. , Michael M. Heller, told me recently on the phone that Japanese Bank's financial problems differed significantly from those currently experienced in U.S. Banks: The five biggest Japanese Banks had active collusion going on between their respective bank executives.

    He determined this as a result of a commissioned research report prepared for a private client. I suspect there are other differences too. The take-away is that Japan's 20 year long "lost decade" and economic malise may not accurately reflect what America should expect, or prepare for. So, why is Japan's current economic condition relevant to Americans in general? Unless we experience similar deflation at some point down the road, Japan remains just a personal niche interest for Keith.

  3. H. Craig Bradley | November 2, 2012

    JAPAN'S BANKING DIFFERS FROM U.S.

    The President of Veribanc, Inc. , Michael M. Heller, told me recently on the phone that Japanese Bank's financial problems differed significantly from those currently experienced in U.S. Banks: The five biggest Japanese Banks had active collusion going on between their respective bank executives.
    He determined this as a result of a commissioned research report prepared for a private client. I suspect there are other differences too.

  4. STEVENEORCUTT | November 2, 2012

    3 words: Twelve Visions Party…
    a 3rd party that will reform and transform the world, not just our nation.
    It's time… google it!

  5. James | November 2, 2012

    Is Japan poor and impoverished?

    If so, how come the Japanese keep flocking to Hawaii to patronize our high end luxury goods stores at Ala Moana Shopping Center which we locals cannot afford? The Japanese presence is very visible. They are everywhere in our State in tour groups, as independent travelers and as students. My cousin's granddaughter goes back and fourth from Kyoto to Honolulu to attend a local community college taking minimum credits. She lives in the heart of Waikiki and having a time of her life at her middle class parents' expense. The situation is not bad for people supposedly wallowing in a depressed economy.

    How come Hawaiian Airlines keeps opening direct flights to various cities in Japan like Tokyo (Narita Airport), Fukuoka, Osaka and to some city in Hokkaido. Potential profits must exist in the Japan market for Hawaiian Airlines to make these investments.

    I visited Japan in 2009 and was impressed at the country. It is focussed on maintaining and preserving its natural resources and agricultural economy. In Ohito, I took a walk along a timber forest stand and thought to myself, "Japanese people are smart and forward thinking people. They have good values and preserving their country for future generations. They are like the people in Oregon at the turn of the twentieth century when some conservation minded people decided to keep Columbia Gorge in its natural state and turned the region into a national park for future generations to enjoy."

    What Japan is doing is not what Hawaii is doing. Hawaii talks about self-sufficiency in agriculture, but it is only lip service. We lost our sugar cane and pineapple industries. The agriculture lobby is very weak. Prime land on Oahu have been converted into residential housing and commercial developments. Is this the right direction? This is what the people in Japan must decide. If the Liberal Democratic Party loses its powers, agriculture interests like rice farmers will lose to real estate developers. As I see it, this is the big issue facing Japan. Japan has been able maintain the status quo. Is it going to sacrifice its agriculture sector for the sake of economic recovery? What will be lost in this process? And will it be worth it?

  6. A Donald - - Not The Donald | November 3, 2012

    A Third Party here in the U.S., would be a viable alternative; if, we can't get Term Limits. We need to destroy the notion of being a, "Career Politician." It was not what the Founders envisioned; and, our current system of, "Careerism," is destroying both our Economic, and our Political Systems. It is a Closed System of Career Politicians on one side of the Circle or Loop; and Deep Pocket, Special Interests on the other half. Everyone else is excluded. It is a a corrupt system that will destroy our Democracy!

  7. A Donald - - Not The Donald | November 3, 2012

    Are we not (U.S), in the first two years of our Second, Lost, Decade? Think a strong case could be made for that argument. No growth; more lay-offs coming; a totally dysfunctional Government; and, no plan to lift us us out of our Malaise; let alone, addressing the huge National Debt. We seem to be paralyzed, as the Ship of State continues to sink to even lower depths. A bright – – but, somewhat crude friend of mine; put it this way: "The Big Dog is Going Down!"

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