Voodoo Abenomics

[Guardsman Bass]

Noah Smith (an economics professor who lived in Japan for three-ish years) has written a couple of good posts over at his Noahpinion blog and Bloomberg about what Japan really needs in terms of changes to its business environment. Here's one, where he points out that he's tentatively in support of Private Equity firms because of how the effective lack of them in Japan hurts dynamism in their economy:

Now, the knock against private equity (besides the debt problem I mentioned at the beginning of this post) is that it screws over the workers of the companies it buys. In fact, it does seem to be the case that private equity firms achieve most of their productivity gains by firing people. The stereotypes are true. So private equity's detractors say: Workers may not be shareholders, but they are stakeholders. When workers sign on to work for a company, and thus sacrifice their mobility and outside options, they enter into an implicit contract with a company, that says, essentially, "This company will try to live as long as possible." When private equity companies chop up and sell a company, this implicit contract is violated, and the worker-stakeholders lose out. (Note: Just to pat myself on the back, I thought of the "implicit contract" thing before reading this Larry Summers paper! But it says basically the same thing.)

And I agree with that. And I think it is a real cost of letting private equity do its thing. But I don't think it's as big a cost as people make it out to be. Again, the reason is Japan. In Japan, the implicit contract between worker and firm is far more important than in the U.S.; companies there view workers as very, very important stakeholders. This is, in fact, why the government makes it so hard to take over companies; Japan is a Bain-basher's dream land.

But - and here I venture into the realm of anecdotes and intuition - I do not think that Japanese workers are happier than American workers. First of all, the low-productivity office environment I described takes its toll. Long wasted overtime hours separate men from their families. Squelched individual initiative creates feelings of frustration and stasis. The impossibility of switching companies, the lack of merit pay, and the pre-determined nature of promotions leave few career goals to strive for. And, most importantly, the binding of employees to their employers creates a pervasive feeling of powerlessness (無力感) and fear; if bad decisions or market shifts force a company to lay off workers, those workers have basically no hope of finding a similar job elsewhere. No wonder the suicide rate in Japan is so astronomically high. The bulk of those suicides are men of working age.

[Simon_Jester]

One can reasonably argue that private equity firms are not needed to solve this problem.

It's not as if the US is immune to accusations that its corporations force white-collar workers to work for very long hours, then waste their time with unproductive things. I'd think that the main thing that restricts this is the requirement for paid overtime, not the ability to buy out a company that uses labor inefficiently.

That said, the key is that by some means, there is a "trap" created by Japan's inefficient use of labor and business culture of expecting very long hours from workers in order to compensate. And if Japan is to enjoy any improvement in its economic conditions- either GDP growth or improved living conditions for the average Japanese citizen- it will have to break out of this trap.

The 'creative destruction' favored by laissez-faire advocates may not be the only way to achieve this. But it has to be achieved somehow.

[Thanas]

I don't think private equity is the way to go there either. Especially if the profits will flow out of Japan to the USA, it doesn't take a lot of imagination to fear what will happen.

Far easier (and better) would be IMO to break up monopolies.

[Irbis]

I take it that many of these well-educated men that are unable to find work cannot leave the country to find work elsewhere? Any particular reason why?

Not only they have bad language education like Thanas said, their writing system itself is incredibly counter-productive when it comes to learning anything but handful of similar Asian languages. People have enough problems figuring out Cyrillic (which is just regular alphabet with a few letters looking different), now try to imagine learning language where absolutely everything is alien to you.

Westerners complain they need to learn about eight thousand 'letter' equivalents to be any proficient in reading Japanese, from their side it's probably just as bad with need to wrap their head around the concept of individual glyphs being meaningless, their order being everything, and words being 'fluid' thanks to grammar changing prefixes and suffixes.

It is not 'nonsensical' as it has been a key theory advanced by the neoliberal theorists: longer working hours as key to improving total, national productivity, 'industrious revolution' versus 'industrial revolution' and so on and so forth. Japan's services cannot easily become 'more productive' in the sense of improving the input-to-output ratio, as the service sector automation is a very poorly defined goal, unlike the automation of regular industrial operations.

Why not? I admit it's just anecdotal evidence from a few Japanese, but from what I heard, higher ups in Japan are dead set against any sort of bureau and service computerisation (as they don't understand computers and aren't willing to learn, in part because their usage due to alphabet being much harder) so Japanese offices still look like they did 70 years ago - lots of document drawers, computers being used only to type then print, hell, until recently they insisted on using normal mail, not email. This slowly changes, but you can imagine how much time is lost at every step of this process.

Just a thought to consider: are they overworked because they are inefficient, or are they inefficient because they are overworked? Because considering the number of hours people are talking about, I can see chronic worker fatigue being a major contributor to lower efficiency.

Yeah, for all the efficiency fetishists bleating about 'just working harder' it's had been long proven humans can only work 6-7 hours daily at good effort rate. Any longer than that and their efficiency falls dramatically, not only that day, but possibly the next one if the work is being too forced.

If they've got more churn and competition in the economy, then that means companies will be less willing to have their employees sit around doing little productive work for 14 hours a day

Maybe I am cynic, but why would that be the case? I have seen a lot of companies 'competing' by just squeezing their workers harder under the threat of firing, not by raising internal standards. Japanese internal economy is shielded from outside, so they won't have to compete with foreign companies, just each other.

For example, the article points out that Japan restricts online sales of non-prescription drugs to protect physical pharmacies. But if the online sales involve fewer hours of labor to get aspirin to consumers... this represents a waste of labor. Certain people are working long hours as a pharmacy clerk, when there is no social need for them to do so, because the same need could be met just as well by a less labor-intensive system. Taken to extremes, this is absurd and needlessly brutal to the people. Just as it would be to employ people as ditch-diggers under back-breaking conditions when a couple of men with a backhoe could do the same job in a fraction of the time.

On the other hand, a lot of automation in service sector is just destroying jobs in places where they could still easily be supported and putting the wage in the pocket of company owner instead, which in a lot of cases is undesirable from society's point of view, especially one valuing long lasting full employment. Automation should make jobs easier and more efficient first, killing them outright might not be desirable or optimal in long run.

[Thanas]

I take it that many of these well-educated men that are unable to find work cannot leave the country to find work elsewhere? Any particular reason why?

Not only they have bad language education like Thanas said, their writing system itself is incredibly counter-productive when it comes to learning anything but handful of similar Asian languages. People have enough problems figuring out Cyrillic (which is just regular alphabet with a few letters looking different), now try to imagine learning language where absolutely everything is alien to you.

In addition to that, "well-educated" is a bit of a mirage when it comes to Japan. Sure, they can memorize a lot and very well, but critical thinking, logical reasoning and an open approach to questioning everything - all things that are considered to be good in western education - are pretty absent from their curricula. So while this works well for some fields, it is pretty bad for most of them. So the Japanese Education is pretty overhyped and I think everybody in the field knows that. Copying authorities - which would be viewed as plagiarism at worst in Euro countries - is a good sign of showing respect.

So - and I am speaking just for myself here - a Japanese would be the last person I would chose to employ in many jobs.

Just a thought to consider: are they overworked because they are inefficient, or are they inefficient because they are overworked? Because considering the number of hours people are talking about, I can see chronic worker fatigue being a major contributor to lower efficiency.

Yeah, for all the efficiency fetishists bleating about 'just working harder' it's had been long proven humans can only work 6-7 hours daily at good effort rate. Any longer than that and their efficiency falls dramatically, not only that day, but possibly the next one if the work is being too forced.

This is just personal interest speaking - can you link me to some of those studies?

[Ralin]

Not only they have bad language education like Thanas said, their writing system itself is incredibly counter-productive when it comes to learning anything but handful of similar Asian languages. People have enough problems figuring out Cyrillic (which is just regular alphabet with a few letters looking different), now try to imagine learning language where absolutely everything is alien to you.

Westerners complain they need to learn about eight thousand 'letter' equivalents to be any proficient in reading Japanese, from their side it's probably just as bad with need to wrap their head around the concept of individual glyphs being meaningless, their order being everything, and words being 'fluid' thanks to grammar changing prefixes and suffixes.

They start being taught English and by extension the Latin alphabet at what, two? No arguments on the craptastic quality of ESL education in Japan, but I'm not seeing any evidence that having to use an alphabet is something that gives them any particular trouble. Especially since they have two phonetic writing systems in their own language and (pretty sure, haven't spent any time in Japan) frequently use Latin characters to transliterate names for signs and shit in their own country. Alphabets aren't a difficult concept to understand and use. That's sort of the point.

Also that last one isn't even specific to the writing system. And there are words written part in kanji and part in kana in Japanese, so...

[Welf]

For example, the article points out that Japan restricts online sales of non-prescription drugs to protect physical pharmacies. But if the online sales involve fewer hours of labor to get aspirin to consumers... this represents a waste of labor. Certain people are working long hours as a pharmacy clerk, when there is no social need for them to do so, because the same need could be met just as well by a less labor-intensive system. Taken to extremes, this is absurd and needlessly brutal to the people. Just as it would be to employ people as ditch-diggers under back-breaking conditions when a couple of men with a backhoe could do the same job in a fraction of the time.

But would it be a net win if they liberalized the prescription market? This would mean physical pharmacies would make less profit from those cashcows, which in turn means they are less able to keep rare medications in stock. In big cities this isn't a problem, but in rural areas this might mean people loss access to local pharmacies. So in rural areas people either face price increases or government subsidies are necessary. Would it really be a net gain in the end? On the one hand you have more efficient delivery for medication you can plan and don't need consulting, but on the other hand you have less support in rural areas or higher subsidies, longer travel to the closest pharmacy in middle sized towns because there will be fewer of them, and even more pressure on the workers due to more competition.

In general I'm very suspicious that more competition and efficiency will make people work less in the long run. They live in a culture where people expect you to work long hours. If I was working 14 hours a day and saw a co-worker leaving after 8 or 9 hours, I'd call him an lazy dirty rat (and I do). Working long hours is also a sign of loyalty to your co-workers. Also, once this is established as expectable baseline, employers will demand that they keep on working. They only way to change this would be really, really strong unions. And those won't be created in an environment of more competition and American hire-and-fire mentality.

[Vendetta]

Not only they have bad language education like Thanas said, their writing system itself is incredibly counter-productive when it comes to learning anything but handful of similar Asian languages. People have enough problems figuring out Cyrillic (which is just regular alphabet with a few letters looking different), now try to imagine learning language where absolutely everything is alien to you.

Westerners complain they need to learn about eight thousand 'letter' equivalents to be any proficient in reading Japanese, from their side it's probably just as bad with need to wrap their head around the concept of individual glyphs being meaningless, their order being everything, and words being 'fluid' thanks to grammar changing prefixes and suffixes.

Japanese people do have problems learning English, but it's not the alphabet* that causes it (since they use roman characters anyway). The problems are more due to the fact that sentence structure is radically different between the two languages, there are no particles in English, there are functionally no plural word forms in Japanese, only two irregular verbs (compared to over two hundred in English), tense and case are different, absence of certain phonemes (Japanese doesn't have "th", which tends to come out "su" because there are no phonemes in Japanese where the tongue passes the teeth, which makes the mouth shape for "th" something they have to consciously learn, "v" which turns into "b", or seperate "r" and "l", but has a phoneme which is partway between r and l) , Japanese is overall quite a regular language, grammatical rules tend to not have that many exceptions, whereas English grammar has more exceptions than rules, etc.

And most of the english words they see in day to day life are used for aesthetic purposes rather than as language (which is the source of a lot of "engrish", they simply didn't care that the English wasn't accurate because accurate English wasn't the point), so they're exposed to more bad English than good.

(Not having learned English as a second language I can't really say, but having learned a bit of Japanese I would say that, learning kanji aside, it's probably harder to learn English as a second language)

That's not to say that the state of ESL teaching in Japan isn't bad (it is), but it's a challenging subject for Japanese people as well.

* Though pronunciation is a different matter, Kana map relatively strictly to their pronunciations and changes to pronunciations are specifically indicated whereas English, well doesn't, pronunciation depends on preceding or following letters, except sometimes, when it's stolen a word from somwhere else and has an accented letter.

[AniThyng]

Not only they have bad language education like Thanas said, their writing system itself is incredibly counter-productive when it comes to learning anything but handful of similar Asian languages. People have enough problems figuring out Cyrillic (which is just regular alphabet with a few letters looking different), now try to imagine learning language where absolutely everything is alien to you.

Westerners complain they need to learn about eight thousand 'letter' equivalents to be any proficient in reading Japanese, from their side it's probably just as bad with need to wrap their head around the concept of individual glyphs being meaningless, their order being everything, and words being 'fluid' thanks to grammar changing prefixes and suffixes.

Japanese people do have problems learning English, but it's not the alphabet* that causes it (since they use roman characters anyway). The problems are more due to the fact that sentence structure is radically different between the two languages, there are no particles in English, there are functionally no plural word forms in Japanese, only two irregular verbs (compared to over two hundred in English), tense and case are different, absence of certain phonemes (Japanese doesn't have "th", which tends to come out "su" because there are no phonemes in Japanese where the tongue passes the teeth, which makes the mouth shape for "th" something they have to consciously learn, "v" which turns into "b", or seperate "r" and "l", but has a phoneme which is partway between r and l) , Japanese is overall quite a regular language, grammatical rules tend to not have that many exceptions, whereas English grammar has more exceptions than rules, etc.

And most of the english words they see in day to day life are used for aesthetic purposes rather than as language (which is the source of a lot of "engrish", they simply didn't care that the English wasn't accurate because accurate English wasn't the point), so they're exposed to more bad English than good.

(Not having learned English as a second language I can't really say, but having learned a bit of Japanese I would say that, learning kanji aside, it's probably harder to learn English as a second language)

That's not to say that the state of ESL teaching in Japan isn't bad (it is), but it's a challenging subject for Japanese people as well.

* Though pronunciation is a different matter, Kana map relatively strictly to their pronunciations and changes to pronunciations are specifically indicated whereas English, well doesn't, pronunciation depends on preceding or following letters, except sometimes, when it's stolen a word from somwhere else and has an accented letter.

Would it also have anything to do with the fact that whatever english pop culture they are exposed to comes as already translated rather than subtitled, thus they lack the exposure to spoken english that you would otherwise get? How do Japanese americans raised in multilingual households do?

Speaking anecdotally here, could we compare say, the standard of english and mandarin in say, Taiwanese society against the standard of english and mandarin in Malaysian Chinese/Singaporean society? In my experience, the standard of english in Taiwan is about the same as the standard of english in Japan, which is to say very poor, while in Singapore, the standard of english or mandarin is at worst mediocre and likely to be some combination of "good at english, bad at mandarin" or "good at mandarin, bad at english" or "sort of okay at both" and "fluent to native level at both" since it is an explicitly multilingual society.

[AniThyng]

So - and I am speaking just for myself here - a Japanese would be the last person I would chose to employ in many jobs.

I know I'm stripping away the context you used to justify your opinion, and I actually don't necessarily disagree, but I'm doing it partly on purpose because it to me is a striking example of how frustrating it can be dealing with issues of discrimination in employment and social issues and boiling it down to a general statement of "an <insert race here> will be the last person I would choose to employ in <insert field here>."

I mean, people are already speculating that it could be "cultural factors" that lead to the situations with MH370/17 and QZ8501. Also, remember that SFO runway overrun with the Korean flight and how it was supposedly "asian working culture"? Yeah.

[K. A. Pital]

Yes, they do. They've got an aging population and an unwillingness to countenance greater immigration, so they need rising productivity if they don't want overall living standards to drop and the net tax burden to go up in order to support all their retirees.

Considering that not only for Japan, but also for most developed world countries living standards have remained pretty much the same as in the late 1980s, discounting technological progress (computers) - despite mass immigration in nations other than Japan - I still do not see how standard approaches help here.

You realize most new jobs are created by expanding new firms, right?

What I also know is that Japan's unemployment has been and generally always remained very low, below OECD average. And while a lot of countries went towards mass unemployment in the last crisis, Japan's labour market was the most resilient one among developed countries. Your answer to that is that most new jobs are created by expanding firms. Japan has a shrinking labour population and I fail to see how a mass influx of new, low-paid jobs in new companies is going to somehow improve their situation. Are they facing population pressure from like 50% of youth unemployment? Not really, last time I heard. And their working population is shrinking (just as their total population, by the way), so the US mantras about 'make jobs dear capitalists!' make ZERO sense in their situation.

What it would do is not only boost the output of goods and services in Japan, but actually give more of Japan's population a chance (particularly its younger population) at higher wages and wealth.

No. New companies, especially small companies, are not offering higher wages. The newcomers are always offered lower wages than the existing staff; if the company has fewer resources, it being a smallish or medium-sized business, then the wages would be even lower. Besides, Japan has had very low unemployment, see above, and their total and labour population are going down. You are solving a Japanese problem? Sure?

As the article mentioned, tons of them are ending up as temps for years in the much lower productivity domestic economy - and the vaunted Life Employment system has been slowly disintegrating anyways.

Slowly, yes. Gradually. You have proposed subjecting the Japanese economy to a set of shocks - typical for a Westerner - and that for no particular reason! The demographic dynamics of Japan are not changing. They are not going to suddenly go crazy and start giving birth to 5 kids per family. Their labour and total population are shrinking. Do they really need shocks that will allow new companies to arise and offer 'more jobs'? That sounds really awkward, man.

Higher productivity means they won't have to sacrifice living standards and countenance a higher tax burden as long as they continue to both refuse greater immigration and have an aging population.

Even very slight raises to productivity introduced by labour-saving technology are enough to maintain the living standards. Japan does not face population pressures. In fact, its population is declining. The young will not be more well-off with new small companies as they offer crap wages. Especially with the seniority promotion system deeply ingrained in Japan's culture.

And god willing, it means they'll finally no longer have people working insane amounts of unpaid overtime in unproductive jobs when they could actually be doing productive work elsewhere.

That will not happen unless you subject Japan to an even greater set of shocks that will annihilate their traditional culture, something akin to what happened in China and introduced the 8-hour working day, official relations between chief and subordinate and so on. There can be merits to this solution, but it is bound to create mass hardship, especially as Japan has been working with its technofeudal order for decades, if not a whole century (it started forming as it is in the 1920s, 1930s). I wonder if you are serious about this.

As for productivity and automation now, go outside of automation-heavy export sector. It's not particularly impressive, particularly in sectors like retail.

Is retail impressively automated in other developed countries? I don't see it. I see cheap migrant labour staying 10 hours behind the counter, often they have zero guarantees, many are employed using black schemes. Is that a superior solution?

I'm calling bullshit on that. If they've got more churn and competition in the economy, then that means companies will be less willing to have their employees sit around doing little productive work for 14 hours a day - and employees will be less willing to stick around to do that if they're no longer afraid that quitting a Lifetime Employment job will make their name mud and hinder them from getting another one.

Except that 'more churn' has caused unprecedented levels of unemployment in the Western countries, time and again. And frankly if you ask me what's worse, Japan's technofeudal, but unemployment-resilient system or the Western system that can throw people into the shitpit for 3-4 years of a crisis and then just tell them to eat more AUSTERITY and wait for MORE JOBS, I am not really sure. You are saying employees will be less willing to stick to a place in a large company that is well-paid, has social guarantees and stuff, and they will instead find a place in a small company - which has bad pay, crappy social guarantees if any, zero recreational facilities and almost no intra-company investment in the quality of the human workers? Because, you know, that's how it generally is? I am seriously thinking on whether you are misguided or just delusional. Japan has no Silicon Valley culture, small companies and fresh employees there get the worst possible wages and conditions. Even in the West a small firm that pays decent wages and has a good social package is a rare thing.

Said theorists are not using the word "productivity" in its normal sense in economics. Confusion about what the word means is excusable, but as a brute fact, saying "Japanese workers are less productive" is NOT the same as saying "it is good that the Japanese work long hours, and they should work even longer if possible."

You are just as culturally ignorant as the other posters here. Japan's companies do not mean the same thing when they hear the word 'productivity'. The time unit of Japan's bosses' internal calculation of productivity is a working day. Not an hour. And per-day productivity gets better if you make people work more, that's pretty easy to tell. So when you advise the Japanese to improve productivity, what they will hear is 'we have to make them work even longer'. And no, magically zapping their brains and making them all adopt Western attitudes and Western concepts won't happen either. So...

For example, the article points out that Japan restricts online sales of non-prescription drugs to protect physical pharmacies.

That is obviously bad. What is also true is that Japan will make online shop programmers and warehouse workers work just as hard.

And since Japan is not a nation with a great surplus of laborers in need of more hours' worth of work, whatever is being done wrong will have bad consequences for the Japanese people.

Except the proposals here are to introduce a society with a shrinking labour force to mass unemployment through the economic shock of destruction of their current system, their larger corporations and pretty much everything that has to do with it to generate new jobs and (rather unlikely as I explained) more wealth for the young.

Stasis and the enforced locking-in of twentieth century business practices is not the answer.

Capitalism is a XIX century practice. Besides, why exactly you need to radically improve output if your population is also shrinking? I also fail to see how 'creative destruction' solves this problem as real wage growth in the West has been stagnant for decades just as in Japan. Savings have been on the decline and in general the West has much lower savings norm than Asian countries.

Either of you can now explain to me how a radically different attitude in the US and other heavily industrialized nations produced the same result: basically stagnant wages despite all the economic growth that occured since the 1980s, tech progress being the only change.

[Fingolfin_Noldor]

In general I'm very suspicious that more competition and efficiency will make people work less in the long run. They live in a culture where people expect you to work long hours. If I was working 14 hours a day and saw a co-worker leaving after 8 or 9 hours, I'd call him an lazy dirty rat (and I do). Working long hours is also a sign of loyalty to your co-workers. Also, once this is established as expectable baseline, employers will demand that they keep on working. They only way to change this would be really, really strong unions. And those won't be created in an environment of more competition and American hire-and-fire mentality.

I was just about this bring this up. American hire-and-fire mentality will not work too well in Japan because society there in general still has some expectations that company provides for them. In some ways they are a society in transition, but the old ways die very hard. Creating a my dynamic Japanese corporate environment is possible, but with behemoths dominating the scene and little room for start ups to grow, it is very difficult to achieve. The Japanese people can be said as having a strong preference to preserve the old traditions and would rather accept a lower standard of living than to change it. In a way, their own companies have already changed in a way to accommodate that. Japanese companies have huge operations abroad and what isn't competitive in Japan has already moved abroad. There is however a large segment of small and medium businesses that form the supply chain for Japanese corporations. My only real quibble with these businesses is that they do not seem to have a lot of interest in expanding their sales and selling their products abroad. Either they are extremely comfortable with the sales they have, or they are just not interested. This contrasts with German companies with a large export orientation. I don't see any of this really mentioned in a lot of analysis, and a lot of analysis seems aimed at the larger Japanese companies. This strikes me as an area that doesn't seem to be well studied.

The American experience with start ups remains quite unique in many ways, and I can only think of Israel that successfully repeated this this. Honestly, I would rather see what a European economist has to say about Japan rather than hear the endless attempts to approximate Japanese experience with that in the US.

[aerius]

The above 2 posters are correct, we can't look at Japan and think they're just like West with the same values, goals, and ambitions. The Japanese aren't a bunch of Americans who happen to be Asian and live on an island, yet that's what we implicitly assume they are when we tell them to do things our way. It's much like trying to bring democracy to Iraq, and will likely have similar results.

Back when I was still in university I worked at Ford-Visteon, which at the time was collaborating with Toyota in the field of automotive electronics. Even though we were all engineers & technicians the culture divide was huge, they're not us and we're not them. They have a 50 year, 100 year, and even a 200 year plan for their company while we could barely see past the next 3-4 year product cycle. And they valued having an artisanal touch on certain things, even if it's a circuit board that's buried where it'll never be seen whereas would go "fuck it, it works, good enough" and pocket the cost savings. And that's just a couple of the countless differences.

So it goes back to what my wife noted. What does Japan want, can they get there, and what changes will they need to do it? And I can say that despite spending over a year working with them in the past, I can't even begin to answer those questions.

[bobalot]

I agree with the vast majority of the article except on one point - opening the agriculture sector to foreign competition would be disastrous. You can see that in Africa, where the European Union has pretty much crushed the milk competition. Without a protective trade barrier for the domestic industry to adjust, European suppliers will just crush Japan.

I disagree. Australia and New Zealand did away with most of their tariffs, subsidies and protective measures for their agricultural industries and they have become far more productive.

[Fingolfin_Noldor]

I agree with the vast majority of the article except on one point - opening the agriculture sector to foreign competition would be disastrous. You can see that in Africa, where the European Union has pretty much crushed the milk competition. Without a protective trade barrier for the domestic industry to adjust, European suppliers will just crush Japan.

I disagree. Australia and New Zealand did away with most of their tariffs, subsidies and protective measures for their agricultural industries and they have become far more productive.

Japanese agriculture isn't as corporatised as Australia's. There are lots of mom and pop farms, with an outsized electoral vote.

[Thanas]

I know I'm stripping away the context you used to justify your opinion, and I actually don't necessarily disagree, but I'm doing it partly on purpose because it to me is a striking example of how frustrating it can be dealing with issues of discrimination in employment and social issues and boiling it down to a general statement of "an <insert race here> will be the last person I would choose to employ in <insert field here>."

So wait, you just stripped away all the context and explanation to go "you're racist"? Good job there.

Also, remember that SFO runway overrun with the Korean flight and how it was supposedly "asian working culture"? Yeah.

Are you saying fear of disagreeing with your superior elder is not a hallmark of Korean culture and did not contribute to several crashes? Because I remember at least a few where this happened.

[Simon_Jester]

I don't think private equity is the way to go there either. Especially if the profits will flow out of Japan to the USA, it doesn't take a lot of imagination to fear what will happen.

Far easier (and better) would be IMO to break up monopolies.

I have no dispute with this. I'm simply noting that it is valid to criticize the current economic policies of the Japanese government on the grounds that they are encouraging Japan to stay stuck in a low-efficiency, labor-intensive, stagnant economy. And that this is bad for the Japanese people.

But would it be a net win if they liberalized the prescription market? This would mean physical pharmacies would make less profit from those cashcows, which in turn means they are less able to keep rare medications in stock. In big cities this isn't a problem, but in rural areas this might mean people loss access to local pharmacies. So in rural areas people either face price increases or government subsidies are necessary. Would it really be a net gain in the end? On the one hand you have more efficient delivery for medication you can plan and don't need consulting, but on the other hand you have less support in rural areas or higher subsidies, longer travel to the closest pharmacy in middle sized towns because there will be fewer of them, and even more pressure on the workers due to more competition.

Apply this argument to the general case and virtually all economic change is treated as either a net loss for the community or at most a wash... which makes it hard to understand how growth or progress can ever occur.

Maybe in this case you're right- and it is better for Japan to have protectionist policies preserve brick-and-mortar pharmacies by outlawing online ordering systems. But that's a case by case argument; if it were right every time then there would be no such thing as positive economic change.

I know this sounds kind of cliche, but honestly. If we always refused to change dysfunctional economic practices, we'd still be subsistence farmers. And methodically refusing to change anything of consequence is a recipe for disaster, when dealing with a country whose economy is not growing and whose labor pool is actively starting to shrink.

In general I'm very suspicious that more competition and efficiency will make people work less in the long run. They live in a culture where people expect you to work long hours. If I was working 14 hours a day and saw a co-worker leaving after 8 or 9 hours, I'd call him an lazy dirty rat (and I do). Working long hours is also a sign of loyalty to your co-workers. Also, once this is established as expectable baseline, employers will demand that they keep on working. They only way to change this would be really, really strong unions. And those won't be created in an environment of more competition and American hire-and-fire mentality.

Perhaps the government would do well, then, to start by placing an upper limit on the amount of hours any one employee can be expected to work (in a week, or in a month, or in a year). Or establishing a system for overtime pay so that companies are incentivized to hire more people rather than just extracting 50% more work out of the ones they already have. Or incentivized to find ways to use each individual man-hour more productively.

What matters here is not "strength through competition," although having competition can sometimes help, perhaps. Hopefully.

What matters is that the Japanese economy, at the basic level of the way labor is used, is in a precarious position and is only holding together for now because many of the Japanese people are willing to suffer constant, degrading toil of one sort or another.

It is a matter of basic common sense that the government should be seeking reforms. Reforms that either bring more wealth to Japan in exchange for their very hard work, or that alter the system so that they can afford to work less.

Said theorists are not using the word "productivity" in its normal sense in economics. Confusion about what the word means is excusable, but as a brute fact, saying "Japanese workers are less productive" is NOT the same as saying "it is good that the Japanese work long hours, and they should work even longer if possible."

You are just as culturally ignorant as the other posters here. Japan's companies do not mean the same thing when they hear the word 'productivity'...

Ah, I'm sorry. See, I thought that because the article was written in English, I should interpret it as though it were, well, in English. Using economic terms as defined in the English language.

The time unit of Japan's bosses' internal calculation of productivity is a working day. Not an hour. And per-day productivity gets better if you make people work more, that's pretty easy to tell. So when you advise the Japanese to improve productivity, what they will hear is 'we have to make them work even longer'. And no, magically zapping their brains and making them all adopt Western attitudes and Western concepts won't happen either. So...

...So it is necessary to somehow get across the idea that they need to use workers' time more efficiently. Surely this cannot be a foreign concept to a nation whose major industrial firms once pioneered automation in manufacturing.

Also, this wouldn't even be the first time Japanese companies adopted Western attitudes and concepts that suited them; look up the role of William Edwards Deming as a contributor and consultant in their postwar economic boom.

Although ironically, many Western companies ignore Deming's precepts on a regular basis, favoring a toxic MBA-culture that helps explain how Japan so readily caught up to the developed world in the late 20th century despite starting from an economic base that was weaker even before the Allies turned it into bombed-out ruins.

In any case, the practical point here is that Japan is not unable to adopt useful bits and pieces of Western practices, or unable to discard the useless bits. Japan should and can find its own solutions to its problems- but the problems are real, the consequences are real. And Abe (or any Japanese leader) could fairly be criticized if he does not address those problems seriously.

And since Japan is not a nation with a great surplus of laborers in need of more hours' worth of work, whatever is being done wrong will have bad consequences for the Japanese people.

Except the proposals here are to introduce a society with a shrinking labour force to mass unemployment through the economic shock of destruction of their current system, their larger corporations and pretty much everything that has to do with it to generate new jobs and (rather unlikely as I explained) more wealth for the young.

Then the proposal in the original post, or for that matter Bass' proposal, can go die in a fire.

I don't care about those proposals. I care about salvaging the key idea that Japan has an economic problem it needs to solve: inefficient, wasteful use of the time and labor of the Japanese people.

Stasis and the enforced locking-in of twentieth century business practices is not the answer.

Capitalism is a XIX century practice.

Capitalism is a 19th century structure- I am not talking about the structure. I am speaking of specific, individual practices, many of which would be much the same under a state-planned economy. Or under any other economic system for running an industrial society. Because a productive enterprise has to function regardless of whether it is owned by capitalists, by a workers' cooperative, or by a state bureau of production.

If the Soviet Union still existed, and wanted to provide an increasing standard of living for its people, it too would face certain realities. It would have to learn how to use modern technology (such as computer networks), and new methods of managing workers at the basic level of individual enterprises, to make the most out of each hour of the workers' time.

The exact way in which the Soviet economy would be dealing with these issues is no doubt different than what the US (or Japan) would do with the same technology and under the same constraints.

But that doesn't matter. The point is, this isn't about capitalism. This is about finding some way to break up a logjam of bad management practices and inefficient use of labor.

Besides, why exactly you need to radically improve output if your population is also shrinking?

Two reasons:

For one:

Because the population of able-bodied workers is shrinking faster than the population as a whole. Today in Japan there are roughly seven retirees and four children for every twenty working-age people- roughly one dependent to support with two laborers, not counting college students and housewives and the disabled. Ten years form now, that ratio will be two dependents per three laborers, and most if not all of the increase will be due to retirements.

That isn't going to work unless each individual laborer is producing more in ten years, on average, than they are now. Since the Japanese can't plausibly work longer hours, they will simply have to do more per man-hour of work that is performed.

And number two:

Because the Japanese people are heavily overworked and deserve some rest. But at the moment, their employers have little reason not to waste their employees' time. The current economic system in Japan provides cover for employers to use inefficient practices, and then make up the reduced productivity per hour by forcing their people to work more hours per day.

This is an injustice that hurts the people of Japan. It should be remedied. That does not mean shock capitaldisasterism or whatever is the proper remedy. It means something is wrong, and should be fixed.

For both these reasons, yes, Japan needs productivity growth. In the English language sense of 'productivity.' Total economic output does not need to improve. Output per man-hour needs to improve.

I also fail to see how 'creative destruction' solves this problem as real wage growth in the West has been stagnant for decades just as in Japan. Savings have been on the decline and in general the West has much lower savings norm than Asian countries.

I am not an advocate of 'creative destruction.' I am an advocate of Japan finding a way to fix its problem of inefficient use of workers' man-hours. If you think there is a better way to do this than "creative destruction," I would be most happy to hear about it.

Either of you can now explain to me how a radically different attitude in the US and other heavily industrialized nations produced the same result: basically stagnant wages despite all the economic growth that occured since the 1980s, tech progress being the only change.

Because in America, there are serious problems with managerial culture and with the basic approach of neoliberal government to the distribution of wealth in society. If Japan can avoid these problems, well and good- but it still may have other problems that need solving.

[AniThyng]

I know I'm stripping away the context you used to justify your opinion, and I actually don't necessarily disagree, but I'm doing it partly on purpose because it to me is a striking example of how frustrating it can be dealing with issues of discrimination in employment and social issues and boiling it down to a general statement of "an <insert race here> will be the last person I would choose to employ in <insert field here>."

So wait, you just stripped away all the context and explanation to go "you're racist"? Good job there.

On the contrary, I'm not saying *you* are racist, but we both know that when it's done the other way around (someone makes your statement stripped of context that may or may not be provided when called on it) it's really easy to just accuse someone of rationalizing their 'racism' no matter how logical or grounded in fact the reasoning may be.

Are you saying fear of disagreeing with your superior elder is not a hallmark of Korean culture and did not contribute to several crashes? Because I remember at least a few where this happened.

Oh I don't doubt that it did,like I said, I don't necessarily disagree, as a chinese person sometimes I hear racist statements said against my race and can only nod and say "yeah that's kinda true..." so my position on racism is not going to be hardcore "it's always wrong!"

[K. A. Pital]

Far easier (and better) would be IMO to break up monopolies.

I have no dispute with this. I'm simply noting that it is valid to criticize the current economic policies of the Japanese government on the grounds that they are encouraging Japan to stay stuck in a low-efficiency, labor-intensive, stagnant economy. And that this is bad for the Japanese people.

On the other hand, you do know that Japan's 'monopolies' were broken down already? And they reformed under a new (arguably, much more efficient and much harder to break) system. I will note that it is completely valid to criticize Japan for it's cultural faults (intensive overworking is one of them, and it did not arise overnight, neither is it really demanded by their economic situation). It is strange, however, to criticize them for non-cultural aspects of their economy, which, I may note, has went the way from a Third World to a First World level faster than 99% of nations in the world - a historically ridiculous 40-70 year timespan, depending on what you see more as critical) - and was among the few such examples (if not the only one).

I know this sounds kind of cliche, but honestly. If we always refused to change dysfunctional economic practices, we'd still be subsistence farmers. And methodically refusing to change anything of consequence is a recipe for disaster, when dealing with a country whose economy is not growing and whose labor pool is actively starting to shrink.

Perhaps you mistake a cultural problem (which has not been adequately solved in a hundred years of contact with Japan) for a purely economic one?

Perhaps the government would do well, then, to start by placing an upper limit on the amount of hours any one employee can be expected to work (in a week, or in a month, or in a year).

Very few governments in Europe do that. These are the ones that had very strong left-wing political forces, social-democratic forces, and they also always had a strong radical socialist or communist presence to the left that disallowed the social-democrats to drift rightward. Germany and France, some Scandinavian countries... who else has such regulations not only in place, but actively enforced?

Or establishing a system for overtime pay so that companies are incentivized to hire more people rather than just extracting 50% more work out of the ones they already have.

Simon, uh... where are these 'more people' coming from? Japan's unemployment is low, it's labour pool is shrinking. Are you saying they should restore full-time employment by offering more fulltime contracts to people who now shifted to part-time jobs? The only real solution is a hard cap on on overtime hours (politically impossible - Japan is an oligarchic country ruled by the same right-wing party for over 60 years, and its system has formed even earlier; left-wing ideas have been ruthlessly exterminated first by decades of fascism and later by the US influence) which will force the spread of labour-saving technology. That is also the one which won't be implemented.

Ah, I'm sorry. See, I thought that because the article was written in English, I should interpret it as though it were, well, in English. Using economic terms as defined in the English language.

I just mentioned this because it seems to me that people are creating some sort of advice for Japan, and when Westerners advise something, it very well may be and most likely will be misinterpreted. Per-hour and per-day productivity are both valid methods of estimating efficiency, except the latter has a larger time unit and given the pay in contracts is in many nations (fuck, almost all nations outside the US that I've seen) is not set at the hour level but at the month/week level, while overtime is not calculated precisely and paid by the actual hours... Or alternatively, there is a norm of unpaid overtime hours (loyalty hours, like 20-40 of them per month)... What exactly will you achieve with your advice unless the whole system of their internal calculation is changed?

...So it is necessary to somehow get across the idea that they need to use workers' time more efficiently. Surely this cannot be a foreign concept to a nation whose major industrial firms once pioneered automation in manufacturing.

It is important to industrial manufacturing because for them it is very important to cut down waste. However, cutting waste in other areas may not be considered a necessity. Japanese companies did not actually adopt the automation process to ease people's lives, it was done out of necessity (cutting material waste required more efficient use of labour time; it was found that automated lines greatly improve the situation and allow the use of 'just in time' methods). How do you explain it to them if the only real result is more free time for their service sector workers, but no real improvement in the production process?

I am an advocate of Japan finding a way to fix its problem of inefficient use of workers' man-hours. If you think there is a better way to do this than "creative destruction," I would be most happy to hear about it.

I would say that we can start with making part-time work more acceptable, and letting the industrial relations slowly change to something more like China, where you are not obliged to go drink with your boss after work, wasting your free time, even though he's your boss. Like I said, it is very much a deeply culture-rooted issue, and remedies must take into account that culture does not change all that fast.

[Simon_Jester]

Do you think that a legally mandated limit on how much time any one person can be forced to work would play a constructive role? It wouldn't have to be forty hours immediately (Rome wasn't built in a day), but just saying "look, no matter how important it is, you can't make people work 280 hours a month" might improve matters, I'd think.

[Jub]

I'm by no means an economist, but Simon's suggestions seem to make sense from a purely logical standpoint. Reducing the hours spent on work and work related tasks by legal mandate should lead to the same work being done in less time due to pressure to increase efficiency or more people being hired to work the missing hours. In either case the outcome should be good for Japan's economy with some tweaks to laws dealing with temps and part-time works serving to smooth over some of the remaining creases.

Culturally I think Japan needs to see the crash before they will make changes at which time it will be too late to do things the easy way. What happens from there is anybody's guess.

[Fingolfin_Noldor]

Culturally, Japan remains a feudal-serf system of sorts. It isn't as bad as the feudal days, but well, the mindset kinda stuck.

[K. A. Pital]

Do you think that a legally mandated limit on how much time any one person can be forced to work would play a constructive role? It wouldn't have to be forty hours immediately (Rome wasn't built in a day), but just saying "look, no matter how important it is, you can't make people work 280 hours a month" might improve matters, I'd think.

Well, it is obvious that I think such a limit is very constructive; the implementation of such limits in the EU, South Korea and China has had results which I can only describe as overwhelmingly positive. When something is legally mandated, it becomes harder for companies to find loopholes and many start actually improving their working practices to avoid making their employees work to death.

However, Japan had limits introduced (generally still a lot more than needed - 45 hours of OT a month). Problem is, they're not being followed. And why would they? There is no strong incentive to follow them unlike Europe, where not complying with the 10-hour working day regulation can send a boss to jail. But then again, Europe in general has had a very strong workers' rights movement, it has labour-protective concepts that would be hard to understand even for Americans, who generally consider themselves to be fairly close to Europeans.

[Simon_Jester]

In that case, as is often true in situations where a developed economy is suffering some severe dysfunction, the first answer is to enforce the laws already on the books.

In the US or Britain, the first step to fixing our metastasizing financial sector would be to simply enforce existing laws rigorously; in Japan they need enforced labor laws. But that would be a valid criticism of the Japanese government in its own right- that it is looking out for the feudal-corporate owners of the system, not for the employee-serfs... with the result that the Japanese economy has become stagnant at a time when stagnation is dangerous.

[Fingolfin_Noldor]

In that case, as is often true in situations where a developed economy is suffering some severe dysfunction, the first answer is to enforce the laws already on the books.

In the US or Britain, the first step to fixing our metastasizing financial sector would be to simply enforce existing laws rigorously; in Japan they need enforced labor laws. But that would be a valid criticism of the Japanese government in its own right- that it is looking out for the feudal-corporate owners of the system, not for the employee-serfs... with the result that the Japanese economy has become stagnant at a time when stagnation is dangerous.

Enforcing a law of that variety? I wonder if the workers themselves will come out and protest the enforcement!

You will be surprised what a combination of loyalty, and fear of job security would do.