OSAKA – The “Banzai”s have faded, but Prime Minister Shinzo Abe is still riding high in the opinion polls on his success in getting the 2020 Olympic Games for Tokyo. He should not be begrudged his triumph, but he should be asked some tough questions about Japan’s role in the world. These go far beyond the practical issues of whether the games can be organized successfully — surely not a major issue — and whether they will provide the economic boost that everyone hopes.
Abe declared that the Olympics would put Tokyo “at the center of the world.” But the real question is: Will Japan use the Olympics to join the real world? Japan has hitherto professed the virtues of being a fully paid-up member of the rich nations’ club, but in reality has been semi-detached from the rest of the world on a whole range of vital issues from immigration to banking and business practices and international.
Equally important — and it is really depressing that it is not being discussed at all — is whether the 2020 Games mean overkill by Tokyo, suffocating the rest of the country.
The immediate happy reaction was so euphoric that some commentators suggested that Tokyo’s Olympic gold might immediately lift Japan out of the economic doldrums and do more than quantitative easing or all the hot air about ending deflation. It is hard to turn the “feel good” factor and the catalytic impact it brings into economic growth, and even more so into hard cash.
In spite of the jubilation, the actual economic benefits of the 2020 games will be small. Tokyo estimates costs of about $8 billion, including $3 billion to build 11 new sporting venues and 10 temporary ones among 37 sites. Another billion or so will be spent on an imaginative rebuilding, designed by architect Zaha Hadid, of the National Stadium with a roof like a flying bicycle helmet. But in total the projected spending is less than 0.2 percent of Japan’s GDP, a far cry from the 3.6 percent of GDP spent when Tokyo hosted the 1964 Olympics as a celebration of its rise phoenix-like from the ashes of war and devastation of defeat.
The government predicts the Olympics will create 150,000 new jobs plus financial benefits of ¥3 trillion. But Eiji Kinouchi of Daiwa Securities has an altogether wildly optimistic prediction that the economic benefits of the games, including a doubling of the numbers of tourists, will come to ¥95 trillion. By adding another ¥55 trillion from Abe’s national land reinforcement program, he says the total gain will be a truly massive ¥150 trillion.
Things could go wrong. Olympic games tend to cost much more than budgeted for. London made a “sensible” estimate of £2.4 billion for staging the games; but it ended up paying just short of £9 billion. Russia estimated that the Sochi winter games for 2014 would cost $12 billion; The cost is now $50 billion. Cost overruns for the Olympics have averaged 179 percent since 1960, and most games have made losses or tiny profits.
Their supporters also say there is $10 billion a year to be picked up from legalizing gambling resorts. Casino companies are certainly placing their bets on Japan, among them Las Vegas Sands Corporation, MGM Resorts International, Caesars Entertainment Corporation, Wynn Resorts and Genting, with predictions that Tokyo could become second to Macao as a global gambling center if it relaxes its prohibition. But is this the face of the world that Japan really wants?
The bigger challenge and opportunity is to imagine Tokyo truly at the heart of the world. It does not look promising. To take a simple example, for the 1964 Games, 26,000 taxi drivers could speak some English. Today you would be hard pressed to find a few thousand among the 51,320 Tokyo taxi drivers.
From every aspect, for casual visitor or would be resident, let alone business entrepreneur, Japan challenges international norms. Foreign visitors are fingerprinted and photographed, as happens in the terrorist-terrified United States, and then have to queue to be inspected individually at customs.
This is not the formality of handing over a form, but in my experience of 35 years of visiting Japan involves a 20 percent chance in Tokyo and a 50 percent chance at Kansai of having your luggage opened. Kansai airport at busy times is the most unfriendly place in Asia for visitors. Families are split, Japanese sheep and foreign goats, and the officious officials don’t give a damn how long the queues are. Yokoso Japan is humbug.
Having got into Japan, if you want to use an ATM to withdraw money via a Japanese bank, as you can in every other bank in almost every other country of the world except North Korea, forget it, unless you use Japan Post. Big Japanese banks are not connected to international networks. ATMs do not work 24/7.
You want to open a bank account, it is a hard struggle through pages of forms in Japanese. You want to send money abroad from a Japanese bank, it will check you as if you are a criminal, even for tiny sums.
Japanese universities have slid down the international league tables as Chinese and Hong Kong universities have risen, even though in key areas like stem cell research, immunology, robotics, photonics, nanotechnology, Japan is at the cutting edge. My professorial colleagues grumble constantly about bureaucracy that binds and slows them.
While Chinese, Indian, Korean students have embraced the opportunity of learning at foreign universities, Japanese have increasingly stayed at home. Coming back with a foreign MBA or Ph.D. puts a Japanese two to four years behind on the career ladder and marks him out as oddball.
As for jobs at leading Japanese companies, foreigners and women need not apply. The IMF may say that women are the salvation of Japan and Abe himself pledged to build creches so that young mothers could continue to work, but there is a long cultural struggle before women will be accepted in the managerial workforce, let alone foreigners. Women managers are 9 percent in Japan, 43 percent in the U.S.
In the last 10 years Japan’s economy has kept chugging along through government spending. Corporate Japan has paid down debt, but with the exception of Toyota and carmakers has found international life increasingly tough against upstarts from South Korea, Taiwan and China. Japan’s inward direct foreign investment is 4 percent of GDP, dwarfed even by North Korea at 12.5 percent. Is there a connection between the lack of interest in the outside world and the fact that former Japanese stars like Sony, Sharp and Panasonic are suffering and don’t seem to be able to generate bright new ideas or products?
Yet when foreign investors have tried to ginger up Japanese companies, Japan Inc. joined forces to resist and keep them from playing a meaningful role. Ask Daniel Loeb, who suggested that Sony should split its electronics company from its entertainments division, or ask The Children’s Investment Fund, which has had several misadventures in Japan, or even ask Michael Woodford, the whistleblower CEO of Olympus, who was sacked for exposing the dirty deeds of the company whose president he had just become. Olympus indeed might serve as a useful anti-buzz word for Olympics and a reminder how far Japan has to go to join the world.
It is the same in politics and international relations. Japan, which has so much experience to offer, of war and peace, bitter defeat from militarism and pacific economic rise, is like a mouse on the international stage.
Beyond this, the rest of Japan should be seriously concerned about the concentration of so many things in Tokyo. It is a pity that Toru Hashimoto, mayor of Osaka, wasted his political capital by speaking so boldly about things of which he knows little, rather than articulating practical proposals for devolution not only for Kansai but for other regions of Japan that would benefit from greater autonomy.
Hashimoto spoke of making Kansai a great airport, but Osaka has watched powerless while both All Nippon Airways and Japan Airlines switched all their flights to America, Europe, the Middle East, Australia and South East Asia to Tokyo. Kansai Airport survives because of the patronage of foreigners, Air France, Cathay Pacific, Delta, Emirates, Lufthansa, Singapore Airlines, Thai Airways. We should applaud them for being brave enough to see the economic potential outside Tokyo — while Japan Inc., including government, finance, business, education, behaves as if only Tokyo matters.
Kevin Rafferty is a professor at Osaka University.