/

Why 3/11 didn’t change Japan

by

BARRON'S ASIA

On March 13, 2011, Haruhiko Kuroda stared out the window as our Boeing 777 descended toward a Tokyo in chaos, visibly anxious about what we might encounter. It was two days after the near-cataclysmic earthquake struck northeastern Japan and precipitated a nuclear meltdown. I was in the Philippines when as many as 20,000 died, and grabbed the first Tokyo-bound flight that was allowed to land. Kuroda, then president of the Manila-based Asian Development Bank, sat across from me on the near-empty flight. We remarked on the obvious irony of us rushing to a city hundreds of thousands were fleeing. “I’m returning to do what I can to help,” he said.

Two years later, Kuroda returned again to helm the Bank of Japan. But my four-hour flight with him was stuck in my mind as Japan commemorated the fifth anniversary of that record trembler. As Kuroda and I chatted about the devastation in Tohoku and the unfolding Fukushima crisis, my fingers were clicking away on what days later would be Bloomberg BusinessWeek’s cover story, “Crisis in Japan.”

In it, I tried to accentuate the positive, exploring how March 11, 2011, could have been a turning point for Tokyo’s sclerotic political system (a possibility Kuroda also raised). Giant Japanese quakes tended to catalyze major change: in 1855, 1923 and 1995. The idea 3/11, which triggered the worst nuclear crisis since Chernobyl, might be transformative filled Malcolm Gladwell’s head, too. “The only time you can get things done is in moments of genuine crisis and catastrophes — there’s a small opportunity to do an extraordinary amount,” the author of “The Tipping Point” observed. “Japan, a country whose politics were in deadlock and sluggish for many, many years, I hope they can seize this moment and accomplish a lot.”

Five years on, the deadlock remains. Japan is on its third prime minister since 3/11, and even self-described transformer Shinzo Abe can’t soften the headwinds heading its way. Growth is negligible as national debt rises apace, the population shrinks and Beijing steals more and more of Tokyo’s thunder. Deflation persists, no matter how many trillions of dollars of liquidity Kuroda pumps into markets. Rebuilding efforts in Tohoku are glacial. The plight of Fukushima refugees (100,000 people still can’t go home) took a back seat to Tokyo’s preparations for the 2020 Olympics. When politicians do make it up to Tohoku, it smacks of disaster porn. All photo ops, no substance.

So why did Tokyo fail the Gladwell test? One explanation is it simply wasn’t hit hard enough. Tokyo shook like mad that day; the epicenter of the magnitude-9.0 quake was just 370 km away. Skyscrapers swayed, bullet trains braked and explosions filled the Tokyo air with smoke, but the devastation still felt remote. Another: micromanaging bureaucrats dragging out decisions in rural areas. And never underestimate the power of denial. Naoto Kan, Yoshihiko Noda and Abe all pledged to do whatever it takes to resurrect the disaster zone, yet each prime minister did even less than his predecessor.

“Under Abe, Tohoku has become a sign of national attention-deficit disorder,” says Jeff Kingston, head of Asian studies at the Tokyo campus of Temple University. “We’ve gone from ‘whatever it takes’ to restore the devastated areas to ‘move on, it’s OK, it’s safe. Bring on the Olympics!’ ”

But as The Japan Times put it in a recent expose, “Tohoku is literally still waiting to move on.” Even the pro-Abe broadcast media alleges Tokyo is fiddling with data to show all’s well with rebuilding efforts. Environmental activists doubt the government’s radiation figures, estimates of how much toxic water is leaking into the oceans and claims by Tokyo Electric Power Co., which owns the Fukushima No. 1 reactors, that families can move back into the nuclear zone. Only last month were three former Tepco executives indicted for negligence, the first time a court will look into the 2011 record of a company that makes BP and Monsanto look good. Better late than never, I guess.

Oddly, 3/11 may have done more to solidify pre-existing policy preferences than change them — in ways that explain why Abenomics hasn’t gotten very far.

Japan’s Gladwell moment seemed assured in July 2012, when Kiyoshi Kurokawa released his headline-grabbing Fukushima report. Lawmakers probably expected the Tokyo University professor emeritus to proceed gently when they tapped him to investigate what went wrong. Kurokawa went spectacularly off-script and called the nuclear debacle a “profoundly man-made disaster” for which all of Tokyo shared responsibility.

Tepco deserved the most blame, of course, for decades of fudging safety reports and bizarre decisions like placing backup power generators where the tsunami could swamp them. Kurokawa also indicted a toxic and corrupt political culture that enabled and protected Tepco. His 641-page opus slammed the “nuclear village,” the cabal of pro-reactor politicians, regulators and companies that is Japan’s answer to America’s “military-industrial complex.” It was a powerful moment: a respected, independent voice despaired at the “ingrained conventions of Japanese culture” and the dangers of “reflexive obedience; our reluctance to question authority; our devotion to sticking with the program; our groupism; and our insularity.”

But the moment passed, and quickly. “The never-let-a-crisis-go-to-waste mentality never got traction in terms of what needed to be done differently,” Kingston says. “Instead, policy entrepreneurs drew lessons that favored their long-standing policy desires and thus 3/11 provided political cover for ramping up pre-existing reform proposals and sustaining policy inertia rather than lead to a Big Bang shake-up.”

Japan’s present, relative to what might have been five years, sheds light on why Abenomics also has gotten little traction. When Kuroda flew to Japan’s aid a second time, in March 2013, he trusted Abe would do his part. The BOJ’s “bazooka,” as Kuroda told me days before he formally joined the BOJ, would set the stage for the real fireworks: a structural reform onslaught that would overwhelm the bureaucracy and remake a jaundiced Japan Inc.

Kuroda did his part, and then some. His recent step toward negative interest rates smacked of desperation, though, as the government drags its feet on deregulation, loosening labor markets, encouraging entrepreneurship and opening protected sectors. Abe’s answer to the debt burden that has short-sellers circling is consumption tax increases devastating consumption and necessitating increased borrowing.

One problem is distraction. This government is far more interested in liberalizing military constraints to let soldiers fight abroad than the economy. Timidity is another. When you read Kurokawa’s Fukushima report, obvious economic parallels leap forward. Even with high approval ratings and a legislative majority, Abe’s team remains unwilling to take on ingrained Tokyo conventions. It displays its own reflexive obedience to Japan Inc.’s ways and the insularity chipping away at its global standing.

Why, for example, isn’t Tokyo shaming executives sitting on trillions of dollars of cash to share the wealth? Or pushing the Diet to enact the epochal change Japan needs? Why are regulators so reluctant to pounce on Takata, Toshiba and other companies tarnishing the national brand? How come efforts to improve corporate governance and empower women are so milquetoast? Why hasn’t Tepco been nationalized, when taxpayers will pay much of the roughly $100 billion cleanup tab anyway? And why is such a seismically active nation racing to reopen nuclear reactors and ignoring the potential for a made-in-Japan renewables revolution? The answer, just as Kurokawa despaired, is a devotion to sticking with the program no matter what.

Surely Kuroda doesn’t regret coming to Japan’s rescue five years ago. But that second time in 2013 to help Abe transform the nation? I’d bet it’s being put to the test. Kuroda could be excused for wishing he’d stayed in Manila.

William Pesek, executive editor of Barron’s Asia, writes on Asian economics, markets and politics. www.barronsasia.com

  • Amused Male

    Mr. Pasek’s article does not entirely agree with my own observations while in Japan in October of 2014. Inaction by the government is not how I would characterize what I saw:

    I visited my hometown and birthplace in southern Japan in a Pacific coast district well within a Tsunami flood plain were one to strike southern Japan. I found many things that had changed due to the Tohoku Tsunami.

    First, I saw a lack of new building construction in the lower elevations, but some visible above 30 meters in elevation farther inland, which is also the theoretical elevation that the local government is using in its disaster planning program. I suspect that there was direct insurance (i.e. private sector) causes for this, as well as permit issuance policy changes (i.e. public sector) as well, although I can confirm neither. I also qualify my comment by it being anecdotal–actual survey information would be useful and far more accurate.

    Second, I saw public safety posters throughout the area regarding elevation above sea level. This was a stark reminder that even sleeping at the lower elevations could mean meeting one’s end in a tsunami. This is again, hardly the sign of an inactive government, although again, the effectiveness of the policies will perhaps never be known in this generation.

    Third I observed government mandated earthquake security measures, including interior anchors for furniture, tying closets and shelving units to existing walls. I was informed that these were enforced by actual visual inspection by local government block wardens.

    I saw tall concrete evacuation towers along the sea coast, 1 km apart, for the local fishing villages to try to reach in the event of a large earthquake (and presumed tsunami to follow). These were apparently funded by public sector funds, although my information is again anecdotal. However based on the cost of such structures, I highly doubt they were funded by private funds.

    Finally I saw massive piles of tripod concrete objects to slow smaller waves stacked on the beaches. These extended for mile after mile. These would be effective in protecting the villages that ring the coastline from lower waves, although would provide little protection from “tidal” surges that characterized the inundation of some Tohoku communities. Visually I would say that they may be effective against waves of 3 – 5 meters at high tide. My observation is simply an amateur’s back of the envelope guess. However, this long pile of concrete barrier objects were funded and installed presumably with public sector funds.

    • thedudeabidez

      If it’s cncrete, they can do it, because the contractors are a fine source of LDP “donations” and amakudari jobs for retired bureaucrats.

      • Amused Male

        Yes of course. The article expects change and asserts nothing happened. But all I saw was change.

      • Amused Male

        Yes of course. The article expects change and asserts nothing happened. But all I saw was change.

  • thedudeabidez

    It’s interesting to read this column and then turn the page to read Kaori Shoji’s column Bilingual which discusses kafunsho, spring pollen allergies. There is perhaps no greater example of the complete and utter dysfunction of Japanese politics. The number of pollen sufferers has been increasing year on year for decades now, with huge numbers of people resigned to wearing masks and suffering from cold-like symptoms for weeks on end. Children are getting the allergies at a younger age, and older people who never had them before are starting to develop problems mid-life.

    This is a major quality of life issue for nearly a third of the population. The cause is known: cedar trees, which were over-planted after the war to be harvested as wood, and then left standing when imported lumber became cheaper. The reason allergy effects in cities like Tokyo and Osaka are so extreme is also clear: smog, and a lack of soil. Since everything is paved over, the pollen is not absorbed, but instead remains on the concrete streets and in the subways, building up and blowing around until there is rain to wash it down the sewers.

    It does not take much imagination to imagine an aggressive program of reforestation, restoring a natural diversity of trees instead of a man-made monoculture of cedar. It’s also easy to imagine investing in more green space in the cities, which would provide residents with benefits far beyond just pollen reduction.

    But, the creative thinking necessary to put someone to work in a forestry job instead of working with concrete on buildings and roads, that one simple leap of the imagination, seems to be too much for any political party to propose. The idea of creating more green space in Tokyo, to help cut down on summer heat, carbon emissions, and to create more space for relaxation and exercise for its residents, does not even exist; on the contrary, more green space is being lost to buildings for the 2020 Olympics.

    In a normal political system, politicians attempt to provide solutions to glaring problems in society. In Japan, this just does not happen.The Ministry of Agriculture and Forestry has stated that at current Ace, reforestation should take another hundred years. I’m not sure which is worse: politicians so devoid of imagination and energy, or a public that’s willing to accept that as the norm.

    • Amused Male

      Creative thinking is a highly culturally normed idea.