Commentary / Japan

Innovation needs to be a Reiwa goal

by Haruaki Deguchi

Emperor Akihito will abdicate on April 30 and his son, Crown Prince Naruhito, will ascend the throne on May 1, with the Imperial era name changing from Heisei to Reiwa. Such an era name system — in which only one name is assigned for the whole period of an emperor’s reign — was introduced by the Hongwu emperor of China’s Ming Dynasty when he assumed the throne in 1368. Although era names were once widely used in East Asia, Japan is now the only country to retain the system.

What kind of an era was Heisei in Japan? As the 30-year period is approaching its end, let me discuss two major points. The first is the issue of the emperor system.

As a law student at university, I majored in the Constitution. What was the hardest to understand was the status of the emperor as provided for by the Constitution. Article 1 says, “The Emperor shall be the symbol of the State and of the unity of the People, deriving his position from the will of the people with whom resides sovereign power.” Although I could understand the literal meaning of this provision, I could not form a concrete image of what is indeed the status and roles of an emperor.

But looking at the speech and behavior of the current Emperor and Empress over the past 30 years, characterized by their efforts to be on the side of people facing great difficulties, especially in consoling and encouraging people who have suffered from serious natural disasters, I came to understand the meaning of the emperor as the “symbol.” Emperor Akihito is the first to have spent his entire reign under the current Constitution. I believe that together with Empress Michiko, the Emperor has lived and behaved as the symbol of the state and the unity of the people with all his heart, mind and strength.

The Emperor, who thus has devoted all of his energy to fulfilling his constitutional role, expressed his desire to abdicate in a video message in 2016. Various opinion polls showed that nearly 90 percent of respondents supported his extraordinary move. Subsequently, the government decided on special legislation to pave the way for him to leave the throne. This development exactly embodies the provision in Article 1 that the emperor’s position “derives from the will of the people with whom resides sovereign power.” The departing Emperor’s position is precisely based on the will of the people.

It was thanks to the efforts of the current Emperor and Empress, who are loved and respected by most Japanese, that an emperor’s status as the symbol of the state and the unity of the people has taken root in this country. It may be said that the Emperor and Empress made the Constitution complete for the first time. The 30 years of Heisei was a period in which the emperor as the symbol was transformed from a legal provision into substance. I believe that in the future, the Imperial throne should be handed down to people who have descended from Emperor Akihito and Empress Michiko, irrespective of their gender. In that respect, the Heisei Era was a very significant period in Japanese history.

But the 30 years of Heisei was also clearly a period of stagnation as far as Japan’s economy is concerned. Over the three decades, Japan’s gross domestic product has halved in terms of purchasing power parity and its international competitiveness has fallen from the top position to 25th (as measured by International Institute for Management Development). When the Heisei Era began in 1989, 14 Japanese companies were among the world’s top 20 companies in terms of aggregate market value. Today, they have all dropped out from the top 20, with the top Japanese firm ranked 35th.

Why? In short, Japanese firms have essentially failed to produce any innovative products over the past 30 years. This is symbolized by the fact that unicorns — unlisted venture businesses that were established within the past 10 years, have an estimated value of $1 billion or more each and have the potential to become a next-generation GAFA (Google, Amazon, Facebook and Apple) — do not exist in Japan. In contrast, the United States has 150 unicorns, China 70, India 17 and the European Union 31.

Why were no unicorns born in Japan during the 30 years of Heisei? Because the nation has not been able to shed its manufacturing industry’s successful experience in the postwar period. Japan’s manufacturing sector is highly productive and the quality of its products is quite high. But it only accounts for slightly more than 20 percent of Japan’s GDP. It cannot be the driving engine of the Japanese economy. Japan has passed the stage where its manufacturing industry played the game of catching up with others — and reached a stage in which it needs to produce new added value and services. However, the nation suffers from a sheer lack of human resources capable of producing new thinking and ideas needed for that.

The people who drive GAFA and unicorns are not the type of people who are diligent, patient and willingly obey their bosses — the type of people wanted by Japan’s manufacturing industry. They are people like Steve Jobs, who had a unique character and was free from conventional thinking. Japan is also in need of people who have received advanced education and hold doctoral degrees, like the people who founded Google. Through free and open discussions among diverse people gathered from around the world, new ideas are born and lead to the creation of unicorns.

On the contrary, Japan during the Heisei Era pushed for education that sought to cultivate cooperativeness and obedience and sent students to universities that are difficult to enter — just like in the preceding decades after World War II. As long as students go through this kind of education, Japan will not be able to cultivate people who can breed new ideas. Japan’s education must be changed to value the distinct individuality of each student.

To accomplish this, each school must have its own distinct characteristic. In high school, it may be OK to give 70 percent of the students an education aimed at sending them to big-name universities. But the remaining 30 percent, endowed with distinct individuality, should be given chances to thoroughly master the knowledge and skill required in the fields they are interested in, like fine arts, music and animation.

The same can be said of universities. Japan’s universities are in a hierarchical system of homogeneity with the University of Tokyo at its apex. It is necessary to establish more universities that are different in character from the University of Tokyo, like Ritsumeikan Asia Pacific University (APU), of which I serve as president. By opening an entrepreneurship program, APU has undertaken the task of nurturing future entrepreneurs capable of launching new industries.

The key words for the new Reiwa Era should be “distinct individuality” and “diversity.” The rebirth of Japan can be achieved only by thoroughly cherishing these two values and cultivating the individuality of children. To attain this, Japan needs to invest more in education. No investment is more effective than education in bringing about positive effects for the future. Why was Japan not able to invest in education during the 30 years of Heisei? As is widely known, Japan’s investment in education in terms of percentage of GDP is always at the lowest level among OECD members.

The root cause of this is the government’s failure to restore its primary budget balance. When the budget for the first year of Heisei and that for this year are compared, spending for investment in policy matters — education, public works, national defense, etc. — has roughly leveled off in real terms. In short, Japan still cannot financially afford to make such investments. It needs to restore the primary balance and fiscal health as soon as possible, so it can start investing more in education and other policy areas. As an educator, I am determined to do all I can to nurture people of marked individuality who can take charge of building the new age.

Haruaki Deguchi is president of Ritsumeikan Asia Pacific University in Oita Prefecture. A lecturer and author of more than 30 books, he founded Lifenet Insurance in 2008 after a long career at Nippon Life Insurance Co.