Thursday, May 30, 2013

Labor Reform Not Happening?

A Q&(My)A that appears not to have been used in that media outlet, so here it is:

Q. Given that making it easier for companies to hire and fire people seems unlikely to happen now (according to reports…), what is your reaction? Is this something that Abe needed to implement and why? Is this going to cause problems in the labor market to build up?

Also, is there an outside chance that once Abe gets a majority in both houses, that he might then try to push through some serious jobs reforms, which may not initially be popular with the electorate?

A. I'm disappointed that he does not appear to be abandoning even the scaled-down version that would would allow businesses to buy out employees whose dismissal has been reversed by the arbitration and judicial process. Not surprising, I suppose, when the Abe administration is already avoiding other changes that could offend vested interests--failing to implement the public health insurance copayment hike (from 10% to a still generous 20%) for the elderly immediately comes to mind--ahead of the July upper house election.

He certainly could use what looks to be a more solid mandate from the electoral vote, more credible than the more or less (please do the arithmetic; I do not have the nmbers at the tip of my fingers) 40% of the votes  that won the LDP 70% of the seats, to further push the Abenomics agenda. But to do that in the immediate political future, he would have to leave the issues that he wants revisit open-ended in the official document scheduled to come out next month. I'm skeptical that he will do that, though, since it would open avenues of political attack for the DPJ against which he and the LDP would have a very difficult time forming a coherent defense. There's also the matter of easing in the consumption tax hike. He doesn't want any short-term negatives spooking that process. Moreover, he has a socio-political agenda with the consitutional amendment process at its core that he would surely like to devote the lion's share of his augmented political capital. Thus, my guess is that he will concentrate on implementing the third arrow as is and on pushing his socio-political agenda, while leaving other reform ideas for a later occasion.

I don't see the lack of progress being a meaningful economic drag in the short-run. The economy is on an upswing, so businesses will hire/contract or not depending on their perception of future prospects, if need be as irregular fulltime workers. In the long-run, though, Japan needs a lifestyle overhaul including different hiring/firing rules accompanied by changes in the social safety net to better utilize a diclining working-age population. Maybe after the next lower house election?

Yes, I have a dream.

Saturday, May 25, 2013

An LGBT Epiphany?

Or am I just late to the conversation? And is it sufficiently explanatory?

I’m having lunch with a couple of foreign correspondents, one of who wonders why Japanese women play such a small role in the public sphere and yet complain so little. I wonder too; it’s as if the feminist movement of the sixties and seventies came went here with minimal effect. I don’t have a good answer, so I broaden the scope of gender-related issues and bring up LGBT in Japan. Specifically, I wager that you can go into most any normal workplace and chances are almost nil that you will find someone who knows a co-worker to be gay. Again, what pressure there has been from the LGBT community has been too little and too few to make a difference. And it’s really an East Asia thing, if you look at the male near-monopoly on political leadership roles in China and the Koreas, or the dearth of LGBTs with public profiles there. (Someone brought up Park Geun-hye on a different occasion. But she’s the daughter of a dead president and only entered public life in her forties. That’s not even Hillary Clinton, that’s the story of every political dynasty in South Asia.)

But then I think I’ve come up with something: your great AIDS epidemic of the seventies and eighties. Suddenly, people around you, your family, friends, colleagues, get sick and died, people that you thought were “normal”, you realize aren’t actually “normal”… which forces you to reconsider the meaning of “normal.” And the outcome, most people who are reading this will surely agree, has been a positive one, if one still in progress.

Of course, that never happened in Japan. We did not have that debate here, because we did not have that great AIDS epidemic here. (We didn’t give women birth control pills, but we didn’t say no either. We have perforce been great consumers of condoms.) It was talked about, but mainly as something that happened “over there,” while the domestic headlines were dominated by a slew of infections by blood transfusion. No family, friends, or colleagues involuntarily outed by HIV; no personal rethinking.

Sounds plausible, doesn’t it? But am I satisfied? No. I prefer overarching solutions, so I’m still left wondering whether there is a significant connection between the ways that the two gender-related issues that took center stage of public discourse in their respective decades over there yet failed to properly materialize here.


And yes, it is amazing, even if she had been, as I suspect, a very proficient chess player.

Friday, May 24, 2013

A Kohno/Murayama-Abe-Hashimoto Dialogue

The following exchange took place between me and a Chinese analyst over the working week, edited for typos and augmented for clarity. I (think I) have his consent in reproducing his end.

1. “Just wondering what's your comment on Hashimoto, the Osaka Mayor's remakrs regarding the issue of ‘comfort women.’ I have a particular question on the possible consequences of politicians who delivers reckless remarks. If Mr. Hashimoto was a German politician, I assumed he'd already resigned from his post. 

“But obviously he's blaming people for their lack of understanding or ability to understand what he meant.  In this sense, are Japanese public more tolerant than in other countries to their public figures?”

If he were a cabinet minister, yes, I'm sure that he would have been forced to resign. But he's a mayor, and I'm sure local elected officials have said/done worse things unrelated to their job description and stayed on. The political damage has been done, though, and the Your Party has decided to break off cooperation with the Japan Restoration Party in the July upper house election, much to the delight of the DPJ
There a genuine need for an open debate on the where and what regarding the role of the Japanese government/military regarding the sexual demands of male soldiers and how all that compared to the other governments/military forces. But Hashimoto chose the wrong place and wrong interlocutors for his message--Hashimoto himself was also the wrong person to raise the issue.

A public figure must expect to have his words framed in a context not of his choosing.

Does that help?

2. “For an outsider like me, I'd assume that with the 1995 Prime Minister Tomiichi Murayama remarks on the comfort women issue, we turned a page of history. Why is [it necessary] to revisit that part of history, bearing in mind that it's a sensitive issue to Korea and China?”

Let me give you the short version of my answer to an ever so slightly different question, namely: Why do Japanese politicians keep revisiting that part of history, bearing in mind that it's a sensitive issue to Korea and China? 

First of all, there are two statements: the Kohno statement, which addressed the comfort women issue, and the Murayama statement, which addressed the Japanese war of aggression. Most Japanese politicians who have looked into the first issue as well as much of the Japanese mainstream media believe that the Kohno statement is not based on good evidence and is at best highly misleading. (I happen to agree with them regard to the women from the Japanese archipelago, the Korean Peninsula and Taiwan (who were all at the time Japanese citizens) but disagree with some of them with regard to the women in the areas of China and Southeast Asia that were occupied by the Japanese military. I’ll leave it at that for now.) They believe that South Koreans and the Korean-Americans have, with the complicity of the leftwing media in Japan, managed to whitewash the true history of the Korean comfort women as part of its national myth at the expense of Japan. They hold plenty of frustration inside, which sometimes boils over when they are prodded by reporters and Diet members. The outcome is always disappointing for them, which generates more frustration in a vicious cycle.

The Murayama statement is a different animal. Only people on the rightwing fringe (I hope) fail to see the post-1937 war in China terms of aggression. A slightly larger (but still small) number probably fail to see the post-1931 establishment of Manchuria as aggression. However, the 1894-95 Sino-Japanese War and the 1904-05 Russo-Japanese War are seen in a very different light by most Japanese. Specifically, they were wars fought between regional powers in a Hobbsian era of global imperialism, regional powers who were widely assumed to have militaries superior to that of contemporary Japan. The Chinese, no doubt, would frame it against the backdrop of the Opium War and other erosion of Chinese sovereignty by the Western powers, whose worldview the Japanese leadership seemingly adopted wholesale. As for Korea, the Koreans tell a story of a proud, independent nation subjugated by its longtime cultural (if not political) subordinate. The Japanese view is less clear, but there’s probably a large segment of the Japanese body politic that sees it this way: There was a dynasty ruling over a largely illiterate caste-ridden society complete with hereditary slaves and it was either us or the Russians. Yes, this sounds like the unedifying “everybody was doing it” defense. But have the Dutch apologized to the Indonesians? The British to the Burmese? The Americans to the Filipinos? The list goes on. So the story looks very different in the rest of Asia, explaining, perhaps, why they like us so much there. Does all this mean that the Murayama statement is wrong? No, but the commentary looks very different from the Chinese and Korean perspectives—as well as the American’s, which basically looks at its war in the Pacific through the Pearl Harbor perspective.

My take is that every nation will have its own national myth, not to the likings of others, perhaps, but not to be bent to their will either. If my advice had any currency, it would be: Never mind what they say; keep an eye on what they do.

“Polls show a majority of people are against Hashimoto's remarks. But he said there' s a problem with the polling method. If we take a look at the political elite group in Japan, how much support can Hashimoto count on? He's once considered a candidate for future PM, does the comfort women issue damage his chances?”

The other conservative parties (as well as some prospective JRP candidates) are avoiding him like the plague. I don’t think that he can fully recover from this reverse in his political fortunes in the foreseeable future. But then, the future is notoriously hard to foresee.

“People in Korea and China will naturally respond with concern over remarks like this in the sense that history will repeat itself in which Japan will impose its will on neighboring countries. I know it's an overestimated feeling toward the conservatives (so-called) in Japan. But people do have a concern there. Besides the comfort women issue, you have Prime Minister Abe's talk of "aggression" not being defined and his wearing a military uniform at an electoral event last month, among other controversial choices.”

Abe was wrong in one sense about the lack of consensus on the meaning of “aggression.” There’s a unanimous 1974 UN resolution on the definition of the term. The problem, of course, is in its application, and when did the opposing parties in any conflict ever end up in agreement? Ask the Turks and Armenians. The Israelis and Palestinians. The Mexicans and Americans. The Spaniards and Americans. The Filipinos and Americans. The Hawaiians and Americans. The Native Americans and Americans… The list goes on. Then ask, how do these differences in understanding affect the here-and-now, and the future? Do the Chinese and Koreans believe that the Japanese are willing and able to change the status quo by force? If so, that says more about them than it says about the Japanese in my view. Otherwise, be happy that Abe has reconfirmed the Japanese government’s commitment to those two statements. Did he want to? Probably not. But that’s the point. Isn’t confirmation by an unwilling prime minister worth far more than one from a willing one?

“How do people view that kind of gestures?”

Depends on the individual. “Comfort women” comments have far more negative domestic currency than those parsing “aggression.” BTW I was surprised that “aggression”=侵略. I had always assumed that it was “invasion”=侵略.

Saturday, May 18, 2013

Why Did Abe Dispatch a Senior Advisor to North Korea?

I have no way of knowing, which is probably a good thing, since I wouldn’t be able to talk about it if I did, would I? But I do have some thoughts around it, helped by a few healthy servings of generic whiskey, in case you’re interested.

1)    Park Geun-hye is not the first South Korean head of state to address a joint Congressional session. And we get it: South Korea has shed a lot of blood for the United States in Vietnam, Afghanistan and where else, whereas we haven’t even made up our minds to come to the protection of US warships patrolling nearby waters. Still, it must have been galling for Abe, who served Prime Minister Koizumi, famously denied by Congress for daring to go to Yasukuni during his tenure, and is in his second round as prime minister himself, to see Congress give her an opportunity to give an oblique kick to Japanese dignity. BTW what do Karzai and al-Maliki have that Koizumi and Abe don’t? Okay, wrong question.
2)    South Korea has vastly more at risk with regard to North Korea than Japan. We worry about rogue missiles, which may or may not carry a nuclear warhead in the possibly not-too-distant future. South Korea must worry about an all-out land war and a massive influx of refugees and a multitrillion-dollar reconstruction undertaking or, worse, North Korea’s absorption into China for all practical purposes, if not legal.
3)    Making nice with North comes with little if any economic costs to Japan. Abe has already managed to put Japan into play with regard to the TPP negotiations and now the Obama administration did not put a hold on LNG exports to Japan because of Iijima’s North Korean sojourn.
4)    And hey, Abe proved, as has been done time and time again, that the North Koreans are rational. And that should count for something.
5)    South Koreans are not going to settle for anything less than total acceptance of their national myths. Abe cannot afford that, even if he were inclined to do so, which he is not. And without that, at least one distinguished delegate from New Jersey is going to put a hold on a Japanese prime minister from addressing a joint congressional session. So, so much for that.

Has the Japanese Economy Really Sucked as Much as I’ve Been Led to Believe?

As doomsayers have changed their sell on Abenomics from it’s not going to work to it’s not really working to it’s not working that much all thing considered, I began to wonder, how much have we sucked, all things considered, anyway? The very first numbers that I looked at surprised me. I’m not an economist, so I’m putting them out there, just in case anyone is interested.
How poorly has the Japanese economy doing this century, say, relative to the rest of the G7? (Remember those countries?) Depends. The following chart shows the quotient of GDP in national currencies at constant prices, with 2013 and 2000 figures as dividend and divisor. It puts Canada ahead of the pack and the United States second, with Japan a disappointing sixth.

United States

United Kingdom





International Monetary Fund,
World Economic Outlook
 Database, April 2013
Does this mean that we suck, if not nearly as much as Italy? Not necessarily. The following chart using the same database shows the quotient of per capita GDP in national currencies at constant prices, with 2013 and 2000 figures as dividend and divisor. Italy still sucks, but the rest of them are bunched more closely together. And Japan has jumped to fourth place, leapfrogging France and the United States, just behind now third-place Canada.
United Kingdom
United States
Many things could be happening between 2012, when the GDP estimates were put together, and the end of the year, and middle-of-the-pack, 0.8% per capita growth per year isn’t anything to crow about. And the unconventional fossil fuel revolution will give the US economy a leg up on the rest of the G7 (while putting the eight and last-wheel Russia in a conundrum). Still, for now, I can say, “It could have been worse, I could have been in America all this time,” if barely? Or am I missing something so very, very obvious?

Saturday, May 11, 2013

Did Something Funny Happen to Me on China Radio International? I’m Staying Tuned

20130510Did Something Funny Happen to Me on China Radio International? I’m Staying Tuned
It’s a Friday night and I’m having a few beers with friends, when talk turns to my media appearances (or lack thereof recently). I mention my Monday turn on a China Radio International (CRI) panel discussion around the 61st anniversary* of the restoration of Japanese independence and the first thing that one of my friends says is that CRI appeared to have banned him, since it had asked him for comments regularly but hadn’t called on him for half a year now. So I told them my story and we wondered if I’d get the boot too.

* You may be wondering, why 61st? Obviously, surely because Abe wanted to commemorate the event as soon as he had the chance. But, then, why didn’t he do it in 2007, when he first had the chance? It actually makes sense when you remember that it is the 61st year that marks the beginning of a new sexagesimal cycle. You celebrate your birthday on the 366th, not 365th, day, don’t you? It’s the same thing.

CRI, like all audiovisual news outlets that I’m aware of, provides a list of questions beforehand so that the panelists/interviewees can prepare for the event, and the session usually runs more or less according to script. But this time, a funny thing happened. As one of the panelists was responding to the third question, my line went dead. When it returned, the exchange on Q6 was coming to an end and the session subsequently began to go off-script. I’m reproducing below the Qs and my As as they looked just before the session. If you have the time to listen to a one-hour podcast, click here. Incidentally, Professor Lawson was pretty awesome. Criticized Abe’s words, criticized China’s actions. I wonder if she’ll be contacted again, too.

Talking points:

1 How do you evaluate Abe's foreign affairs policy after he won the election this time?

I give him an A-minus. His economic diplomacy has been near-flawless. He engineered Japan’s entry into Trans-Pacific Partnership negotiations in time for meaningful negotiations against considerable domestic opposition. TPP in turn has spurred the Japan-China-South Korea FTA and the Regional Comprehensive Economic Partnership processes, while serving as a cornerstone of the third pillar of Abenomics. He is presiding over an auspicious start to his energy policy agenda—nuclear power, natural gas—with Vietnam, Turkey and elsewhere in the Middle East, and of course Russia. His political diplomacy is where I give him a minus, since he has helped annoy two important neighbors partly unnecessarily. Note that he has a chance of killing two birds with one stone vis-à-vis Russia as talks move forward on the Northern Territories.

2 Why could he lead the country to turn more conservative?

Fundamentally, because everybody else in the immediate neighborhood—China, South Korea, North Korea—is pushing the envelope on nationalism, becoming more aggressive. Prime Minister Abe’s political agenda is probably to the right of the Japanese public’s ideological gravity center, but anxieties around regional developments are further marginalizing pacifists.

3 Did Shinzo Abe want to reinterpret Japan’s war history? Abe commented on Japanese aggressions against China and Korea, saying there’s no clear definition of “aggression” either in academia or international communities. Different countries may have different understanding of the term depending on their own situation. Why did he do so? How dangerous is it for the region?

Actually, Mr. Abe is wrong about the definition of “aggression.” A UN resolution adopted unanimously in 1974 defines “aggression.” That said, there is an important question here. Specifically, does that definition apply retroactively? After all, Europe and the United States had been engaging in all sorts of aggressive behavior in Asia and worldwide for many years. Which leads us to my next point, which is: It’s obvious that, as Mr. Abe said, “It differs from which side you look.” If you don’t believe me, just ask the Israelis on one hand and Palestinians on the other, the Indonesians on one hand and the Dutch on the other, Anglo-Saxons on one hand and Native Americans ion the other, the Han people and the Tibetans and Uighurs… but you get the idea. As for why he said what he said, he was asked. In the upper house Budget Committee, where, by custom, the prime minister can be summoned to be subjected to questioning. But he also reiterated his intent to leave the matter to experts to hash it out; the overseas media tend to leave that part out of their reports, but Mr. Abe also should have left it at that.

4 But still Abe got over 70% for supporting rate, why is it? Does it mean domestically people support nationalism? Or is it more for his economic policy?

It’s Abenomics, Abenomics, Abenomics. His political agenda is of minor importance when it comes to opinion polls.

5 Will this support rate push him further on the road of nationalism and right-wing orientation?

Support for his administration is key to achieving his political agenda, which is already fairly clear. It does not change his orientation, but it certainly makes it more potent.

6 Japan is trying to escape the post-war regime. What steps/measures have been taken by Abe on this road?

I don’t know what you mean by “escape the post-war regime,” but if you mean develop ballistic missiles, nuclear weapons, and aircraft carriers, no, Japan is not, give us credit for not being that stupid. But if you mean, coming to the defense of allied military vessels under attack, coming to the defense of UN PKO forces under attack, yes, I think that Mr. Abe wants that, and a majority of the Japanese public will support him on this.

7 In 2007, when Abe served as Prime Minister for the first time, the national referendum law was enacted. The law established the procedures for amending the Constitution. Is this just the first step for Abe’s goal of revising Japan’s pacifist Constitution?

Yes. Without the law, the process could not go forward. But remember, not only the LDP but the DPJ also wanted to amend the constitution in principle, so it also supported the law. Most Japanese political parties of significance and a healthy majority of the Japanese public want to amend the constitution. However, they are very much divided on what they actually want in an amendment. So how China deals with this desire will play a meaningful role in how the eventual consensus evolves.

8 In Japan, fresh calls for constitutional amendment from various political parties have got louder. Why is it? How likely is it for Japan to amend the Article 9 of its Pacifist Constitution?

A determined and powerful prime minister is surely needed for and probably capable of putting such a momentous initiative of little immediate consequence for the Japanese public at the front and center of the national debate. Mr. Abe is the first prime minister to make progress in this respect a centerpiece of his eventual legacy, while the early success of Abenomics has prolonged the proverbial post-election honeymoon. So he’s serious, which means that all the other parties have to speak up as well. I expect that the Self-Defense Force will be recognized as an army and that the role of that military in international peacekeeping operations will be sanctioned. An affirmation of the right to collective self-defense is also to be in order. Otherwise, the pacifist elements of Article 9 will remain in place and may even be augmented, depending on how far the LDP can go without forcing the Komeito to bolt the coalition.

9 Will the US allow Japan to revise its pacifist Constitution? What role will US play in this issue?

Japan is a sovereign state. And has the United States ever intervened in the constitutional amendment process of a democracy? Case closed. Besides, any assertive commentary from the United States, or China for that matter, is likely to have the opposite effective in the national debate over the constitution.

10 How dangerous is it for the region if they finally get Pacifist Constitution Article 9 revised?

No more than, say, the extent to which the region is threatened by South Korea’s constitution, whatever it says about its military. Did you know that South Korea has compulsory military service? Look, Japan is not going to retake the Northern Territories or Takeshima by force just because it has a new Article 9. And it already has administrative control over the Senkaku Islands. And if an amendment enables the Japanese Self-Defense Force to play a more effective role in UN peacekeeping operations, I hope that our neighbors, who are already very active in this respect, should support it wholeheartedly.

11 Another event is that for the first time, Japan officially celebrated the day of restoration of Japanese sovereignty on April 28, when the San Francisco Peace Treaty was signed 61 years ago to end the occupation by allied forces. The event was marked with the presence of both the Prime Minister and emperors and empress. How meaningful is this event? Is this another signal that Japan is on its way to more right wing?

The event does not change the facts on the ground: the Japanese government is not going to increase its defense spending by 10% or even 5% per year. The Japanese Self-Defense Force is not going to take the Northern Territories or Takeshima by force. The Maritime Self-Defense Force is not going to lock fire-control radars on PLA vessels on the high seas. The event does not change the national narrative that molds Japanese behavior. The left wanted Japan to repudiate the past; the right wanted to celebrate it. The Prime Minister did neither, and chose to focus on the post-war recovery, both the economic and the political. And I suspect that the Japanese public was more focused on enjoying the long Golden Week holidays.

12 When defending the controversial visit to Yasukuni Shrine by ministers and parliament members, Abe dismissed the concern by neighboring countries, arguing that it’s natural for people to pay respect to soldiers who died for their national interests. He also mentioned of using “force” to expel potential Chinese landing on Diaoyu Islands. What message do these send?

What else could he say when reporters or Diet committee members ask these questions? After all, Diet members and cabinet ministers have long visited Yasukuni—notable Yasukuni supporters include universally-recognized pro-China doves, such as former Foreign Minister Masahiko Komura and former Prime Minister Yasuo Fukuda—and the Abe administration has adhered to the deal that the Prime Minister, the Chief Cabinet Secretary, the Foreign Minister, and the Defense Minister stay away. And the Japanese government, exercising administrative control, has always used force to expel anyone who has landed on the islands, including Japanese nationalists. In fact, it was precisely to keep Japanese nationals away from those islands that the Noda administration tried to buy the remaining three in a bidding war with Governor Ishihara.

13 Japan has strengthened its relationship with the US and will continue to seek support from the US to gain an advantageous position in related territorial disputes. Japan is aware that the US refuses to take sides in the Diaoyu Islands issue. The US has claimed that it will support neither Japan nor China in the territorial disputes. However, Japan has managed to make the US confirm that the Diaoyu Islands fall within the scope of the US-Japan Treaty of Mutual Cooperation and Security. Why did US take such positions? Does it mean the US also need/rely on Japan to fulfill its “pivot to Asia” strategy?

States, as a rule, do not take sides on territorial disputes, which should be settled by negotiation, arbitration, and, that failing, at the International Court of Justice. But states do take sides when use of force comes into play. Specifically, Japan exercises administrative control over the Senkaku Islands, control that the United States ceded when it returned Okinawa to Japan. There is a mutual security treaty between Japan and the United States. Ergo, the United States is obligated to come to Japan’s defense on the Senkaku Islands. So it’s just a reiteration of the legal implications of the status quo.

14 At the same time, Japan will further its military buildup and will probably go beyond the exclusively defense-oriented strategy. Due to the restriction by the pacifist Constitution, the Self-Defense Forces are not allowed to possess intercontinental ballistic missiles, strategic bombers, or attack aircraft carriers. However, Japan has been trying to bypass the Constitution to upgrade its military capability. For instance, Japan has invested a lot in the Maritime Self-Defense Force. How dangerous is it to the neighboring countries like China and South Korea? And the Northeast Asia region?

Like you, I do not worry about Japan developing intercontinental ballistic missiles, strategic bombers, or attack aircraft carriers. They are very expensive, and any efforts directed towards the development of such indigenous capacities will be strongly discouraged by the United States. Besides, any increase in the overall defense budget will be very incremental. Do not expect anything like 10% or even 5% per year. I can see factions in the PLA and their political, industrial and academic supporters making those arguments, though; the military—to be fair, all militaries, not just China’s—is always looking for potential enemies.

15 What’s the prospects of Japan’s relation with China? South Korea? Will the regional countries accept Japan’s growing right-wing trend?

The question you really should be asking is: Will China persist in its efforts to change the status quo vis-à-vis Japan, Vietnam, the Philippines, and India? On a related, if geopolitically less important matter, will China continue to allow North Korea to develop nuclear weapons? The Japanese public will support Mr. Abe as long as China’s answer to these two questions is “yes.”

16 What should Japan do to restore its relation with regional countries?

Stand up for its rights, fulfill its obligations, and respect the rule of law. And be as consistent as circumstances allow in its actions and words.

Thursday, May 02, 2013

Is Mrs. Watanabe Already Gearing Up to Play the Role of the Greater Fool?

Analysts agree that individual investors largely sat out the pre-lower house-election, post-summer, stock-market recovery. Most also believe that they have been instrumental in the post-election bull market along with overseas investors. However, there’s dissenting opinion that claims otherwise, telling us that they have been for the most part been net sellers. So who’s right?

My money is on conventional wisdom. Individual investors had been buying and selling equities in the neighborhood of 3 trillion yen per month most of 2012. In December, the month of the lower house election, the figures jumped to 5.5 (buy) and 6.0 (sell) trillion. In January, the monthly numbers crossed the 10 trillion threshold, where they have stayed ever since. What has happened is obvious: Mrs. Watanabe is selling stock, taking out some cash, then plowing most of the money back and/or churning her equity holdings—most likely both. (There’s data to make a more educated guess if you’re interested.) Either way, the individual investor is obviously helping to drive up the stock market. The real question is: If Mrs. Watanabe is finally here, can a bubble be far behind?

Wednesday, May 01, 2013

From Prime Minister Abe’s Take on “Aggression,” to Reading Entrails

Prime Minister Abe said the wrong thing, but was what he said wrong? But first, let’s clear up one thing; the Japanese media did not “refrain” from covering Prime Minister Abe’s comments around his intention to revisit the Murayama Statement and more specifically his views on Japanese “aggression.” Here are online samples dated April 23 from three major dailies (translation mine):

Asahi: On April 23 at the House of Councilors Budget Committee, Prime Minister Shinzo Abe stated with regard to the Murayama Statement, which expressed remorse and apologized for colonial rule by Japan that “the definition of ‘aggression’ has not been determined, academically or internationally. It differs from which side you look in the relationship between one country and another.”
Prime Minister Abe agreed that “it can be said [about the phrases in the Murayama Statement ‘not too distant past’, ‘following a mistaken national policy’, and ‘colonial rule and aggression’ that they] are vague points.”

Mainichi: On April 23 morning at the House of Councilors Budget Committee, Prime Minister Shinzo Abe expressed the understanding with regard to the Murayama Statement, in which then Prime Minister Murayama apologized for past colonial rule aggression by Japan, that “the definition of aggression has not been determined, academically or internationally. It differs from which side you look in the relationship between one country and another.”

Yomiuri: Regarding the 1995 Statement by Prime Minister Murayama, which apologized for the past colonial rule and aggression, [Prime Minister Abe pointed out that “it can be said that the definition of “aggression” has not been determined, academically or internationally. Regarding the passages where the statement says among other things, “During a certain period in the not too distant past, Japan, following a mistaken national policy…”, he stated that “it can be said that they are vague. These issues have been pointed out in the statement.”

Sankei is the only one of the four major dailies that failed to report Abe’s April 23 comments. At first glance, this is odd. After all, the Murayama Statement is a pet peeve of the staunchly nationalist daily. However, it did cover an earlier Abe statement at the same Budget Committee the previous day that reiterated his commitment to issue a new statement in 2015, the 70th anniversary of the end of WW II (which the other dailies apparently did not deem sufficiently newsworthy) and, like the other dailies, has been providing significant coverage of the subsequent overseas fallout. Most likely, the reporter or his/her editor considered the April 23 comments merely incidental to the reiteration of Abe’s determination and consequently insufficiently newsworthy, at least for that particular day.

Whence the misunderstanding? First of all, you have a problem if you have to rely on The Japan Times and the English language versions of the Japanese dailies for news on Japan, Second, what you see online may not be what you get on hardcopy, and the dailies have different internet strategies. A cursory online search may be insufficient to tease out editorial intent (and its potential impact) as evidenced in the coverage.

In this case, an online search was sufficient to dispel any notion of a media conspiracy, implicit or explicit. But note that the difficulties for political analysts do not end there. Economists have at their fingertips (nowadays quite literally) numerous quantitative data sets collected and arranged for a wide variety of temporal and spatial densities, which they can mine for correlations on which to superimpose their favored causal relationships. Pity the poor political analysts, though, who for the most part only have monthly (at best) public opinion polls with their limited number of often changing questions and election results to work with. Beyond that, they have to make do with descriptive information and told-to stories: the former limited by inherent medium bias, the latter by the fact that even highly placed sources, once beyond matters of their immediate ken, must rely on the same recursive information cloud generated by the media and rumormongers that the analysts can tap in on their own.

If the economic analyst is a practitioner of numeromancy, then the political analyst is condemned to read entrails.

I’ll take a shot at answering my initial question later, and I think I already have the gist of it in my head. But this is it for now. Life beckons.