I usually forget to follow up on my threats (easy come, easy go), but I see that I’ve been retweeted, so…
The main point of Noah Smith’s op-ed is that the adoption of the corporate governance code currently being considered by an advisory council for the Financial Services Agency and having it heeded by corporations will be an embracement of neoliberalism that will assure Abe’s legacy. This post will not argue one way or other on that, since it is a matter of opinion on which I do not know enough to have one. Instead, I am going to talk about his opening monologue to tell you how bad corporate governance is in Japan. I also have no opinion on how bad or not it is; I’ll leave that to people like Nicholas Benes, whom Smith quotes, to worry about that.
Smith states: “Hostess” in Japan refers to a woman who works in a bar or a lounge and is paid to flirt with men. A French journalist once referred to them as “prostitutes who do not think they are prostitutes.”
Nothing personal, there are no hostesses among my relatives and friends that I’m aware of, but does Smith really think that a “hostess” has sex for money? Or does he belong to a religious sect that defines “flirting” as “prostitution”?
Smith goes on to state: Japanese corporate employees are the main customers at hostess bars. It’s a tradition in Japan to send (all-male) work teams to hostess clubs after hours, on the company dime. These sessions are often mandatory. Clients are also traditionally taken to hostess clubs by salesmen. Companies pay for these excursions, which go under the heading of “entertainment expenses.”… [I]n 2013, Shinzo Abe’s government introduced a plan to make “entertainment expenses” partially tax-deductible for large businesses (as they already are for small companies)… [I]t illustrates one of Japan’s biggest structural problems: poor corporate governance…. Wasting money on useless perks like hostess-club visits is merely a symptom of a much deeper disease.
Can Smith tell us what he thinks “useful” perks are? Or does his sect frown on all “perks” as “useless”? Being a loner by nature, I was never a fan of spending a mandatory evening out with people at my workplace, particularly when we had to go back to the office afterwards to finish up. (It also did not help that, as a civil servants, our bosses—mine at least—could not swing hostess club visits our way. Instead, I lost a lot of money playing mah-jongg…) But shouldn’t rewarding your sales team be part of business management 101? You have your business conventions in Miami, we have our afterhours treats. And it certainly seemed to have worked in the 1950s, 60s, 70s and 80s. Of course societies change over time. I have observed within my own working lifetime enthusiasm for such workplace “perks” as well as the once-ubiquitous annual workplace excursion wane, as younger employees increasingly came to prefer their own personalized afterhours companionships. “[E]ven more importantly,” though, Smith neglects to tell you that the FY2014 tax bill that reinstated tax breaks for big business does not cover entertainment for your own directors and employees (or for small businesses either, for that matter). That’s right, half of what Smith is railing against actually did not happen! As for the other half, i.e. entertaining clients, give me a break.