Japanese Prime Minister Naoto KAN

Japanese Prime Minister Yukio Hatoyama announced this week that he, his entire cabinet, and the powerful Ichiro Ozawa, Secretary-General of the Democratic Party of Japan (DPJ), would resign. Hatoyama would be succeeded by Finance Minister Naoto Kan, a fiscal conservative who is one of the founders of the DPJ. This move, which comes less than a year after the the party swept to power with promises of change and a break with the past.

The Democrats now face their first major leadership challenge since taking office. While reshuffling the government has been common in post-war Japan, the big difference between the DPJ and the previously ruling party, the Liberal Democratic Party (LDP), is that the LDP has a big well of experienced leaders on which to call. By contrast, the DPJ is relatively young and is having to scramble to suddenly find suitable candidates for a number of key positions.

The political goal for the shake-up seems clear:  After eight months of indecision and broken promises, Hatoyama bowed to party pressure to leave in advance of July’s elections for seats in the upper house of the Diet.

Japan is in transition

The choice of the 63-year-old Kan to succeed Hatoyama is not entirely unexpected, but highlights a dilemma in the DPJ leadership. Despite the fact that the DPJ ran on an agenda of reform and wants to represent change, Kan is closely associated with the government apparatus, being one of the founders of the DPJ and its leader on two occasions since the late 1990′s. Another rumored possibility for the post had been free-market supporter Shinji Tarutoko, who heads the House of Representatives Environmental Committee, but who was relatively unknown by establishment politicians. In other words, it seems that the party’s appetite for trying new approaches is muted.

All of the commotion surrounding the Prime Ministerial change is merely a distraction from Japan’s underlying trends: greater involvement on the international stage, including matters of defense and global security, and a pressing need to develop a new social structure that can accommodate Japan’s shrinking population base. The country is struggling to maintain growth in the face of this demographic crisis, and it remains to be seen whether Japan can rein in its debt, which stands at about 200% of the nation’s GDP.

It’s all very regular, very orderly and, most importantly, very predictable.

But it seems to me that predictability is not the prescription for succeeding in today’s open global markets. And the Japanese themselves have seen less of this predictability, with the reduction of retirement benefits and the retraction of so-called lifetime employment in most sectors. Yet, the social structures seem largely unfazed by the new realities of the global economy, and of the severe impacts it is having on the Japanese themselves.

And so I was happy to come across a very nicely written Op-Ed piece in the New York Times this week, written by Masaru Tamamoto, an iconoclast who asks the serious question “where is Japan going?” By calling into question the discrepancy between those who cling to an aging Japan that is free from foreign influence and the potential for a Japan that is more progressive, he sheds an interesting light on contemporary problems of immigration, social class and risk-averse behavior normatives in Japanese society.

In my experience, I find that Japan has many tremendously gifted people; moreover, the industriousness of the country is beyond reproach. Yet a feeling of stagnation seems ever-present — sometimes close at hand, and sometimes more distant, but always there.  Life in Japan — not just for me, but also for my Japanese friends — is good.  But the social structure seems to demand that no one really succeed in a big way.  In the long run Japan needs and deserves more.  We’re all canaries in a gilt prison.

The original article is available on the New York Times website.

Op-Ed Contributor

Japan’s Crisis of the Mind

By MASARU TAMAMOTO
Published: March 1, 2009

Yokohama, Japan

RECENT events mark Japan’s return to the world’s stage, or at least so it seems. Tokyo was Secretary of State Hillary Clinton’s inaugural overseas destination. Last week, Prime Minister Taro Aso was the first foreign leader to visit the Obama White House. All this suggests that Washington sees Japan, the world’s second-largest economy, as a powerful nation. If only we saw ourselves the same way.

The truth is, Japan is a mess. Mr. Aso’s approval rate recently hit 11 percent, and his ruling Liberal Democratic Party is in open disarray. His predecessor barely lasted a year. The opposition Democratic Party of Japan just offers more of the same. This is largely because we have become a nation of bureaucrats. What passes for national policy is the sum of various ministerial interests, often conflicting or redundant, with jealously guarded turfs and budgets.

There can be no justification for all those mostly unused airports. Or for roads that lead nowhere. Or for the finance minister who appeared to be drunk at the Group of 7 meeting this month in Rome. Our problem is so deep that it sometimes seems that no political party can tame the bureaucracy and put in place a coherent national agenda.

But what most people don’t recognize is that our crisis is not political, but psychological. After our aggression — and subsequent defeat — in World War II, safety and predictability became society’s goals. Bureaucrats rose to control the details of everyday life. We became a nation with lifetime employment, a corporate system based on stable cross-holdings of shares, and a large middle-class population in which people are equal and alike.

Conservative pundits here like to speak of this equality and sameness as being cornerstones of “Japanese” tradition. Nonsense. Throughout much of its history, Japan has had social stratification and great inequality of wealth and privilege. The “egalitarian” Japan was a creature of the 1970s, with its progressive taxation, redistribution of wealth, subsidies and the dampening of competition through regulation. This all seemed to work just fine until our asset-price bubble popped in the 1990s. Today, the hemmed-in Japanese seem satisfied with the knowledge that everyone around them is equally unhappy.

Since the middle of the 19th century, our economic success has relied on the availability of outside models from which to choose. Our model for social security took inspiration from Bismarck’s Germany, state planning from the Soviet Union, public works from the Tennessee Valley Authority, automobile assembly and manufacturing from Ford. Much of Japanese innovation has involved perfecting what others have created. Sony is famous for its Walkman, but it didn’t invent the tape recorder. Japan’s rise to economic greatness was basically a game of catch-up with the advanced West.

So what happened once we caught up? Over the past two decades, the answer has largely been paralysis. Japan’s ability to imitate outside models was mistaken for progress. But if progress is defined by pursuing a vision of a desirable future, then the Japanese never progressed. What we had was a concept of order and placement, which is essentially stasis.

In the West, on the other hand, the idea of progress rests on establishing individual autonomy and liberty. In Japan, bureaucratic rule offered security and predictability — in exchange for personal freedom. The problem is that our current political leaders can’t keep their side of the bargain. Employment security can no longer be guaranteed. The national pension and health plans seem to be insolvent in the long run. People feel both insecure and unfree.

Signs of despair are everywhere. Japan has one of the highest suicide rates among rich countries. There may be as many as one million “hikikomori,” from teenagers to those in their 40s, who shut themselves in their rooms for years on end. Then there are all those “parasite singles” — or unmarried adults living with their parents. But by far our most serious problem is a declining and aging population. Given present trends, total population will likely decline from around 130 million to under 90 million in 50 years or so. By that same time, 40 percent of Japanese could be over 65.

If we want to survive as a nation, we must shed our deeply rooted resistance to immigration. Contrary to widespread prejudices in favor of keeping Japan “pure,” we desperately need to dilute our blood. Our aging nation will need millions of university-educated middle-class immigrants with high productivity, people who will put down roots and raise families, whose pride and success will be the affirmation of new Japanese values.

Japan desperately needs change, and this will require risk. Risk-taking is not common among the bureaucratically controlled. You won’t find many signs on Japanese beaches saying, “Swim at your own risk. No lifeguard on duty.” If that sign were to appear, many Japanese would likely ask the authorities to tell them if it is safe to swim. This same risk aversion translates into protectionism and insularity. The ministry of agriculture, for example, wants to increase self-sufficiency in food. There is not nearly enough critical thinking and dissent in the Japanese news media.

Still, the idea that the Japanese are afraid of risk has no basis in history, for better or for worse. Remember Pearl Harbor? In fact, Japan’s passiveness today is in large measure a calculated and reasonable reaction to its behavior during the Second World War. But today, this emphasis on safety and security is long past its sell-by date.

We have run out of outside models to imitate. We must start from scratch, embracing an idea of progress that is based on innovation, ambition and dynamism. Doing so will take risk — and extraordinary leadership. But the alternative is to continue stumbling down a path of decline.

Masaru Tamamoto is a senior fellow at the World Policy Institute.