After the deluge: Japan's response to the 2011 tsunami demonstrated its enduring strengths ©PA
David Pilling is the Asia Editor of the Financial Times. He was its Tokyo Bureau Chief from 2002-2008 and he has drawn on his time in Japan in his new book, "Bending Adversity: Japan and the Art of Survival" (Allen Lane, £20). Pilling's book begins and ends with the earthquake and tsunami which hit Japan in March 2011. But the story he tells is a much bigger one: of Japan's ability to overcome "successive waves of adversity from would-be Mongolian invasions to repeated natural disasters". Japan's national genius, Pilling implies, lies in the art of recovery. I talked to him during his recent visit to London from Hong Kong.
JD: The title of your book, Bending Adversity, comes from a Japanese proverb about turning bad fortune into good. But this doesn’t just give you a title does it? It’s your organising metaphor too.
DP: It’s a sort of organising principle, yes. After the tsunami, I called an old friend of mine, someone who’d been a vice-governor of the Bank of Japan, and he quoted this saying to me. It says something like, “Make the best of a bad situation.” I wanted a more literal transition and I came up with: “Bend adversity and turn it into fortune.” I thought this was an interesting way of organising a book that was going to start and finish with the tsunami.
People have often thought of Japan as a place where nothing changes until there’s a huge crisis and then everything changes. The two data points, as Bill Emmott memorably put it in a review of my book, are the Meiji Restoration, where Japan ripped up feudalism and established a parliamentary democracy of sorts in a very short space of time, and the second was ditching its attempt to become a “great power” by building up an empire and changed to becoming a “great power” through economic development. But even the feudal Japan that preceded the Meiji Restoration had actually been changing in all sorts of ways already—this was not just some static, feudal society that had been ever thus. And so it was primed for adversity. It was ready. So when adversity came it could move quite quickly. I think that’s a more sensible way of looking Japan. Another way that people tend to talk about Japan is to see it as change-averse. But I think it is adaptive. It adapts and changes like many other societies do.
This point about Japan’s way of bending with, or adapting to, adversity is also central to your account of the so-called “lost decades” of the 1990s and 2000s. You suggest that those years weren’t quite as lost as the standard story makes out. Do you think the way Japan has dealt with years of apparent economic stagnation is a kind of object-lesson for the west, as it contemplates the possibility that it too might now be mired in what some economists have been calling “secular”, or long-term, stagnation?
I think Japan has done better than people think, but the idea that it’s any kind of model is way over done. It did make some serious policy mistakes, one being to allow deflation to take such a grip. Certainly, it has to some extent been in what is called a “deflationary equilibrium” in which, in some senses, living standards have been preserved and real growth per capita has been at western levels or thereabouts. Just to step back a bit: we greatly exaggerated the threat posed by this astonishing economy that was emerging in the 1980s and was supposed to be going to overtake America. If we didn’t organise our own companies on Japanese lines, with people bowing and singing company songs, they were going to smash the hell out of us. That was the ridiculous story in the Eighties.
The ridiculous story we’ve been given in more recent years is that everything Japan did was wrong and inevitably led to this stagnant, non-changing, non-adaptive society. But neither of those stories was true. They’re both exaggerations and one is perhaps a reaction to the other. So I think the last 20 years [of Japanese] history needs to be reassessed.
As for whether Japan is a model or not—a lesson from Japan is the danger of bubbles. You could argue that Japan is still getting over a bubble that burst in 1990. Companies have built up massive savings post-bubble and because they’re sitting on all these savings, there’s a huge problem for Japanese demand, which has had to be filled by the government. I think Japan should have dealt with all this earlier and more radically.
Does it follow from you said about the danger of bubbles that the reasons for Japanese decline in the Nineties aren’t distinctive or specific to Japan? In other words, was this just a textbook case of irrational exuberance?
I think there’s a lot in that. There may be other factors as well. For instance, Japan’s demography began to change in the 1990s. I would also add that, after the Second World War, Japan had a very good catch-up model, the best the world had ever seen—a model of how to move from being a poorish country to one as rich as many European countries and catching up with American living standards in terms of GDP per capita. It was based on manufacturing, on continually improving the manufacturing process, making things westerners made but making them better. It was brilliant at that. But that model has run out of steam in the digital age. It’s adapted less well to the digital world where systems, openness and integration have become more important. The classic case is Sony. It had this brilliant product, the Walkman, which revolutionised the way we listened to music. It had all the technology to produce something like the iPod and it never did, because it was stuck in this engineering mindset.
Certainly Japan’s strengths in the catch-up phase are still important, and probably underrated even today, but the world has moved on and Japan has not necessarily moved on as quickly as it ought to have done. There are exceptions to that—there are interesting things going on—but certainly Japan is no longer the powerhouse it was in the manufacturing, analogue age.
The book has a wide historical sweep. A crucial part of the story you’re telling is the Meiji Restoration in the second half of the 19th century, what one might describe as Japan’s entry into modernity.
Japan looked at China, the great power that it had looked up to for centuries, and it saw it being chopped up like a melon. A small British contingent brought the Chinese empire to its knees. And so the modernist thinkers in Japan—among them Fukuzawa Yukichi—came to the conclusion that Japan needed to embrace the west, to learn from it. Fukuzawa was one of the most subtle thinkers of the time. There were those who thought Japan had to learn the tricks of the west in order to repel it. Fukuzawa was more subtle: he said, no, the west is about rational thought and scientific discovery. He thought Japan needed an enlightenment. But you could argue that his hope has never fully been fulfilled. The two important data points that I mentioned earlier—the Meiji Restoration and the postwar economic recovery—were both revolutions imposed from above. In the first instance, a clique of Samurai decided that Japan needed to rejuvenate, because otherwise it was going to be overrun. And then the change after the Second World War was ushered in by the Americans.
To what extent the rise of Japan as a military and economic power in the first half of the 20th century was taken by other Asian nations as a model to be emulated?
It was taken that way at first. People like Nehru, Gandhi, Sun Yat-sen, all thought that the Japanese defeat of Russia in 1905 was a great event for Asia. This was Asians beating westerners at their own game.
Turning to Japan’s postwar economic recovery, you seem to suggest in the book that some reassessment of it is in order; that the standard western narrative of the “lost decade” has meant we’ve become a bit too insouciant about just how remarkable the recovery was.
What Japan did post-1945 was extraordinarily important. After Japan, you had South Korea, Taiwan, China… China’s model is different, but is nonetheless heavily inspired by Japan. Japan showed that an Asian nation could attain the technological and living standards that westerners have. The idea, for example, that Japan could have a car industry would have seemed nuts in 1950. The Americans said, “Maybe the Japanese should have an economy.” They talked about making napkin rings. This was the view of what Asian societies were capable of. So the fact that the Japanese were able to overturn it was extraordinarily important. But this was a catch-up model. The idea that this was a model that was somehow superior to others is where our interpretation of Japan went awry. This was a superb way of getting within shouting distance of American living standards. But, as I said earlier, some of what Japan did in the catch-up years has turned out to be not so good in the post-catch-up years.
Presumably Prime Minister Sinzo Abe’s economic programme, so-called “Abenomics”, is intended to remedy some of those shortcomings, shortcomings that, as you imply, have been baked into the Japanese economy for decades?
Right, though the crucial part of Abenomics is the monetary part. If you look at the past 15 years, the establishment view of Japan’s situation was the following: we’re in deflation but monetary tools are no good for getting out of deflation. So the only thing we can do are supply-side reforms to make the economy more productive. And only by doing that will we get out of deflation and become a growing economy again. Now that view, in my opinion, led down a cul-de-sac. Abenomics, in a sense, reverses that. It says: yes, we can get out of deflation and we can do it with monetary means. Sure, there are other elements to it as well—fiscal and structural reform, but getting out of deflation is the key policy goal.
The other important aspect of Abe’s premiership is a promise of national self-assertion isn’t it?
Yes. The Japanese public has become progressively more nervous about a rising China. And so there is a feeling that Japan needs to be stronger—economically and diplomatically. Abe’s desire to strengthen Japan’s economy, to get out of the rut of the last 20 years, is born of his nationalism. He thinks that unless you have a strong economy you won’t be a country that people take seriously. That is the motivating force behind Abe. So, in a sense, Abenomics and his increasingly strident nationalist rhetoric are two sides of the same coin.
How dangerous do you think Abe’s posturing towards China has been and could be in the future?
In a sense, Abe was made in Beijing. I don’t think he would have been elected but for this feeling among the Japanese public that China was becoming stronger and, from a Japanese perspective, more unreasonable and threatening. Now, you can argue about whether China actually is threatening, but from a Japanese perspective, it looks to be.
As for whether Abe is dangerous or not, I’d say: unfettered, yes. For example, the secrecy bill that he has just pushed through is a retrograde step. But if by “dangerous” you mean that this is 1930 all over again, I’d say: absolutely not. What Abe wants to do is to defend what he sees as Japan’s geographical integrity. Japan is not a threat to the surrounding nations. Also, I wouldn’t underestimate the strength and stability of Japanese civil society. The Japanese think of themselves as this uniquely peaceful haven. So that’s a powerful countervailing force.
