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The following is the first of several (slightly modified) excerpts I’d like to share from my book Japan’s Open Future.

The Japanese government affirms that “refugee assistance is a bounden duty of a member of the international community,” and “one of the important pillars of Japan’s contribution to world peace and prosperity.” The country does send money to support refugees overseas—it gave $75 million in 2006 to the UN High Commissioner for Refugees (UNHCR). But the reality inside Japan is a far cry from its rhetoric and money sent abroad; any refugee who seeks a home in Japan is playing against terrible odds. Between 1981, when Japan ratified the UN Convention on Refugees, and 2002, Japan accepted just over 300 people as refugees. Put differently, all the refugees Japan admitted over a twenty-year period under the convention could fit onto a single airplane. Consider the difference: whereas in 2001 Japan admitted 26 refugees out of about a million asylumseekers worldwide, in that same year the US admitted more than 20,000, Germany admitted more than 17,000 and Britain admitted more than 14,000. Even though the US and Europe have tightened their rules since 9/11, they still admit far more refugees than Japan. As TAKIZAWA Saburo, the UNHCR Representative in Japan, commented in a 2008 speech, “The ratio of asylum seekers coming to Japan is only 0.0013%”; when they look to Japan as a potential home, he said, they see “walls” and “structural barriers.”

Drilling down from the aggregate numbers, what is it like for an individual asylum-seeker in Japan? Saul Takahashi, former Refugee Coordinator for Amnesty International in Japan, tells the story of meeting with Mohammed, a Nuba from Sudan, who had been tortured and whipped by the army. Takahashi tries to get Mohammed to understand what he is up against in hoping to become a refugee in Japan: “I tell him that it is practically impossible to get asylum in Japan … It will take years and during this time he will not get a work permit or any aid at all, [and] after they turn him down, he may be detained and deported.” In response, “Mohammed is silent for a minute. Then he says that he must try. He has no choice. He can’t go home. He has no place to go.”

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Here is a paper I contributed to the Carnegie Council’s journal Policy Innovations following a Sophia University conference on migration.

Japan’s population is on a downward slope, a trend which causes analysts no small amount of concern. As the Japanese government warned in a report a few years ago, “The speed with which the birth rate is falling is creating a situation that undermines the very foundations of society, the economy and the sustainability of local communities.” From its current population of more than 127 million, and extrapolating from current trends, the country may shrink to 100 or 90 million people by 2050.

Perhaps more important in economic terms is the narrowing of Japan’s demographic pyramid: Whereas 11 workers supported two retirees in 1960, the ratio was four workers to one retiree in 1999, and by 2050 the UN projects that only 1.7 workers will support one retiree. Those workers will face a heavy burden. A McKinsey study predicts that Japanese households will be no better off in 2024 than they were in 1997: “The continual improvement in living standards the Japanese have enjoyed during the last half-century will come to an end.”

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This was the question explored at a recent interdisciplinary conference in Tokyo, jointly sponsored by Sophia University and the Carnegie Council for Ethics in International Affairs, where I was lucky enough to be a panelist. After the conference, James Farrer of Sophia University and Devin T. Stewart of the Carnegie Council prepared an excellent summary of what we discussed. Here it is – recommended reading for anyone interested in immigration or refugee issues.

The goal of declaring a “right to move” proved elusive at a two-day symposium onimmigration ethics at Sophia University in Tokyo, held in cooperation with the Carnegie Council for Ethics in International Affairs (Dec. 12–13, 2009). While many of the participants, and certainly both of us, started out with the hope of issuing a strong declaration on the rights of people to move across national borders, several obstacles emerged. Given that the conference was held in Tokyo, the Japanese immigration context also framed the debate.

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I’d like to share a recent review of my book Japan’s Open Future: An Agenda for Global Citizenship by Dr. Hans Schattle, an expert on global citizenship and author of the 2007 book The Practices of Global Citizenship

I have not yet had the chance to read Schattle’ s book, but according to the Amazon review, it “provides a detailed and vivid account of how the term global citizenship has been interpreted and communicated in recent years,” and it “includes numerous fascinating conversations with global citizens from many nations, revealing how notions of global citizenship have been put in practice by an ever-increasing number of governing institutions, non-governmental organizations, corporations, schools, and universities.”

 It was exciting therefore to be reviewed by a global citizenship expert who could assess Japan’s Open Future in this broader context. Dr. Schattle wrote the review for Global Asia, a publication of the East Asia Foundation. The East Asia Foundation was established in Seoul in January 2005 with the goal of promoting “peace, prosperity security and sustainability in East Asia,” while Global Asia aims to “provide a compelling, serious, and responsible forum for distinguished thinkers, policymakers, political leaders and business people to debate the most important issues in Asia today.”

Here is his review in full.

“THE CONCEPT OF ‘global citizenship’ has gained momentum in recent years as a metaphor to describe both communities of individuals and professional and advocacy networks that operate across national boundaries. While global citizenship often comes across as an idea that transcends the limits of nationalism, much of the contemporary public discourse on global citizenship also uses the concept as a way to evaluate the policies and practices of national governments. It is this view of global citizenship, as a series of enlightened and responsive policy choices carried out by nation-states, that drives the authors of a sweeping new volume, Japan’s Open Future: An Agenda for Global Citizenship. John Haffner, Tomas Casas I Klett, and Jean-Pierre Lehmann have channeled their experiences in academic and business circles in Japan into a tour de force of the country’s recent history and the imperative for Japan to establish a new foreign policy ‘rooted in an enlarged conception of humanity that identifies Japan’s interests integrally with the fate of people everywhere.’
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The Wall Street Journal has just translated from Japanese a hilarious interview with Hiroshi Kimura, ostensibly Japan Tobacco Inc.’s president and chief executive. Either we are being had by another Sascha Baron Cohen character, or the translator is a  wicked prankster. This is high comedy: 

… Mr. Kimura has a law degree from Kyoto University and joined the company in 1976 when it was still a government domestic monopoly called Japan Tobacco and Salt Public Corp. “I wanted to work for an international firm, and so Japan Tobacco initially wasn’t within my top 10 choices, but it helped that I liked tobacco,” said Mr. Kimura, who smokes two packs of cigarettes a day.

WSJ: What did you learn from your first job?

Mr. Kimura: … When I first joined I learned from a senior the [French] phrase noblesse oblige, which I understood to mean not shirking the responsibilities of your position. In my early days I was given many challenging tasks to stretch my abilities, which gave me the foundation to develop into the manager I am today.

WSJ: Who gave you the best business advice?

Mr. Kimura: Our customers. As a cigarette company, similar to makers of food or medicine, our products are consumed by our customers and have a direct impact on their lives. To meet their high expectations, we have to be constantly aware of the market pulse and make trusted and preferred products.

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At a Brussels nuclear law conference in 2007, I gave a technical paper on intergenerational issues in nuclear waste economics. I argued for the prudence of applying a conservative discount rate when setting aside funds for future nuclear waste management so as to guard against contingencies. Recently I had the chance to look at my argument again with fresh eyes when I obtained a copy of the conference proceedings (published by Bruylant), and I was struck by one passage that may be of broader interest, especially given what happened between 2007 and now in global financial markets:  

“The fifth and final argument for [a conservative discount rate] is the possibility of some unforeseen event that could dramatically change the economic circumstances of one country or another. In Nassim Nicholas Taleb’s excellent recent book, The Black Swan: The Impact of the Highly Improbable, the mathematician and former trader argues that history is dominated by highly improbable, high impact events. He cautions that markets are poor predictors of war, for example, that government predictions are generally unreliable, and that the accuracy of a forecast ‘degrades rapidly as you extend it through time.’ Or as he cautions in a nutshell: ‘No one in particular is a good predictor of anything. Sorry.’

The  Asian financial crisis of 1997 led to rapid – and quite unforeseeen – devaluation of the Thai baht, the Korean won, and the Indonesian rupiah. Argentina’s economy, meanwhile, experienced hyperinflation in the late 1980s and then collapsed between 1999 and 2002. Japan actually experienced deflation and a zero interest rate policy between 2001 and 2005, quite at odds with economic predictions for the country two decades earlier (and also at odds with what one would expect of the world’s second largest economy). These examples give us pause, because Argentina, Japan and Korea have nuclear plants, and Thailand announced plans in June 2007 to build the country’s first nuclear plant. All will need [nuclear waste] repositories in time. But more within the spirit of Taleb’s argument, the better lesson is to recognize that we have no idea where the next financial crisis will occur.”

The last sentence was meant as a general warning, not a premonition. We may have recognized the lesson of that sentence for now - humility - but we’re likely to forget it again in the next bull market.

As for the title of this post, it comes from the fact that seemingly small human preferences at one moment in time - apparently marginal increments of utility or enjoyment – can have huge impacts on future generations. As Cowen and Parfit write (I quote them in my paper), “Imagine finding out that you, having just reached your twenty-first birthday, must soon die of cancer because one evening Cleopatra [the ruler of ancient Egypt] wanted an extra helping of dessert.” The example sounds far-fetched, right? But the issue is whether incremental forms of consumption and enjoyment at the expense of the environment today - widespread enjoyment of shark fin soup, for example - are set to have similarly dramatic and harmful impacts on future generations.

As the British economist F.P. Ramsey wrote in an important paper in 1928 (“A Mathematical Theory of Saving,”), to “discount later enjoyments in comparison with earlier ones … is “a practice which is ethically indefensible and arises merely from the weakness of the imagination.” Sadly, and ironically, Ramsey died only two years after writing those words, only 26 years old, and with the wisdom of someone who had lived much longer.

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A recent episode of National Public Radio’s All Things Considered discusses Japan’s (mis)treatment of foreign workers; my Japan book co-author, Jean-Pierre Lehmann, is interviewed just after five minutes into the seven minute program. It’s also worth listening for the politician Taro Kono’s candid comments about 3:28 into the interview.  

A recent New York Times article, “Japan Pays Foreign Workers to Go Home, Forever,” provides some further context (the photo by is from a town hall meeting in Hamamatsu; see the photo essay accompanying the article).

As Hidenori Sakanaka, director of the Japan Immigration Policy Institute, is quoted in the New York Times, “It’s a disgrace. It’s cold-hearted … And Japan is kicking itself in the foot … We might be in a recession now, but it’s clear it doesn’t have a future without workers from overseas.”

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Below is an interesting article by Dan Slater of Finance Asia in response to Japan’s Open Future (the book I have written with Tomas Casas i Klett and Jean-Pierre Lehmann, as introduced in an earlier post). I am reprinting Dan’s article here with his kind permission; it has been picked up on a couple of other sites as well.

And thanks to Elissa Bogos for allowing me to reproduce one of her wonderful photos here! John 

 
By Dan Slater  |  7 April 2009 
A new book raises the grim possibility China could ‘turn inwards’ and end up like Japan.

China’s decision not to allow Coca Cola to buy local soft drinks champion Huiyuan Juice, announced on March 18, and the latest World Bank report predicting growth will slow to 6.5% from the previously forecast 7.5%, has caused some commentators to wonder whether China could turn inwards. The fear is that China could turn away from its relatively open economic model and copy Japan’s ‘mercantilist’ model, defined as manipulating the terms of trade in one’s favour through currency depreciation and non-tariff barriers to imports and investments, and thus ‘stealing’ growth from one’s neighbours.

Japan has a total trade-to-GDP ratio of just 18%, and the stock of foreign direct investment represents a truly lamentable 1%. With only 2 million registered foreigners, Japan is the least welcoming country in the Organisation of Economic Cooperation and Development (OECD), with a ratio of 1.5% foreigners to the total population. Compare that to 10% in Spain, or even Germany, which has 16 million foreign residents in a population of 85 million.

China is far more open, with FDI accounting for 4% of GDP and 10% of capital formation in 2008. Total trade accounts for 35% of GDP. Foreign firms exporting out of China account for almost 50% of total exports — probably a unique ratio in world history. China also has huge imports, meaning the net contribution of trade to GDP is much smaller. But China is clearly an important cog in the global production chain. Japan, despite its well-known brands, is not. Indeed, Toyota pretty much sums up the significance of Japanese exports. (Cars are Japan’s most important export component, and within that, Toyota is the most important company.)

Tomas Casas i Klett, co-author of the excellent new book Japan’s Open Future warns: “The world can digest one mercantilist super economy, but not two.” This comment refers to what Casas i Klett believes is the defining characteristic of Japanese economic history, namely the accumulation of trade surpluses with the rest of the world. His concern is that in a time of crisis, China could follow Japan’s lead in turning away from mutually enhancing growth, as Japan did in the 1930s and surprisingly, even today, as reflected in the figures above. The effect would be a series of ‘beggar thy neighbour’ policies through currency depreciations and protectionist methods which could plunge the world into depression, according to one widely held theory.

China already looks somewhat like Japan in its pomp. Just as Japan went through a manically energetic episode after the Second World War, during which people united behind the goal of ‘catching up with the West’, China in the 1980s turned its back on the ideological rigidities of Maoism. Just as Japan did earlier, China has flourished by creating an enormous amount of manufacturing capacity in order to export to the West. But the pupil has surpassed the master: China’s ratio of trade to GDP is 35%, two times that in Japan. Japan seems to be going in the other direction, with its share of the world export market falling from 8.25% in the 1990s, to 5.5% today.

Is Japan still mercantilist if its trade activity is diminishing? Yes, but perhaps an increasingly bad example (which is precisely why Casas i Klett urges opening up the economy). Japan still has huge trade surpluses (but the first current account deficit in 13 years came in January 2009), and exports provide what growth the economy manages to eke out. “Fifty-five percent of GDP comes from private consumption, 15% from exports, but when you look at the growth rate of GDP, which is very marginal, that marginal change can be largely explained by a rise in exports. So it’s the change in GDP, not the absolute value of GDP, which is changing,” Kenichiro Kawasaki, a former Japan economist at Lehman Brothers, explained to FinanceAsia last year.

Another similarity is excessively depreciated currencies. Japan has achieved that by extraordinarily low interest rates, while China has achieved it through a target level against the dollar.

The end of the bubble in 1989 brought about conflicting responses in Japan. Under Prime Minister Koizumi, the country made some attempts to switch from the state-directed, mercantilist model of economic growth to a more classically liberal one. But Casas i Klett and his co-authors argue (despite cosmetics reform like the privatisation of certain agencies, especially the Post Office) that this has made little real difference: “Japan (today) is closed by any objective criterion one cares to use: level of imports, inward foreign investment, immigration, foreign managers and professionals, foreign brand recognition, penetration of international media, foreign language capability, international standards, contribution to development, extent of political contests inside Japan etcetera.”

Actually, during the internet bubble of 2000, a crop of ‘new economy’ companies did emerge. What is different to the post-War era, which stimulated entrepreneurial giants like Honda and Sony, is that these companies did not become great world-beaters. On the contrary, the internet sector, as reflected by the mother board of the Tokyo Stock Exchange, has never recovered from Takefumi Horie’s Livedoor scandal.

The question now is whether China will react in the same way as Japan to an economic catastrophe — and let us be clear that this does not necessarily imply evil or stupidity. The lesson of the 1930s (as could be repeated today) seemed to be that liberal economies simply did not work, especially when only the Soviet Union and Nazi Germany seemed to have found an economic solution. Recall that pre-war Japan was run in the orthodox liberal manner — at least until 1931 when the country was forced off the gold standard along with Britain. After 1931, in a bid to solve the banking crises and wealth inequalities that had followed World War I, Japan adopted very illiberal policies. The results were initially good: Japan saw trade growing at a faster rate than GDP in the 1930s. The big difference versus Japan in the post-war era was that these policies did not result in yearly trade surpluses, because of the military’s import needs. The state took on even more power in 1938 with a series of laws controlling trade and capital. By then, the country was run on purely ideological (Fascist) lines, rather than purely economic (mercantilist) lines.

Experience teaches us that realistically speaking, it’s impossible to maintain a ‘business as usual’ approach in times of economic crisis, however desirable in principle. Brokerage CLSA has published figures which predict a huge shrinkage in world trade. Unless GDP shrinks to the same extent (a disaster in itself) it’s impossible to see China, or any trading country, maintaining its openness in terms of trade-to-GDP ratios. 

CLSA’s China economist, Andy Rothman, is more bullish than most on China, but apparently only if assuming China becomes less open. Rothman claims that China is far more of a continental economy than generally appreciated, given its low net exports (under 10% of GDP). Thanks to its control of the state banks, the government can force spending to rise on real estate and construction, a sector which is greater than 10% of GDP, and can therefore balance out a collapse in net exports. So problem solved? Kawasaki, quoted above, would not agree. But it would show that China has the ability to crush the vested interest in the export sector for the good of the overall economy. Crushing vested interests in its domestic economy is exactly what Japan has failed to do.

Theoretically, even a successful domestic re-orientation would not prevent an international reduction in living standards, since countries would depart from the theory of comparative advantage. In practice, that theory has been partly discredited, since industrialised countries trade mostly with each other (for example Renault has 10% of the German car market). But new compensating domestic demand must be found — and here Japan and China are both challenged: Japan by terrible demographics, and in China, by a lack of widespread wealth. In this crisis, there are no easy answers.

© Haymarket Media Limited. All rights reserved.

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At long last, my book Japan’s Open Future: An Agenda for Global Citizenship (co-authored with Tomas Casas i Klett and Jean-Pierre Lehmann) has landed in warehouses in the UK and the US. My fellow bloggers at Sans Everything will know that this has been a long time in the making, and I thank them for some very helpful feedback on earlier drafts. 

 

Japan’s Open Future is ambitious, drawing on a range of disciplines and themes including history, communication, business, economics, politics and geopolitics. It seeks to present a grand strategy for Japan by showing how all these issues are connected. Over the next couple of months I will be posting commentaries and excerpts here that draw on specialist topics from the book; as I do I will invite people with a stake in those topics to drop by and join us for a discussion.

 

Let me start by sharing an opinion piece I wrote for the Huffington Post, “Japan in a Post-American World.” It provides a summary of our argument as it relates to these acutely challenging global circumstances. In our book we argue that Japan has no choice but to look outward and become a global citizen if it would like to have a more secure and prosperous future. The alternative, of remaining insular and closed to new ideas, immigration and trade, would be a loss for the global community and would exacerbate Japan’s current problems. The financial crisis has only served to reinforce our argument on many levels.

 

Yet more than one recent commentator has underscored the absence of good ideas and creative reform efforts emanating from Japan. Let me share four recent examples. (more…)

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Nerke, Greenland, by Lawren Harris

Nerke, Greenland, by Lawren Harris (1930)

It sold for nearly $2.1 million dollars, that little oil painting shown above. Only 12 by 15 inches, the work came to the art world’s attention a few months ago, when a Vancouver woman decided to have her collection appraised. The painting by Group of Seven founder Lawren Harris had been given to the woman’s father, commercial artist Gordon Davies, by Harris himself in the 1930s, and it had remained in the family for more than seventy years. Interestingly, the piece itself is merely a sketch for the painting “Greenland Mountains”, which was purchased by the National Gallery of Canada in 1936, mislabeled, and subsequently turned into a 1967 stamp celebrating the Canadian landscape. The Danes must have been very proud. (more…)

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