Needing to See a Method Behind the Madness

If Eamonn Fingleton wrote about Israel his media presence would  be reduced to the occasional Alex Jones show spot and approving links to his blog by Stormfront posters.

Instead he writes about Japan and China so everyone from the New York Times to Forbes provide him with an outlet for views that range the gamut from insightful, to a more politely phrased “sneaky slant-eyed bastards!”

Rarely have I found a pundit both as interesting and infuriating as Mr. Fingleton.

His expertise on the issues of high-tech supply chains and the economics of East Asia are beyond question. He’s done a substantial amount of work bringing to light the back-end of global supply, such as suppliers of semiconductor grade silicon. Fingleton has also shown a complex appreciation for the value-added labor within complex modern machinery. It’s quite true that simply assembling the end product is not particularly profitable, with the bulk of the actual profit going to the designers and producers of difficult to manufacture components.

Yet he proceeds from this into a fantastic realm of speculation and paranoia. Extensive government support of industries. Strategic capture of vital telecommunications supplies. Shell-games designed to fool the western world. Intentional manipulation of government statistics!

If you were to read Fingleton at face value, you would be forgiven for believing that Beijing and Tokyo are secretly plotting to take over the world. Their bureaucrats and businessmen are all evil geniuses, while the U.S. government is staffed by incompetent dupes (I grant that our many libertarian interlocutors might agree with the latter half of that sentence).

The biggest problem I see with Fingleton’s analysis is that he’s trying to create patterns to fit his data. Like any good storyteller (and journalist) the facts alone are insufficient; there has to be a narrative. Fingleton’s narrative is that the structural advantage Japanese firms have gained in the world economy are part of a concerted effort to deceive the West about the true strength of Japan’s economy.

This narrative allows Fingleton to check off a number of boxes which fit his experience:

• Western governments tend to bicker and act poorly when formulating public policy.
• Japan is a wealthy country with a high standard of living. (This is particularly notable in major metropolitan areas such as Tokyo, where Fingleton himself resides)
• The media reports of Japan’s demise and the intelligentsia’s dismissal of Japan as a player in world politics feel exaggerated in light of Japan’s living standards.
• China is growing at a substantial pace, and despite the public animosity, has strong trade and economic connections to Japan.
• In general, East Asian states are known for higher cooperation between state and industry. In addition these states have been rapidly growing in terms of export and trade. In some cases these same states have made tremendous strides into industries that Fingleton considers strategic and important.
• Fingleton himself is concerned about post-industrial economies and whether or not they are viable.
• The West (and the United States particularly) consistently run trade deficits and seem to be relying on foreign funding for their debt.

Any of these alone would not make an intelligent person suspect a coordinated strategy of media manipulation and high international statecraft. Not content to allow them to stand apart, Fingleton then proceeds to construct a world wherein all of these factors tie into singular causes: a pan East-Asian conspiracy to defang and eventually supplant the West as the leading economic region in the world.

Of course this misses several important factors in the analysis such as:

• Despite strength for certain Japanese firms, the social benefits of this strength does not trickle down into the rest of society. In fact since the 1980s (the peak of Japanese developmental booms) almost all measures of income inequality have been trending in the wrong direction.
• The historical animosity toward Japan felt by other East Asian states is not merely “kabuki” as Fingleton likes to assert, but rather a strong rationalization for the state’s existence. This is particularly true in China, where Mao and the CCP derive a substantial amount of legitimacy in their role as liberators vs. Japan.
• The intensity of energy resource conflict and fishing rights conflict in the region is often understated. The Senkaku Island dispute, for example, also works into energy resource development, the parameters of fisheries management and other key resource issues covered under the UN Convention on the Law of the Sea (which both Japan and China have ratified).

More important, however, is Fingleton’s own position as an outsider looking over the situation in a purely data-driven lens.

If as a westerner, Fingleton feels substantial vulnerability against the realities he sees of East Asian economies, he also misses the deep-seated cultural and societal vulnerabilities felt in every level of society. I am more than happy to defer on this issue with regard to China, but it has been my consistent experience that while we Japanese have “relaxed” since the late 1980s, there is a substantial amount of unease in society. This is particularly true for the decision making classes and the chattering classes, which see a raft of problems, but no easy solution.

Worse, the rising levels of inequality have led to both a tacit acceptance, and growing disillusionment with the “kakusa-shakai” by those of my generation and younger. We’re richer today but that wealth feels fragile and no one is quite sure how or whether we even will try to address major issues such as an aging population, rising inequality, increasing poverty and unemployment.

Our faith in government has fallen as the change we hoped to see with the end of LDP hegemony has failed to materialize. Instead we see more internecine squabbles between party bosses and little progress by the Diet in issues that most concern ordinary Japanese. The once god-like admiration of the bureaucrats is no longer present. It hasn’t found a direct replacement. Our business leaders tend to be uninspiring, and our faith in celebrity tabloid culture is superficial.

If industry is doing fine, it’s in spite of our government. Even when the Ministry of International Trade and Industry (MITI, now the Ministry of Economics, Trade and Industry) was in its heyday as the envy of the bureaucratic world, economic policy between the LDP and bureaucracy was largely focused on placating domestic stakeholders. As our multinationals grew, they increasingly found it burdensome to prop up lagging, inefficient industries at home and today this can be seen in the eagerness to move manufacturing centers overseas to lower labor costs.

In many respects even our politicians have lost sight of our country’s strengths. Those economic strengths, while formidable, are also no longer sufficient to guarantee long term domestic growth and prosperity. We feel the insecurity in our bones. Fingleton is surely right that attitudes and media portrayals are masking much of the latent strength of Japan’s economy, but those attitudes stem not from malice or conspiracy as he alleges, but a trauma and insecurity rooted in the Bubble Bursting.

I’m glad there’s someone out there who looks beyond the ennui and malaise that seems to have gripped the media narrative about Japan. I do wish, however, that he not attribute so much of his own perceptions to some vast conspiracy. There isn’t one. It’s just easier to see someone’s strengths from the outside.