Davos Newbies

For all the hype about China, for all of India’s current growth, Japan remains the world’s second largest economy. But just about no one talks about Japan any more. Even in my Davos days, the handful of Japan-focused sessions we scheduled were attended almost exclusively by Japanese participants. No one else wanted to know.

It doesn’t take a very long memory to recall a very different time, when books about the Japanese challenge to American dominance were business bestsellers. The all-powerful MITI (the Ministry of International Trade and Industry) was intelligently directing resources to key sectors so Japan’s leadership could continue to grow. Their companies had already swept the car industry and consumer electronics. It was only a matter of time before semiconductors, computers, finance and pharmaceuticals would yield.

The bursting of the Japanese bubble put paid to those visions. MITI was replaced in 2001 by the Ministry of Economy, Trade and Industry. There are plenty of world-beating Japanese companies, but after 15 years of economic sclerosis, no one hails the Japanese model as worthy of emulation.

I went the other night to the launch of a book that attempts to explain what went wrong – and continues to go wrong – in Japan. Michael Zielenziger’s Shutting Out the Sun is, in effect, a social psychology of a nation (I’ve known “Z” for 30-some years, since our time on The Daily Princetonian together). He examines in depth the hikikomori, the roughly 1 million Japanese that shut themselves in their bedrooms and don’t emerge, sometimes for many years. Zielenziger argues that the hikikomori are symptomatic of a nation that is choosing to retreat into its own shell.

“Japan is a monoculture in a world that needs a rainforest,” Zielenziger says. The intense focus that worked from 1945 to 1990, he argues, doesn’t work in a globalized, networked economy that provides the highest rewards to nimbleness, adaptability and innovation.

Zielenziger’s exposition of his book was so unremittingly dark that I felt like asking ironically, “So what’s the bad news?” Unfortunately, there is some truly bad news in prospect. Zielenziger sketched a scenario where soon-to-be prime minister Shinzo Abe connects with the lost generation of 20-35-year olds to provoke a period of powerful, resurgent nationalism. In a Japan that is nuclear capable. In a Japan that views China’s growth far more as a direct challenge than as an opportunity. And on a global stage where the US may well be happy for Japan to be its security surrogate in east Asia.

Update Zielenziger also has a blog, where he seems to be covering Asian political and economic news more broadly (he was Tokyo bureau chief of Knight Ridder for seven years, and travelled extensively throughout east and south Asia). One of the latest posts expands on his comments the other evening about Shinzo Abe.