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“Passionate, erudite, living legend lecturers. Academia’s

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“A serious force in American education.”

—The Wall Street Journal Mark Ravina

The University of Texas at Austin

Mark Ravina is the Mitsubishi Heavy Industries Chair in

Japanese Studies at The University of Texas at Austin. He

received his MA and PhD from Stanford University. Mark has

received research grants from the Fulbright Program, the

Japan Foundation, the Academy of Korean Studies, and the

Association for Asian Studies. His books include The Last

Samurai, Land and Lordship in Early Modern Japan, and To Stand with the Nations of the World: Japan’s Meiji Restoration

in World History, which won the 2018 Book Prize from the Southeast Conference of the Association for Asian Studies.

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Mark Ravina

The University of Texas at Austin

M ark Ravina is the Mitsubishi Heavy Industries Chair in Japanese Studies at The University of Texas at Austin. He received his AB from Columbia University and his MA and PhD from Stanford University. He has been a

visiting professor at Kyoto University’s Institute for Research

in Humanities and a research fellow at Keio University and the

International Research Center for Japanese Studies. He has also

received research grants from the Fulbright Program, the Japan

Foundation, the Academy of Korean Studies, and the Association

for Asian Studies.

Mark has published extensively on early modern Japanese

history, with a particular focus on the transnational and

international aspects of political change. He has also published

research on Japanese and Korean popular culture, Japanese

i

Presenter Biography

economic thought, and the history of science. His books include The Last Samurai: The Life and Battles of Saigō Takamori; Land and Lordship in Early Modern Japan; and To Stand with the Nations of the World: Japan’s Meiji Restoration in World History, which won the 2018 Book Prize from the Southeast Conference of the Association for Asian Studies.

A former director of the East Asian Studies Program at Emory University, Mark has also served as president of the Southeast Conference of the Association for Asian Studies and on the editorial board of The Journal of Asian Studies. As a public intellectual, he has appeared on CNN, CNN International, NPR, and the History Channel.

Mark is also the expert for the Great Course Understanding Japan: A Cultural History.

ii

Table of Contents

● Introduction

Presenter Biography. . . . . . . . . . . . . . . . . . . . . . . . . . i

Course Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

● Guides

1 Japan’s Global War Vision Unravels . . . . . . . . . . . 3

2 How the US Occupation Remade Japan, 1945–1952 . . 11

3 The Japanese Economic Miracle: Empire 2.0 . . . . . 18

4 Japan’s Civil Society Protests of 1960 . . . . . . . . .26

5 Japan Inc. and Its Upstart Challengers . . . . . . . . . 32

6 Japan Faces the Nixon Shocks: China and Gold . . . 41

7 The Rise of Japanese Cinema . . . . . . . . . . . . . . 48

8 How Japan’s Carmakers Outmaneuvered Detroit . . 55

9 From the Heights of Japan’s Bubble Economy . . . 63

10 Jobless and Divorced in Japan: “Wet Leaves” . . . . 71

11 Japan Confronts the Collapse of a Bubble . . . . . . 79

12 Japan after the Fukushima Nuclear Disaster . . . . . 87

● Supplementary Material

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

iii

•

iv

The Rise of

Modern Japan

I n 1945, Japan was a war-ravaged nation. Its people were hungry, exhausted, and defeated. The once fearsome Japanese army limped home, and Japan’s great empire, which briefly dominated much of East Asia, was no more. Japan’s cities lay in ruins, and its people needed American food aid to survive.

Yet within a generation, Japan seemed on the verge of a second empire—a Japanese empire 2.0. By the 1980s, it seemed that Japan might again dominate the world, although its second empire was based on economic, not military, power. Japan’s economic power inspired both fear and admiration. When the importation of Japanese automobiles and electronics battered the fortunes of American manufacturers, some advocated learning from the Japanese model. Others spoke ominously of a coming war with Japan, although Japan was a US ally and home to major US bases.

In the early 21st century, that specter of a second Japanese empire has faded. Japanese economic growth has been slow since the bursting of an asset bubble in 1990, ending fears that Japan would dominate the world through economic power. American observers

1

Course Scope

are now as likely to treat Japan as a cautionary tale as they are to treat it as an economic model. Yet so much of contemporary Japan still warrants admiration. Japan has the longest life expectancy in the world, free and fair elections, and a free press, and, at the risk of a cliché, the trains run on time. How can we reconcile these different aspects of Japanese history? What common threads connect the Japanese empire 1.0, the Japanese empire 2.0, and contemporary Japan?

This course explores Japanese politics, economics, and culture. It traces the connections between Japan’s military empire and its economic empire. Which wartime politicians thrived in a postwar world? How did Japan and the United States move so swiftly from enemies to allies? And how did the Japanese people make sense of those changes? The course explores Japanese history through the careers of some of its leaders, such as politicians and industrialists. It also looks at films and fiction to explore how ordinary Japanese people made sense of these decades of tumultuous change. What were their hopes, fears, and aspirations? And what can that tell us about Japan’s future?

2

Lecture 1

Japan’s Global

War Vision

Unravels

I n early 1944, a group of Japanese diplomats, businesspeople, generals, and journalists realized that the war was lost to the United States and its allies. They urged

the Shōwa emperor to surrender, but the idea

was quashed by the emperor’s inner circle.

And in April 1945, three of the organizers were

arrested and sent to prison for undermining

the war effort. So, who were these men, and

why did they begin talking about surrender

more than a year before the war in the

Pacific ended?

Table of Contents

Lecture 1 • Japan’s Global War Vision Unravels

● Shidehara Kijūrō

The standard US history says

that Japan had an overall plan

for world domination and

surrendered only because

of two atomic bombs. But

Japan didn’t have a single

plan for world conquest; rather,

it had two conflicting plans. One

was to fight the United States, rō ijū a K and the other was to fight the har USSR. And Japan was late to choose ● Shide

between the two—to the great advantage of the United States.

Former foreign minister Shidehara Kijūrō had no interest in a war with the Soviet Union or anyone else. His great accomplishment before the war had been a 1922 arms control treaty between Japan, the United States, and the United Kingdom, ending an expensive arms race in the Pacific. Shidehara was an outspoken advocate of the post–World War I League of Nations, and he infuriated the military by negotiating the return of some Japanese territories to China.

In 1927, a joint force of Chinese nationalists

and communists attempted to force out a

local warlord in Nanking. Remarkably, Japan

followed a policy of calm nonintervention, with

Shidehara declaring that he trusted the Chinese

nationalist government to punish its own troops.

The Japanese military command never forgave

Shidehara for forcing it to stand down.

4

Lecture 1 • Japan’s Global War Vision Unravels

From Shidehara’s perspective, things began to go wrong in 1929 with the global stock market crash. In the 1920s, Mitsubishi and Japanese business broadly embraced Shidehara’s vision of cooperation with the United States. The logic was simple: Arms control agreements meant less government spending, meaning lower taxes. And Japanese businesses loved the US goal of free trade in China because they were confident they could compete in the China market.

The Great Depression broke the optimistic business environment that was the backbone of Shidehara’s worldview. Soon, it emboldened the Japanese military and right-wing politicians into thinking they could act with impunity. In September 1931, the military seized control of Manchuria. And when the League of Nations refused to recognize Japanese control of Chinese territory, Japan quit the league and created the puppet state of Manchukuo. So, to Shidehara, Japan had gone off the rails by 1933.

● Mazaki Jinzaburō

The group who urged the Shōwa emperor to surrender had the informal support of a motley crew of unlikely allies, including the retired general Mazaki Jinzaburō. Mazaki couldn’t yet grasp the idea that Japan needed to surrender, but he believed that Japan was fighting the wrong war. He wanted to fight the Soviet Union and build a massive continental empire. For him, things started going wrong after a clash between two military factions in 1936.

Mazaki’s faction was known as strike north. They were fanatically anti-communist but also somewhat anti-capitalist. Mazaki hated arms control and the zaibatsu, or business conglomerates, and he was affiliated with the right-wing officers who had staged the coup in Manchuria.

5

Lecture 1 • Japan’s Global War Vision Unravels

The rival faction, known as strike south, was focused more on South China, Southeast Asia, and the Pacific. Because of that, it was also more concerned with the United States and Britain than with the Soviet Union. Its leaders favored a comprehensive plan to build Japanese industrial capacity and prepare for a long-term struggle in the Pacific.

In February 1936, the strike north faction attempted to settle the debate by force. They staged an abortive coup, taking control of downtown Tokyo and murdering several political rivals. The rebels imagined themselves to be acting out of devotion to the Shōwa emperor and hoped they might get his approval. But the monarch was not pleased to have his officers killing each other in downtown Tokyo. The coup collapsed, and the rebels surrendered three days later.

Strike south now gained the upper hand over national policy and began working on a five-year national mobilization plan to prepare the Japanese economy for war in China and the Pacific. But strike north was still spoiling for a war with the Soviet Union. Only after Japan suffered a series of bloody defeats in Mongolia from May to September 1939 did it abandon the idea of fighting the Soviets.

While Hitler and Stalin were preparing to jointly

invade Poland in September 1939, Japan was

fighting the USSR. And Japan signed a neutrality

pact with the USSR in April 1941, while Hitler

invaded the Soviet Union in June 1941. Japan and

Nazi Germany were distrustful, ineffective allies.

They never attempted a joint military operation,

much less a coordinated global strategy.

6

Lecture 1 • Japan’s Global War Vision Unravels

Two years later, in April 1941, Japan and the USSR signed a neutrality pact, allowing Japan to focus fully on strike south. Stated otherwise, until six months before Pearl Harbor, Japan was too torn by internal factionalism to decide on a single strategy. And while Mazaki’s faction lost, it stayed influential long enough to undermine a single-minded focus on the Pacific.

● Yoshida Shigeru

Japanese military police determined that the ringleader of the group that urged for Japan’s surrender was Yoshida Shigeru, formerly the ambassador to the United Kingdom. Yoshida spent his two years in London trying desperately to stop the deterioration of Anglo-Japanese relations. But his British counterparts knew he had little clout at home, so they didn’t take his ideas seriously. Still, he appealed to the sense that Britain and Japan were comrade imperial powers.

Japan wanted British recognition of Japan’s effective control of everything north of the Great Wall. Yoshida emphasized that Japan and the United Kingdom shared a common enemy in the Soviet Union and in communism generally. And both countries wanted China to prosper for trade reasons, so wouldn’t Japan and the UK need to cooperate, and possibly intervene, to help China maintain a stable central government?

The British found Yoshida’s proposals too vague and self-interested. The real problem was that Britain knew Yoshida could not speak for Tokyo, and that became obvious in July 1938, when Japan began a full-scale invasion of China south of the Great Wall. Yoshida was humiliated and retired at age 60.

7

Lecture 1 • Japan’s Global War Vision Unravels

● Konoe Fumimaro

The man who directly proposed surrender to the emperor was former prime minister Konoe Fumimaro. As prime minister, Konoe was supposed to rein in the wilder elements in the military and forge a national consensus on economic and military mobilizations. He would keep everyone on the same page so that Japan would be ready to fight a major war in China at the end of the five-year plan, in about 1942.

But Konoe did the opposite of what he was he was chosen to do. When Japanese and Chinese troops skirmished on the outskirts of Beijing in July 1937, Konoe sided with Japan’s most belligerent voices, who advocated a swift knockout blow against China’s nationalist government. Cooler heads argued that Japan needed to contain the situation. Instead, Japanese troops swept south and seized most of China’s major coastal cities in short order.

Nanking fell that December, and Tokyo did almost nothing to rein in its troops, which terrorized the civilian population. Konoe was so convinced that he could pummel the Chinese nationalist government into compliance that he broke off negotiations with the head of the government, Chiang Kai-shek, and set up a new government recognized only by Japan. That was the end of any possible compromise with the United States or Britain.

Having led Japan into a massive war with China, Konoe argued for surrender in 1944 because he realized how badly he’d blundered. The knockout blow never was delivered. Instead, the Chinese government retreated to the west and slowly bled the Japanese army through guerrilla warfare. It was already clear to some level-headed observers in 1941 that war with China was unwinnable. But key elements of the Japanese military were convinced that China was refusing to surrender only because of US and British support. So, it was essential to attack America.

8

Lecture 1 • Japan’s Global War Vision Unravels

Konoe realized that expanding the war was a terrible move. He tried to arrange a meeting with US president Franklin Roosevelt to deescalate the coming conflict, but he had nothing to offer. In October 1941, he stepped down as prime minister and was replaced by Tōjō Hideki, who was convinced Japan could win the war with China by expanding the conflict to also oppose the world’s largest industrial power.

By December 1941, even before Japan attacked the United States, it already was struggling with the burdens of a huge war. Its economy was showing strains from massive deficit spending. When Konoe finally met with the emperor in February 1945, he argued that Japan had to consider surrendering to the United States because the alternative was catastrophic. But Konoe had lost his credibility. The emperor disregarded him and sided with generals who insisted the war was still winnable.

● The End of the War

At the 1945 Yalta Conference in Crimea, Stalin committed to attacking Japan after the surrender of Nazi Germany. In return, the Soviets were promised Manchuria, the southern half of Sakhalin Island, and the Kuril Islands. But by July 1945, the United States was becoming much less enthusiastic about working with Stalin. It excluded the Soviets from the Potsdam Declaration of July 26, which called for Japan’s surrender. Stalin began to worry that the United States would renege on promises made at Yalta.

The atomic bomb at Hiroshima demonstrated that the United States could obliterate Japanese cities with impunity, and it prompted Stalin to enter the war with massive force. The Soviet Union attacked Japan hours before the second bomb dropped on Nagasaki, sweeping through Manchuria and crushing exhausted Japanese troops. They swept down the Kuril Islands, and Stalin even considered seizing part of Hokkaidō, Japan’s second-largest island, until President Harry Truman pushed back.

9

Lecture 1 • Japan’s Global War Vision Unravels

Nagasaki had little value as a military target, and there’s little evidence that Japanese leaders had processed the scale of the Hiroshima bombing in just three days. Arguably, Nagasaki wasn’t one of the last bombs of WWII but among the first of the Cold War—a signal from Truman to Stalin to not get greedy and go beyond the territory promised at Yalta.

Shidehara was 73 when Japan surrendered. He returned to politics and briefly served as prime minister immediately after the war. General Mazaki was arrested as a war criminal, but once it became clear that he’d been out of power since 1936, he was released.

Because Yoshida had been arrested by Japanese military police for advocating surrender, the United States thought somewhat erroneously that he was an antiwar activist. He went on to become one of Japan’s longest-serving prime ministers. Konoe, racked by guilt and fearful of the future, decided not to wait for the US occupation to decide his fate. He died by suicide on December 16, 1945.

● Reading

Dower, Empire and Aftermath.

Hasegawa, Racing the Enemy.

● Questions

1 Why did Japan surrender? Was it because of US nuclear

weapons or the Soviet threat?

2 How did the start of the Cold War shape the last stages of

World War II?

10

Lecture 2

How the US

Occupation

Remade Japan,

1945–1952

F rom September 8, 1945, to April 1952, Japan was a defeated nation under US military occupation. With Japan under US control, the United States had to answer

a huge question: What should postwar Japan

look like? The occupation served to resolve

World War II, when the United States and

Japan were enemies, and to create a new,

strong ally for the United States in a new

war—the Cold War.

Table of Contents

Lecture 2 • How the US Occupation Remade Japan, 1945–1952

● Exoneration of the Emperor

The United States faced a momentous decision in 1945: What would it do with the Shōwa emperor? A good percentage of the US public favored executing him as a war criminal. US officials discussed abolishing the monarchy and indicting the emperor in a war crimes tribunal. A less extreme position was to require him to abdicate while Japan retained the constitutional monarchy in some form. Complete exoneration was also on the table.

The United States quickly fixated on that latter position, meaning that guilt and blame fell solely on a cabal of evil militarists who had manipulated the hapless monarch. The emperor would not stand trial, and he would not abdicate. Rather, the United States would attack anyone who suggested that he was in any way responsible for the war.

This policy had several problems. First, it’s historically inaccurate. The emperor wasn’t a crazed warmonger, but he certainly wasn’t a powerless bystander. And the occupation’s decision to depict the emperor as powerless rather than all-powerful created a reverse image of Japanese wartime propaganda. The emperor went from knowing everything to knowing nothing. This is implausible, and it made it difficult even for historians decades later to write about the emperor as an ordinary person.

But it’s essential to navigate between the extremes of hapless victim and wartime mastermind because so much of the emperor’s troubling conduct lies in his inaction. For example, after Japanese troops rampaged through Nanking, China, in 1938, the emperor never summoned his generals and asked them to discipline their troops. Nor did the emperor address Japan’s war crimes.

12

Lecture 2 • How the US Occupation Remade Japan, 1945–1952

General MacArthur argued that removing the

emperor would lead Japan to disintegrate into

guerrilla warfare, but that apocalyptic vision was

probably not rooted in reality. The Japanese people

were openly talking about abdication, and the

emperor’s uncle himself declared that the emperor

should abdicate to mark a new start for Japan.

This perspective also explains why US policy changed so quickly. In July 1945, President Harry Truman’s secretary of war, Henry Stimson, and British prime minister Winston Churchill both came out in favor of surrender terms for Japan, explicitly stating that it could retain a constitutional monarchy. The goal was to speed the war’s end. But the final surrender terms made no mention of the emperor at all.

The Potsdam Declaration allowed for the possibility that Japan might retain the emperor system but without any explicit promise to do so. And it was a long way from absolving the emperor of any and all responsibility for the war. But that was in July and August. By October, the United States was committed to the emperor’s complete exoneration. Quite simply, World War II was over, and the Cold War had begun.

● Japan’s New Constitution

On the question of the Japanese constitution, however, the occupation chose radical change. Under the old constitution, the emperor was the sovereign of Japan. He gave the Japanese people the 1889 constitution as a gift, and he did so based on his authority as a direct descendant of the ancient Japanese gods.

13

Lecture 2 • How the US Occupation Remade Japan, 1945–1952

By contrast, the 1946 constitution established the emperor as merely a symbol of the state. All key legislative powers lay with the Diet, and the cabinet was responsible to the elected representatives of the people. Among other things, the new constitution stated an explicit right to vote and right to academic freedom. The US Constitution merely implies such rights. Article 9 of the new constitution also explicitly endorsed pacifist idealism.

Initially, the occupation entrusted a Japanese committee to draft the new constitution. This committee was led by the Japanese legal scholar Matsumoto Jōji and included Yoshida Shigeru, a former ambassador to the UK and future prime minister, and Shidehara Kijūrō, then prime minister. But the committee merely tinkered with the earlier Meiji Constitution. Indeed, both Yoshida and Shidehara had enjoyed successful careers under the 19th-century constitution, and their goal was to slightly expand the authority of the Diet without touching on questions of rights or sovereignty.

When Douglas MacArthur and his advisers saw the Japanese draft, they were appalled. On February 4, MacArthur directed his legal office to draft a new constitution for Japan. The transformation

14

Lecture 2 • How the US Occupation Remade Japan, 1945–1952

of the Japanese emperor from a sovereign monarch to a symbol of the state, and the transformation of the Japanese people from imperial subjects to sovereigns, was beyond anything the Japanese leaders thought appropriate, much less necessary. But MacArthur’s office issued an ultimatum: Japan could reject the constitution, but then occupation forces would no longer guarantee the existence of the imperial institution of the emperor.

As prime minister, it was Shidehara’s duty to explain the new charter to the emperor. To the politician’s amazement, the emperor was completely supportive. Shidehara and Yoshida were also stunned by the popular response. A new Diet was elected in April 1946, and even conservatives embraced the American draft. Of course, the occupation had purged many open militarists. Parliamentary conservatives didn’t like that the occupation imposed an American-style constitution, but they could soothe their pride with the knowledge that the emperor and the imperial house survived.

Yoshida came to love the new constitution.

Article 9 would enable Japan to avoid military

entanglements and the cost of supporting an

army. Instead, it would rely on US protection and

focus on building an economic empire. This plan

was known as the Yoshida Doctrine.

● Tokyo War Crimes Trials

At the conclusion of World War II in the Pacific, occupation powers convened the International Military Tribunal for the Far East, more commonly known as the Tokyo War Crimes Trials. The

15

Lecture 2 • How the US Occupation Remade Japan, 1945–1952

primary focus was to assign responsibility against the Japanese for a conspiracy to commit crimes against the peace—meaning planning or participating in a war of aggression.

The charge of conspiracy was modelled on the prosecution of officials in Nazi Germany. In that case, there had been a Nazi Party and a single head of the party, Adolf Hitler, who held power from 1933 to 1945. Hitler and his aides convened meetings where they explicitly planned a war and war crimes. In Tokyo, the prosecution argued that in Japan, too, there had been a coherent conspiracy to wage aggressive war in East Asia.

The problem with this legal theory is that from 1927 to 1945, Japan had been led by 16 different prime ministers. And the military was so divided that factions were murdering one another in 1936. The only single point of continuity from 1927 to 1945 was the Shōwa emperor. And the emperor was now deemed a victim of the conspiracy. To push a conspiracy charge without tainting the emperor, the US prosecution had to coach defendants to protect the emperor.

In Tokyo, the lead prosecutor for the

United States was Joseph B.

Keenan, an assistant attorney

general who viewed the

Japanese defendants through

the lens of his experience

targeting organized crime.

He could have abandoned

the problematic conspiracy

charge and focused instead on

conventional war crimes, but he

suggested dropping conventional an en Ke war crime charges to conclude the B. ● Joseph trial sooner. He was overruled by his

staff, but his handling of the case was so poor that several of his associates quit.

16

Lecture 2 • How the US Occupation Remade Japan, 1945–1952

The problem of prosecuting conventional war crimes was also complicated by Cold War concerns. The US secretly granted immunity to Japan’s biological warfare unit in exchange for their data. Word spread among Japanese officers that the key to avoiding indictment was to offer some sort of anti-communist intelligence, however implausible or insubstantial.

A key figure in this tactical disaster was Charles A. Willoughby, General MacArthur’s chief of intelligence. He helped numerous war criminals escape prosecution in Japan—including some responsible for the Bataan Death March—in return for the promise of anti-communist intelligence. Later, the CIA found most of his recruits to be utterly useless if not dangerous.

Even setting aside Keenan's confusion and Willoughby’s fanaticism, the Tokyo War Crimes Trials left a toxic legacy. It became impossible to discuss the role of the emperor during the war because an international tribunal had exonerated him. That damper dissolved somewhat in 1989 with the death of the Shōwa emperor, and aging Japanese veterans began to talk more openly about the war. Ultimately, the Tokyo War Crimes Trials made it much harder for Japan to understand how it had precipitated a catastrophic war.

● Reading

Dower, Embracing Defeat.

Koseki, The Birth of Japan’s Postwar Constitution.

● Questions

1 What were the goals of the US occupation of Japan?

2 How did the Japanese people respond to defeat?

17

Lecture 3

The Japanese

Economic Miracle:

Empire 2.0

T he question of when postwar Japan began and ended is tricky enough that historians have two answers. The short postwar period, which started in 1945 and

ended sometime in the 1950s, was a time of

tumultuous change. But historians also speak

of a long postwar period, beginning in the

1950s and lasting until the 1990s, that was

defined by tremendous continuity in politics

and economics. How did Japan go from being

a war-ravaged, impoverished country with four

governments in three years to a country of

astonishing continuities?

Table of Contents

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

● Shifting Consumer Attitudes

In 1945, Japan was a shattered nation dependent on US food aid for survival. Homelessness, hunger, illness, and despair were endemic. Even before surrender, factories reported critical labor shortages due to malnutrition. Urban school children were, on average, an inch shorter than their counterparts 10 years earlier. Official rations were barely 1,000 calories a day, and staying alive meant buying on the black market, foraging, or stealing.

Ten years later, endemic hunger was a painful memory—but only a memory. Total calories by the early 1950s had doubled from a few years earlier to about 2,000 a day. And chocolate was no longer something American soldiers tossed from jeeps to hungry children. Japanese-made chocolates could be bought at shopping centers. Massive underground malls are now a signature feature of Japan.

The construction of new shopping venues reflected a massive shift in consumer attitudes. Japan had begun mobilizing for war in the mid-1930s, and by the 1940s, consumer goods were seen as something akin to treason. Patriotism meant punishing self-abnegation, and shopping was inconceivable.

By the mid-1950s, however, people began to talk openly of consumer desires. At first, people spoke of small electric appliances, like a vacuum cleaner or an electric rice cooker. Then, Japanese consumers began to talk about three treasures: a television, a refrigerator, and a washing machine. Another new phrase was mai-homu shugi, or “my home-ism.” The idea was that focusing on a nice home was a positive ideology rather than a vice. These phrases were complete inversions of wartime ideology.

19

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

● The Pauley Plan

The US occupation set up Japan for success both by design and by accident. Initially, US policy was shaped by the idea that Japan needed to pay some price for World War II. But the Potsdam Declaration also mentioned “Japanese participation in world trade relations.” Those two goals don’t quite jibe. After Japan’s surrender, US policy shifted steadily from the first goal to the second.

Early occupation plans also called for Japan to pay punitive reparations to China and the rest of East Asia. Edwin Pauley, a US oil magnate and confidant of President Harry Truman, developed the policy, arguing that Japanese heavy industry was inseparable from militarism. Further, Pauley argued that dismantling industrial plants and relocating them to China and the Philippines would allow those countries to resist Japanese economic control.

Pauley insisted that because Japan was dependent on imported raw materials, it had to invade neighboring countries to get those materials. He also argued that Japan had invaded China to get a market for its exports. Pauley’s solution was to eliminate Japan’s export-oriented industries, but others had a different solution to the problem: free trade.

Then, in 1948, the United States introduced the Marshall Plan policy of foreign aid to boost the war-ravaged economies of Europe. While the Soviet Union was extracting reparations from East Germany, the United States was extending aid to West Germany to restart its economy. US policy was to promote the rebirth of industrial capitalism, while Soviet policy was punitive. The Pauley plan for Japan clearly did not fit with the US policy for Europe.

The Chinese Civil War finished off the Pauley plan. Indeed, some of the most dogged defenders of the Pauley plan were supporters of the Chinese communist leader Mao Zedong. As

20

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

early as 1946, Pauley himself had to admit that China might not be politically stable enough to receive hundreds of millions of dollars of dismantled Japanese industrial plants. And only months after the civil war, China and the United States were on opposite sides in the Korean War.

Japan eventually paid some reparations to the Philippines, Burma, Indonesia, and South Vietnam. But Pauley’s vision of deindustrializing Japan to raise living standards in the rest of Asia never materialized. In fact, the Korean War flipped the logic of the Pauley plan. Pauley had wanted a prosperous China to be a sentinel for Japanese aggression, but by 1950, the United States wanted a prosperous Japan as a sentinel for communist expansion. A vibrant capitalist Japanese economy became a primary goal of the US occupation.

● Industrial Policy in Japan

US industrial policy in Japan was messier and more complex. Initially, the United States was determined to break down the industrial combines known as zaibatsu. Critics insisted that if economic power was concentrated in the hands of a few massive corporations, a prosperous Japanese middle class would never emerge.

A handful of massive conglomerates such as Mitsui and Mitsubishi controlled a majority of key industries, including manufacturing and banking. And those corporations used their enormous power to favor their own subsidiaries and drive down the profits of smaller rivals. Critics argued that they also exerted downward pressure on wages, stifling the emergence of a robust middle class. And that, in turn, weakened Japanese democracy.

Still, the zaibatsu escaped the occupation largely unscathed. Much like reparations, the idea of breaking up the zaibatsu collapsed because of the Cold War. The United States wanted increased Japanese industrial production more than it wanted

21

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

economic democracy. Also, the zaibatsu were savvy at preempting some reforms. They offered to partially dismantle themselves, knowing they could reassemble after the occupation.

A vibrant middle class emerged despite the concentrated power of the zaibatsu. Almost by accident, US policy set the stage for decades of strong growth. Part of the basis for that growth was a 1948 plan called the Dodge Line.

One huge success of the US-led occupation was

Japanese land reform. Millions of tenant farmers

became landowners and doubled their incomes.

The new property owners became the core of a

rural middle class that was largely conservative

and deeply committed to capitalism.

Early in the occupation, the Japanese government was running up huge budget deficits. One result of all of this was double-digit inflation. In 1948, the United States demanded that Japan get inflation under control. Specifically, the US banker Joseph Dodge insisted on massive reductions in government spending. The explicit goal was to reduce consumer demand—in other words, to trigger a recession.

The results were predictable. Inflation came down but at the cost of a rise in bankruptcies and labor unrest. The domestic market for Toyota automobiles collapsed, and the company was on the verge of collapse. The Dodge Line seemed like it might destabilize Japan. But North Korea attacked South Korea in June 1950, and weeks later, the US Army asked Toyota to make 1,000 cargo trucks. The company stopped talking about layoffs and began paying its workers overtime.

22

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

US military orders created a Japanese export boom that was funded by the US taxpayer, not the Japanese budget. Almost every aspect of the Japanese economy surged. The Dodge Line recession was severe, resulting in strikes and bankruptcies, but it gave Japan a stable yen. And the recession was short enough that companies like Toyota managed to survive just long enough to enjoy a US-fueled export boom.

● Postwar Politics

Elections in 1946 and 1947 brought a wave of change to Japanese politics. In the immediate postwar period, three main parties emerged. The Liberal Party, which was center-right, was led by Yoshida Shigeru, a diplomat and former ambassador to the United Kingdom. Next, there was the centrist Democratic Party led by Shidehara Kijūrō, who had been foreign minister in the 1920s. The third was the Socialist Party.

All three parties won about a third of the vote in the 1947 national election. The Socialist Party joined with the Democratic Party to create a government, and Katayama Tetsu of the Socialist Party became prime minister for 10 months, beginning in mid-1947. But the left was weakened by internal differences, while the center-right chose to ignore differences of its own in order to win elections. And the center-right coalition was positioned to enjoy the fruits of the Korean War boom.

Although Katayama’s government lasted only 10 months, it did implement major reforms, including regulations on workplace safety, unemployment insurance, child welfare, and parental leave. But Katayama didn’t have the votes to fulfill two main campaign promises: nationalizing the coal industry and increasing wages for government workers. Consequently, he was toppled by his own party for not doing enough.

23

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

Japan’s enduring center-right coalition was comparatively pragmatic. In 1955, the Liberal Party and the Democratic Party formally joined together based on common interests in blocking socialist attempts to nationalize the coal industry. At the core of that coalition was the Yoshida Doctrine, named after Yoshida Shigeru, who served as prime minister from 1946 to 1947 and again from 1948 to 1954.

Under the Yoshida Doctrine, Japan would side with the United States in the Cold War. It would not attempt to revise Article 9 of the constitution, which prohibited it from forming an army. Instead, Japan would accommodate US military bases in Japan and rely on the United States for national security. And Japan would again become a world power—this time, an economic power.

After the outbreak of the Korean War, Yoshida

had to resist US pressure to create a Japanese

army. Although the United States had imposed

Article 9 of the constitution on Japan, Secretary

of State John Foster Dulles was pressuring

Japan to rearm by 1950. But Yoshida refused

to create a real Japanese army, arguing that it

would be unconstitutional.

The Yoshida Doctrine rejected a core goal of the postwar Japanese far right: revising the constitution and building a real military. But the doctrine also amounted to a rejection of the Japanese left, which wanted Japan to be neutral in the Cold War. In effect, the Yoshida Doctrine gave voters a new reason to be proud of their country in the form of an economic empire.

24

Lecture 3 • The Japanese Economic Miracle: Empire 2.0

The good news was that Japanese empire 2.0 wouldn’t lead to another war. The bad news was that Japan would have US military bases forever. But overall, voters loved the bargain. They voted for the Liberal Democratic Party year after year until the 1990s. That remarkable electoral success, from 1955 to 1993, marked Japan’s long postwar period of remarkable economic and political continuity.

● Reading

Dower, Embracing Defeat.

Johnson, MITI and the Japanese Miracle.

● Questions

1 How did the Japanese economy recover from wartime

devastation?

2 How did the United States prepare Japan for postwar success?

25

Lecture 4

Japan’s Civil

Society Protests

of 1960

I n June 1960, Japanese prime minister Kishi Nobusuke faced a diplomatic and public relations disaster. Tens of millions of Japanese people joined some form of protest,

and every major newspaper and major business

organization explicitly or implicitly called for

Kishi to resign. How did the leader of the Liberal

Democratic Party, the majority party presiding

over a period of peace and a booming economy,

fall from power?

Table of Contents

Lecture 4 • Japan’s Civil Society Protests of 1960

● A New Security Treaty

US president Dwight Eisenhower’s press secretary, James C. Hagerty, arrived at Haneda Airport in June 1960 to coordinate the final details of Eisenhower’s upcoming visit—the first-ever visit to Japan by a sitting US president. The visit would celebrate the conclusion of a new security treaty between Japan and the United States and signal Japan’s reemergence as a fully sovereign nation and trusted US partner.

But things did not go according to plan. As Hagerty was driving from the airport, radical college students and communists breached the airport fence and surrounded his car. They jumped on the roof, sang the communist International anthem, chanted “Hagerty go home,” and smashed the car’s windows and fenders. The violence was more theatrical than destructive, but Hagerty concluded that a presidential visit would be politically unwise and potentially unsafe.

Ten days later, Kishi announced that he would resign as prime minister. His expected career triumph had turned into a catastrophe. But the other target

of the protest—the

treaty itself—survived

unscathed. In fact, it

proved to be one of

the most durable

treaties in modern

history and is still in

force more than six

decades later. So, the

high-water mark of the

Japanese opposition

was also its moment of

epic failure.

ke

su

Kishi No bu

●

27

Lecture 4 • Japan’s Civil Society Protests of 1960

The original security treaty of 1951 had been completely unequal. It was imposed on Japan as a condition for ending the US occupation after World War II. It had no expiration date and gave Japan almost no say in how or where US troops would be used. Furthermore, by 1960, that unequal relationship seemed out of step with Japan’s postwar economic recovery and broader political rehabilitation.

The US-Japan alliance needed a new treaty that would reaffirm US military bases in Japan but be more respectful of Japan’s sovereignty and autonomy. And the United States was willing to renegotiate the treaty because it wanted to showcase Japan as a model ally. So, given that both governments wanted a new treaty, why did things get so messy?

● Opposition to the Treaty

First, there were the changing battle lines of the Cold War. Few Japanese people wanted to join the communist side of the Cold War, but the idea of navigating a middle course—allowing Japan to remain close to the United States but not in opposition to the Soviet Union and China—had wide appeal. The option to remain neutral was especially intriguing because of the rise of the Non-Aligned Movement, where several major Asian nations sought to create a group of countries that refused to choose sides in the Cold War.

In Japan, the Non-Aligned Movement became a

way to criticize Japan’s alliance with the United

States. Weren’t US bases in Japan a legacy of

colonialism? And why was Japan tolerating its

subordinate status?

28

Lecture 4 • Japan’s Civil Society Protests of 1960

A second reason things got so messy was the relatively strong showing by the USSR in the late 1950s. The USSR was the first country to put a satellite in space, and in 1960, it was the first country to send animals into orbit and to bring them back safely.

A third factor was a rise in tensions around US military bases. Simply put, GIs behaved badly and angered the local population. Some incidents made headline news at just the wrong time with respect to the new treaty.

The fourth complication was Prime Minister Kishi himself. He had a terrible relationship with the press and a dreadful political past. Kishi had served in Prime Minister Tōjō Hideki’s wartime cabinet, and he was in charge of the industrial development of Manchuria, known as the Japanese puppet state of Manchukuo, where he used forced labor to promote rapid industrialization. He was arrested as a war criminal, but the United States decided he could be a valuable ally because he was a fiercely anti-communist bureaucrat and had experience promoting economic growth.

Kishi’s wartime record made him a juicy target for the Japanese left. He also rekindled public fears of war because he was an advocate of revising the Japanese constitution to eliminate Article 9. The very fact that the treaty was Kishi’s treaty gave the opposition a huge cudgel.

Kishi controlled large majorities in both the upper and lower houses, so all he needed to do was use slow and deliberate parliamentary procedures to get the treaty approved. But that wasn’t his style. Instead, the harder Kishi pushed, the more he further enhanced the opposition’s argument that he was a man of Japan’s ugly, fascist past, not a man of its democratic future.

So, the appeal of neutrality, Soviet supremacy in the space race, problems with the bases, and Kishi’s own past all moved Japanese opinion away from the treaty. Across the country, rallies and petitions against the treaty grew larger, with millions of signatures arriving at the Diet.

29

Lecture 4 • Japan’s Civil Society Protests of 1960

● The Vote on the Treaty

Ultimately, Kishi boxed himself in. He called for a vote to extend the Diet’s time in session on May 19, using that extra time to vote on the treaty itself. The opposition didn’t have the votes to block the extension, but they thought public opinion was shifting their way. So, opponents of the treaty sat down in front of the Diet speaker’s office so that he couldn’t leave and reach the rostrum. They blocked the vote until 11 pm, at which point the speaker—a Kishi ally—called the police and had the entire opposition carried out.

With the opposition gone, the speaker called the Diet to order and held the vote to extend the session. A vote was called on the treaty, and it was approved. And unless the upper house voted against the treaty, it would be officially ratified.

The optics were horrific. The opposition had been trying to paint Kishi as an unrepentant warmonger, and he gave them the perfect images: police physically dragging the opposition out of the Diet. Every major Japanese newspaper condemned Kishi for acting like an autocrat.

Even after massive public protests, such as a general strike on June 4 involving at least 5 million workers, Kishi still didn’t understand that his career was over. He was convinced that he could fix the situation by holding a vote in the upper house on June 16, just before the Eisenhower visit. But on June 15, massive protests formed at the Diet in anticipation of the vote the following day.

The most radical student factions clashed with angry and exhausted police. The students set police trucks on fire and tried to pull down the gates to the Diet. In the melee, a 19-year-old university student was killed. Within 36 hours, all of Japan’s major newspapers and all of its major business organizations had denounced the violence and called for a return to parliamentary democracy.

30

Lecture 4 • Japan’s Civil Society Protests of 1960

● Kishi’s Legacy

Kishi held out until June 23, when the United States and Japan exchanged official diplomatic instruments of ratification. Then he resigned. With Kishi gone, the anti-treaty movement collapsed. It had achieved one key goal—the defeat of Kishi—but it had utterly failed at stopping the treaty.

That dual legacy is key to understanding Japan since 1960. Three “don’t be Kishi” points became the cornerstone of Japanese politics for the next two decades: Don’t raise the specter of war; don’t raise the specter of dictatorship or strong-arm the opposition; and never take the political center for granted.

In the 21st century, Japanese communists still regularly get more than 10% of the vote. It’s one of the largest nongoverning communist parties in the world. But that doesn’t mean 10% of Japan’s population favors communism; rather, many of these votes are protest votes intended to remind the center-right coalition to not be like Kishi. The political paradox of a vibrant communist party in one the world’s most successful capitalist economies is an enduring legacy of the 1960 security treaty crisis.

● Reading

Packard, Protest in Tokyo.

———, “The United States–Japan Security Treaty at 50.”

● Questions

1 Why did so many Japanese people oppose a security treaty

with the United States?

2 Why has the treaty endured despite that opposition?

31

Lecture 5

Japan Inc. and

Its Upstart

Challengers

F or almost four decades—from the 1950s until the late 1980s—the Japanese economy grew at a record pace. As early as the 1960s, observers were talking about

an economic miracle and a unique Japanese

model of economic development. By the 1970s,

prominent American authors and intellectuals

were insisting that the United States needed to

learn from Japan. But that admiration turned

alarmist and somewhat paranoid by the 1980s.

By then, Japan had evolved from a shattered

wartime nation to an economic superpower.

So, what was the Japanese economic miracle,

and what caused it?

Table of Contents

Lecture 5 • Japan Inc. and Its Upstart Challengers

● The Basics of Economic Growth

Economists and policy analysts have many ways to measure economic growth. In the 1950s, the major Japanese stock market index, called the Nikkei, was around 100. By 1960, it was above 1,000. It was past 2,000 by 1970 and above 6,000 by 1980. At its peak in 1990, it neared 40,000. That growth rate is 23% a year. Of course, those stock prices in 1990 were part of an asset bubble. When that bubble burst, the Nikkei—and other indicators of Japanese economic well-being—plummeted.

Between 1955 and 1985, per capita GNP in Japan grew almost thirtyfold, yielding an average annual increase of more than 11%. And Japanese industrial production increased more than fourfold between 1950 and 1960 and more than tripled between 1960 and 1970. Over those 20 years, industrial production grew by an average of more than 13% per year. By comparison, US industrial production increased about 75% between 1950 and 1960, and then another 50% from 1960 to 1970, for an average of around 5% per year.

There were some bumps in the road. Japan is

highly dependent on imported energy, and the

1973 oil embargo caused a short but severe

recession. Growth was slower through the 1970s

and 1980s than it had been in previous decades.

Multiple factors affected this fast economic growth. The first was a domestic environment in which capitalists and entrepreneurs could thrive: stable currency, interest rates, and financial institutions. The ideal environment would also include a solid material infrastructure—things like highways, railroads, seaports, airports, a reliable electrical grid, and clean water—and

33

Lecture 5 • Japan Inc. and Its Upstart Challengers

social infrastructure, meaning functioning schools, police, and courts. This also includes a government without punishing levels of corruption. None of these had to be best in the world; they just needed to be good enough.

Now, establishing these basics is difficult, and many places lacked them during the postwar period. But postwar Japan nailed the basics, supporting the same government, the same currency, and the same adequate, if unexceptional, school system year after year.

Another macroeconomic factor of the Japanese economic miracle was exchange rates. From 1949 to 1971, the yen was fixed at ¥360 to the dollar. The yen was set intentionally low as part of a US policy to boost Japanese exports and help rebuild the Japanese economy. Since the Japanese currency was cheap, Japanese labor was also cheap. It was also capable and disciplined. That meant Japanese workers could be employed in state-of-the-art production facilities.

● MITI and the Japan Development Bank

Japan wasn’t a command economy, where the state ran key businesses. Rather, the state pushed businesses to grow in ways that advanced key government objectives. The guiding idea was that Japan was capital poor and resource poor, so it couldn’t quite trust market forces. In normal industrial competition, manufacturers might build too many plants and overproduce, leaving idle factories. Idle factories are expensive, especially when capital is scarce.

For Japan to be competitive internationally, it couldn’t be fully competitive domestically. It was a strange hybrid vision: limiting competition with the end goal of making domestic companies more competitive. The key agency in setting these goals was Japan’s Ministry of International Trade and Industry, or MITI.

34

Lecture 5 • Japan Inc. and Its Upstart Challengers

MITI’s heyday was in the 1950s and early 1960s, when it intervened overtly in Japanese industry. Its focus was on rebuilding Japanese heavy industry, emphasizing shipbuilding and the production of coal, steel, and electricity. In that early stage, Japan’s capital markets were extremely underdeveloped. Japanese business was highly dependent on bank loans, and that gave the government leverage through government banks, such as the Japan Development Bank.

That leverage was both direct and indirect. Industries received direct government loans, but government support also worked in the form of tacit loan guarantees. If one of Japan’s development banks supported a project, then private bankers assumed the project had government support and that it wouldn’t go bust. So, they could safely offer private loans, too.

In 1952, MITI calculated how much steel it thought Japanese industry would need and how much capital that would require. The estimated cost was ¥42 billion, of which private sector banking could provide about ¥31 billion. So, the government’s newly established Japan Development Bank pledged to cover the remaining ¥11 billion. Once it became clear that the government was backing the domestic steel sector, private banks were also eager to lend. The net government investment ended up being much smaller than the projected ¥11 billion.

The Ministry of International Trade and Industry wanted that new money spent on state-of-the-art technology—specifically, something called the basic oxygen converter. That steel-production process vastly reduced time and labor requirements. MITI encouraged Japanese companies to license the technology and offered special loans for the construction of new steel plants that employed the technology. It also had enormous control over the licensing and import of foreign technologies.

If Japanese steel companies had been dependent on the stock market rather than the government for capital, that investment in imported technology might not have been possible. Those

35

Lecture 5 • Japan Inc. and Its Upstart Challengers

expensive new plants with expensive foreign technology might have taken years to yield profits. But all the Japanese banks wanted was a sense that the steel makers wouldn’t default. And since the Japan Development Bank was in on the deal, it was clear the plan had tacit government approval.

In addition, the Japanese government added layers of tariff and regulatory protection to insulate the domestic steel industry from international competition. And the Japanese steel industry became exceptionally internationally competitive. In fact, many Japanese industries that once had been nurtured by the government stopped needing Japanese support and even began to resent MITI’s meddling.

● Innovation in Japanese Business

Many governments intervene to nurture or protect domestic industries. But if simple protectionism worked, then the US National Wool Act of 1954 would have turned the US mohair industry into a global powerhouse. In fact, critics argue that policies to protect infant industries have the unintended effect of keeping those industries from ever growing up. But in Japan, the steel industry—and then the auto and electronics industries grew up just fine. What was different?

Japanese businesses were relentlessly innovative and focused on quality and efficiency. Beginning in the 1950s, Japanese industry adopted a goal of continuous quality improvement, later known as total quality management, or TQM. The basic principles are now so common that it’s difficult to appreciate that they were once revolutionary.

At mid-century, quality control was commonly understood as the end point of manufacturing. After something came off the line, a team would check to see if it met quality standards. Quality control was punitive, which means workers had an incentive

36

Lecture 5 • Japan Inc. and Its Upstart Challengers

to hide rather than fix mistakes. TQM reversed that thinking entirely. Managers needed to empower workers to rethink production and to be engaged in quality control.

Japanese industry also pioneered what we now call supply-chain management and lean production management. As with TQM, lean supply chains are now common. A reduction in consumer options allowed for a massive reduction in complexity. It also increased quality along with much smaller, and therefore cheaper, inventories of specialized parts. Overall, production was simpler, leaner, and faster.

Because many Japanese businesses were innovative and agile, they often didn’t need or want active protection from the Japanese government. Instead, they wanted helpful inaction. Japanese businesses were quite content to protect themselves through a combination of legal and not-so-legal cartels. They were also content to have the government be slow and lax about Japan’s antitrust laws.

In the late 1960s, Japanese electronics

manufacturers established a price-fixing scheme

for color TVs. They fixed one price for the

domestic market and another price for export.

That allowed Japanese manufacturers to sell

at cost or even below cost in the United States

while selling the product above cost in Japan,

thereby making a profit overall. The government

was forced to act after the practice was exposed

in the Japanese media in 1966.

37

Lecture 5 • Japan Inc. and Its Upstart Challengers

● Clashes with MITI

Some of Japan’s most successful companies actually bumped heads with MITI. They might never have openly defied the Japanese government, but they did push against government plans.

As late as 1965, for example, MITI thought that the Japanese auto industry needed radical consolidation. It wanted to reduce the industry from 10 players to two: Toyota and Nissan. As you might imagine, Honda did not like the plan. MITI thought Honda should focus on motorcycles, but Honda wanted to make cars.

In 1963, MITI let Honda build a niche sports car, the S500. It was fast, fun, reliable, and cheap. Western car enthusiasts took notice. Honda Sōichirō, the company’s founder, realized he could get around MITI by focusing on the US market. Ten years later, Honda

38

Lecture 5 • Japan Inc. and Its Upstart Challengers

had a huge hit with the Honda Civic—the perfect inexpensive, fuel-efficient car for Americans confronting the 1973 oil embargo. For years, Honda sold twice as many cars in the United States as in Japan, becoming a heavyweight in the US market.

Another company that succeeded after clashing with MITI was a leader in transistor electronics. When Western Electric agreed to license the patent for the transistor, MITI designated three major electronics companies—Mitsubishi, Toshiba, and Hitachi—to apply. Those three were supposed to share the license to save money. The plan worked, and Hitachi and Toshiba did great things with Japanese government support.

But another Japanese company called Tokyo Tsūshin Kenkyūjo applied to MITI to make consumer electronics with transistors. MITI ignored it, thinking the company was too small. But the company was excited about the new technology, and it approached Western Electric directly. It got a license and asked MITI to authorize it after the fact. MITI officials were furious, but they reluctantly approved the plan. That tiny company pioneered tiny all-transistor TVs and changed its name to Sony.

The constructive clash between two opposing forces— government planning and intervention versus capitalist creativity and innovation—is crucial in explaining the Japanese economic miracle. More than anything else, Japan’s postwar economic transformation emerged from the productive entanglement of these two forces.

● Reading

Johnson, MITI and the Japanese Miracle.

Lynn, “MITI’s Successes and Failures in Controlling Japan’s Technology Imports.”

39

Lecture 5 • Japan Inc. and Its Upstart Challengers

● Questions

1 How did the Japanese government boost the Japanese

economy?

2 How did government and industry cooperate, and how did

they clash?

40

Lecture 6

Japan Faces the

Nixon Shocks:

China and Gold

U ntil the 1970s, Japan—despite its buoyant postwar economic recovery— had remained very much the junior partner in its alliance with the United States.

After the 1970s, however, Japan became

known as a wealthy global power and possibly

even a rival of the United States. Those

changes were largely the result of long-term

trends within Japan. But a series of US policy

shifts known as the Nixon Shocks was a major

inflection in the US-Japan relationship that

transformed the alliance and world politics.

Table of Contents

Lecture 6 • Japan Faces the Nixon Shocks: China and Gold

● The Reversion of Okinawa

US president Richard Nixon and Japanese prime minister Satō Eisaku met three times in late 1969. The central issue was, at first, the reversion of the Okinawa archipelago to Japan. Okinawa was still under US military

control, a legacy of the US

occupation after World War

II. Nixon was happy to give

Okinawa back. Due to growing

difficulties with the war in

Vietnam, many members

of the administration

wanted to reduce US military

commitments overseas.

But the reversion raised some ku

serious questions. Satō explicitly isa

● Satō E

articulated a formal nonnuclear policy under which Japan would not permit the introduction of nuclear weapons on its territory. How much of Okinawa would remain under US control as military bases? And in particular, how would US bases be reconciled with Satō’s nonnuclear policy?

Satō wanted a nonnuclear Okinawa after reversion, but US foreign policy demanded something different. The United States had hundreds—maybe thousands—of nuclear weapons on Okinawa, and its policy of deterrence involved hiding its nuclear arsenal so that the Soviet Union would think twice about attempting a first strike. If the United States followed Satō’s policy, then the Russians would know that anything on Okinawa, or in Japanese territorial waters, was free of nuclear weapons. That would make all of those assets useless for deterrence.

At one level, Satō’s nonnuclear policy was somewhat contradictory. To allow Japan to remain lightly armed and nonnuclear, he wanted a firm commitment from the United States

42

Lecture 6 • Japan Faces the Nixon Shocks: China and Gold

to defend Japan. That included the threat of nuclear retaliation should an attack on Japan occur. But remaining under the US security umbrella also meant turning a blind eye to US ships and aircraft with nuclear-strike capabilities in Japanese territory.

The problem was so intractable that it was resolved only in a secret protocol, which both governments denied even after it was leaked some 30 years later. The United States agreed that it would not store nuclear weapons on Okinawa, but it might reintroduce them in an emergency. In essence, the United States would ask for permission while fully knowing that Japan would say “yes.”

● Textile Exports

To make the negotiations even more complicated, Nixon brought up the question of Japanese exports. For Nixon, the big trade issue was textiles. Japanese exports were destroying the textile industry in the South, and Nixon wanted those votes. His solution was to try and convince Japan to voluntarily restrict its textile exports.

This seems to have caught Satō off guard. He had not laid the groundwork with economic advisers or business interests back in Japan for any concessions on trade. But he wanted the talks about Okinawa to be successful, so he gave Nixon a standard Japanese response: ”zensho shimasu,” or “I’ll do my best.” This euphemism really means “no,” but Nixon took it as “yes.” So, Nixon was convinced that he had settled the textile issue, using Okinawa for leverage. That misunderstanding did not bode well for the Nixon-Satō relationship.

In late 1969, Satō announced an agreement on the return of Okinawa. To capitalize on his success, he called snap elections, and his ruling Liberal Democratic Party captured an almost 60% majority in the lower house of parliament.

But for Nixon, things began to unravel quickly. He was convinced Satō had agreed to voluntary export restrictions. And when those restrictions didn’t materialize, Nixon threatened retaliation. At

43

Lecture 6 • Japan Faces the Nixon Shocks: China and Gold

one point, he insisted that he could restrict textile imports under the Trading with the Enemy Act of 1917. That interpretation of the law meant that Japan was simultaneously an enemy power and an ally—one with US military bases and possibly even US nuclear weapons.

Japan and the United States eventually did reach an agreement on voluntary export limits two years later, but it was not pretty. And the tension over Okinawa and textiles shaped Nixon’s next two major policy shifts.

● China and the International Gold Standard

In July 1971, Nixon announced that he would travel to China and meet with Mao. Nixon had been staunchly anti-communist, and Mao had been a ferocious anti-capitalist. The US-Chinese thaw was based largely on a common dislike of the Soviet Union.

In Japan, Nixon’s announcement was an utter shock. The government received no advance notice and no request for input. This was painful because the state of US-China relations had a direct impact on Japan. US policy had been to build up Japan as a counterexample to Asian communism, and the biggest communist country in Asia was China.

Along those lines, Satō himself was a rather vocal proponent of Taiwan, visiting in 1967 despite vocal objections from Beijing. Was Nixon’s visit the beginning of the United States shifting its support from Taiwan to Beijing? If so, then it seemed like Japan would have to follow suit.

But normalization of relations between Japan and China would reopen questions of what happened during the war. Would Japan owe China reparations? Japan had signed a peace treaty with Taiwan in 1952, but that agreement was supported by a mutual interest against communism. Taiwan waived all rights to reparations, but what would Mao do?

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Lecture 6 • Japan Faces the Nixon Shocks: China and Gold

Then, one month after Nixon announced his trip to China, he declared that the United States was abandoning a gold-backed US dollar and fixed exchange rates—the cornerstones of the Bretton Woods international economic system. Instead, currency rates would be set by what’s known as dirty floats—mostly market rates with some central bank intervention to keep currencies in a predictable range.

Nixon’s policies were not directed solely at Japan. Still, the impact of the end of Bretton Woods on Japan was huge. The dollar quickly fell to around ¥260, and it continued to fall for years. Since the 1990s, the dollar has floated mostly in the range of ¥80 to ¥130. So, a key effect of the end of the gold standard was the end of artificial US support for the Japanese economy.

With all of these events occurring in 1971, US-Japan relations were pretty bad when Satō and Nixon met in January 1972. In fact, Nixon broke Satō’s charmed career. In June 1972, Satō announced that he was stepping down as prime minister, a job he’d held for 2,798 consecutive days. He holds the record in Japan for the longest uninterrupted term as prime minister, but he couldn’t ride out Nixon’s pivot on China.

In another shock to the US-Japan relationship,

Japan became a target of the 1973 oil embargo

because of its alliance with the United States.

Soaring oil prices triggered a brief interval of

massive inflation, cresting above 20% in 1974.

Rising energy costs forced Japan’s economy

into a short but deep recession, with industrial

production contracting by about 20%.

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Lecture 6 • Japan Faces the Nixon Shocks: China and Gold

● The US-Japan Relationship Today

All of these shocks created a sense that Japan was terribly vulnerable. But Japan’s economy didn’t collapse. On the contrary, Japan’s economy seemed unstoppable in the 1980s, and it looked like Japanese investors were going to buy up the world. So, what happened?

Japanese industry adapted quickly to new realities. With the end of the cheap yen, manufacturers gave up on cheap exports and went for higher profit margins from higher tech exports. Japan made its manufacturing more energy-efficient. And with some restrictions on Japanese exports, Japan began moving factories to the United States. Rather than crush the Japanese economy, the Nixon Shocks and the oil crisis prompted a transformation.

For all the turmoil of the 1970s, some things remained unchanged in the US-Japan relationship. The United States still has major military installations on Okinawa. The two countries still have a “don’t ask, don’t tell” policy on nuclear weapons. And they still view China and North Korea as common threats, even though China is no longer strictly communist and North Korea presents its own distinctive combination of Stalinism and a Confucian monarchy.

But the Nixon Shocks prompted a debate in Japan over how to be both reliant on the US and still autonomous. Ever since the 1970s, Japanese politicians have struggled with that combination of dependence and independence.

● Reading

Pan, “Whither Japan’s Military Potential?”

Rosenbluth and Sundquist, “Japan and the Collapse of Bretton Woods.”

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Lecture 6 • Japan Faces the Nixon Shocks: China and Gold

● Questions

1 What were the Nixon Shocks?

2 How did Japan weather the turbulent 1970s?

47

Lecture 7

The Rise of

Japanese Cinema

A s Japan moved out from the shadow of defeat in World War II into postwar prosperity, there was a shift in popular concerns from problems of poverty and

despair to problems of affluence. Early postwar

Japanese films, for instance, focused largely on

questions of survival—dying in battle or from

tuberculosis, or maybe falling into crushing

poverty. But beginning in the 1960s, the focus

shifted toward existential crises: Why should we

survive? And what is the meaning of life?

Table of Contents

Lecture 7 • The Rise of Japanese Cinema

● Early Postwar Films

Many films from the late 1940s and early 1950s were explicitly about the struggle to come to terms with defeat in war. This is reflected in the winners of Japan’s oldest film prize, awarded annually from Kinema Junpō magazine (which translates roughly as Cinema Weekly).

The 1948 winner, A Ball at

the Anjo House, is about

the decline of a family in

the postwar world. The

wealthy and cultured Anjos

are losing their improbably

spectacular seaside mansion

because of postwar land

reforms that have crushed

their income. The film title

comes from the family’s plan

to throw one last ball—a

farewell to their mansion and

to their way of life.

In 1949, the winner for best

film was Drunken Angel, a

movie about a gangster dying

of tuberculosis as he’s being

treated by a physician who is

drinking himself to death. Like

many Kurosawa Akira films,

Drunken Angel is ultimately

about redemption. But the

environment reeks of poverty,

despair, deceit, corruption,

sickness, and death.

● A Ball at the Anjo House

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Lecture 7 • The Rise of Japanese Cinema

The 1951 winner was Until We Meet Again. This is the story of two young lovers, Saburo and Keiko, who meet in the Tokyo subway during an air raid. The romance ends tragically when Saburo gets his draft notice and goes off to die. It’s not a subtle film: World War II destroyed pure, young love, and the people who promoted the war were evil.

One more example is the 1956 winner, Floating Clouds, based on a 1951 novel of the same name. Yukiko and Kengo meet in Vietnam, which is under Japanese rule, during the war. Then, in postwar Japan, they have a turbulent affair for years. He’s married and won’t get a divorce, and both are struggling economically and emotionally until Yukiko dies of disease. Thematically, the film is about the loss of empire and loss of identity in postwar Japan.

● Abe Kōbō

Just a few years later, films began to explore the hollowness of postwar prosperity. They asked questions about what lurks beneath Japan’s postwar recovery and what Japan is leaving behind as it grows prosperous. The best example is the work of Abe Kōbō, one of Japan’s most acclaimed postwar writers.

Abe was an avant-garde artist, ahead of others in critiquing the conformity of Japanese prosperity. He was born in Tokyo in 1924 and grew up in the Japanese puppet state of Manchukuo, where his father was a physician. He was drafted in 1945, but the war ended before he had to report for duty. Abe’s father died during a typhoid epidemic in the winter of 1945. When he and his family were finally repatriated in 1946, their ship was held in quarantine within sight of Japan for 10 days as cholera raged on board.

Abe grew up deeply cynical of the Japanese state. Conformity to the state meant complicity with deceit, deception, disease, and death. But he also became disillusioned with the alternative of

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Lecture 7 • The Rise of Japanese Cinema

Marxism. By the early 1960s, he was an almost pure cynic and pure existentialist. For him, all systems of authority were masks for exploitation, oppression, and deceit.

Abe’s most famous work from this period is his novel Suna no Onna, or The Woman in the Dunes, published in 1962 and made into a film in 1964. The film won a special jury prize at Cannes and is considered a masterpiece.

It’s important to distinguish between art house

films and the rest of the movie world in postwar

Japan. For example, the 1964 box office smash

in Japan was Mothra vs. Godzilla, and the

1965 hit was a documentary about the 1964

Olympics. Surrealist explorations of existential

anxiety were not raking in the big bucks. But

by the 1980s, many artists were exploring the

paradoxes of Japanese prosperity.

The protagonist is a schoolteacher and amateur entomologist. He takes a trip to the beach to collect insects in the dunes. There are vague hints of a romantic relationship gone sour, but he has no strong attachments. He misses the last bus back, and some locals offer to find him a place to spend the night. With a rope ladder, they lower him into a pit. At the bottom is a ramshackle house where a woman—who never gets a name— sets him up for the night.

The following morning, the man can’t find the rope ladder out of the pit. He’s been kidnapped, and he’s expected to dig out the sand from the pit. Otherwise, the shifting sands will collapse the house and the locals will deny him fresh water.

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Lecture 7 • The Rise of Japanese Cinema

Over time, the man slowly loses his previous identity as a teacher. He and the woman become lovers. And he becomes obsessed with an experiment to extract pure water from the sand so that he’s not beholden to the locals. When the villagers take the woman—now pregnant—to a doctor, they mistakenly leave the rope ladder in place. The man climbs out to escape, but he realizes he no longer has a connection to anything outside the pit. So, he climbs back down into the pit to live out his days.

The movie is surreal but also allegorical. The man’s previous life in the outside world was meaningless. He can find as much existential satisfaction in the sand pit as in the outside world. His connection with the woman is raw and often cruel but somehow authentic. And the man finds intellectual satisfaction with his experiments to obtain water from the sand. The irony is that he is obsessed with pure water because that would give him independence from the villagers, but he could be completely independent by just leaving the pit. The question is: Where would he go?

● Middle-Class Japanese Life

Abe revisits these same themes in his 1967 stage drama, Friends. It’s the story of a single man whose apartment is invaded by strangers who insist they are his family. They push their way in, and the man can’t get them to leave. Even worse, he can’t convince anyone that they’re not his family. When the man calls the police, the fake family acts as though they are the man’s parents and siblings and the man is just having a mental episode. The police don’t want to get involved in a nonviolent family squabble, so they leave.

Friends is a surreal quest for authenticity. But the outside world isn’t just heartless—it’s terrifying. The protagonist is crushed by his nonconformity and his failure to look like a member of a

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Lecture 7 • The Rise of Japanese Cinema

conventional Japanese family with normal, everyday problems. The man’s fake family is more believable than the truth, or perhaps just less complicated.

The breakout film in ridiculing middle-class Japanese life was the 1983 film The Family Game. It was both a critical and financial success, winning an award for best film of the decade. The parents in a middle-class family are desperate to get their younger son, Shigeyuki, into an elite high school. Shigeyuki’s parents hire a series of tutors but without result. The plot centers on a new tutor, Yoshimoto Katsu, who is a seventh-year student at a third-tier university. His tutoring consists mostly of sitting Shigeyuki in front of test prep materials and punching him if he doesn’t study. The plot highlights the absurdity of ordinary, middle-class life in Japan.

Another film in this style is The Funeral, which is about a couple who struggles to arrange a funeral for the wife’s father. They’re so lost over how to proceed that they get a video to learn what to do. Once again, all middle-class conventions wind up looking ridiculous. The film’s central question—how do we authentically mourn our troublesome relatives?—is a real challenge but also a luxury of a prosperous society. It’s a problem in a society where people commonly die from old age rather than in their youth by war, poverty, or disease.

● The 1990s and Beyond

Ever since the Japanese asset bubble burst in 1990, leaving decades of sluggish growth in its wake, films like The Family Game seem like period pieces. Underlying the film is the notion that if Shigeyuki can just get good test scores, he’ll get into a good high school, and then a good college, and he’ll be assured a good, middle-class life. The game itself might be absurd, but you can still win by following the rules.

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Lecture 7 • The Rise of Japanese Cinema

Japan’s more recent comedies are darker, and its family dramas are more poignant. There’s the underlying sense that the game is rigged—that playing by the rules doesn’t guarantee anything. What if you sacrifice your true self to play by the rules and you still don’t get that promised upper-middle-class life? What if— after being a straight arrow and playing by the rules—you get laid off in your mid-40s and lose dignity and self-respect?

Those more recent films don’t lampoon the rat race of middle-class culture so much as reject it—sometimes in the hope of something else, and sometimes just with nihilistic dread.

● Reading

Abe, The Woman in the Dunes.

Motoyama, “The Literature and Politics of Abe Kōbō.”

● Questions

1 How did Japanese films change as Japan grew prosperous?

2 What can those films tell us about Japanese society?

54

Lecture 8

How Japan’s

Carmakers

Outmaneuvered

Detroit

B eginning in the 1980s, American media started to report that the Japanese economy would soon surpass the US economy as the world’s largest and that

everything was going to be made in Japan.

But the bursting of a massive asset bubble in

1990 led the Japanese economy into a long

period of slow and even negative growth. Why,

on the eve of decades of Japanese economic

stagnation, did so many observers think that

Japan was unstoppable?

Table of Contents

Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

● New Emissions Standards

The public health impact of pollution—particularly auto emissions—became a major concern during the 1960s. In the United States, there were three catalysts: the New York City smog crisis of 1966; the oil spill off Santa Barbara, California, in 1969; and the fire on the Cuyahoga River in Cleveland in 1969. A sense of peril led Congress to enact the National Environmental Policy Act of 1969 and the Clean Water Act of 1972. It also created the Environmental Protection Agency in 1970.

There were parallel problems in Japan. In fact, the Japanese case was arguably worse, with two large cases of mercury poisoning. The most famous of these occurred in the late 1950s in the small coastal factory town of Minamata. There was also an epidemic of lung disease in the 1960s and early 1970s caused by sulfur dioxide pollution from a petrochemical plant in Yokkaichi. And across Japan, people living near major highways had alarmingly elevated blood levels of lead due to breathing the exhaust from leaded fuels.

Enormous public pressure developed both in the United States and Japan for more regulation. Japanese industry, as in the United States, tended to resist such regulation, arguing that it was impossible to lower pollutants or that the costs were too high. And Japan’s Ministry of International Trade and Industry tended to take industry’s side. But when the United States began announcing emissions standards, MITI shifted. Japanese industry would need to meet US standards to compete in the export market.

Then, US carmakers successfully lobbied the US government to postpone the new emissions standards. They insisted it was impossible to meet the targets. In Japan, MITI and the major carmakers wanted similar delays. But two upstart carmakers, Honda and Mazda, broke ranks with the big carmakers and declared that they were ready to meet the new pollution standards. For Honda and Mazda, the new standards presented an opportunity to gain market share. The big companies then

56

Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

agreed they had the

technology to reduce

emissions—they just

hadn’t wanted to bear

the expense. And all

Japanese automakers

met US standards on

the original schedule.

So, Japanese

carmakers actually

won by failing to

lobby the Japanese

government as well as

US carmakers lobbied

the US government.

They succeeded at

lowering emissions

by improving fuel

economy, and they

did so largely by

adapting existing

technologies—things

like high-compression

engines and fuel injection. American automakers had used those, too, but mostly on luxury and muscle cars.

Japanese cars were perfect for the US market in the 1970s. Exports to the United States surged from fewer than 200,000 in 1968 to almost 2 million in 1980. But that boom was as much in spite of MITI and the Japanese government as because of MITI.

● Japan’s Electronics Industry

The case of Japan’s electronics industry is somewhat more favorable to MITI. Beginning in the 1960s, MITI outlined plans for a shift in Japanese electronics from basic consumer products to

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Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

high-tech and knowledge-intensive industries. A centerpiece of that strategy was the development of a domestic semiconductor industry.

MITI returned to the strategy that it had used with steel in the early 1950s and transistors in the 1960s. It would subsidize domestic research and development while forcing domestic manufacturers to share knowledge and facilities to avoid duplicating effort.

As late as 1972, Japanese manufacturers of integrated circuits were operating in the red and competing in the US market only by selling below cost. But they slowly became competitive. By the 1980s, Japanese companies were world leaders in market share and in research and development. That success in integrated circuits boosted Japan’s broader electronics industry because it supported a stable domestic supply of components, unlike in the United States, where semiconductor manufacturers faced a boom-bust cycle.

Video games and consoles were another huge

growth sector for the Japanese economy.

Nintendo games were hugely successful

products with great cultural and economic

impact. The Japanese government didn’t shape

the creative process of developing those games,

but a reliable supply of domestic components

gave Nintendo an advantage.

As with autos, however, once the Japanese industry was competitive, MITI’s interventions were less helpful. It acted like a lumbering national bureaucracy whenever it tried to influence the consumer market. An example is the videotape wars of the

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Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

1980s. Sony developed a home video standard called Betamax, while Panasonic and much of the rest of the industry backed VHS. Early on, MITI decided it would be inefficient to support two competing standards and weighed in on Sony’s behalf. That was the losing side. So, much like autos in the 1970s, the Japanese electronics industry was succeeding by the 1980s despite MITI as much as because of it.

● Japan’s Global Political Ambition

By the mid-1980s, the Japanese economy seemed unstoppable. The country had weathered the oil crisis, and its economy was expanding and dominating new markets. That economic power contributed to a rethinking of Japan’s political standing.

A prominent voice of that

rethinking of Japan’s

global political ambition

was Japanese prime

minister Nakasone

Yasuhiro, who served

from 1982 to 1987.

Nakasone became

convinced it was

time to move beyond

the postwar Yoshida

Doctrine to a more

nationalistic and expansive

● vision of Japanese power. Nak

ason He contended that the Yoshida

e Yasuhiro Doctrine had served Japan well

during an era of American supremacy,

but the coming era would belong to Japan.

As a world power, Japan would need to increase its military profile. Nakasone also advocated for changes in Japanese economic policy. He felt it was inappropriate for Japan, as a

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Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

global power, to continue to indulge in petty protectionism and overt industrial promotion. Much as Japanese cars had outgrown MITI, it was ridiculous for Japan to bicker with the United States over protecting Japanese citrus and beef. Those issues were beneath the dignity of a world power.

Japan would also need to explore different aspects of its culture. In the postwar era, the Japanese people had prospered by focusing on cooperation and group loyalty, especially company loyalty. Those values would remain important, but Japan also needed to foster what Nakasone described as “adventurousness and strong individualistic leadership.” He also wanted Japanese education to change to support that less conformist temperament.

Nakasone formalized his ideas in an official policy statement and voiced them at a meeting with Ronald Reagan at Camp David in 1986. He pledged to increase Japanese domestic consumer demand and open Japanese markets to US products. He also promised to increase Japanese military spending in support of Reagan’s confrontation with the Russians. Reagan was thrilled. This was a personal triumph for Nakasone: He and Reagan had met as equals, like Roosevelt and Churchill.

But Nakasone, with his bold vision of the future, got ahead of his own government. Even before he returned home, the ruling Liberal Democratic Party was disavowing Nakasone’s promises. The LDP was not ready to stop protecting Japanese farmers, and it was leery of changes in military policy. Nakasone did break the 1% ceiling on defense spending, but that was mostly through an accounting trick.

● Japanese Knowledge Industries

In the end, Nakasone stumbled, but many shared his views about the need for a bolder, more assertive Japan. Sony founder and chairman Morita Akio voiced dismay that America remained great at pure research but couldn’t turn that research

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Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

into products because its business culture was broken. The conservative Diet representative Ishihara Shintarō, by contrast, celebrated American decline.

In the United States, a similar vision of impending Japanese dominance fueled both policy and paranoia. In 1989, Congress modified US trade law to require the president to act against any country that violated international trade agreements or otherwise discriminated against US exports.

Decades later, it’s hard to make sense of this. Japanese global dominance never happened. And a centerpiece of the anxieties— Japanese supremacy in computing—proved entirely unfounded. MITI interventions did help create a Japanese supercomputer industry, and Japanese research institutes produced the world’s fastest supercomputer in 2011 and again in 2020. But that didn’t lead to Japanese success in the rest of the computer markets.

Why did the MITI model that had worked for steel, transistors, and semiconductors not work in knowledge industries? In the background, of course, is the financial crisis of the 1990s. But more specifically, postwar Japanese business culture and knowledge industries weren’t a good fit. Compared to older industries like automobiles, software isn’t really a tangible product. In some cases, the consumer doesn’t even make a purchase. Companies earn money by selling ads and demographic information.

Early on, Japan led in every major innovation

within the mobile phone market. But because

of Japan’s focus on hardware-based features,

rather than software, its phone manufacturers

were oblivious to some of the aesthetic appeal

of the iPhone. Japanese cell phones had great

features but with a clunky, ugly interface.

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Lecture 8 • How Japan’s Carmakers Outmaneuvered Detroit

The knowledge industry grew up with new rules. For instance, Silicon Valley embraced the idea of a minimum viable product— something just good enough to be adopted by early customers who provide feedback that’s used to drive further product development. In other words, you distribute something short of perfect and let your consumers help you improve the product.

But that business model is antithetical to the total quality management approach—a model of slow, deliberate improvement to existing technologies—that made Japan rich for two generations. Even a full generation after Japan’s financial and real estate bubble burst in the 1990s, the country’s broader business culture has remained strangely inhospitable to the knowledge economy.

● Reading

Morita and Ishihara, The Japan That Can Say “No.”

Muramatsu, “In Search of National Identity.”

● Questions

1 How did Japan’s economic growth in the 1980s change

Japanese politics?

2 How did Japan’s economic growth affect US-Japanese

relations?

62

Lecture 9

From the Heights

of Japan’s Bubble

Economy

T he term baburu keizai, or “bubble economy,” refers to the swift rise in Japanese asset prices beginning around 1985, their continued growth for the next

five years, and then their rapid collapse in

1990. How and why did the asset bubble get

so big? Why did it burst, and what are the

repercussions?

Table of Contents

Lecture 9 • From the Heights of Japan’s Bubble Economy

● Japan’s Economic Crisis

In some ways, the Japanese bubble from 1985 to 1990 was just another asset bubble. But in other ways, it was profoundly different. The magnitude of Japan’s economic correction was huge. The Nikkei stock index corrected by more than 50% and then continued to drop even further.

Japan’s recovery has also been excruciatingly slow. The Nikkei index peaked in late 1989 at nearly 40,000. It then fell to below 8,000. Three decades later, it finally got above 20,000. Much the same happened with housing prices. After the US real estate

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Lecture 9 • From the Heights of Japan’s Bubble Economy

asset bubble burst in 2008, full recovery took, on average, 10 years. In Tokyo, it took 30 years for prime condos to recover their former peak values. And in most of the country, home prices continue to be a fraction of their peak.

Lastly, the economic crisis was part of a crisis of Japanese identity in the postwar world. Japan’s Shōwa emperor, who had served since 1925, died in January 1989. There was a joke circulating around Tokyo at the time: Why were we once so stupid as to attack Hawaii when we could have just waited and bought it? Implicit in the joke was a sort of rehabilitation of the Shōwa emperor. Whatever the emperor did—or failed

to do—during World War II, he had presided symbolically over the rise of Japan’s second, economic empire. But a year after his death, the economic empire was collapsing.

In addition to the economic crisis, the balance of power in the world was changing. When the Berlin Wall fell in 1989, capitalism and liberal democracy had triumphed decisively over communism. Japan was on the winning side of the struggle between capitalism and communism, but there was no euphoria in East Asia. Instead of a unification of the two Koreas, like in Germany, North Korea’s Kim dynasty kept chugging along, an amazing combination of Confucian monarchy and Stalinism.

China rejected the Soviet model of glasnost reforms to increase government transparency. Instead, it opted for the violent suppression of public dissent, as exemplified by the Tiananmen Square massacre in June 1989. So, the Cold War didn’t really end in East Asia. These global events, along with the

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Lecture 9 • From the Heights of Japan’s Bubble Economy

bursting over the Japanese asset bubble, led to an existential crisis in Japan. And those rumblings of discontent continue decades later.

● Financial Deregulation

The reasons for how and why the bubble got so big are complex, but essentially, it happened because the Japanese economy didn’t look like a bubble. The long-term Nikkei index had grown by about 12% a year from around 1950 to 1990. There was a surge in stock prices in the late 1980s, but it wasn’t unprecedented. Japanese regulators thought external forces would prompt a correction, so they decided to wait it out rather than overcorrect.

When Black Monday occurred in the United

States on October 22, 1987, US stocks fell by

almost 25% in a single day. That broke a five-year

rally and prompted a massive correction around

the world.

Another reason the bubble got so big was financial deregulation. Under pressure from the United States, Japan deregulated its financial markets and opened them to foreign competition. That led to a flurry of ill-advised lending and liquidity. Until then, Japanese banking had been highly regulated, meaning it was unlikely to provoke an asset bubble.

Then, in the 1980s, Japanese companies began exploring alternatives to standard commercial loans. Deregulation meant there were new alternatives to raising capital. There were now Japanese and foreign financial companies eager to help issue bonds or sell stock. With these new competitors, old-school

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Lecture 9 • From the Heights of Japan’s Bubble Economy

Japanese banks had to scramble to compete. In their search for business, bankers lent to some businesses that they would previously have rejected as too risky. Even if the borrowers’ business plans seemed shaky, the client seemed to have great collateral assets in valuable real estate holdings.

But land prices were inflated. So, when the real estate bubble burst, all of those Japanese bank loans to shaky businesses went bad and the banks’ balance sheets turned red. Furthermore, the bankers couldn’t foreclose on the loans because then they’d be stuck with real estate that they didn’t want and, more importantly, couldn’t sell.

● The Plaza Accord

Lastly, the bubble got so big because of the September 1985 Plaza Accord, named after the Plaza Hotel in New York City, where it was signed. This was a joint agreement between France, West Germany, Japan, the United States, and the United Kingdom to push down the value of the US dollar in relation to the German deutsche mark and the Japanese yen.

The dollar had risen during the early 1980s, and that hurt US exporters, especially in manufacturing. The US president, Ronald Reagan, did not want new import restrictions on cars or on farm and construction equipment. Instead, he pressed for an international agreement on exchange rates. His goal was to make US exports cheap and thereby reduce the US trade deficit. The intervention pushed the exchange rates from a high of about ¥260 per dollar in early 1985 to a low of ¥140 in early 1987.

The Plaza Accord didn’t do much to help US exports to Japan, but it made US real estate and even companies seem cheap if you were spending Japanese yen. So, Japanese investors went on a buying spree. What really caught the media’s attention was

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Lecture 9 • From the Heights of Japan’s Bubble Economy

trophy real estate, like when Mitsubishi purchased Rockefeller Center in New York City, or when a mysterious Japanese real estate tycoon purchased the famous Pebble Beach Golf Links.

If you sold all of the real estate in Japan at 1988

market values, you’d be able to buy the entire

United States four times over. And if you sold the

Imperial Palace, which is about 1.3 square miles,

you would be able to buy all of California.

Those purchases sparked enormous fear and resentment that Japan was buying up the United States. But many of those purchases were terrible investments. Mitsubishi ended up defaulting on its loan to purchase Rockefeller Center, and the mysterious Japanese investor sold Pebble Beach Golf Links at a loss of about $300 million just two years later.

The net effect of the Plaza Accord was to inflate the Japanese asset bubble even more. Japanese investors could now overpay for real estate around the world. And because the Plaza Accord was supposed to slow Japanese exports by increasing their relative price, Japanese government officials viewed the accord as a correction of the economy, much like Black Monday had been for much of the world’s economies in 1987. In effect, the Plaza Accord became a reason for the Japanese government to ignore the growing bubble rather than do something about it.

● Bursting the Bubble

Once Japan’s central bank realized that no external force was going to deflate the bubble, it finally started raising interest rates in December 1989. But because the bank had waited so long, its actions quickly burst the bubble rather than slowly deflate it.

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Lecture 9 • From the Heights of Japan’s Bubble Economy

There are two possible responses to an asset bubble: tough love and stimulus. The tough love response is a supply-side economic strategy. The logic is that the economy is full of badly allocated assets—money and people tied up in ventures that just aren’t profitable—and the only answer is lots of bankruptcies. Massive unemployment and bankruptcies are terrible, but they lead to economic recovery in the long run.

Liberal economics focuses more on the consumer side of things, opting for stimulus packages. The thinking is that after a huge correction, people hold on to their meager savings. But that only makes the crash worse, because that fear of spending drives good companies into bankruptcy. Giving people lots of money starts to cause inflation. And because inflation means that your money will be worth less tomorrow, you are incentivized to spend money now to get its full value. The logic is that inflation and government debt are necessary evils.

After the 1990 crash, the Japanese government spent a full decade vacillating, not quite willing to take the tough love approach but also refusing to just pour money into the economy with the explicit goal of inflation. Only in the late 1990s did the Japanese government began to force banks to consolidate through a series of huge mergers. And only after that did it push for the banks to write off bad debts.

Conservative economists argue that even after consolidation, banks still haven’t cut off their weaker customers. They argue that lots of lingering bad debt explains why the Japanese economy seemed to recover in the early 2000s but was clobbered again by the 2008 financial crisis.

Liberal economists argue that the Japanese government was too timid on stimulus. Not until 2012 did Prime Minister Abe Shinzō commit to a stimulus strategy, setting an explicit government goal for inflation of 2%. A liberal economist would argue the 2% target

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Lecture 9 • From the Heights of Japan’s Bubble Economy

was too low and not credible, and in fact, inflation did not even hit 1%. Since the 1990s, Japan has had several years of deflation, with prices falling, and zero or even negative interest rates.

The deeper issue is that the bursting of the bubble forced a recognition that Japan’s era of high-speed growth was over. The stock market and other asset markets could not keep growing at double-digit rates because the underlying economy wasn’t growing by double digits. Japan was now a mature economy, and history suggests that mature economies can aspire to sustain only single-digit growth.

Looking back on the decades since the bubble burst, one key lesson is that anomie and diffuse discontent aren’t conducive to economic growth and consumer confidence. Overhanging all the questions of economic policy has been a sort of spiritual gloom. Things were just good enough to weaken demands for radical change and just bad enough to squash economic or political optimism. That’s a complex and somewhat contradictory state of affairs, but it’s central to understanding Japan in the 21st century.

● Reading

Committee on the History of Japan’s Trade and Industry Policy RIETI, “Japan’s Industrial Structure.”

Gerstel and Goodman, “Japan: Industrial Policy and the Economic Miracle.”

● Questions

1 What was the Japanese asset bubble, and why did it burst?

2 How did the Japanese government respond to the asset

bubble?

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Lecture 10

Jobless and

Divorced in Japan:

“Wet Leaves”

I n the wake of Japan’s 1990 financial crisis, slow economic growth became the new normal. What were the social consequences of that new normal? And how did it affect

people’s daily lives?

Table of Contents

Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

● Impacts of Unemployment

The aftermath of the asset bubble produced decades of slow, grinding pain rather than a huge, immediate shock. The number of people out of work rose and remained high for years. This affected younger workers and less-educated workers the most. The World Bank found that unemployment among young Japanese men rose from less than 5% in the late 1980s to almost 12% in 2003.

The nature of work also changed, especially for those at the bottom of the ladder. During most of the postwar period, the Japanese economy had been characterized by lots of full-time, long-term jobs. In the 1980s, only 15% of the workforce was contract workers, part-time workers, and gig workers. But that grew to more than 35% in 2012.

The Japanese government did not have a well-developed plan to address the huge increase in workers who were drifting in and out of employment. While formal Japanese unemployment never got very high by international standards, tent cities of homeless, unemployed, and displaced contract workers began to appear in Japan’s urban areas.

The rise in unemployment had a huge ripple effect. It changed marriage patterns, causing the marriage rate to drop about 25% and the divorce rate to soar—almost doubling in the years after the bubble burst. Much of a man’s life revolved around work, and a woman’s sphere was at home. But when the asset bubble burst, many Japanese men in their mid-50s were pushed out of work and back home, where their wives had no idea what to do with them.

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Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

The term nureochiba, or “wet fallen leaves,”

referred to retired men who had nothing to do at

home. They just wanted to tag along with their

wives on errands, sticking to the women’s feet

like wet leaves.

Younger couples also suffered, but the impacts tended to be different. For instance, there was an upsurge in single-parent households. Combined with high unemployment for single mothers, this led to an increase in child poverty. Using a standard international definition, child poverty in Japan rose from 12% in 1995 to 16% in 2012. By comparison, the same figures for the United States were 22% in 1995, dropping to 21% in 2012. So, while Japan still looked OK in comparison with other countries, the Japanese numbers were moving in the wrong direction.

The impact on children in Japan was exacerbated because its social safety net was underdeveloped. Japanese family law doesn’t have strong provisions for joint custody or mechanisms for collecting child support. Usually, the mother gets the kids and assumes full responsibility for them—including all financial responsibility—and the father is told to disappear. As a result, Japan has one the world’s highest poverty rates for families with a single, working parent—more than 50% compared to 33% in the United States.

Japan’s burst asset bubble also caused a surge in reports of child abuse and domestic violence. It’s hard to interpret the numbers because the increase might reflect changing attitudes rather than more crime. For instance, the increase in reported domestic violence might just reflect a greater willingness to report problems or a greater responsiveness from the police. Either way, Japanese families came under enormous stress, heightening public awareness of families in crisis.

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Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

● Poverty in Popular Culture

Japanese director Kore-eda Hirokazu has made a career of exploring families experiencing poverty and despair. His breakthrough film, Nobody Knows, released in 2004. It’s the story of four siblings between ages 5 and 12. Each has a different father. They live with their mother in a tiny Tokyo apartment, and they don’t attend school. Only the oldest can be seen in public because the property owner won’t allow five people to live in such a small apartment.

One day, the mother gives the eldest child, Akira, some money and leaves, telling him to take care of the others until she returns. The mother returns with gifts just as things are getting desperate, but then she leaves again—this time for good. The children manage for a while, but they can’t pay the bills. After the power and water are turned off, they get water from the nearby park and scrounge for food in the streets.

The film was loosely based on a true incident in 1998 that captured enormous media attention. And while the film is grim, it’s actually sweeter than the true story. Given the subject matter, Nobody Knows did surprisingly well at the box office, and it was acclaimed by both Japanese critics and at international film festivals.

Kore-eda’s 2018 film Shoplifters deals with much the same subject matter. This film focuses on a family of petty criminals who takes in a girl who is being abused and neglected by her parents. By law, the Shibatas are criminals and kidnappers. But they’re the most stable and loving family the girl has ever known. And that simple paradox is at the core of the film.

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Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

● Family Collapse in Films

Kurosawa Kiyoshi’s film Tokyo Sonata treats the collapse of a much more prosperous family. The film opens with an ordinary white-collar manager, Sasaki Ryūhei, discovering that he’s going to be fired. His boss asks him,

“What are you going to do now

that you can be replaced by

cheaper Chinese workers?”

Ryūhei doesn’t tell his family

that he’s been fired. He

pretends to go to work but

spends his days in a public

park, surrounded by other men

in business suits. All of them

are pretending to hold jobs while i

sh

desperately searching for work and yo Ki

getting meals from a soup kitchen. awa

● Kuros

Ryūhei’s already-strained relationship with his wife and two sons begins to collapse. The elder son wants to join the US military. His parents oppose the idea, but the son insists that he’ll simply wait until he’s old enough to enlist without their approval. The younger son, Kenji, is a piano prodigy, but his talent and passion make Ryūhei aware of his own misery. Ryūhei blocks his son’s ambitions. At one point, he slaps Kenji, accidentally knocking him down the stairs and giving him a concussion.

Ryūhei visits an employment agency but refuses jobs as a security guard and as a convenience store manager because he views them as beneath him. He finally gets an interview for a management job, but when the interviewer asks him what his special skill is, the question exposes Ryūhei’s existential void. He has no answer. Desperate for work, Ryūhei finally takes a job cleaning bathrooms at a shopping mall.

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Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

When Ryūhei turns down a job managing a

convenience store, he demonstrates a real

paradox of the Japanese labor market. Retailers

are struggling with a shortage of workers and are

pushing up the retirement age to retain people.

But older, traditional managers like Ryūhei find

those jobs beneath them. They feel displaced, if

not discarded.

The film then takes an almost surreal turn. After a night of bizarre, traumatic episodes, the family meets up again at the house. They act as though nothing has happened, and they have dinner together. The only one missing is the elder son, who has enlisted in the US military.

In some ways, the bursting of Japan’s economic bubble simply means that Japanese society is grappling with many of the same problems as the rest of the industrial and post-industrial world. Capitalism generates astonishing wealth but also astonishing inequality. How does a society provide a safety net that helps the neediest? That’s especially challenging in Japan, where so much of that safety net was provided by job stability. Now, those stable jobs have grown increasingly scarce.

● Marriage in Japanese Films

A parallel film, Owatta Hito, engages the same general theme: How will Japanese families deal with unemployed or retired husbands? The protagonist, Tashiro Sōsuke, is a bank executive who faces retirement. He was once a rising star in the main office, but he was moved to a regional branch and never realized his full potential. Without his office job, Sōsuke struggles to fill his days.

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Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

The movie is a tender, bittersweet story, especially in its exploration of Sōsuke’s relationship with his wife, Chigusa. Sōsuke genuinely tries to reconnect with his wife, but she has emotionally moved on. She has her own business as a beautician, and she just doesn’t want him around. Their adult daughter encourages them to divorce.

In the end, Chigusa tells Sōsuke that she doesn’t want a divorce but rather wants to graduate from their marriage. The idea of graduating from marriage was that couples that had grown apart didn’t need to divorce and sever all ties. Rather, spouses could live apart and maintain an amicable but more distant relationship.

Sōsuke moves out and returns to his home village. In one of the final scenes, Chigusa visits and tenderly offers to give him a haircut. She wants him to be happy, and she wants to stay connected with him. But she’s also happy that he lives hundreds of miles away from her and that she doesn’t have to see him every day.

Modern medicine affords us the gift of longer lives, but that means many couples outlive their original connection. How can couples stay connected when they might expect to live together for a half-century or more? Making long marriages work is a challenge in any society. In the United States, the divorce rate for older couples doubled between 1990 and 2015.

In Japan, two generations of steady economic growth, social stability, and political stability delayed or attenuated some of the common problems shared by the rest of the industrial and post-industrial world. But since 1990, Japan has faced those challenges with unique, concentrated intensity.

● Reading

Aoki, “A Demographic Perspective on Japan’s ‘Lost Decades.’”

Eberstadt, “Japan Shrinks.”

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Lecture 10 • Jobless and Divorced in Japan: “Wet Leaves”

● Questions

1 How did the bursting of the asset bubble change Japanese

society?

2 How do films reflect the new vision of Japan?

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Lecture 11

Japan Confronts

the Collapse

of a Bubble

T he Liberal Democratic Party has governed Japan almost exclusively since the end of World War II. It held power for 61 of the 65 years between 1955 and 2020, making

postwar Japan look a lot like a one-party

state—but a one-party state with regular, free,

and fair elections. Why has the center-right

Liberal Democratic Party lasted so long? And

why has it failed twice during the period since

Japan’s economic bubble burst in 1990?

Table of Contents

Lecture 11 • Japan Confronts the Collapse of a Bubble

● The Liberal Democratic Party

Back in 1955, the conservative and liberal wings of the Japanese Socialist Party managed to stop fighting each other long enough to create a partnership. This left Japanese conservatives and the US government concerned that the socialists might form a stable center-left coalition. As a result, Japan’s two center-right parties—the Liberal Party and the Democratic Party—merged to create a united front in the Liberal Democratic Party, or LDP.

The United States was also convinced that the socialists were receiving help from Moscow, so it covertly supported the LDP with millions of dollars. But by the late 1960s, US support was inconsequential. The LDP was a self-sustaining political machine, using a wide range of patronage schemes to remain in power.

Another key factor of the LDP’s strength was the electoral system itself, which favored conservative rural districts. Japan’s electoral system did have automatic periodic redistricting, so it was slow to react to demographic changes. Farm districts kept their seats even as Japan’s population moved from the countryside to the cities. Consequently, farmers were consistently overrepresented.

Each rural district had one representative while urban districts elected multiple representatives. That gave the LDP safe seats in the countryside and the possibility of getting additional seats in the urban districts. For example, if the socialists tried to get all four seats in an urban district, they might inadvertently split the vote and let an LDP candidate sneak in with only 10% or 20% of the vote.

So, the LDP had a structural advantage. From the 1960s until electoral reform in 1994, the socialists consistently got around 20% of the vote and the LDP between 40% and 50%. But even when the LDP fell under 50% of the vote, it almost always won a simple majority in the lower house—or so close to a majority that it could pull in some independents or small parties to form a government.

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Lecture 11 • Japan Confronts the Collapse of a Bubble

● Challenges to the LDP

That said, there were some long-term trends that looked problematic for the LDP. One challenge was the steady growth of third parties. By the 1980s, minority parties were getting a combined 30% of the vote. And the LDP also began to show signs of splintering along ideological and personal lines.

That trend toward splintering the LDP was catalyzed by the 1988 Recruit scandal. Recruit is a human resource company that specialized in getting job notices to recent college graduates. It wanted special access to government data about high school and college students, so, just before the company went public, it sold its stock to key politicians at below the initial public offering price. Afterward, the stock price soared and the politicians got rich.

A lot of people were bribed—almost the entire LDP elite. The prime minister had to resign, and many potential successors were tainted. And because the scandal involved insider trading, its impact was magnified when the bubble burst and the Japanese stock market collapsed. Some people wondered if the whole asset bubble was an insider trading scam.

The Recruit scandal was followed by a second incident. In 1989, the LDP chose Uno Sōsuke as prime minister, but he was promptly toppled by a sex scandal. Once the scandal broke, the tabloids started publicizing the affairs of other major politicians. So, the LDP had to find a leader who was powerful enough to lead the party but not important enough to have been targeted by Recruit, and he couldn’t have a lover. The party settled on a man named Kaifu Toshiki. And the joke at the time was that his major qualification as prime minister was his affection for his wife.

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Lecture 11 • Japan Confronts the Collapse of a Bubble

● The 1993 Election

All of these factors came together in the 1993 general election. A bunch of major LDP figures had broken from the party to form their own small spinoffs, and as a result, the LDP got only 36% of the popular vote.

Then, Hosokawa Morihiro, a former LDP politician, did something unprecedented. Rather than rejoin the LDP to form a majority, he pulled together a sprawling coalition of non-LDP parties that basically included everybody but the communists. It seemed like the dawn of a new era in Japanese politics. But the new government was weak and unstable. Their huge, messy coalition couldn’t agree on much, and it was in power for only a year, with two different prime ministers.

In 1994, the socialists broke away to form a different coalition with the LDP. The LDP had been created in 1955 to block the socialists, and now the LDP was a coalition partner with the socialists—and with a socialist prime minister. That coalition lasted about two years. So, the LDP was out of power for a total of about three years.

The coalition government in 1994 changed the

electoral structure, abolishing Japan’s strange

system of multiple members per district. That

reform was supposed to break LDP dominance,

but the LDP ultimately adapted to the new

system and came back into power.

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Lecture 11 • Japan Confronts the Collapse of a Bubble

The strange alliance of the LDP with the socialists ended in 1996 after two disasters. The first was a huge earthquake that hit the Osaka area in January 1995. The government response was terrible, and the press highlighted how victims relied on aid from nongovernment groups, including the yakuza crime syndicate.

The second event was a domestic terrorist attack in March 1995. A cult called Aum Shinrikyo released poison gas in the Tokyo subway during rush hour, killing 12 commuters and injuring thousands of people. It became clear that Aum Shinrikyo had recruited smart and successful people—graduates of Japan’s elite universities—into this suicidal, homicidal cult. So, the organization’s success suggested a moral failing by Japan’s premier institutions. Amid a collapsing economy and social fabric, voters moved back to the LDP.

● The Democratic Party of Japan

In many ways, the second period of non-LDP rule beginning in 2009 was like the period in 1993. The LDP was damaged by a corruption scandal, and it lacked a strong leader. The public was angry about the still-sluggish economy now almost two decades after the bursting of the asset bubble.

The winner of the 2009 election was the Democratic Party of Japan, or DPJ, which was created in 1998 by LDP dissidents. The DPJ stumbled almost immediately on US-Japanese relations. During the campaign, the party had promised greater independence in Japanese foreign policy. Rather than playing junior partner to the United States, Japan would strike out on its own and forge new relationships with its Asian neighbors.

A huge part of that new policy would be a reduction of US military bases in Okinawa. But as soon as the DPJ won, it had to figure out what would replace military reliance on the United

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Lecture 11 • Japan Confronts the Collapse of a Bubble

States. The left wing wanted to reduce the need for a military by reducing tensions between Japan and China and between Japan and North Korea.

The goal of a warmer relationship with China quickly collided with reality. A long-simmering territorial dispute with China over some tiny islands at the far edge of Okinawa escalated into a major confrontation. The DPJ found itself stuck between an angry China and a resentful United States, and the United States was not inclined to save the DPJ from its mess.

What finished off the DPJ was a series of natural and human disasters in March 2011. First, a massive earthquake struck about 50 miles off the shore of Sendai in northeastern Japan. The earthquake registered at 9.0 on the Richter scale, and it triggered massive tsunami waves. More than 15,000 people lost their lives in the disaster, and hundreds of thousands were left homeless.

The tsunami also knocked out power to the Fukushima Daiichi nuclear power plant, and when the backup systems failed, the reactor cooling systems shut down. The heat buildup caused reactor-containment structures to explode. Radiation spread over a huge area, requiring the evacuation of almost 400,000 people. The disaster left more than 4 million people without electricity and more than 1 million without water.

Then came revelations that the Tokyo Electric Power Company (TEPCO) had concealed decades of problems, abetted by the Japanese government and the Ministry of Economy, Trade and Industry. So, in 2012 elections, the DPJ got crushed. The party went from 308 seats to 57. And the LDP won a simple majority, dominating national politics once more.

● The LDP Today

The leader of the LDP’s resurgence after 2012 was Abe Shinzō, the grandson of Kishi Nobusuke, Japan’s prime minister from 1957 to 1960. Kishi had previously served in Tōjō Hideki’s

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Lecture 11 • Japan Confronts the Collapse of a Bubble

wartime cabinet, and much of the postwar public viewed him with suspicion or fury. Kishi’s heavy-handed tactics brought millions of protestors into the streets. And he was forced from power in 1960, when he tried to fast-track approval of a US-Japan security treaty.

But Abe Shinzō venerated his grandfather and endorsed a revisionist view of Japanese history. In Abe’s view, World War II occurred because Japan was determined to fight against Western imperialism and colonialism. That view alarms many Japanese people, and public opinion polls show that majorities consistently oppose changing Article 9. But absent a political alternative, Abe was enormously successful, leading the LDP to several huge electoral victories. In 2020, he became the longest-serving prime minister in Japanese history before resigning for health reasons.

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Lecture 11 • Japan Confronts the Collapse of a Bubble

Overall, the LDP’s success is something of a paradox. Japanese voters keep returning the party to power even though they oppose one of the party’s major goals: an enlarged military. The ambivalence shows up at election time, when Japanese voters give the LDP majorities, but not enough of a majority to change the constitution. The LDP’s remarkable rebound reveals just how much Japan is still shaped by the early postwar world.

● Reading

Lipscy and Scheiner, “Japan under the DPJ.”

Rosenbluth, “Messy Politics but Healthier Democracy: Japan in 2010.”

● Questions

1 Why did Japan’s dominant Liberal Democratic Party finally

lose power?

2 How did the Liberal Democratic Party rebound?

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Lecture 12

Japan after

the Fukushima

Nuclear Disaster

J apan still lives in the shadow of the March 2011 disasters: the earthquake, tsunami, and environmental devastation at the Fukushima Daiichi nuclear power plant.

Fukushima was a unique and unprecedented

natural and human disaster, but it can also

be looked at as an event that heightens the

paradox of Japan since the 1990s. If Japan’s

modern history has been about building

empires, is that era over?

Table of Contents

Lecture 12 • Japan after the Fukushima Nuclear Disaster

● The March 11 Disasters

The initial tremors of the earthquake were massive—around 9.0 on the Richter scale. The following tsunami inundated more than 200 square miles of coastline, reaching up to six miles inland. The wall of water was more than 130 feet high in some places. Around

20,000 people

died, and a million

buildings were

destroyed. Among

its impacts,

the tsunami

compromised the

safety systems

at the Fukushima

plant, causing

explosions,

radiation leaks,

and the evacuation

of 165,000 people.

For a few brief moments on March 11, the nuclear plants in the Fukushima prefecture operated like engineering marvels. All 11 reactors survived the earthquake intact and began automatic shutdowns. But the reactors were not designed for the massive tsunami that struck minutes later. The tidal wave overtopped the seawalls around the reactors, damaging the backup systems. The water also destroyed the electrical equipment used to control and monitor the reactors.

Workers had no standard way to cool the reactors’ fuel rods for a safe shutdown. The plant’s emergency procedures simply didn’t allow for the possibility of a prolonged, total loss of power. So, they had to improvise. They used fire hoses to pump seawater into the reactors in an attempt to cool them. This helped stop the meltdown from spreading beyond the reactors to the pools

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Lecture 12 • Japan after the Fukushima Nuclear Disaster

of spent nuclear fuel, but it created huge pools of contaminated water. And despite these efforts, hydrogen explosions damaged the containment structures of two additional reactors.

The magnitude of the quake itself provoked an acute sense of fragility in Japan, and that vulnerability was intensified by how the Japanese establishment responded to the disasters. In the days and months after Fukushima, everything dysfunctional about Japan was brought to the fore.

● Leadership during the Disasters

On March 11, the top two executives at the Tokyo Electric Power Company, the nuclear plant’s owner and operator, were out of the office. The CEO, Shimizu Masataka, recognized that the optics were terrible and struggled to get back to Tokyo. Train service was briefly suspended, so he tried to get help from Japan’s Self-Defense Force. But as soon as he was airborne, the Defense Ministry had the airplane turn around because authorities wanted to prioritize evacuations of victims of the earthquake and tsunami.

When the CEO finally got to Tokyo the next morning, he began to realize the full scope of the disaster. He attended a press conference a day later but then disappeared from public view for a month, leaving midlevel officials to deal with the disaster and handle questions from the media. There were widespread rumors that Shimizu had committed suicide or suffered a nervous breakdown. But he came through the crisis quite well, unlike hundreds of thousands of people in Fukushima prefecture.

Shimizu did resign as the CEO of TEPCO. But he was promptly appointed to the board of Fuji Oil, whose largest shareholder is TEPCO. Shimizu is a poster child for the dysfunction of the Japanese old-boy network. He’d risen through TEPCO’s ranks despite a questionable safety record at another TEPCO nuclear reactor. Indeed, during his career, he’d consistently

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Lecture 12 • Japan after the Fukushima Nuclear Disaster

made the argument that nothing can be made completely safe. Shimizu and others failed to realize how simple and inexpensive changes—like a higher sea wall around the reactors—could have been amazingly cost effective.

Japan’s prime minister at the time, Kan Naoto, had campaigned on shaking up institutions like TEPCO—nominally private companies whose overly cozy relations with government regulators protect them from the consequences of their own mismanagement. But the 3/11 crisis put Kan in an impossible position. He didn’t trust the information he was getting from TEPCO, but he needed to work with TEPCO to contain the disaster.

Unsure of TEPCO officials’ honesty and competence, Kan took it upon himself to micromanage the crisis. He even intervened in the attempt to cool the reactors. During a teleconference between Kan and senior TEPCO officials, the nuclear power plant director, Yoshida Masao, agreed with Kan to stop frantic efforts to cool the reactors with fire hoses. Then Kan turned to his engineers and said, “Ignore my public statement; keep cooling the reactors with fire hoses.”

The optics of Japanese leadership were terrible during the Fukushima crisis. The public saw the old guard as self-serving liars, and the nuclear village did what it does best: protect itself, even at the expense of public safety and trust.

● Politics after the Disaster

Even before the disaster at Fukushima, support for Kan and his Democratic Party of Japan had cratered. The scope of the disaster and government mismanagement opened the door for a resurgence of the Liberal Democratic Party, Japan’s longtime political power. The LDP decisively won the December 2012 elections.

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Lecture 12 • Japan after the Fukushima Nuclear Disaster

But once the LDP returned to power, it pretended everything was fine. The LDP wanted cheap electricity to promote the profitability of Japanese industry, and it was convinced that it could overcome public concerns about nuclear power after Fukushima.

The LDP was wrong. An attempt to restart Japan’s nuclear plants ran into furious opposition. Public opinion polls showed that upward of 80% of the population wanted to reduce or eliminate nuclear power. Public demonstrations attracted as many as 200,000 protestors. And the opposition cut across the political spectrum.

The breadth of the antinuclear sentiment blunted

industry plans. Before 3/11, Japan’s 54 reactors had

produced roughly 25% of the country’s electricity.

Afterward, four reactors produced about 4%.

But the Liberal Democratic Party went ahead with its plans to minimize alternatives to nuclear power. It eliminated the previous government’s subsidies for renewable energy. As a result, Japan has become more dependent on imported fossil fuels, and it fell behind its targets for limiting greenhouse gas emissions. Much of Japan’s progress toward reduced emissions has come from reduced industrial output—a slow economy—rather than increased efficiency.

Even a decade after Fukushima, the Japanese government has no sensible plan to meet electricity demand while reducing greenhouse gases. The government and the major utilities insist that the answer has to be nuclear power. But the electorate wants the reduction—or elimination—of nuclear power. So, the LDP’s plan is, in essence, to hope that voters forget about 3/11 so that the nuclear village can restart more plants.

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Lecture 12 • Japan after the Fukushima Nuclear Disaster

● Family Policy

Another area where Japan seems stuck is family policy. Japan has experienced population shrinkage since 2010. Its young people aren’t getting married or starting families. By most projections, the Japanese population will shrink for the foreseeable future.

In Japan—as elsewhere—the decline in family formation is driven by economic insecurity. Women who follow conventional gender roles want men with conventional, stable jobs. And those jobs are less common in Japan after the bursting of the economic bubble in 1990. And men who follow conventional gender roles aren’t interested in marrying and assuming the responsibilities of a family that they might not be able to support. The decline of lifetime employment and the rise of a freelance economy have made marriage and family formation less attractive.

Some cultural critics attempt to put an

optimistic spin on the family policy issues.

Maybe family values are overrated, and Japan’s

solo society will produce an exciting new future.

Travel magazines commonly rate Japan as a

great place for solo travelers.

There are limits to what government policy can accomplish here, but there are some good models for how to raise marriage and fertility rates. These include business incentives to create full-time jobs, labor laws that raise the minimum wage, laws that increase job security, subsidies for new families, strong family leave policies, and gender equality in the workforce. But the Liberal Democratic Party is too traditional, and too beholden to

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Lecture 12 • Japan after the Fukushima Nuclear Disaster

industry, to embrace those kinds of changes. On the contrary, it blocks even symbolic gestures, such as letting women keep their original family names after marriage.

To judge by literary prizes and movie adaptations, Japan is full of people finding meaning beyond traditional families. But for traditionalists, it’s hard to embrace that future. It requires giving up the idea of empire 1.0—Japan’s military empire in the early 20th century—and also empire 2.0, which placed Japan as an economic superpower in the second half of the 20th century. Forsaking those visions of empire and accepting Japan as a slower growth, solo society requires a new vision of Japan.

● Reading

Aldrich, “Rethinking Civil Society–State Relations in Japan after the Fukushima Accident.”

Kushida, “The Fukushima Nuclear Disaster and the Democratic Party of Japan.”

● Questions

1 What were the 3/11 disasters?

2 How have the 3/11 disasters changed Japan?

93

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● Image Credits

vi: f11photo/Getty Images; 4: Library of Congress, Prints and Photographs Division; 16: Library of Congress, Prints and Photographs Division; 27: Library of Congress, Prints and Photographs Division; 38: Alden Jewell/flickr/CC BY 2.0; 42: Nijs, Jac. de/Anefo/Wikimedia Commons/CC BY-SA 3.0; 49: Fiverr.com/Jpdelarama; 57: Alden Jewell/flickr/CC BY 2.0; 59: Government of Japan Public Relations Office/Wikimedia Commons/CC BY-SA 4.0; 64: ngkaki/Getty Images; 75: ©Depositphotos.com/DenisMakarenko; 85: lasta29/flickr/CC BY 2.0; 88: MasaoTaira/Getty Images

96

Notes

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Table of Contents

Mark Ravina

M ark Ravina is the Mitsubishi Heavy Industries Chair in Japanese Studies at The University of Texas

r Biography. . . . . . . . . . . . . . . . . . . . . . . . . . i

Course Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Japan’s Global War Vision Unravels

How the US Occupation Remade Japan, 1945–1952

The Japanese Economic Miracle: Empire 2.0

Japan’s Civil Society Protests of 1960

Japan Inc. and Its Upstart Challengers

Japan Faces the Nixon Shocks: China and Gold

The Rise of Japanese Cinema

How Japan’s Carmakers Outmaneuvered Detroit

From the Heights of Japan’s Bubble Economy

Jobless and Divorced in Japan: “Wet Leaves”

Japan Confronts the Collapse of a Bubble

Japan after the Fukushima Nuclear Disaster

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . .