The U.S.-Japan Bilateral Economic Relationship: Past, Present, and Future: Panel 1
March 9, 2017
MATTHEW P. GOODMAN: We’ll now move on to the panel discussion on the past, present and future of the U.S.-Japan economic relationship. And I am delighted to have such a dream-team panel up here, a terrific set of folks with really interesting, different, but complementary perspectives, I think, on these issues.
I’m going to briefly introduce them, though you do have biographical material in your packet. To my immediate left, your right, is Yumiko Murakami who is the head of the OECD Tokyo Center, the Organization for Economic Cooperation and Development in case you don’t know that acronym. In Tokyo, she works on increasing awareness of the OECD, among other things, in Japan and Southeast Asia and working on some of the substantive issues that they work on, which we’ll talk about in a second.
Yumiko used to be at Goldman Sachs, as did I, and so nice to have another fellow Goldman Sachs person not in the U.S. government where they all seem to be these days. And worked for U.N. Development Program as well in the Caribbean and Cambodia, so interesting background.
Next to her in the middle there is Shihoko Goto, a senior associate for Northeast Asia at the Woodrow Wilson Center. She works on Japan, Korea, Taiwan, other parts of Northeast Asia.
Before she went to the Wilson Center, she was a journalist for over a decade with Dow Jones, UPI, in Tokyo and D.C., and so has an interesting perspective, I think, on the relationship from all of those perches. So delighted to have Shihoko with us.
And then at the end is Richard “Dick” Samuels who is Ford international professor of political science and director of the Center for International Studies at a small, not very well-known institution in Boston, Massachusetts that has the initials MIT.
And seriously, Dick is really just a powerful and well-known expert on Japan from many dimensions. He’s written many books, written widely on Tokyo’s grand strategy, on the events of March 11th, the day after tomorrow, four years ago in Fukushima and the response to that. So I want to hear a little bit more about that soon.
He’s writing a book now, I think, on the Japanese intelligence community, which is very interesting, another departure. But delighted to have Dick with us here today.
So with that, Dick is going to do a presentation. And do we have PowerPoint with that, Dick?
RICHARD SAMUELS: No.
MR. GOODMAN: No, you’re not. OK, great. And then we’ll have a conversation up here.
Please, go ahead.
MR. SAMUELS: Great. Well, thanks, Matt.
And I’m delighted to be here. It’s a great opportunity to join you all, and in particular to return to a topic that I’ve long held a deep interest in, which is the intersection of technology and the economy, national security and U.S.-Japan relations.
Matt asked me to do this. Remember, he said, we’re going to go from the past to the present to the future. I’m the past. (Laughter.) See, it’s the advantage of being the oldest guy in the room.
But he asked me to do this because more than two decades ago, really a quart of a century ago, I wrote a book about Japanese techno-nationalism called “Rich Nation, Strong Army.” And it was about the relationship of technology to national security. And the idea and the premise of the book was that in the late 20th century Japan had ideas about national security and technology that diverged sharply and contrasted with U.S. ideas. So he’s asked me to sort of reprise that and then look back at it from a 2017 perch, which I’m happy to do.
It’s a moment when Japan is the global champion of free trade and the United States is tearing up multilateral trade agreements, so there’s been a bit of a reversal of roles here. It’s very clear that Japan, the United States and the bilateral relationship, all three have changed very dramatically and, I have to say, in unexpected ways.
So I’m going to use the “WABAC” machine here. That’s how old I am. Some of you ‒ there’s only one giggle and that’s from a guy my age ‒ (laughter) ‒
MR. GOODMAN: I know.
MR. SAMUELS: ‒ exactly ‒ to get the feel, to get a feel for sort of the extent of these changes.
So the Japanese lesson at the time, and now we’re talking about the late ’80s and into the early ’90 s, seemed simple enough, which was that a state could subordinate a defense production and still emerge as one of the world’s most technologically sophisticated nations. At a time ‒ it was already a time when a nation’s defense skills more than ever depended on the strength of its commercial economy. Japan seemed well-positioned at the time to have both butter and guns should it make the requisite political decision to have the latter, which it had not really at the time.
And after all, the Japanese defense industry was really very small relative to the larger economy. It was on a par with, well, total sales of sushi in Japan. You can’t say that about hamburgers and, well, maybe you can say that about hamburgers and the defense industry, but I doubt it, in the United States.
But despite limited production of a final systems and large-scale weapons platform, Japanese firms emerged in the 1990s as world leaders in the design and the manufacture of the materials and the components and the subsystems that were essential for defense systems at home and abroad, if they were to be shared or traded. And the shared and traded part was where the frictions came in with the United States. It was getting access to Japanese technology that seized the imagination of so many American politicians and business leaders.
Indeed, the most rapid growth in post-war Japan was in the sectors that were closely linked to the materials and to the technologies that enhanced the battlefield capabilities of modern weapons. There was data processing, telecommunications, opto-electronics, lightweight materials and so forth. And this was because by making integrated circuits in large volumes for consumer electronics and graphite fiber in large volume for golf clubs and squash racquets, Japanese manufacturers were able to accumulate enormous and valuable experience and spin on their knowledge to military and civilian aerospace applications, to take one example.
And having responded to the escalating demands of rapidly changing civilian – (audio break) – for these and for other products, they found themselves able to meet military specifications of performance and reliability and quality, often at lower cost. It was an extraordinary moment, and it came out of the commercial sector in Japan.
And as I saw it at the time, the overall Japanese economy achieved this by optimizing on three principles. The first was the holy grail of autonomy, in Japanese kokusan.
Since the mid-19th century, Japanese economic planners had to sort of navigate between the Scylla of technological backwardness and the Charybdis of foreign dependence. There was rarely an industrial policy. There were lots of industrial policies, but there was rarely an industrial policy that failed to justify itself with goals in reference to the development of autonomous technology, jishu gijutsu, or indigenization. That’s the kokusanka.
And this was not limited to defense production. I mean, I’m here talking about that as my case, just my case for you, but it was not limited to defense production. It was not uncommon for each subsequent generation of Japanese products, whether it was nuclear power plants or machine tools or chemicals or eyeglasses, to depend less than its predecessor did on foreign technology. The point is that Japanese firms purchased enormous ‒ and purchased is the key, not stole, purchased, often at high prices ‒ enormous stores of mostly U.S. knowledge as a way to achieve independence from U.S. technology, used the purchased technology to transcend the need to purchase technology in a sense.
So the second was on the ‒ that was the autonomy. The second was on the emphasis on diffusion of that technology in the system itself. And Japanese firms and industrial policy officials worked very hard and they worked together to diffuse technologies as broadly as possible throughout the economy and they did it by treating technology as a quasi-public good that was developed and distributed through elaborate networks of producers, but also bureaucrats. The state was involved. It didn’t determine what was going on, but there was a synergy there.
A research consortia, which came to the attention of, particularly integrated circuits, first came to the attention of the United States, were created with the government’s blessing to enable competitors to achieve common technical goals before they competed with one another in the market. Japanese forms cooperated in a consortia at every level of the development cycle, including basic research, which is something you’re not supposed to be able to do in neoclassical economics. We’ll get back to that perhaps.
But systems development, device manufacturing, across the board, and collaboration persisted as a highly-valued norm in Japan, whereas if you looked up collaboration in an American textbook on science and technology management, you wouldn’t find the word, you would find the word “collusion” instead. And I did and that’s why I went off to do this study.
The third element of all this and final element of all of this was nurturance. Autonomy and diffusion were necessary, but they were not sufficient on their own. Users sometimes had to be supported and sustained, and that’s what the state economic planners often did.
So these three elements were what distinguished Japan from the United States and framed my fin de siècle snapshot of Japanese techno-nationalism.
Japan had brought more than a century of experience in foreign technology licensing and what it called international cooperation ‒ that’s actually a euphemism which I’ll talk about ‒ to a global market that was just learning that single firms and single countries could no longer build complex systems or even all the necessary components on their own.
A central purpose of international cooperation was to enhance the Japanese technology base which in turn would strengthen the Japanese position in international projects and enhance the ability to demand a higher value-added workshare. This is perfectly rational and very clear.
But the world didn’t stand still and this is where the changes started happening, unexpected ones, neither did Japan or the U.S.-Japan relationship. So when I look back, it seems to me that the big shift came with the hyper-articulation of the global supply chains, not just in defense. Again, not just in defense.
The goal of autonomy came to be delegitimated across the board in Japan, but the shift had a particularly strong impact on the defense industry. Japanese defense firms formally acknowledged a new age had dawned, this is their term, in defense procurement. And under a lot of pressure for acquisition reform, it accepted U.S.-style procurement criteria. So ideas like better, faster and cheaper eventually displaced and came to displace. They were new to the Japanese discourse on procurement. They displaced autonomy, diffusion and nurturance as formal goals.
And so by 2003, about 10 years later, the Japanese government had begun a formal reassessment of its national policies regarding autonomy in particular. A few years after that, now about a decade ago from now, in the national defense program guidelines autonomy had nearly disappeared as a strategic imperative for Japanese defense contractors and for the MOD.
Japan was reacting to a dramatic structural change in global industry. International cooperation had become the norm, and Japan, having tied its own hands by not selling its defense equipment abroad and so forth, it tied its own hands. It had been left out and had been just left behind really.
So consequently, Japan reformed its arms export ban, relaxed it, and completely eliminated it two years ago. And now it’s a brave new world for Japanese defense contractors as they struggle to acquire new technologies, to enhance their capabilities, to reduce the risks of R&D and to actually sell in a global market for the first time.
So back in the day, one of the most intractable problems in U.S.-Japan economic relations was what we call the lack of symmetrical access to each other’s R&D base. It seemed to many, and this is just, again, to continue this and finish this snapshot of what it was back then, back in the day that Matt asked me to do, it seemed to many that cooperation was a euphemism in Japanese for Japanese learning and American teaching. That was supposed to be cooperation.
Reciprocity had, from an American perspective, had a sort of you give, we’ll take kind of a quality to it. Japanese researchers were comfortable learning from Americans, but Americans, few Americans, positioned themselves to learn effectively from the Japanese. So getting access to Japanese technology became quite high on the U.S. agenda. And part of the problem, of course, was America hubris and part was Japanese defensiveness.
But the largest part was structural, which is that generic, nonmilitary, state-of-the-art, nonproprietary technology development that was undertaken in U.S. universities to which the Japanese had free access, but in the United States. But in Japan that kind of activity was undertaken in corporate labs to which access was more limited.
So a quarter century later it all seems quite different. Now open, substantive commitment to mutual access is much more common. Its many problems notwithstanding, you might consider the nuclear power industry an imperfect, but prime example. A better example is all across the defense sector in the Standard Missile-3 program, the F-35 program and elsewhere.
But the larger point is that alliance imperatives and shifts in the global marketplace conspired to make Japanese techno-nationalism much less attractive to Japanese, to Japanese firms and to the government.
Since Matt asked me to stroll down memory lane, let me end by revisiting briefly what was once labeled the Japan problem. It was captured in a concept that dominated the discourse on U.S.-Japan economic relations. It was the concept of revisionism. And it had three components, and I’ll be very brief and the I’ll get out of the way here.
The first is that Japan was different. The argument was that Japanese economic planners had moved beyond Adam Smith, they had embraced Friedrich List, they’ve reinvented the institutions of capitalism. Some of you here may remember this. At first, this was celebrated by the Japanese. We’re different, this is good, right? But then when being different meant being bad or being maligned and it came to create problems in the bilateral relationship, they rejected it, they rejected the charge of being different as racist bashing. It was not that, but that was the nature of the discourse at the time.
Second, revisionism held that Japan could not change on its own. Revisionists said that, that Japan was guided by a rudderless momentum of some kind, a system that protected itself from change. And on this account, Japan had no core beyond its prescient and its omnipotent, but deeply divided bureaucracy. That’s the way it was characterized.
In the event, we learned just how effective Japan’s political leadership could be and how much change actually was possible and how many problems bureaucrats actually created, much less solved.
Third, it was argued, and, finally, it was argued that Japan was a threat and, therefore, it had to be contained. So specialists had been saying for years that the second-largest economy, then the second-largest economy in the world, must be understood better. And the revisionists arrived to say they understood it quite well and that it’s because Japan was different and because it could not change on its own that Japan was a threat to American power. Some will recall that “The Coming War With Japan” was a bestseller in the United States; some may not recall that. Let me tell you, it was.
Well, Japan was and still is different, but it’s clear that it can change, it’s clear that it did and that its changes have benefited the U.S. economy. While Japan still attracts very little inward direct foreign investment given it’s punching below its weight in inward DFI, its firms’ cumulative investment in the United States at the end of last year was close to $400 billion, second only to Britain’s, and these firms employ over 700,000 workers at higher-than-average U.S. wages. There was studies which I’m happy to refer you to during Q&A.
So if my French were anything more than nonexistent, I’d end here by trying to invoke the opposite of plus ça change. But since I don’t know how to do that, I don’t know what the opposite of plus ça change is, let me just end by reminding us in English just how little has remained the same during the last quarter century.
Thank you very much.
MR. GOODMAN: Excellent. Thank you, Dick. (Applause.)
Well, terrific. And actually really different from what we normally hear, so very rich with insight and perspective and food for thought, which I want to follow up on and I want to kind of take you from the past and make you, you know, Christmas present and future as well as Christmas past in a second.
But let me bring Shihoko and Yumiko in and do, again, a bit of a walk through memory lane, sort of 30 years past through the present, and then we’ll have a separate round about the future.
But first, Shihoko, talk about how in other aspects of the relationship in a more micro level what has changed over these 30 years and in attitudes between the two sides over that time.
SHIHOKO GOTO: Right. I think there are two points that I really wanted to make, that we had seen what we had thought were two unshakable truths. And firstly is that Japan was no longer an economic threat to the United States. And then second of all that Japan no longer was seen as an economic role model that is the envy of the world, and its confidence has been shaken from the seemingly dizzying heights of the 1980s and ’90s. And both of those presumptions have really been challenged over the past year.
And we’ve seen the United States change greatly and really seeing itself more as a victim of the global economic system rather than the victor. And we’ve seen also a rise of economic nationalism, which is to say a rise of political arguments that would blame foreign governments for problems that are intrinsic to the United States.
And, of course, granted, if we look at the latest trade deficit figures, the U.S. deficit actually reached a five-year high in January to $49 billion and the deficit against China has risen 13 percent to 31 billion (dollars). But it actually shrank by 16 percent to 5 billion (dollars) against Japan. And that’s the reality. And yet, there is this concern about the United States losing out and some action has to be taken to rectify the situation.
Japan obviously was very concerned about the Trump presidential campaign rhetoric, but, as Congressman Castro said, that seems to have dissipated somewhat, that Trump has retreated somewhat from that looking at Japan from the prism of the 1980s.
And so we see, for instance, in the Yomiuri poll that was taken immediately after the Abe-Trump summit meeting that 66 percent of those surveyed said that the meeting went well. That’s good news. But looking ahead, 45 percent said they have more doubts and concerns about the bilateral relations compared to 42 percent who are saying that they are equally hopeful and wary about bilateral ties. These are hardly numbers that really talk about deep-rooted confidence in the bilateral relationship.
And another interesting poll data came from the Fujisankei news group, which found that 56 percent of Japanese surveyed see Trump’s policies actually having a negative impact on the Japanese economy. And a lot of that pessimism stems from the fact that whilst the summit itself succeeded in really having a good initial meeting between Trump and Abe on a personal level, the issues of conflict, especially on the economic front, have been sidestepped. And we’ve talked today already about the upcoming economic dialogue. But that is to say that the sensitive issues have been pushed aside and we still don't know where we stand.
And another concern that Japan really has is about the retreat from the United States. And in particular, we’ve talked about TPP and this retreat from multilateral agreements, of course, but really retreating as a Pacific power economically as well as militarily from the region.
The question is, since then we’ve talked about, with the political vacuum that the United States is leaving behind in the region, what is China going to do? Is China going to step into that? No one has really asked, does Japan have a role to play? Can Japan step into that vacuum? Does it have that willpower? Does it have that desire to do so? And if so, can it do so?
And one of the things that will be of great interest is the upcoming TPP meeting next week in Chile. U.S. representation is limited to the Chilean ambassador to the United States. The other TPP member countries will be represented at a higher level. And it will also include representatives from China and South Korea as well, which are, of course, not TPP members. And that kind of role that Japan can play will be played out next week.
MR. GOODMAN: OK.
MS. GOTO: If I could actually just add on to the second point that I made, which is about, you know, the retreat of Japan as an enviable economic model or not. I actually think Japan is changing the definition of what an enviable economic role model can be.
And I was reminded recently of Masayoshi Takemura, who some of you may or may not remember, was very briefly the Japanese finance minister under Prime Minister Murayama. And at that time, he actually was the author of a little booklet and a slogan called “Chiisaku tomo kirari to hikaru kuni Nippon,” which translates as Japan is small, but shining nation, which argued that Japan should aim not to be a major power, but that it should be a small, but prosperous and stable country that contributes to global challenges, not unlike the smaller European countries punching above their weight on the international stage.
But I should point out that this book is now on sale on Amazon Japan for 1 yen ‒ (laughter) ‒ which is under 1 penny, I guess, under the current exchange rates. And it had absolutely no customer reviews either. (Laughter.) So it is an idea that is not getting much traction over the past two years.
And, of course, I could go on about the problems that the Japanese economy has faced, everything from the lack or the weakness of female participation in the workforce and, of course, the issue of the demographic challenge where 40 percent of the population is expected to be over 65 years of age by 2060.
But I would argue perhaps that size may not matter, age may not matter either, because according to the World Economic Forum, some of the most sought-after job skills in 2020 will be, one, an ability for complex problem solving; and second, critical thinking capabilities; three, creativity; and four, people management skills. These aren’t really about the ability to code or to apply quantum mechanic theories. These are really skills that require maturity and experience as well as high educational levels. And Japan certainly has the ability, if not the willpower to adjust its educational system and its corporate structure accordingly.
And I say that Japan can actually be a successful role model in an alternative sense of the word because it has, despite the hollowing out, despite some of the challenges that Japan continues to face over the last decades, it has achieved economic and social stability. And it’s had a more equitable distribution of wealth, which has proven to be one of the biggest challenges here in the United States as well as in Western Europe.
And throughout the economic doldrums, it’s really continued to have a low unemployment rate and one of the best educated workforces in the world. It obviously enjoys a very long life expectancy. It has trains that don’t break down. And it has a corporate culture that continues to value on-the-job training and investing in its workers. And in short, it’s already achieved some of what Trump’s “America First” policies are trying to achieve today.
Of course, its economic model may not be Trump’s verbal to other countries, but the fact that it has chosen to adopt policies that value stability over rapid growth can be something that could prove to be a lesson to other countries.
The question, though, the big fundamental question, though, is whether it can continue to grow or at least to remain stable and whether it can withstand the competition coming less from the United States, but more from the rest of Asia.
MR. GOODMAN: Excellent. OK, lots of things to follow up on there. I have about five questions that I want to ask you.
But let me give Yumiko a chance to weigh in. And actually, that’s a good segue in talking about, you know, what Japan’s challenges, but also its strengths are today.
But before you do that, I spelled out what OECD stands for, but I’m sure beyond that not many people in this room have a really clear sense of what the OECD does and what your office does in particular, so could you just spend a minute or two explaining that and then we’ll talk about the substance?
YUMIKO MURAKAMI: Sure. At OECD, we actually cover a very wide range of economic policies and with the economy, whether it’s, you know, macroeconomies or environment or education, trade policies, a lot of different areas we cover. And we really provide the venue to discuss, you know, best practices because different countries have different experiences. Sometimes some of these issues are very similar or some of these issues are very common, so we do provide a lot of opportunities for policymakers, business entities, academia, a lot of people to really discuss and really share best practices.
In fact, Japan was not one of the original members when the OECD was founded in 1961. It was a little too, I guess, soon after the war and Japan was not exactly ready to be a member. But Japan did join OECD in 1964.
And at the time, because we’re talking about sort of the past Japan-U.S. relations here, I wanted to mention that the U.S. was very, very instrumental in terms of bringing Japan into this global organization which was really trying to improve economic relationships through really the promotion of free market-driven economies.
And what’s interesting is, at the time, Japan was really trying to catch up, as you know, you know, during the ’50s and ’60s and Japan had to really start from scratch in terms of infrastructure, in terms of a hard infrastructure. And when Japan became a full member of OECD in 1964 and since then, Japan and the U.S. together, hand in hand, really started to play a very, very important role to lead not only the OECD member countries, but also nonmember countries, in particular in the case of Japan other Asian countries, to move forward, to really push the economic system into more a global we call it GVC, global value chains, to make sure that countries within the global value chains can really benefit from the global economies, global trades in an equitable way.
And there are many challenges. Obviously, there are many issues. But really, Japan and the U.S. have been very, very close in terms of promoting the idea that every country can benefit from global trade, every country can benefit from the global value chain.
So over the last, you know, 50 years, we have a very good history, good will we have built between Japan and the U.S. through OECD, other international organizations. And I do think that spirit really is not changing or really has not changed just because we have a new administration in the United States. In fact, there are many other new opportunities because of the situation that we are facing, you know, the political scene that’s changing in the U.S.
Just to give you a couple of potential opportunities in terms of how Japan and the U.S. can work together even more closely going forward, one of the things that I think is really interesting and we at OECD we do a lot of work on is how productivity has been slowing down, both in Japan and the U.S. On a global basis, if you look at the productivity trend since the early, you know, even before the Lehman shock, you know, early 2000s, it’s been a slow, gradual decline.
Again, it’s not just a Japan issue because we have been struggling with the productivity issue for a long time, but if you look at the U.S. it’s the same situation. If you look at the other OECD countries in Europe, we have seen a slowdown, we have seen a slowdown in productivity, which is actually a little bit a surprising phenomenon.
If you think about how I feel more productive because I have no emails, I have, you know, like, you probably feel more productive, right, because a big part of your job on a day-to-day basis is done, you know, by email and digitally versus, you know, paper. So it’s a little bit of a surprise when you think about it, how we have become a lot more digitized in terms of what we do in day in, day out versus how we used to conduct our daily, you know, work, you know, during the ’90s and early 2000s.
But the reality is, if you look at the productivity on a macro level, it has been coming down. Why is this? It’s one of the major research areas that we are doing quite a bit of work on at OECD. And I don’t think anyone has a very clear answer to it. But I do think it’s one of the things that we need to really focus on, because perhaps what we’re seeing in the U.S. in terms of the income gap problem, it has a lot to do with the fact that productivity as a macroeconomy, at the top level, it’s coming down or it has been coming down.
Because if you look at the top companies in terms of the productivity growth, you know, companies that are growing productivity, there are actually quite a few companies that are growing at the rate of, say, in the case of service sector, 5 percent every year over the last 20 years. The problem is, if you look at the macro level, it’s not spreading out to many sectors or many companies. So it doesn’t really bring up the macro data.
So the productivity is not spreading out, the innovation is not spreading out throughout the economy, and that’s the case in the United States, that’s probably the case in Japan and many other countries. So why is it happening? And it’s something that Japan and the U.S. can really do a lot of things together in terms of addressing these issues. What are the root causes of this productivity? In other words, why is the globalization, why is this IT-driven or technology-driven revolution, so to speak, why is it not helping everybody? Why is it helping only a very small segment of the economy? Why is it that we’re seeing such a huge gap between the 99 percent and 1 percent?
And I think it’s something that we all have to be thinking about if you want to make sure that the drive for a free market-driven economy, the drive for globalization, drive for GVC, global value chains, is here to stay.
So, again, in terms of the challenges that we face, common challenges we face, we have a lot of them, but one of the most important challenges that we should discuss jointly between Japan and the U.S. is, what is happening to the productivity trend and what is causing in terms of how productivity is really not spreading in terms of growth throughout the economy?
So, again, we can talk more about this later on in terms of what we can do in, you know, in terms of, you know, more concrete action plans. There’s a lot of discussion to be done in terms of how Japan should look at the labor market reform. It’s something that the U.S. can actually help Japan, a lot of U.S. companies can help Japanese companies in terms of sharing best practices here.
We talk a lot about how the aging side in Japan is changing the way we do things. We do have very, very serious issues in terms of labor shortages in Japan, yet labor market reform is still very, very slow in terms of making changes. I do think that U.S. companies can do a lot in Japan in terms of helping Japanese companies move forward to have much more progressive reform in that space.
On the other hand, in terms of Japanese companies in the United States, you know, we talked about the productivity issue earlier. One of the main things that we need to be focusing on in terms of having productivity increase or growth is really education, reskilling, how people can reskill themselves as they face changing working environments. And Japanese companies are pretty good about training their employees on a very long-term basis, something that we can probably talk a lot more in terms of how companies can provide educational or training opportunities, a good practice that could be potentially, you know, looked at. We should be looking at, you know, in terms of what have Japanese companies done for their employees in Japan, and that practice can be potentially a good model for U.S. companies.
And, you know, we talked about how Japanese companies have been expanding operations in the United States, for example Toyota. What are they doing in terms of providing opportunities for training in the United States? That can be potentially a very good way to look at reskilling opportunities and how that can promote really productivity growth in different areas of the economy.
MR. GOODMAN: OK. I’d like to ask for a moment of empathy for the moderator here who’s just been presented with this delicious smorgasbord or Viking as they say in Japan ‒ (laughter) ‒ display of delicious foods and deciding where to start and where to go first. So this is really challenging.
But, Dick, let me pull you back in and ask about the R&D story today. Where are we on cooperation? And how much ‒ what is the most interesting part of U.S.-Japan cooperation on R&D today? And how much hubris and defensiveness and structural problems are there in that cooperation?
And if I can add, give you a chance to advertise, what’s MIT doing about this?
MR. SAMUELS: OK, thank you. I would have told you that even if you hadn’t asked. (Laughter.)
MR. GOODMAN: I figure.
MR. SAMUELS: It’s a good question. I guess I would place the R&D relationship in a larger context of not just MIT, but all American research universities, is that it’s critically important to maintain, to keep our doors open for researchers and for students. For some universities, it’s a cash cow. But for research universities, it’s the secret to American science and technology.
I sat on a panel like this once here in Washington where we were looking at optoelectronics around the world. And we invited the four ‒ this was an NSF project ‒ invited the four leading optoelectronic specialists in the United States to evaluate how Japan was doing in it. And the first guy got up and he had a very heavy Irish brogue; then he sat down. The next guy got up, he had a Russian accent; he sat down. Third guy was Korean American, had a heavy Korean accent. And before the fourth person could get up, the guy next to me poked me in the ribs and said that’s the secret to American science and technology. And it remains the secret to American science and technology.
So when we had these difficulties with one-way flows back in the 1980s, there were two possibilities. One of which Congress preferred, which is you shut down our labs to foreign visitors. In this case, they were targeting the Japanese. MIT’s solution was the opposite. MIT said, no, the Japanese have taken the time to learn English, the Japanese have taken the time to study, so when they come to American labs they’ve read the written work and they know who to talk to and they know what they need to learn.
The number of American scientists and engineers who are sophisticated about Japan you could count on the fingers of two hands at that time. So what MIT created was the first program of applied international studies, the MIT-Japan program. And we have ‒ I’m proud to say that we have now sent over 1,000 MIT science and engineering students to work in Japanese laboratories, 1,000. And none of them got off easy because the front-end requirement for all of them is that they learn Japanese and they take courses on history and culture.
Now, learning Japanese in four semesters, as you know, as everyone here knows, is not really necessarily going to get you from Narita to downtown. But it’s good enough as a base so that you’re working with your colleagues in Japanese labs on a regular basis. You get good fast as a matter of survival. So we’re very proud of that.
And let me just add one more thing and, again, pull the lens back into the larger picture. That MIT-Japan program became a model for now 18 different countries where we’re sending students around the world, all of whom, not all of whom, but about 85 percent of whom are learning the language and working in labs around the world because we’re training, we believe at MIT, a generation of globally aware professionals for whom, you know, doing work in one country is not a career, can’t do it. And so we’re preparing them for that kind of a world, so it’s there.
And just a final point and I’ll stop. What I’ve read in the research on Japanese investment in R&D, the reason why Japanese firms pay a higher average wage in the United States is because the R&D component is so high. And so there is an enormous contribution to the American research community on the commercial side coming from Japanese investment on the order of $40 billion in the last year or two, so there we are.
MR. GOODMAN: Interesting. Well, I think we’re going to talk a little more about that later. And there are, I’m sure, going to be questions about that.
But, Shihoko, let me ask you, actually, and Yumiko, and you can sort of think ahead as I ask this question of both of you. Another dimension of what you both talked on was how Japan early on the OECD or might today step out and play a role as a kind of leader in trying to promote, you know, good standards and rules and norms in, you know, in the economic space in the Asian Pacific and beyond.
Thirty years ago, talk about hubris and defensiveness, I think neither the U.S. nor Japan would have been comfortable with that notion of Japan going out and playing a role as a leader in the region. But today, it feels like, especially with the United States having, you know, decided, without any particular pressure to do this in my opinion, but to pull back from its traditional role as a, you know, as a leader on economic rule-setting, norm-setting and so forth.
What are the, you know, what are the prospects and what are the best areas where Japan could actually step forward and help, you know, lead in the Asian Pacific and economic realm? And what will the U.S. think about that? And why does that help or hurt the U.S. if Japan does that?
MS. GOTO: Yeah. It’s interesting you talk about how such a thought would have not been entertained 10, 20 years ago. Because when we think about the Asian financial crisis of 1997, ’98, Japan came up with the initiative for the Asian Monetary Fund, which was essentially the Asian version of the IMF. And that was essentially squashed in large part to the United States as well as China. And there was this desire for Japan to take on a greater leadership role to ensure financial stability in the region.
Turning today and we see a different scenario. We keep talking about TPP because it is a very tangible example. When we look at the joint statement that was released after the U.S.-Japan bilateral summit last month, regarding the trade relations it leaves open the interpretation that whilst the United States may want to pursue a bilateral agreement with Japan, that it wouldn’t stop Japan from pursuing other forms of trade relations either.
And I think when we talk about the future of TPP and there is this very ‒ and the Washington narrative right now is that TPP is dead, it’s over or it’s on a deep, deep hibernation stage, that’s actually not the truth. It is moving. It is trying to figure out ways of reinventing itself, redefining itself. And there is movement and it’s not completely dead.
What is interesting is that there hasn’t really been this appetite on the part of Japan, at least in the public sphere, to want to take on that mantle of leading in a new economic architecture that would initially be based on trade, but it could expand into further areas.
I think there is a hunger, Japan is able to take a lead if there is a TPP-11 that emerges. Of course, there are political dimensions to this as much about the actual changes and the content of the TPP itself regarding market access, but it does leave open the possibility of Japan taking on a new role. And there is a need for that.
MR. GOODMAN: OK.
Yumiko, let me refine the question a bit with you and talk about a few things. I know you mentioned productivity work as something that we can work on together for mutual benefit and for the region and the world. The OECD also works on a bunch of other things, regulatory reform, anticorruption, export credit disciplines. We were talking earlier, womenomics is something you work on, it probably fits back in the productivity bucket as well.
In any of those areas or some others, what do you think is what are promising areas where Japan could step forward and help lead? And what’s the United States’ contribution respectively on those issues?
MS. MURAKAMI: I think one of the interesting areas for Japan to step up and then play a key role, and it’s been already very active in terms of pursuing this agenda forward, is really the high-quality infrastructure development. Because obviously, the United States is, according to the plan, according to what I hear from the new administration, it’s one of the focused areas in terms of the next four years of U.S. economic strategy. There will be quite a bit of infrastructure development in the United States.
But also, if you look at around the world, Asia is another very, very important area in terms of infrastructure growth. And because of the fact that Japan has very strong expertise when it comes to high-quality infrastructure development, whether it’s environmentally, you know, environmentally friendly project or, you know, in some cases, Japan is actually very, very active in terms of making sure that the sort of the more local needs, whether it’s, you know, diversity, you know, there are a lot of ethnic issues in the region, especially in Asia.
You know, we are very sensitive to reflect some of these unique issues from the local countries, local issues, in terms of reflecting those issues in the infrastructure development. Because when it comes to sustainability of these, especially hard infrastructure, it’s very important to reflect local needs, which may not be fully understood by donor countries a lot of times because, again, local needs are very different. Japan has a very strong history helping other countries in Asia in terms of developing infrastructure there.
So I do think one of the interesting things that we should be thinking about is what Japan can do to make sure that the high-quality infrastructure stays on top of the agenda for the region and how Japan can really promote that issue.
And because the U.S. is having the same, you know, basically issue where the quality of the infrastructure is going to be a very important element ‒ we talked about earlier the Shinkansen project in the United States. Japan has very strong expertise in that area. So we can just tie these different needs from different regions. U.S. infrastructure needs, the infrastructure needs in the Asia region, that’s going to stay for a long time. That’s why we have a number of new initiatives in terms of coming up with new funds to finance these projects.
But the underlying theme here is the quality. We have to really make sure that the quality of these infrastructure projects is given the highest level of attention here. And I think Japan can do a really significant job there in terms of maintaining the high level of quality, whether it’s in environmental aspects or whether it’s, again, reflecting the local needs that may not be necessarily very obvious to, say, the donor countries which are, you know, involved in these projects.
MR. GOODMAN: And building capacity and things locally.
Well, again, to advertise, I already did it once, but we are doing a lot of work on infrastructure investment in Asia. And we’re looking at these questions of quality as well and what that means and how to measure it and then who’s bringing what to the table.
MS. GOTO: Matt?
MR. GOODMAN: Shihoko, and then I want to ask one more question of Dick and then bring others in.
MS. GOTO: Yeah. I just want to add on the infrastructure development proposals that may or may not move forward. We talk a lot about high-speed rail and infrastructure, we automatically think roads and bridges and ports. But it is also an opportunity for Japan to really make lemonade out of lemons in terms of its demographics.
Japan will be a pioneer country when it comes to dealing with this aging population. It is trying not just to be at the forefront of robotics to face some of those challenges, but it’s also taking on initiatives in things like urban planning and access of public transportation systems that would be friendly to an increasingly elderly population. And that is something that the United States could certainly learn and that will certainly require a lot of input from local governments to understand, you know, the specific needs of each region and each city, each jurisdiction.
MR. GOODMAN: Yeah. No, I think there is a lot of prospect in the demographic area broadly and aging. And the U.S. has good, you know, services for elderly folks’ experience that maybe is also useful in the other direction, so that’s very promising. Again, lots of things to follow up on.
But Dick, let me bring in your work on 3/11. I think I said earlier the wrong year. Two days from now will be the sixth anniversary of the triple disasters around Fukushima. You wrote a book about this. And I’m particularly interested in the point about that I think you ‒ I confess I haven’t read the book, but I’ve read enough of the summary of it to know what your thesis is. And I’m interested in how it changed Japan and, in particular, how it changed its capacity to respond to things like this in any form, whether hard, soft response capability and how it ties into this story of what Japan can do in the region.
MR. SAMUELS: Well, it’s exactly the right question to ask about 3/11. You know, for those of us who grew up as social scientists, we’ve been taught in every discipline, whether it’s economics, political science, sociology, all of them, that when you have an external shock to a system, all sorts of change is possible, you know, punctuated equilibria, the term of art in your discipline, but we’ve borrowed it in political science.
And it seemed to me on March 11th, 2011 that this was that kind of moment for Japan. And it seemed that way to most Japanese. The discourse in Japan shifted very sharply in the direction that the postwar is over and the post catastrophe begins. Sengo kara sai goei (ph), that became a ‒ but everyone talked about regeneration, rebirth, new generation of Japanese, change and so forth. So I went in thinking this was the moment to study the old and see the new coming into form.
And I looked at three sectors. I looked at the military, I looked at energy and I looked at local government, all of which I had worked on in the past. And I guess the first thing that struck me is how all the political entrepreneurs, all the political actors in Japan found 3/11 a way to justify whatever position they already had. No one changed their ‒ well, there was one exception, which I’m going to give credit to somebody for whom credit is rarely assigned and that’s Kan Naoto.
But virtually everyone else in the Japanese system at the time, if you were opposed to increasing the military and making Japan more muscular, 3/11 proved that Japan’s military shouldn’t be more muscular. They should have shovels in their hands because that’s what they’re good at. They did a great job doing, you know, humanitarian assistance and disaster relief, HADR.
If you believed that Japan should be more military, you say 3/11 proved I was right because we didn’t have enough lift, we need more lift, we need to have new defense equipment.
On the energy side, if you believed that you were anti-nuclear before, you know, this was proof that you were right. If you were pro-nuclear before, you said, well, you know, this is a black swan event and we really can’t throw the baby out.
So I was terribly disappointed in a way. And the book sort of pivots off of that disappointment. Kan, and I’ve got to give him credit, he was pro nuclear ‒
MR. GOODMAN: He was prime minister at the time.
MR. SAMUELS: Yeah, he was the prime minister and much maligned. He was the villain in chief in many of these narratives. He was pro nuclear until he saw it up close and had responsibility for leading the nation through a nuclear accident and he became vigorously anti-nuclear. Actually, Koizumi, former Prime Minister Koizumi also did. But for the most part, the leaders of Japan didn’t change, they just had new ammunition to use in their fights with one another.
What did change? Well, certainly the energy sector changed because Japanese nuclear power plants are, you know, still not, in large numbers, back online. The military didn’t change much, the alliance didn’t change much, despite the wonderful part, you know, the extraordinary mobilization of 100,000 Japanese troops within three days, two days and 20,000 U.S. forces, Operation Tomodachi. High ratings, the Japanese public appreciated all this. But nothing much changed in the alliance for a while.
And when it did change, it was thanks to the villain from central casting in North Korea or Chinese provocations. So you started getting change, but it wasn’t in response to 3/11. Likewise on local government, I won’t go into. So it’s a very mixed picture.
And I would have expected, based on the theories we were armed with going in, that there would have been much more change than there was.
MR. GOODMAN: Interesting. Well, now I will read the book.
MR. SAMUELS: Thank you.
MR. GOODMAN: I know you don’t need the royalties, but ‒
MR. SAMUELS: You’ve got to buy the book, not just read it. You have to buy the book. (Laughter.)
MR. GOODMAN: OK. All right.
So I will now invite, although there’s so much more on the buffet table that I could dive into, but let me let you do that by choosing things that you think are interesting and asking about. There are microphones. Please identify yourself, ask a question, and we will go around.
Who would like to be the brave first questioner? That’s always tough. Yes, sir, in the back there.
Q: Thanks. Jonathan Ward, I do China-India relations at University of Oxford.
I wanted to ask you about the sort of total pool of the infrastructure market. I mean, it seems like in Asia, for example in the Indian Ocean region, the sort of nature of the competition let’s say between Chinese large companies and Japanese or American or others is sort of on price versus quality and sort of guaranteed outcomes and that sort of thing.
I’m wondering if you could give a size to the overall market and how much of that might be sort of, you know, inevitably going to go to the lower price point versus how much might be the right market for competition on quality.
MR. GOODMAN: Yumiko, do you have ‒ the ADB has done estimates of the size of the gap or the need.
MS. MURAKAMI: I don’t have the answer to that question in particular. I know that there are a number of studies that are done by not only ADB, but also Japanese government has done – have done something similar. And we – also there is an institution called ERIA, based in Jakarta, which is a research ‒ well, it’s similar to OECD, more like a regional institution, which has done a lot of work on it. So I must say that I have to refer to those institutions who have done some studies in that area.
I know the gap actually is significant. So that could be potentially an area where, you know, Japan, as you know, we actually are pushing a lot more of a quality-driven projects versus the price-driven projects.
MR. GOODMAN: Or life-cycle cost is a theory, right? Not the immediate ‒
MS. MURAKAMI: Yes, sustainability and also the energy aspect or I should say environmental aspect that needs to be taken into consideration when you look at the cost, just not only initial cost, but also if you look at the life cycle, if you look at the running costs and so on and so forth. So what seems to be the costs according to the bidding, you know, if you look at the initial and what ends up, you know, costing the host country, it can be very, very vast.
Q: I guess I would be sort of wondering if it might make sense to think of those as two separate markets ‒
MS. MURAKAMI: Yeah.
Q: ‒ and to size them accordingly. I mean, one might be purely about price, the other might be purely about quality. And then there’s the question of, can Japan and the United States actually compete in the price market? Like, is there a way to bring in India and competitive advantage somehow through, you know, coordination that might allow these countries to compete?
MR. GOODMAN: When you say different markets, you mean different types of infrastructure might be sort of looked at as, you know, something where the lowest price is the better option? Is that intrinsic to the type of infrastructure, you think?
Q: (Off mic.)
MR. GOODMAN: Mic.
Q: (Comes on mic.) Sorry to take up so much of this. But, like, in Sri Lanka, for example, you have a light-rail project that Japan is doing. But then, you know, China, you know, Harbour Engineering is redoing the port. And it really seems to be a question of, what can the country actually afford? I mean, there are certain things they just want to get done fast and cheap and there are other things that might be more enduring. And I think that seems to be the nature of what it looks like on the other side of the bid.
MR. GOODMAN: Interesting. Well, we ought to pull you into some of our work on the Asian infrastructure because these are interesting questions. But we should give others a chance as well.
The lady back there, second in the back.
Q: Thank you. Hi. My name is Vicki Walker, I’m with a small firm called Prime International that’s concerned with labor rights and work opportunities. And I wanted to just speak with the panel referring to leadership in the region, in the sub-region especially, Southeast Asia.
And with Japan’s very strong work ethic and training, I’ve often done trainings in the history of child labor in most countries, and Japan is the single country that has had, because of education programs and such strong work ethics, to be able to overcome that.
I’m wondering what you could see as your role in the region to protect child labor, trafficking, recruitment problems, supply chains with both private sector and national governments. Thank you.
MR. GOODMAN: Is this a part of this, does someone know, is this a part of Japan’s development programs to work on labor? I know it was part of the issue was addressed in TPP actually. There was in the labor chapter of TPP there was a commitment by members of TPP not to use child labor. And so that’s a vehicle that you wouldn’t have expected to take that issue on, but did. But I don’t know whether more broadly Japan is doing work on this in its development work.
Do you know, Yumiko or Shihoko?
MS. MURAKAMI: I do actually think it’s one of the areas that Japan has done quite a bit of work and also will continue to do so, especially in light of the fact that TPP, you know, is somewhat a question mark right now in terms of where it’s going.
In the region, we have another trade framework called RCEP. Japan is very active promoting RCEP framework as well, so ‒
MR. GOODMAN: Regional Comprehensive Economic Partnership.
MS. MURAKAMI: Yeah. So we don’t know. Obviously, you know, I like to think there will be some progress on the part of TPP as well, but we don’t know. But in terms of the regional trade agreement, we have a different framework that we can work with. Japan has been a very big part of RCEP as well as TPP, but, you know, set TPP aside.
So if you look at the economies within the region, one of the challenges is the fact that the degree of economic development, it is so different depending on the country. I mean, you see a huge difference between Singapore and ‒
MR. GOODMAN: Laos.
MS. MURAKAMI: ‒ Myanmar, for example. But, you know, we’re trying to actually push these countries to form a common marketplace. And when you try to do that, which we’ve already been doing quite a bit of work on it, and quite frankly Japan has been a very forceful player to push the integration of the Asian market, when you try to do that, you know, the things that you mention in terms of protecting, you know, children, you know, having a right labor code, that should be standardized that can be accepted by all the economies, all the countries within the region.
But again, if you look at the situation, it is so different in terms of economic and social developmental stage, such a huge difference between Laos and Thailand. So that’s the challenge. And I think Japan has been doing and can do a lot more in terms of helping less developed economies, in particular in Asia, because it’s such a huge gap between the most developed and least developed economies, to bring up these countries to the level that’s acceptable to all the countries within the region.
And again, without the presence of TPP potentially, RCEP becomes a lot more important and Japan becomes a lot more important because Japan is the country that can really bring up the least developed economies to the standard, you know, including protecting labor market, you know, workers’ rights. So I do see much bigger role for Japan to do that right now.
MR. GOODMAN: Yeah. Unfortunately, RCEP doesn’t look like it’s going to be getting into those sort of questions. It sounds like if it gets done in the near term it’s going to be sort of a pretty thin set of border-related changes, tariffs and so forth, but not get into that depth. But there is the opportunity there. Japan, Korea, I’d put other members of RCEP who could help work on those issues.
I saw Yamakoshi-san in the back, and then ‒
Q: Thank you. My name is Atsushi Yamakoshi, I’m from Keidanren-USA. And thank you all for very interesting presentations.
I’m particularly interested in a comment by Yumiko-san about the productivity and the good practices. And I can understand to some extent the value of Japanese corporations’ good practices in the United States, for instance, but not so much Korea about U.S. corporations’ good practices which can be applicable to Japanese companies facing the big problem of productivity increase.
So could you, if possible, give us some examples in your mind about good practices of U.S. corporations, either in the United States or in Japan, not only in the short-term value, but a kind of longer-term value? Thank you.
MS. MURAKAMI: Yes. I can tell you, as a former Goldman Sachs employee ‒ so are you ‒
MR. GOODMAN: Right. (Laughter.)
MS. MURAKAMI: ‒ I can tell you that when it comes to diversity, when it comes to promoting women, U.S. companies in general are a lot more, you know, aggressive. I do think they set a very good example for Japanese companies. And I can tell you as somebody who worked for Goldman Sachs in New York and in Tokyo. So if you go to Tokyo office of Goldman Sachs, you see a lot more female professionals working on the same trading floor as men. You don’t see that if you go to, I don’t want to mention it, but Japanese companies in the same industry.
You know, I don’t think it’s perfect. I mean, I still think, you know, even at Goldman Sachs there are a lot of issues when it comes to diversity. But I do think, in terms of comparison, Goldman Sachs is 10 times better when it comes to promoting diversity in the workplace in Japan.
So what happens in Japan is, if you go to, you know, top universities, right, and if you ask students which companies they would like to work for, you know, a lot of students, a lot of female students want to work for Goldman Sachs or they want to work for McKinsey, they want to work for U.S. companies. You know why? Because they have better opportunities to pursue, to really pursue career opportunities at U.S. companies versus Japanese companies.
So I think it creates, to some extent, it creates competition. And I think that’s a good thing. If Japanese companies want to be competitive, they want to attract the best talent possible, then they should look to the companies which are doing that. And I do think it’s one of the good examples that I can share with you in terms of what U.S. companies can do to promote diversity in Japan, because diversity, it’s really not a social ‒ I don’t want to say it’s not a social issue, because it is a social issue, but it’s not a human rights issue, so to speak, it’s an economic issue. It’s very much an economic issue because Japan needs labor, Japan needs talent.
And, you know, we talked about how Japanese population is very well educated. We have OECD, we have this survey called PIAAC, which is basically adult survey. We look at the educational level of adults between 16 and 65. Japan comes at the top. We have the best-educated population in Japan.
If you look at gender, if you look at the gender, the female population versus male population, Japanese female, Japanese women are best-educated according to this same survey that we do at OECD. So we have the best-educated talent pool, Japanese women, yet we have one of the largest gender-based gaps in terms of salaries in Japan among the OECD countries.
We have one of the biggest gaps in terms of employment, even employment between men and women in Japan, especially at the higher level, you know, the people with college degrees, although labor participation of Japanese female labor participation has been actually improving. But if you look at the college level, college-educated level, female participation is still pretty low.
So again, what U.S. companies can do is to really show Japanese companies, hey, you are leaving this, you know, incredible talent pool and U.S. companies are actually using them and they’re actually doing a pretty good job. So it’s one good example.
MR. GOODMAN: I mentioned that Mike Green and I studied Japanese down the street. Another one of our classmates was Kathy Matsui, who was at SAIS at the time, and she is the now Goldman Sachs, for a long time, has been head of equity research at Goldman Sachs. Chief strategist I guess she’s called now. And she coined the term “womenomics,” right, about 10, 12 years ago. And I remember, she was here for a session on this topic, actually it was more broadly on Abenomics, and she said that she had been called for Japanese CEO and asked to join, this was a couple of years ago, but asked to join a panel on diversity or a committee on diversity, advisory group. And she was skeptical and said you’re just doing this because I’m a Japanese-American woman and you need that for your quota, right, to put me on. He said, no, no, no, we need women, we don’t have enough women. I mean, we don’t have enough employees, we need more talented women in, you know, in managerial positions and getting them ready for that role.
And so I think it is, I mean, I think it is a social and moral issue as well, but it’s clearly an economic issue. And I think Japanese companies understand that. I think that’s a good answer to that question. That is something that I think Japan could learn a lot, and vice-versa, we can learn from Japan and what they’re doing in this.
Abigail, that might be a seg, and then Kikuchi-san in the back.
Q: I actually have a comment and it ties into the last two questions, the child labor issue and womenomics.
And there are actually some amazing NGOs in Japan that are working on child labor issues worldwide. And it ties into the womenomics and the diversity issue because the major one is ACE, A-C-E, and it’s run by a woman. And it’s such a reminder that when you offer opportunities for women to engage and you bring in diversity, they will come up with different solutions.
And ACE is partnering with various businesses. They did an event or an initiative a while back partnering with Morinaga, so when you bought a Morinaga chocolate bar a certain percentage of the money would go to addressing child labor issues, I believe, in Africa.
So these are some of the things that are being done that we often think of the U.S.-Japan relationship as focused on government-to-government, but there is civil society, business, everyone is working on these issues.
MR. GOODMAN: Great, thanks.
Kikuchi-san, back there.
Q: Hello. My name is Kikuchi and I’m with Washington Research and Analysis.
Matthew, if you were planning an event for 3/11 I’ll sit down, but otherwise I have a question to Dick Samuels.
I’d like to thank MIT which was the first and perhaps the only university that sent a team right away after 3/11 to a place called Minamisanriku. And they’ve been there for ‒ I don’t know if they’re still there. But they proposed all kinds of quick relief and rehabilitation methods that could bring back the community to life.
But I think, and I haven’t read the final report of this MIT group and I’d like to, they proposed very low-cost and immediate-impact solutions which was, I think, directly in opposition to the official position of wanting to rebuild an even higher tsunami embankment of much bigger scale, which is costing so much. And that is the reason why the six years after the event half the places are empty because now they wanted to raise everything 5 meters high, residential sections, carving mountains up and putting dirt on city places, and not remembering that this event happens in the area once in 500 to a thousand years. And the place that’s going to happen is towards Nagoya and now to Shikoku, but not much is done there. But instead they’re building these huge things all over northeast Japan.
Now, perhaps that is a symptom, one side of Japan. They have a bureaucracy that must spend money and there seems to be no relief from that. And perhaps your team and MIT could put some effort into reviewing that situation, because the Gyatso is the only way in this sense. Thank you.
MR. GOODMAN: That’s the first time we’ve heard the word Gyatso today, which is surprising considering. (Laughter.)
MR. SAMUELS: That told you everything you need to know.
MR. GOODMAN: Right. Dick, you want to ‒
MR. SAMUELS: Well, thank you very much for telling folks about the MIT-Japan 3/11 initiative which we undertook. And the way we did it, literally days after the catastrophe, we needed money and you’re not going to sit around and start writing grant proposals to make this thing happen. So I decided we would tax all those faculty at MIT who have chairs from Japan. And “tax” sounds onerous; they were very cooperative.
What we did was we identified, there were 20 or 25 chairholders, maybe more now, all around MIT who have very close relations with and owe much of their research funding to Japanese supporters. So we went to them and said, look, we want to get to the site and begin talking to people, finding out what’s needed and thinking about solutions with the residents, and can you spare a dime?
Well, the reaction and the response was overwhelming by my colleagues. I’m very proud of my colleagues and in every school. We have five schools at MIT, all the different schools, from engineering and science, to management, architecture planning and social sciences. And one of my colleagues in the architecture school actually did, as Kikuchi-san said. He went out there and stayed. And we were able to keep him out there, work with the people in the community, devise plans.
But, you know, we’re talking about a tsunami and there’s no tsunami greater than a bureaucracy that needs to spend money as the fiscal year winds down. I mean, that’s just, you know, and if you’ve got a fair amount you’re going to spend a fair amount.
And what we were able to do as a university with university-based researchers was not going to set the tone for the ‒ I don’t think we ever imagined that it would. And, of course, it didn’t. But I’d be happy to send anyone here our final report, and I’ll make sure you get one if you just give me your cards.
MR. GOODMAN: Shihoko, can I ask you, did you know polling about this topic and 3/11 and how it changed attitudes in any particular way, I mean, about, you know, about nuclear power, about systems to deal with disasters? Which I think was really, you know, a central question here, about the United States because, you know, we did do things like the MIT program. Do you know sort of, or even if you don’t have the polling data, do you have a sense of how this affected people’s attitudes?
MS. GOTO: I mean, two things that really immediately come to mind. One is shaken confidence in government. And secondly, a greater respect for nongovernment actors, including NGOs that actually contribute to that.
And related to that would be the involvement of citizen action outside of the NGO community, this really rallying of public interest and a sense of Japan. It’s not called 3/11 for nothing. Obviously, it happened on March 11th. For Japan, it was Japan’s 9/11, it was the sense of unity, of a common purpose. And that did drive civic interest. But I’m afraid I don’t have any polling data with me.
MR. GOODMAN: That’s OK. That was the kind of answer I was looking for.
OK, maybe we’ll take one other question and then I’ll people to go break.
Yes, ma’am, here in the second row. It’s right there. Thanks, Alex.
Q: Thank you. I’m Deanna Horton, Munk School of Global Affairs, University of Toronto, and Asia Pacific Foundation.
I know this is about U.S.-Japan, but I’m thinking about how Japan regards itself in terms of the future. Is the fact that the U.S., the withdrawal that you were talking about and also what’s happening, the question mark around TPP, Japan increasingly seems to be looking at itself in terms of Asia, the increasing economic integration with China, for example.
And how do you think this is going to evolve in terms of how Japan regards itself? It may have reasserted itself in terms of the defense relationship with the U.S., but is it going to start turning itself more to Asia?
MR. GOODMAN: That is a U.S.-Japan question because, you know, if the U.S. is not going to be playing the same role, at least for a while, that it did in the region, then, you know, Japan has to make a choice about, you know, whether it’s going to do more or less, the same, try and pull the U.S. back in or whatever. So I think it is a relevant question.
And maybe everybody may have a thought on that.
MR. SAMUELS: Well, I mean, this is precisely the topic of a project that I’m doing with colleagues in Berlin at the Freie University. And we’ll have the result, the papers, but we can talk about your getting them sooner, coming out from International Affairs at Chatham House. We’ll be publishing the papers this time next year.
The short version is you’re exactly right. And it was actually before Donald Trump, before his election, before his candidacy, when smart people in Japan realized that the United States’ massive power was not endless, its iron-clad commitments may not be ‒ the United States may not be, or feared anyway, that the United States may not be capable of making good on commitments, and began asking serious questions. So you started seeing about five years ago, maybe 10 years ago, five really, editorials about U.S. capability, U.S. commitment, those two things in particular, and whether or not it could be sustained.
And what does Japan do as it’s become obvious that the United States, even its massive military power, can’t operate the way it did in the past, having a monopoly on control of the commons, the air and the sea, in the areas closest to China?
Well, as China expands into the blue water and as the United States has to demonstrate some resilience, Japan has to figure out what’s plan ‒ not plan B, but what’s plan A prime? It still involves very much the United States, but Japan has been pivoting in Asia and that’s what we’re going to call this volume. Japan is pivoting in Asia, so it’s overtures to India, it’s overtures to Australia, it’s using aid to provide military equipment or let’s call it constabulary equipment to Malaysia, to the Philippines, to Indonesia and so forth. So you’re starting to see a hedge evolve and it’s perfectly reasonable for the Japanese to be concerned about.
Now, of course, the election of President Trump has simply accelerated those concerns because it’s put it right on the front burner. His insouciance about nuclear proliferation in the region really did get people’s attention.
MR. GOODMAN: Right.
MS. GOTO: Before the Abe-Trump summit, I was actually intrigued by the non-Japanese and non-American coverage of the event, in particular from the European media and interest from Germany in particular. They wanted to learn about how Japan was kind of pivoting itself, being able to leverage the situation in the United States for its own ability to rise and to be able to really carpe diem and to reposition itself as a strong ally of the United States.
That said, the U.S.-Japan alliance has always been an asymmetric one. And it is and there have been rising questions about the sustainability of such a relationship. And Abe himself, well before Trump’s rise to the presidency, he went to all 10 ASEAN countries and there have been greater overture to Australia and to India and all these other countries.
But the big gap for Japan is its immediate neighbors, so relationships with South Korea, relations with China. And unless there is a breakthrough in relationship between Japan and Korea in particular, for Japan to take on a leadership role as the, I don’t want to say hegemon, the power, it will always be a challenge.
And so on the one hand, there is the need, given the current situation in the United States. There is a want, certainly on the part of the Abe administration. But there remains those challenges that go beyond simple economic or military alliances and that remains on the political field.
MR. GOODMAN: Thanks.
MS. MURAKAMI: I would say that if you are in Japan or if you are in Asia physically, I think you would agree that Japan has already established a very, very significant presence, especially when it comes to economic relations between Japan and the rest of Asia.
Obviously, military aspects and economic aspects, they are interlinked and it’s hard to separate them. But if you just look on the economic side of things, you will feel that, being in the U.S., you will feel Japan has been one of the twins, Japan and the U.S., in terms of how Japan has been perceived in terms of its place within Asia.
But if you’re in Japan and Asia, you would know that Japan has its own place. And that place is actually very, very high, it’s probably the highest, you know, in terms of where Japan is versus the U.S.
So in terms of what Japan may be able to do now that it looks as if U.S. presence may be a little bit smaller within the Asian economy, within the Asian markets, I actually do think that Japan has already established very strong positioning within the region. And then therefore, I think it’s a very natural expectation for the region in terms of what Japan will continue to do, which is to really drive what Japan has been driving, which is market-driven economy.
And as I mentioned earlier, there are many, many countries within Asia, which are just still very, very early in terms of developing free market economies in their own countries or within the region. And I actually am not really concerned about the fact that U.S. may be, you know, taking a step backward, too, within the region in terms of where the region is ahead, is moving ahead, and how Japan is helping that trend. So actually, that is going to be enhanced even more. I don’t think it’s going to have negative impacts in terms of what Japan will do, will continue to do in terms of moving the direction into the right market-driven economy.
MR. GOODMAN: I use this metaphor too much, and so some of you may have heard it before, but I think of it like the U.S. and Japan have been playing golf and we’re both pretty good golfers. The U.S. just hit the ball deep into the woods and we’re going to be hacking around in the woods for a couple of years, maybe four. (Laughter.)
And, you know, Japan has got to keep playing straight. The U.S. will be back because, you know, our objective, the objective hasn’t changed. We’ve still got to get that little ball in that little hole, so we’ll be back, inevitably. But in the meantime, Japan has to plow ahead and try to shoot straight and true. And so, you know, that’s a difficult thing for Japan to do, but, you know, I think, from an American perspective, I would say “yoroshiku onegaishimasu” because this is a – (laughter) – this is a difficult time for us.
With that, please join me in thanking this terrific panel. (Applause.) As I say, it was like a buffet. There was so much delicious food there, and I wish we had more time to do this, to get into all of it. But we’ll do that. We’ll bring you back and do more of it.