Musings on Japan

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SamLinder's picture
SamLinder
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Musings on Japan

02 July 2009

Japan Calling: A Little More Local Color on the Japanese System

 

A friend in Japan is updating me on how things are going there.

Its been about ten years since I have worked in Tokyo personally, but everything he is saying is a logical extension of how things were at that time. I am very familiar with the NTT communication system, which was the basis of some of our early work here in the US. Its convenient sometimes to have a determined bureaucracy with plenty of money and power at your back when its time to get a strategic initiative achieved.

This is useful because people like to make facile comparisons between Japan and the US without really understanding some important differences in the markets, public policy, demographics, and culture.

 

  • "There are many things here that make life difficult, but on the other hand, make life much easier, some planned, some dictated by circumstances and by accident. It seems very socialist. Makes it very difficult to compare Japan and the US.
  • There is national health care here. Due to a focus on disease prevention (they have started to take waist measurements and warn you if your waist is say more than 34 inches), not eating too much meat, getting enough vitamin D from sunlight and getting a little exercise because you have to walk 10 minutes to the train station, you can expect, on average, to be fully functional until about 75 and live into your 80s.
  • Almost everyone is reimbursed for commute to work, by least expensive route, say bus and train, even if you work in a convenience store. Japanese people have told me that the idea is that everyone who wants to work should be able to work where they want without being deterred by the cost of the commute. At one firm I worked at, the limit for the reimbursement was 800 dollars per month, so a very few people commuted by bullet train from quite a distance away. More exactly, if you go to work 5 days a week, the company will reimburse you for the bus/train pass, which allows unlimited travel, so you can use the train pass to go shopping or do other things on weekends for free.
  • My pass for a half hour commute each way, about 40 miles round trip, is 120 dollars per month. This is why the public transportation systems work well and have continued to improve. All the trains are continuing in improve, and for example, the bullet train now uses one half the energy it did when it debuted 45 years ago. JR East, beginning with the Yamanote Line, is replacing all its trains with new regenerative braking trains that are lighter and roomier and use half the energy of the earlier models. Advertisements on the trains say it takes 1/10 the energy to go by train than by car, but I think that is for older models.
  • Which brings us to the biggest advantage: most people do not need a car here, and if they do need one, a household can get by with just one car.
  • I have long thought of cars as vampires sucking the economic life out of every household in the US. And the risk of death and serious injury from car accidents is about half what it is in the US (although the statistics may not be directly comparable).
  • In 45 years, only one rider has been killed on the bullet train, and that was because he tried to stick his hand in the door too late and got the sleeve of his jacket caught in the door. While there are commuter train accidents from time to time, they are rare, and I think in Tokyo, the last passenger deaths were about a decade ago when a train derailed. Since the auto fatalities in Japan are about 7,000 per year, whereas in the US they are around 40,000 per year with about double the population, I guess that if the Japanese drove as much as people in the US, there would be about another 10,000 auto fatalities per year here, so over the 20 years I have lived here, there are say 200,000 people walking around who wouldn't otherwise be here. That trumps absolutely all other considerations.
  • I think it is telling that during the oil price spike last year, the US cut its gasoline consumption by about 5%, whereas in Japan, gasoline consumption was cut by 14%. I said, the Japanese cut their gasoline consumption by 14%... BECAUSE THEY CAN.
  • Broadband, subsidized and incentivized, has been here for a decade. Around 1999, I picked up a Yahoo Broadband modem, filled out a form, brought it home, and plugged it in. 6 M/sec, 15 dollars a month. Although I didn't understand it at the time, the modem was converting my telephone calls into internet telephony, so calls to the US that were a dollar a minute by NTT were suddenly a flat 3 cents a minute. Around new year, I made a lot of phone calls, and was bracing for a thousand dollar phone bill... and then I realized that I hadn't gotten an NTT bill in months... it was instead a 20 dollar charge tacked on to my credit card.
  • The Japanese government has been panicking about the oil running out for more than a decade. I noticed Koizumi saying "global warming, global warming" over and over again, and mention of peak oil was conspicuous by its absence. That's when I realized that when he was addressing the captains of industry, what he was really saying was "You idiots, the oil is running out! Get the energy use of everything down!"
  • Because broadband is widely available, the Japanese government went from wanting 10% of workers to telecommute at least some of the time, to wanting 20% to telecommute by next year, as a means of reducing energy consumption.
  • Mitsubishi is advertising a split system heat pump air conditioner/heater that runs at about 6 cents per hour (and the electricity rate here is high, about 20 cents a kilowatt hour). My Sharp heat pump is 16 years old and runs for about 10 cents an hour. My total heating/cooling expense for a year is about 300 dollars.
  • There is a huge panic going on in the US about how bad the electricity grid is. I think there are estimates that unreliable electricity is costing the US 100 billion per year. In Tokyo, there has been only one major blackout in 20 years, and that affected only about a quarter of the city for half a day due to a crane snagging high tension wires. The only outages I have seen myself were when a construction crew accidentally severed a line (one hour) and when a fighter jet crashed into high tension wires (two hours). Quakes do not normally affect electricity, water, or telephone. Gas meters have automatic sensors that turn off gas supply, and then if it seems all clear after an hour, automatically reset. We sometimes have fairly big quakes every day for weeks on end... I'm not joking.
  • When a quake is detected by sensors, the sensors send signals to a central computer. The computer has models of 100,000 quake scenarios, and it matches the data to a scenario, estimating the surface shaking for each small grid square of Japan. If surface shaking in a particular location is predicted to exceed a certain level, the bullet trains automatically engage emergency braking. All city halls have automatic announcement systems that estimate the shaking and count down to the arrival of the primary wave at their particular location. Nuclear reactors and power generating stations receive advance warnings. Some residential condos also have this. I suppose it will become standard soon.
  • You can get warnings of a few seconds or minutes depending on how far away the quake is.
  • (After seeing the Kobe quake first hand, my solution was 1) buy earthquake ground shaking estimate map of Tokyo, 2) see closest station to downtown where risk drops substantially due to granite outcrop getting you off the alluvial plain. Estimates of shaking in downtown Tokyo is 10 times the estimated shaking where I live.)
  • This is why I think it is so difficult to compare the situations. You cannot walk away from the mortgage. On the other hand, your commute is subsidize and you do not need a car, so it is as if the condo were free."

 

EndGamePlayer's picture
EndGamePlayer
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Ahead of the game

Interesting read Sam- For so many other countries the name of the game is "Be Prepared" and in the US we think of "Maintain the Status Quo to Grow".

I for one would rather see 100 trillion$ being spent on getting us ready for what lies ahead than 2 trillion$ on the financial nonsense they seem to think is the answer to all our woes. What this country really needs is -

  • Peak Oil Preparedness- by added incentives for cities & counties to build efficient transportation for the masses - bus systems, trains and city bike-ways. We're looking at being a 3rd world country if we don't soon have high speed trains instead of flying.
  • Prepare for Population Increases - Better Insulated builldings with solar, wind and low-power technologies. And expand back to generational living for better family support systems. Better local food systems and improved water management.
  • Healthier ways of living encouraged instead of paying through the nose when things go wrong. People don't realize the food they are eating isn't actually a food after its been processed. I call them the starving obese - they are starving their body by eating processed foods and not what the body wants - real food is fresh, raw and un-touched by heat, a machine or chemicals.
  • Get farm systems off high energy use and into more local energy production - I know of at least 3 farms in 5 miles that could be methane producing power houses while still producing thier regular products - milk, hogs or poultry. . . never mind turning more land over for ethanol if it's needed to sell food to the world population.

It is so sad as we watch the descisions being made all seem to be pointing to the wrong direction our country is headed. It really makes me loos faith that anyone actually cares to stand up and get us on the road to our freedom.

EGP

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Re: Ahead of the game
EndGamePlayer wrote:

Prepare for Population Increases - Better Insulated builldings with solar, wind and low-power technologies. And expand back to generational living for better family support systems. Better local food systems and improved water management.

Wrong direction, and wrong idea. We have an unsustainable world population today with current energy use. How are we going to support it moving forward? Unless you expect that miraculously sometime in the next 2-5 years, we get increasing crop yields with reducing power and oil consumption.

 

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tedsan
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Re: Musings on Japan

 Sam, 

Thanks for the very intersting posting on Japan. My father's side of the family is Japanese, as is my mother-in-law, and I've travelled there on several occasions, but learned quite a bit from what you wrote.

The Japanese really take their energy efficiency seriously - I think it's  a matter of national pride. But they're a country of contrasts. While the citizens spend considerable money on being efficient, they have so many districts lit up like Christmas all night long with those gaudy signs. It's like Times Square on steroids!

I also loved their public transportation. You can set your watch by the trains. 

Thanks again. Great posting.

SamLinder's picture
SamLinder
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Re: Ahead of the game
EndGamePlayer wrote:

I for one would rather see 100 trillion$ being spent on getting us ready for what lies ahead than 2 trillion$ on the financial nonsense they seem to think is the answer to all our woes.

EGP

Careful, EGP, you're in danger of being logical!

(BTW, I agree with you 100%!)

SamLinder's picture
SamLinder
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Re: Ahead of the game
Gungnir wrote:
EndGamePlayer wrote:

Prepare for Population Increases - Better Insulated builldings with solar, wind and low-power technologies. And expand back to generational living for better family support systems. Better local food systems and improved water management.

Wrong direction, and wrong idea. We have an unsustainable world population today with current energy use. How are we going to support it moving forward? Unless you expect that miraculously sometime in the next 2-5 years, we get increasing crop yields with reducing power and oil consumption.

Gungnir,

While I understand your concerns (I absolutely agree that we "have an unsustainable world population today"), I tend to agree with EGP in this particular case. It's like the old boy scout motto, "Be Prepared."

Granted, none of us wants to encourage population growth - in fact, quite the opposite. However, I think it would be prudent to prepare for the worst case, rather than hope it won't happen.

As a matter of fact, that's how I live my life and I suspect you do too. Plan for the worst and prepare for it. If it doesn't happen - great. If it does happen, we aren't caught off guard.

I suspect you'll be living that sort of life every day in the not too distant future!

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SamLinder
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Re: Musings on Japan
tedsan wrote:

 Sam, 

Thanks for the very intersting posting on Japan. My father's side of the family is Japanese, as is my mother-in-law, and I've travelled there on several occasions, but learned quite a bit from what you wrote.

The Japanese really take their energy efficiency seriously - I think it's  a matter of national pride. But they're a country of contrasts. While the citizens spend considerable money on being efficient, they have so many districts lit up like Christmas all night long with those gaudy signs. It's like Times Square on steroids!

I also loved their public transportation. You can set your watch by the trains. 

Thanks again. Great posting.

Domo arigato, tedsan. I found it quite interesting myself - hence my sharing it here.

I've been to Japan myself a few times in years past and find it a fascinating country. I even learned to read and write in Hiragana and Katakana at one point in the past. All lost now, I'm afraid - been too many years.

I do agree with your comment about it being "a country of contrasts." It does make you wonder why they burn through so much electricity considering they have to import their oil.

I also envy the train system. In fact, there are any number of train systems around the world that are quite excellent. I never have understood why this country can't follow suit. There are certainly enough countries to emulate!

scepticus's picture
scepticus
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Re: Musings on Japan

Japan is ahead of the game onmeany real world issues.

 

Firstly, they ecnountered the endgame of the demographic transition earlier than any other nation.

Secondly, they had a post-bubble debt-deflation earlier than any other nation.

Thirdly, they have higher public debt than any other nation (I think).

Fourtly - all of the posts above.

In Japan there is a debate right now about allowing interest rates to go negative. That is savers get charged for savings, and borrowers get loans in which the principal they have to repay is less than the cost of the loan!

If the japanese are right about energy shortage preps, perhaps they are also right about this fundamental change to the workings of the economy.

We have much to learn from the japanese. Look to them for signals regarding our own future.

 

 

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SamLinder
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Re: Musings on Japan
scepticus wrote:

In Japan there is a debate right now about allowing interest rates to go negative. That is savers get charged for savings, and borrowers get loans in which the principal they have to repay is less than the cost of the loan!

Scepticus,

That's pretty amazing stuff! Is there a link so that I can read more about this? Thanks in advance.

scepticus's picture
scepticus
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Re: Musings on Japan

Sam, sure there are some links. I think much of the best debate is in japanese language, so not so accessible. However, I suggest you start here:

http://ianfu.blogspot.com/2009/04/more-about-negative-interest-rate.html

I am an advocate of -ve interest rates. In the comments section of the post below on Mish's blog, I had a discussion with a large group of libertarians about it. Needless to say they didn't like it. Judge for yourself:

http://globaleconomicanalysis.blogspot.com/2009/07/sweden-cuts-deposit-rate-to-negative-25.html

To summarise in simple words:

1) The interest rate should be determined in a free market sense purely between demand for saving and demand for loans. Higher demand for saving than loans should result in -ve interest rates.

2) The inability for interest rates to go negative is the reason why we have a liquidity trap right now.

3) The reason why we can't have -ve savnigs rate right now is because it would result in cash hoarding.

4) accordingly we should eliminate cash, in order to allow a true market price discovery between savings and borrowings.

Also consider:

- the paradox of thrift

- the fact that savings are in fact spendings in a capitalist economy (just someone else's spendings, i.e all savings are lent out immediately). This arrangement is essential for the maintainance of a modern industrial economy.

 

 

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SamLinder
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Re: Musings on Japan

scepticus,

Thank you for the links. They should provide for some interesting reading. I also find your summarization to be food for thought. Fascinating!

SamLinder's picture
SamLinder
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