From the Editor

Back to Contents of Issue: June 2003

JPY1 billion from the government to answer Japan's question of the moment: "Where did it all go wrong?"

by Roland Kelts

Here we are, nearly halfway through the year, and things are starting to look awfully familiar. All the noisy reform talk we heard at the end of March has died down, and unless Koizumi and his cohorts are careful, 2003 is going to be another year of dallying -- eventually being chalked up to the list of the "lost."

Of course there are plenty of pockets of quality in Japan, but that only serves to make the wider scene all the more frustrating. If outfits like Nissan and Toyota can pull their socks up, why can't the likes of Mizuho and Daiei? The Japanese public, the investors and the rest of the world are now getting very impatient.

But help is now at hand, albeit in a very Japanese way. Facing chronic deflation, a twelfth year of economic slump, surging corporate bankruptcies and nearly half a trillion dollars worth of bad debts, the Japanese government has set up a think tank to study its failures.

The Shippai-gaku -- or "failure-ology" -- Institute, which has received JPY1 billion in state funding from the Ministry of Education, has been established to answer the country's most pressing question of the moment: "Where did it all go wrong?"

Western commentators have been working on that question for more than a decade now, and in this issue the economist Gregory Clark produces a surprising new angle on the subject. He argues that the blame for wrecking Japan's economy can be laid at the door of a small handful of politicians. From another angle, Leo Lewis takes a look at Nintendo, and the way that the computer games maker is coping with the challenges of ultra-tough markets.

JPY1 billion from the government
to answer Japan's question of the moment:
"Where did it all go wrong?"

The failure institute itself will have a broad range of interests and will examine company failures from the smallest noodle bars to the largest manufacturers. On the state level, it will look at recent milk poisoning scares, Japan's BSE crisis and safety scandals at Tepco's atomic power stations. Even Japan's railways -- officially the most punctual in the world -- will not escape the failure inspectors.

Heading the research is Japan's first ever professor of failure-ology, Yotaro Hatamura. "Japan has always been scared by the concept of failure," he says. "We didn't see it, we didn't watch for it and we didn't catch it. The Japanese economic miracle was just Japan learning from other people's failures. The time has come to learn from our own."

Hatamura, who has already submitted analysis to the Japanese government, has divided his findings into two main areas. A large proportion of Japanese failure can be attributed to standard problems: He lists ignorance, fatigue, carelessness and poor planning as the top offenders. But he has also identified a number of specifically Japanese issues of which the inability of individuals to make decisions is the prime culprit.

If Japan does have a problem making decisions, it might have something to do with the searing heat of summer. Blowfish, J@pan Inc's wry collector of odd statistics, has certainly found it all too much, and we've given him a chance to sound off at more length than usual.

Otherwise, the best advice is to keep drinking plenty of fluids, and switch the aircon up to full -- unless some failure by the power companies causes Tokyo to black out, that is.

Finally, a fond farewell to writer and former J@pan Inc editor, Daniel Scuka, who is heading off to Europe. We wish him the very best.

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