Bending Adversity: Japan and the Art of Survival (39 page)

Boats were everything for many people in Rikuzentakata. On 11 March, after the earth had stopped shaking and when the water in the bay started stirring up in muddy pools – a signal that a tsunami was coming – many fishermen rushed to their vessels. Sixty-year-old Shuichi Kanno was one of them. Despite his daughter’s objections he headed not for the hills, but for the water. ‘Without a boat, I can’t think about my life,’ he said. He decided to save the biggest of the three vessels he owned by sailing it out into the incoming tsunami, a survival technique fishermen had learned over generations. ‘I wasn’t at all afraid. My only thought was to protect my boat. That’s what we did in the Chile earthquake too,’ he said, referring to the 1960 tsunami that had swamped Rikuzentakata after an earthquake halfway around the world.

For those who lost their boats, life had been hard. Government compensation had been slow and insufficient, said Sachiko Kanno, Shuichi’s 62-year-old wife. ‘There’s no money and there’s no shipbuilding companies to make them anyway. It may take years and we’ll all be grey by then.’ Kanno was a tough, bright-eyed woman. Clothes pegs were hanging, ready for use, from her apron, which she wore over a housedress and tracksuit bottoms. ‘Those without boats are collecting seaweed. It’s famous in these parts. Or they’re working on construction sites, or in the rice fields. Some of them aren’t doing anything at all.’ Now it was
uni
season, she said, when fishermen gathered the prized sea urchin that fetched high prices around Japan. They used poles, several metres long and fitted with mirrors, to hunt for the spiky creatures on the ocean floor. But many of the poles had been washed away and an argument had broken out among union members. Some were saying it was unfair to let those with poles fish while those without could not. There had been a meeting about it to thrash out a compromise.

That morning I met Councillor Sasaki. He took me back to the Fumonji temple, where the remains of unidentified bodies were being kept in wooden boxes wrapped in muslin cloth. Just twenty-three boxes remained compared with nearly 300 when I was here before. The others had been identified from their DNA and claimed by relatives. There was one new box. That April, there had been a typhoon. It washed a body up on the beach more than a year after the tsunami had claimed it. ‘We’re 95 per cent sure we know who it is,’ Sasaki said. ‘Now we just need the DNA evidence.’ The body washed ashore had been wearing the remnants of a Capital Hotel uniform. Sasaki said it must be one of his colleagues, missing since the day of the tsunami. ‘We escaped by bus, but she went by car to take her mother to the evacuation centre.’ He gulped and fell silent. ‘We feel that she’s come back to us,’ he said eventually.

Offerings sent by people from around Japan had been placed on rows of shelves by the altar: cans of sports drinks, jelly sweets, marshmallows, Hokkaido biscuits. The priest, in a blue cassock and purple bib, pointed out the temple roof beam, made with a single piece of wood twelve
ken
in length, or about eighty feet. ‘You can’t find a piece of wood this long any more,’ he said. ‘It must have taken a year to
prepare a piece of wood like this.’ The temple was founded in the thirteenth century, but was rebuilt away from the coast in the early sixteenth century, presumably after a tsunami. In an alcove, among Buddhist deities, was a statue of a ferocious-looking, half-naked demon, sword in one hand and some kind of sling-shot in the other. The scowling figure was riding a wave, which reared up behind it in the form of a halo. ‘It’s called a
nami kiri fudo
, a wave-killing god,’ the priest said. ‘From ancient times this temple has offered protection against tsunamis.’

The god’s powers had not been sufficient in 2011. Unlike Ofunato, which was slowly creeping back towards the water, Rikuzentakata had been so destroyed it might never be rebuilt in its former location, people said. The whole town, which in the 2010 census had a population of 23,302 inhabitants, could end up being shunted away from the coast towards the hills. That was assuming people stayed at all. Sasaki worried that, unless businesses restarted soon, there would be little choice but to drift away in search of work. The number of registered residents had already fallen to 19,000 and was shrinking with each passing month. As in Ofunato, there were plans to put up a temporary shopping street, but the location had not yet been decided. Reconstruction money was pouring in from Tokyo – Sasaki said the town’s budget had increased seven-fold – but there were too few people to deal with it. About one-third of the town’s 300 government officials had been killed in the tsunami, leaving a deficit of knowledge and expertise. There were plans to build a sea wall, twice as high as the one knocked down, and Sasaki was betting that people would eventually move back into the town proper. ‘Right now people have to live on the higher ground, but after a while they’ll move back to the coast because they love and respect the sea,’ he said. ‘They know that one day they’ll get hit again by a tsunami, but they just can’t help it. That’s their culture.’

Some rebuilding had already started. Sasaki took me to a house-raising ceremony on the outskirts of town to celebrate the completion of a municipal canteen. The money had been donated by people from Zushi, a city in Kanagawa prefecture outside Tokyo. Representatives of Zushi were here. Carpenters in their traditional
jika-tabi
boots were milling around. At one end of the field was the frame of a new
barn-sized building. At the other, marquee tents had been erected and volunteers were cooking yaki soba noodles and cabbage. There were giant bottles of sake lined up ready to drink. Children were being taught to pound
mochi
rice cakes in a giant wooden mortar. With each swing of the enormous pestle, the crowd shouted out encouragement. On the offbeat, an old lady sloshed water into the mortar with her bare hands, removing them just before the heavy pestle came thundering down again. Inside the frame of the newly constructed house sat a little ‘god-shelf’ with offerings of rice, rice cakes, a pineapple, bananas, an apple the size of a bowling ball, a bottle of sake and a bream, which was considered a lucky fish.
³
On the roof, carpenters were hurriedly nailing the final pieces of plywood into place. The atmosphere was how I imagined an Amish barn-raising.

After some speeches, more jokey than solemn, a priest entered the house wearing a purple cloak and a tall black hat known as an
eboshi
. He pulled a scroll from a quiver at his side, unfurled it and began reading in a half chant, half sing-song voice. It was an almost other-worldly sound, like someone blowing through a conch shell. The words themselves were surprisingly prosaic. He named the construction company, thanked the carpenters and listed the food that would be served at the canteen. Imagine a priest chanting ‘pork cutlets, rice with fish, and soba noodles’ to the rhythm of the Lord’s Prayer. Parents hushed their children, telling them to show respect. The priest ended with a noise like a screeching police siren, the sound becoming higher and louder and then lower and softer until it finally faded away altogether. ‘We hope to have many more ceremonies like this,’ Sasaki said when it was over. ‘It’s a sign that we’re making progress.’

I wanted to see the
ippon matsu
, the solitary 270-year-old pine that had survived the tsunami. I had spotted it from a distance, a slender, solitary symbol of survival set against the backdrop of the ocean. Now we drove up close. It stood by the side of a little stone bridge. The tree had a long, spindly trunk, with a cluster of branches at the very top. It stood more than eighty feet tall, though it was leaning slightly towards one side. The bottom half of the trunk had been wrapped in a protective green material, like a bandage. Across the road, towards the water, was a long wan-coloured municipal building,
collapsed at one end, like a brontosaurus with its neck resting on the ground. A tourist was standing beneath the tree, gazing upwards. It turned out she had been in Kobe in 1995 when that city was crushed by an earthquake. ‘It’s a miracle, isn’t it?’ she said, shaking her head. ‘Out of 70,000 trees, this is the only one that survived.’ Sasaki said the news, in reality, was not so good. Technically speaking, the tree was dead. After the tsunami, the townspeople had covered its trunk to protect it from snow and insects. They had dug a large trench around it and installed a foundation to prevent encroaching seawater from poisoning the roots. But the land had sunk so far, its roots had been inundated by the ocean all the same. The tree had been examined by arboreal experts from around the country. Normally it should have flowered in May, Sasaki said, but no flowers had appeared. ‘Even after all this effort, the experts pronounced it dead.’

Experts from the Tsukuba Research Institute had subsequently taken away several cones and had managed to nurture eighteen saplings from the seeds. Sasaki had wavered over what should be done about the lone pine itself. His inclination was that the town should forget about the dead tree and focus their efforts on the living. But the solitary pine had become a symbol of the town’s resilience, as well as a tourist attraction. The mayor, Futoshi Toba, had been swayed. ‘As a symbol of reconstruction the lone pine offers emotional support to the people of this city,’ he had said.
⁴

The officials of Rikuzentakata had hit upon a plan. They were already raising donations towards the Y150 million – nearly $2 million at the time – that would be needed to put it into action. An official Facebook page entitled ‘Ganbapeshi Rikuzentakata’ (‘Hang in there, Rikuzentakata’) had been established to help collect funds.
⁵
The idea, Sasaki explained, was to send the tree to Kyoto to be preserved ‘like a dried flower’. The trunk would be chopped into nine sections. Each would be hollowed out and treated. A carbon spine would be inserted and the trunk reassembled as it once was. The branches themselves were trickier. The plan was to create realistic replicas, made of high-grade plastic, modelled on the originals. The hope, said Sasaki, was to have the tree back in its present position by March 2013, to take its place as a memorial for the second anniversary of the tsunami.
⁶
As I listened to Sasaki, I thought about the meaning of the tree, with its plastic
branches and newfangled carbon innards fitted by craftsmen from the ancient city of Kyoto. The ‘miracle pine’, I thought, would be old, yet new; dead, but preserved. It would be artifice presented as reality. It would have beaten the odds. It would be different from what it once was, yet somehow the same. It would, it occured to me in that moment, be a fitting symbol of Japan.

Not long after the earthquake and tsunami of 2011, John Dower, the great scholar of post-war Japan, wondered whether the shock of the tragedy might stir change, whether something new might be ‘cracked open’ or ‘set in motion’, as he put it. For years, people had speculated about what it would take to get Japan moving again. This was, after all, a country whose history – at least on the surface – seemed to be characterized by long periods of stasis followed by bursts of transformative activity.
¹
It has become a cliché of Japanese scholarship that big external shocks have produced decisive changes in direction. The threat of being colonized in the nineteenth century led Japan to jettison feudalism almost overnight in the Meiji Restoration of 1868. Defeat in the Second World War caused it to pursue ‘greatness’ by economic, rather than military, means.

In recent years, there have been two events seemingly momentous enough to catalyse radical change. The first has been the rise of China, the biggest shift in global power in a hundred years and one intensely relevant to Japan, an island neighbour that broke so decisively with the Middle Kingdom in the nineteenth century and fought it so ferociously in the twentieth. The second is the impact of the post1990 economic crisis, starting with the collapse of the bubble and culminating in a lengthy period of deflation and loss of economic vigour. Both shocks have been compared to the Black Ships, whose menacing presence triggered a political revolution in the nineteenth century. Both, it is true, have had a profound impact, provoking deep changes in Japan’s social and economic fabric. But neither China’s rise nor Japan’s decline has triggered a decisive shift in direction on anything like the scale that occurred after 1868 or 1945.

What about the tsunami, asked Dower? Might it prise open the ‘space’ in which Japan could try something new? His question reminded me of what a senior finance ministry official had once told me a decade before. Over lunch at a little French bistro in Tokyo, he had quite taken me aback when he announced breezily, ‘What Japan needs is a really good earthquake.’ That would not only trigger a construction boom, he explained in remarks clearly calculated to shock me, but, more important, it would invoke the sort of can-do spirit Japan had exhibited after the war, a spirit dulled by affluence and complacency. Natural shocks had, after all, caused big national reassessments in the past, though these had not always been for the better. The Great Kanto earthquake of 1923, which flattened Tokyo and killed some 140,000 people, helped crystallize a lurch towards totalitarianism. Just a week after the earthquake, the Taisho emperor issued an imperial rescript stating that, though there had been much progress ‘in science and human wisdom’, this had been accompanied by ‘frivolous and extravagant habits’. (The earthquake had destroyed much of the vast Yoshiwara pleasure quarters in the eastern part of the city.) The disaster, he intimated, was some sort of divine punishment. Yet brighter things came out of the 1923 disaster too. Tokyo was reconstructed as a modern city with underground trains and department stores, cafés, theatres and parks. Dower talks of a flourishing of popular society that, momentarily at least, brought with it a ‘real sense of being part of the world’. Tokyo Modern, as he called it, had ‘gas stations, movie theatres, dance halls’. Then twenty years later, ‘it was all destroyed in the air raids, and it became a vanished city’.
²

That sense of foreboding – and possibility – was there in the weeks and months after the great tsunami of 2011. There were those who thought the catastrophe would tip Japan over the edge by delivering a final psychological blow after years of creeping pessimism. There were others, conversely, who felt the tragedy might shake Japan from its sleepwalk and produce what Dower called ‘a kind of clarity’. He wondered, for instance, whether the tsunami-engulfed coastline of Tohoku might be rebuilt in ‘future-looking ways’ (it was not), or whether the nuclear catastrophe might mobilize a grassroots opposition movement and force a reassessment of energy policy. There has indeed been an upsurge of anti-nuclear sentiment that has forced the
government, as Dower predicted, to reassess its energy strategy. Most of the country’s nuclear power plants stand idle. The old power monopolies have been broken up with the separation of generation and distribution businesses. At least a modicum of competition has been introduced to the residential electricity market. The setting of a generous ‘feed-in tariff’, which encourages companies to produce alternative energy and sell it to the grid, has sparked some imaginative thinking. Marubeni, a mammoth trading house, is the latest business to take the bait, in 2013 announcing plans to investigate geothermal reserves in a Hokkaido national park. Japanese scientists have also announced what could conceivably be an important breakthrough in the energy field – the extraction of methane gas from huge, frozen undersea deposits known as ‘fire ice’. Though this technology is still in its infant stage, Ryo Minami, an energy official, compared it to the discovery of shale gas, the extraction of which has revolutionized US energy prospects.
³

Yet, for the most part, during the time I took to write this book, it would be hard to have claimed that Japan had seized the moment. The authorities cleaned up the debris with admirable efficiency, but then seemed lost for inspiration as to what to do next. Economically things got, if anything, worse. Businesses accelerated their investment abroad and the economy contracted. The absence of nuclear power threatened both an energy and a balance-of-payments crisis. Japan needed to spend increasing amounts of foreign reserves on importing oil and gas. Public debt piled higher. Politics seemed as depressingly out of touch as ever. Japan was resilient, but all at sea.

•   •   •

Then, something curious happened. A few months after I finished the first draft of the book in the autumn of 2012, a palpable sense of optimism, or at least of heightened expectation, returned to Japan. The cause of the excitement came from perhaps the most unlikely source imaginable: the re-election of one Shinzo Abe. Abe’s first term as leader, which lasted less than a year, had, after all, been an unmitigated disaster, a catalogue of pratfalls from a man whose nationalistic and sometimes reactionary convictions were out of step with the broad electorate. Why on earth would his re-election in 2012 – he took office on 26 December, like some belated Christmas present – provoke
anything other than a dreadful sense of
déjà vu
? The answer was that, in contrast to Abe Mark I, who had exhibited a fondness for revisionist causes but profound lack of interest in matters economic, Abe Mark II came armed with an economic blunderbuss. It was called ‘Abenomics’.

In simple terms, Abenomics was a wildly ambitious – some called it wildly reckless – experiment in psychology. The idea was to do whatever it took to banish fifteen years of deflation. It wasn’t quite the Meiji Restoration, but it marked a dramatic about-turn in policy. Abe had been persuaded that Japan’s economy would never regain its vigour unless it broke free of its deflationary trap. He announced that, if he were re-elected prime minister, he would set a 2 per cent inflation target and oblige the Bank of Japan to hit it. That would mean installing a governor at the central bank who believed deflation was Public Enemy Number One and that the bank possessed the firepower to vanquish it. Both would be novelties.

Abe’s message was simple and bold. Indeed, many criticized it for being simplistic and dangerous. They argued that Japan’s problems were deeply structural, not amenable to solution simply by running the printing presses. Yet it was precisely the boldness – almost the recklessness – of Abenomics that was so invigorating. After years of hesitant policymaking, here was a leader willing to bet the ranch on a single objective: that of returning the economy to inflation. Whatever you thought of his nationalist convictions, Abe was able, in the words of one commentator, to ‘change the political weather’.
⁴

As discussed in earlier chapters, an extended period of deflation can sap an economy of its ‘animal spirits’. In the long run, it is also likely to be unsustainable. That is because, when prices are falling, old debts grow bigger as a proportion of a shrinking pie. Tax revenues fall with each notch down in activity. As a result, Japan’s public debt has ballooned, reaching more than 230 per cent of output in gross terms. Because interest rates are low, debt can be serviced fairly painlessly. Yet all the while the debt grows bigger. Japan has spent years in a sort of stable deflationary equilibrium, the economic equivalent of a cryogenic state, but at some point it needs to get some inflationary blood coursing through its veins again.

If Abenomics goes to plan – and there are certainly substantial risks that it will not – Japan will slide gently from a deflationary equilibrium to a mildly inflationary one. Suppose it achieved Abe’s inflation target of 2 per cent, and could somehow muster annual growth of another 1.5 per cent. That would mean a fairly healthy nominal growth rate of 3.5 per cent. If company profits, wages and taxes rose too, then everything – including the public debt – would start to look better. ‘We need to say goodbye to a shrinking economy,’ was how Abe put it.
⁵
Sure, Japan would still be left with big structural problems – how to finance pensions and healthcare with a declining workforce, how to raise productivity, how to compete internationally. But it would be out of its deflationary trap, and in a much more positive place.

Abenomics came in three flavours: monetary expansion, fiscal expansion and structural reform. Abe called them three arrows, a reference to Motonari Mori, a sixteenth-century
daimyo
lord who had told his three sons they would be stronger if they worked as a team. It was easy to break the shaft of one arrow, the
daimyo
had explained, but nearly impossible to snap three shafts bound together. Abe let loose his first arrow almost immediately: a spending package worth roughly $110 billion at the time, or 2 per cent of gross domestic product. The money would be spent mainly on infrastructure, including repair and construction of earthquake-proof roads, bridges and tunnels. Unshakeable bridges, not bridges to nowhere. The second arrow was the appointment of a new central bank governor to carry out radical monetary expansion. Even before he had picked his man, markets had stirred to life in anticipation. The yen started falling, and shares on the long-depressed stock market began to rise on the expectation that both a weak currency and inflation (which would restore pricing power) would be good for business.

The man Abe installed at the Bank of Japan was Haruhiko Kuroda, a finance ministry veteran who had long been scathing about the bank’s impotence in the face of deflation. An international figure and fluent English-speaker, Kuroda was head of the Asian Development Bank, a regional institution bankrolled by Japan. He had the right balance of gravitas and sense of mischief to oversee the change, which meant telling proud officials at the central bank that they had been
getting everything wrong for years. At Kuroda’s first board meeting, the bank agreed to a volte face. It would double the monetary base – the notes, coins and electronic money in circulation – to around 55 per cent of GDP by the end of 2014, more than twice the level prevailing in the US and Europe. To achieve this, the bank would massively step up the amount of government bonds it bought. The idea was that, with no more government paper left to buy, Japan’s banks, pension funds and insurance companies would be forced to put their money into riskier assets such as property and shares. Alternatively, they could invest abroad, which would weaken the yen. In fact, a weaker yen was very much part of the plan, although international etiquette meant Japanese officials had to pretend otherwise. Yet, for the most part, international institutions such as the Group of 20 and the International Monetary Fund welcomed Japan’s new policy. Even Washington was on board. Better to have a Japan returned to some sort of economic health, the world seemed to be saying, than to worry too much about its depreciating currency. My own paper, the
Financial Times
, pronounced the new measures ‘perhaps the boldest ever experiment by the central bank of an important country’. The headline to the main story read simply, ‘Japan Starts Monetary Revolution’.

By May 2013, six months after the idea of Abenomics first took hold, Japan’s broad stock market had risen 65 per cent, its steepest rally in decades. It went on to rise yet further, but lost some of those gains in a rocky June when markets and commentators alike began to lose their nerve in the ability of Abe’s plan to turn the economy around. Still, the yen, which had been as strong as Y77, to the dollar, fell to about Y100, a collapse that made Japan’s exports immensely more competitive. The central bank, confident of reaching its inflation target, raised its growth forecast for 2013 to a pretty respectable 2.9 per cent. Despite the market wobble, investors who had bought the Abenomics story were cashing in. One told me jokingly that he ended all his emails, ‘All hail to Abe’.
⁶

Naturally, Abenomics had many sceptics. Some said the new policy would simply peter out. Deflation, they argued, was a structural problem born of poor demographics and lack of demand. Seeking to beat it by printing endless money would prove useless. Nor was Abenomics new, they argued. It was simply a tired rerun of the borrow-and-spend policies that had failed so miserably in the 1990s. Why should
stimulus work any better now? Abe had an answer for this, alluding to the fact that previous stimulus packages and been stop-and-start affairs. ‘True, we have shot these arrows before, but only timidly, and incrementally,’ he said, returning to his favourite metaphor. ‘In my plan, the three arrows are being shot strong, fast and all at the same time.’
⁷

Economists are nothing if not argumentative. Others trained in the dismal science feared not that Abenomics would fail, but that it might work too well. Instead of creating inflation, they worried it would cause hyperinflation. Even one of its supporters compared the reflationary exercise to pulling a brick with a piece of elastic. First, the brick wouldn’t budge; then it might jolt forward uncontrollably.
⁸
One of the concerns was that, as inflation returned, the value of savings would be eroded and money would pour abroad. If the outflow were large, it could deprive the government of the funds it needed to feed its deficit habit. That would oblige it to borrow abroad, or print yet more money until the yen was entirely debased. In the meantime, the government would find it harder to pay the interest on the public debt. One of the virtues of deflation was that the government could borrow at super-low interest rates. If rates began to rise, servicing the debt would become harder. There was also concern about commercial banks that had stuffed their balance sheets with government bonds. If interest rates rose along with inflationary expectations then the value of those holdings would drop,
⁹
potentially threatening the banks’ solvency. Escaping deflation, in the words of Takatoshi Ito, an academic economist, meant treading ‘a narrow path’. Not a few economists predict Abenomics will end in disaster.