Don’t hate Yoichi Masuzoe for what he said — just look at what he has done

Yoichi Masuzoe has just been elected Governor of Tokyo after being the front runner more or less since the election race began. Predictably, the Western media is already finding the most superficially controversial angle to present him to the world: as far as I can tell, the usual offenders are parroting talking points that started out on the blog of former Socialist leader Mizuho Fukushima—more precisely, this post just over a week ago, where she dug up a 1989 article that quoted him as saying that women are not fit to lead government because they focus on single issues and have menstrual cycles. (She also cited a slightly more recent interview, in which he criticized local NIMBY types who sought to block nuclear plants, as evidence that he is a nuclear supporter.)

I will not defend Masuzoe’s statements about women, which are pretty heinous, but some context is necessary. 1989 was twenty-five years ago and Japan was still stuck in the “Mad Men” era when it came to gender relations. It was ten years before Masuzoe ran for political office and he was not that well known yet. I am pretty sure that he got over whatever strain of foot-in-mouth syndrome he may have had at the time, because Masuzoe’s detractors were hard-pressed to come up with a single damning quote from him since about 1995. Characterizing Masuzoe based on what he said about women back then is unfair—and also unnecessary given that there are more real issues with his governorship.

One concern I have comes from Masuzoe’s official resume. Summarized in one paragraph, Masuzoe started out as an academic studying French politics at Tokyo, Paris and Geneva, gradually gained notoriety as an author and TV commentator, and made a pretty decent showing against Shintaro Ishihara and Kunio Hatoyama in the 1999 Tokyo gubernatorial election. He won an LDP seat in the House of Councillors the next year. Despite his being critical of pretty much everyone else in the Diet, he was put in charge of the LDP’s constitutional reform commission and then became Health and Welfare Minister under Abe, Aso and Fukuda, during which time he came out as a quasi-hero in two major scandals. By 2009, he was the most popular politician in Japan. He bailed from the LDP as it fell from grace under Taro Aso, starting a new “Shinto Kaikaku” party amid hopes from the likes of Tobias Harris (link) that it would be the kind of force that would tank the LDP for good. It proceeded to do absolutely nothing, the LDP returned to power under Abe 2.0, Masuzoe declined to stand for re-election in 2013 and begged the LDP for forgiveness in order to run for governor under their quasi-endorsement. Summarized in one sentence, Masuzoe is a showhorse and not a workhorse, an Obama type of guy who can give a good press conference but who is not likely to actually do anything in a political context without seriously cocking it up, and that is not enough to run one of the largest subnational governments in the world.

Then there is the unofficial resume from the tabloids. Taking all of the tabloid stories I have seen at face value, Masuzoe supposedly met a Japanese woman while in France and they had a lovely wedding, but somehow didn’t actually get married. His first de jure marriage was to a French woman, but they were divorced for undisclosed reasons. (My wife recalls Masuzoe saying on a TV show that this first wife made rice pudding for dessert at one point, and he was enraged at the concept of rice being a sweet dessert.) After returning to Tokyo, he married his second wife, Satsuki Katayama, a promising young Ministry of Finance bureaucrat. The marriage lasted in earnest for only a few months, as Katayama discovered that Masuzoe had a short temper, and kept a collection of about twenty kinds of knives. They separated in short order and were officially divorced in 1989, but before the divorce was final, Masuzoe found a mistress and fathered his first child. He had two more children, at least one of whom was with a different mistress, and at some point married his secretary, who had two more of his children, for a total of five kids with three women. In the nineties he got serious about his horse racing hobby and started buying horses; two of them won the Japan Derby, in 1997 and 1998, but he got out of this business just before going into politics. At some point, he put his wife in charge of his “research institute” shell company, and transferred most of his valuable assets into it, including a 300 million yen house in Tokyo’s Setagaya Ward and two vacation houses in Yugawara and Kawaguchiko. He reported a total of 360 million yen in assets when he was in the Aso cabinet, but insiders reckoned he was worth more like 1 billion and hiding most of it under his wife’s shell company. After leaving the Diet in 2013, he petitioned a court to reduce his child support payments to his first child (who is disabled) because his monthly income had fallen to just 100,000 yen; Katayama was quoted in the Mainichi Shimbun as being reluctant to support Masuzoe because of this. One tabloid speculated that he may have lost a ton of money betting on horses and needed to adjust his obligations for that reason.

I am doubtful that Masuzoe will last for four years. He has what appears to be a fairly weak electoral mandate, with less than 50% of the vote in an election that appears to have had relatively low turnout (the snowstorm in Tokyo yesterday likely kept many undecided voters from going to the polls today). Like his predecessor Inose, Masuzoe does not have a record of coalition or consensus building, but rather a record of being outspoken and confrontational, which will not serve him well given that the Tokyo legislature is not the single-party paradise that the National Diet has become. I also suspect that, given all that the tabloids have already dug up, Masuzoe must have some more skeletons in his closet that could take him down if a political foe were willing to utilize them. So don’t worry, reporters, this guy has plenty of potential to be interesting without sticking his foot in his mouth.

Are we looking at a new political order?

We are less than a month away from the gubernatorial election in Tokyo, with the campaign officially starting a week from today, and it seems like it may be a key part of yet another massive political realignment.

Until last week, Yoichi Masuzoe was looking like a shoo-in, with the support of the Abe government and very strong results in both LDP and DPJ polls. Then former prime minister Morihiro Hosokawa, who led a coalition that briefly broke the LDP’s uncontested decades of power in 1993, came out of nowhere and announced his candidacy a couple of days ago on a platform strongly opposing the restart of nuclear power. He has the backing of none other than former LDP prime minister Junichiro Koizumi, who stood beside him for the announcement. According to some reports, perennial back room fixer and band destroyer Ichiro Ozawa is also behind the Hosokawa campaign. Meanwhile, Koizumi’s son Shinjiro, who has quietly become the most popular active politician within the LDP, is criticizing Abe for supporting Masuzoe, who ditched the party in 2009 to start his own third party that went nowhere—this despite the fact that there are no other potential candidates within the LDP who poll nearly as highly as Masuzoe.

Hosokawa and the alliance supporting him seem to be getting a groundswell of momentum, despite an obvious defect in his candidacy: he resigned as prime minister in 1994 because of a scandal that was essentially exactly the same as the scandal that just took down Governor Inose. Here is Hosokawa in April 1994:

Hosokawa has been fending off allegations that he accepted an improper donation of 100 million yen ($970,000) from a trucking company previously accused of bribery and links to organized crime. He has admitted receiving the money, but says it was a loan. His opponents say it was a bribe.

The sense of irony here is palpable. The coalition that Hosokawa heads came to power last August promising an end to the so-called money politics of the Liberal Democratic Party, which the coalition displaced. Now LDP members – whose 38-year grip on power was broken after a slew of bribery and influence-peddling scandals – fax each other copies of a receipt Hosokawa has released in an attempt to show that he paid back the money, because they believe it to be an obvious and sloppy fake. ``If you show this receipt to the tax authorities,’’ says Motoo Shiina, an independent member of Japan’s upper house who left the LDP six years ago, ``they will laugh.’‘

Here is Inose in December 2013:

Inose acknowledged in November he had received 50 million yen ($500,000) from the political family behind the huge Tokushukai medical group before last year’s gubernatorial election. The money, handed to him in cash, was kept in a safety deposit box and Inose said it was a personal loan that had nothing to do with his campaign for the city’s top job.

He has been grilled by a hostile assembly on several occasions, with the media picking apart his appearance and stuttering performance, focusing on beads of sweat that dripped down his neck. At hearings and in press conferences he has waved around a piece of paper he insists amounted to a loan agreement, although observers noted that it bore no date for repayment and showed no terms and conditions.

There is another obvious defect in both Masuzoe and Hosokawa, in that like Inose, they both made careers out of being outspoken and pissing off the establishment, but never managed to show much for it other than ignominious defeats.

So who else is out there? Besides the two media-anointed leading contenders, we have our good buddy General Tamogami running on the far right, and socialist/communist-supported lawyer Kenji Utsunomiya (who came in a distant second to Inose in the last election) running on the far left. Of the four candidates, three (Masuzoe, Hosokawa and Utsunomiya) are anti-nuclear in one form or another, while Tamogami’s energy policy, in line with his other stated policies, presumably relies on the Japanese air force.

Neither I nor most Japanese commentators are entirely sure what to make of all this, but it certainly incites a lot of speculation as to what will happen next. Will the retired DPJ insiders like Kan and Hatoyama manage to squeeze Utsunomiya out of the race and consolidate the anti-LDP vote under Hosokawa, or will Utsunomiya split that segment and let Masuzoe win? Will Tamogami leverage Shintaro Ishihara’s support and his own possession of actual administrative experience to eke out a victory while the others shout over each other about the nuclear issue? Will Antonio Inoki parachute in from North Korea at the last minute? Will everyone in Tokyo just stay in bed on the 9th and let Doctor NakaMats realize the fruits of decades of campaigning? Perhaps most importantly, what will all of this mean for the Abe government? It’s fascinating, and I for one can’t get enough of it.

Seven things I didn’t know about the consumption tax

In the last few months I have been reading up a lot on Japanese tax law, and have come across the following interesting facts about the consumption tax:

1. The national consumption tax rate is only 4%. There is also a uniform local consumption tax defined as 25% of the national tax; the two taxes are added together to form the 5% figure that everyone pays. The local consumption tax is split evenly between the prefecture and municipality where the applicable good or service was sold.

2. Not all of that 5% goes to the government. Businesses always take the full 5% from their customers (so long as those customers are located in Japan) but only pass on a fraction of this amount to the government. They can deduct any consumption-taxable expenses—inventory, materials, machinery, fees and the like—from their consumption-taxable revenues, and pay 5% on this net amount. The idea is to charge a total of 5% tax on the final value absorbed by consumers regardless of how many middlemen were involved in getting a product/service to the consumer. Businesses generally tally up their consumption tax bills on a quarterly basis.

3. Small businesses get pretty sweet tax breaks. Businesses with annual sales of less than 50 million yen can choose to keep anywhere from 10% to 50% of the consumption taxes they charge, regardless of their actual deductible expenses. The permitted amount depends on the type of business: wholesalers keep the least while service businesses keep the most. This is a really good deal for small service businesses, since their biggest expense is usually personnel, and most personnel costs (salary, social insurance, etc.) are not subject to consumption tax. Businesses with annual sales of less than 10 million yen get an even better deal: they are completely exempt from paying consumption tax. So in quite a few cases, part of the 5% paid by the consumer is effectively absorbed by smaller suppliers and subcontractors in the value chain.

4. Consumption tax applies to imports into Japan, whether for personal or business purposes, though the rules for this are very complicated. If you are bringing valuables into Japan as an individual, the 5% tax is calculated against a “taxable value” on the item, which is usually 60% of the retail price paid overseas. This is technically separate from customs duty, but is charged as part of the same inspection process and is superseded by customs duty where customs duty applies (i.e. to alcohol, tobacco and single items valued at more than 100,000 yen). You don’t have to pay consumption tax on anything within your duty-free exemption. Here is an example of how the calculation works.

5. Consumption tax arguably creates a government subsidy for large exporters. This is because exports are not subject to consumption tax in Japan (though they may be subject to consumption tax in the importing country). So when a company like Toyota or Sony totals up their consumption taxes, they usually end up having more taxable expenditures than taxable sales, resulting in a consumption tax refund. Quite a few companies get hundreds of millions of yen a year refunded this way.

6. It’s possible for Japan residents to get a consumption tax exemption for items in excess of 10,000 yen which are to be taken overseas. This is different from the exemption for foreign tourists and comes with a bunch of qualifications, among them that the item must be a gift for someone else or to be used or consumed by the resident outside Japan, and that it must be sold at some kind of “export store” (輸出物品販売場). I might look into this further if I ever get around to buying a washlet for my parents’ house.

7. Consumption tax was introduced in 1989. Most Western European countries adopted some form of consumption tax in the early seventies, and the idea had been floated by the Japanese government as early as 1978, but nobody acted on it until the height of the bubble. The initial tax rate was 3%, all of which went to the central government. The coalition government in the early nineties proposed hiking the tax to 7% but almost immediately back-pedaled due to negative public reaction. The current 5% rate, including the local consumption tax, became effective in 1997 after the LDP returned to power.

Why I don’t have an iPad: Son-san, are you out there somewhere?

I want one, and I’m willing to pay for a data plan. But Softbank will not give it to me.

I have used a Softbank iPhone for a while now—since July 2009, to be precise. Softbank has generally been pretty good to me. When the iPhone 4S came out, they essentially upgraded my iPhone 3GS for free in exchange for a two-year contract extension, and I was happy to take that offer. And their “packet-hodai” deals have been a very cost-effective way to stay in touch while traveling, often coming out cheaper than using hotel wi-fi.

When the new iPad was released last month, and Softbank offered a sweet deal for the 4G model (no money down, and less than 3,000 yen per month for up to 100 MB of data), it seemed like a good time to break down and buy one. I switched job functions a few months ago and now have to do quite a bit of traveling and client presentations, so having a nice big portable Retina display would be more useful than ever.

So I started my online application on the evening of March 18. The application is quite long. I had to input all my information (which Softbank already had) and agree to a few different lengthy form contracts.

Finally they asked for my credit card information, which I duly entered.

“ERROR: The name on your credit card must match the name on your application.”

I knew that my middle name was on my Softbank account, so I had entered my middle name on the first screen of the application. But my credit cards don’t have my middle name. Figuring that was the problem, I canceled the application and re-entered everything without my middle name. This time my credit card was accepted.

Two days later, I received a link to upload a scan of my identification. I started by trying my driver’s license. The upload had to be a JPG, and the scanner at work only produces PDFs, so I scanned a PDF, took a snapshot in Acrobat, and pasted it into Windows Paint.

A few minutes later I got another email. “Your ID has been rejected because it does not match the name on your application.”

Doh! Must be because it has my middle name on it.

Next try. My health insurance card does not have my middle name. Neither does my credit card. And health insurance card plus credit card is listed as an acceptable combination. So I scanned, copied, pasted, saved, and uploaded again.

A few minutes later I got another email. “Your ID has been rejected because it does not match the name on your application.”

I growled, picked up my phone and called customer service. After 15 minutes on hold I finally got to an agent and explained what had happened.

“OK,” she said. “I have your phone number. Can you confirm the name on your account?”

I gave her my name.

“Um,” she said, “that’s not the name on the account.”

I explained that my original account had a middle name on it but that I couldn’t use it while applying through the website. She put me on hold for a few minutes.

“Can you upload ID without your middle name on it?”

“Like I said, I already tried that.”

She put me on hold for a few more minutes.

“So… you tried using ID with your middle name, and then without your middle name?”

“YES,” I said.

She put me on hold for a few more minutes.

“OK, what you need to do is go to a Softbank store and request a change of name…”

I hung up on her and fumed on Facebook. One friend suggested that I complain to Masayoshi Son on Twitter. And I did, which sort of made me feel better. He never replied, though.

At that point I was willing to give up on my iPad dreams, but the deal still seemed too good to pass up. So on Friday, March 24, I walked up the street to the nearest Softbank store and told them I wanted an iPad. The guy at the counter checked my ID, asked for my mobile number, and produced a one-page printed application for me to sign.

“Is everything in this application correct?”

That’s when I noticed that my name was screwed up: the space between my first and middle names was in the wrong place.

“Well… that’s how it was entered in our system. I guess it was probably an error when they set up your account.”

I sighed. “I would have noticed it then. But OK. Can you still process the application?”

“Sure we can.”

“OK. And how long will it take to actually get an iPad?”

“Something like a week, probably. We will call you when it’s ready.”

The next week passed without a call. Yesterday (Monday), I tweeted Softbank customer service asking if there was any way to check the status of the request. They promptly responded that they had no way of checking and that I needed to take it up with the Softbank store.

So I went back to the Softbank store today, gave them my name and asked for a status update. The lady at the counter went into the back for a few minutes and then returned.

“We don’t know what the status is.”

“You have no idea how long it will take?”

“There is a huge backlog. It could easily take a month,” she said. “We request the iPad from Softbank, Softbank requests it from Apple, and there are probably some other steps involved as well.”

Seriously? Is it so hard to take my money and give me a product?

I am tempted to cancel the application and buy a Wi-Fi model at the store, but I know that I will want access to mobile data from time to time. Not enough to warrant a full-blown e-Mobile subscription, though. That’s the most frustrating part of this experience. Why can’t Softbank get its act together?

Ten things you may not have known about Japan’s newest and, um, peachiest airline

  1. Its name is Peach. Seriously.
  2. It is a joint venture between All Nippon Airways and First Eastern Investment Group, a Hong Kong private equity firm.
  3. Its livery designers apparently got their inspiration from the Barbie Jet.
  4. “Peach” allegedly stands for Pan-Asian, Energetic, Affordable, Cute & Cool and Happy.
  5. As many native English speakers instantly noticed, “Peach” is an anagram for “cheap.”
  6. Peach claims to be Japan’s first low-cost carrier. Obviously, this is a blatant lie since Skymark and Air Do both preceded them and are both still flying.
  7. They will be based at Kansai Airport in Osaka, where only the cheap survive.
  8. Peach’s corporate parent, A&F Aviation, was recruiting operations personnel on LinkedIn’s job board a few months ago and didn’t seem to care that much about language ability. Their staff roster must look pretty interesting by now.
  9. Peach is not the first fruit-themed airline. There is an airline in South Africa called Mango, and the US has both Berry and Lime. That said, Peach is probably the fruitiest of them all.
  10. Peach is so cheap that they didn’t even have chairs at their first presser.

As an aviation geek, I am morbidly fascinated…