Also posted at ComingAnarchy—please weigh in with comments there.

On the summit of Jebel Hafeet, on the border of the UAE and Oman, I found this graffiti—the characters for “China” spray painted on the rock.

I saw similar graffiti in a natural valley in Sapa, Vietnam, back in 2005. As China grows richer, and its citizens find more opportunities for overseas tourism, I guess we should expect more of this kind of vulgar graffiti to pop up in the natural tourist sites of the world.

I’m happy that China’s economic development has created an upwardly mobile middle class that has the opportunity to travel overseas. I just wish they wouldn’t take out their lack-of-modern-empire-penis-envy frustrations on the natural environment of the world. And Japan, perhaps China’s biggest buggaboo, is possibly the biggest target for this graffiti as more and more Chinese tourists flood in to visit its temples, shrines and other monuments.

(It could be worse—at least the Chinese government doesn’t have management over tourist sites outside China, which would be a real disaster for human civilization).

Nice graph imagery from The Economist:

Hat tip to Marginal Revolution.

Apparently my profile is high enough that someone in China wants to sell me Metal Fun. I guess they finally realized that I don’t need any Viagra?

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Brad Glosserman, a former member of the Japan Times editorial board now with CSIS*,  has a WSJ op-ed (link here just in case) on Japan’s national security situation as its society ages and population declines, taken from a US strategic perspective. It’s pretty grim stuff:

The strategic implications of this shift are equally important. Japan’s demographic transition will act as a guillotine, cutting off the country’s policy options. Most simply, budget priorities will shift. Health care, currently underfunded, will become a considerable drain on the government purse. Defense spending—always a tough sell in Japan—will feel a tighter pinch. Recruitment for the Self Defense Forces, already difficult, will get harder. The reluctance of some Japanese to see their country assume a higher security role will be intensified as the population gets older and more risk averse. Japan will be reluctant to send its most precious asset—its youth—into combat.

Other forces will reinforce Japan’s increasingly inward-orientation. Foreign aid and investment have laid the foundation for Japanese engagement with Asia (and the world). But as the domestic economy dwindles, official development assistance and the investment capital that lubricated foreign relations will shrink. This will diminish Japan’s status in the region as other countries replace Japanese funds.

All won’t be negative: The demographic transition will make it difficult, if not impossible, for other regional powers to demonize Japan as in the past. The bogeyman of remilitarization could be laid to rest for good. This will help eliminate one of the most important obstacles to regional cooperation and provide a real impetus for Asian solutions to Asian problems.

Then he wraps up with some recommendations for how the US can respond to Japan’s demographic changes:

The U.S. needs to be prepared for these contradictory impulses and adjust how it engages Japan accordingly. First, it must abandon the quid pro quo mindset that often characterizes alliance discussions. Japan will have considerably less to contribute to the alliance, but that should not mean the alliance is less important. Discussion should focus on how Japanese contributions serve larger public and regional interests. Japan must do its part and come up with creative ways to share burdens and responsibilities.

Second, the U.S. should shift the alliance’s center of gravity away from military issues. Japanese engagement in this area will become more problematic. If Washington pushes Tokyo harder to make military contributions, it risks politicizing the alliance and undermining its support in Japan.

Third, the U.S. should create and strengthen regional institutions. Regional security mechanisms can pick up the slack as the U.S.-Japan alliance evolves. Other economic and political organizations can minimize tensions in the region. This process should begin soon, while Japan has more influence to maximize its leverage during the creation process. Washington and Tokyo should stop seeing their bilateral alliance and multilateral institutions as zero-sum alternatives. The U.S. should not see this process as a threat to its interests; instead, it should trust Tokyo to see that its interests are respected in these discussions. That would constitute a new form of burden sharing.

Finally, the U.S. has to get its own economic house in order. Washington has relied on Japanese savings—along with those of China and other Asian nations—to finance its profligacy. As Japan ages, it will no longer have those funds to lend to the U.S. This is a potentially wrenching adjustment for America—one that might produce some premature aging of its own.

Typically for op-eds by think-tank people, Glosserman is less interested in making his thoughts clear to the general public than he is in reaching a more sophisticated audience of policymakers. This strategy makes for just this sort of opaque, “wonkish” writing style.

So as the title of this post suggests, I’ll offer the clarity that Glosserman won’t. At the risk of mischaracterizing his argument, here are the points I think he is trying to make:

• The demographic situation means Japan will get weaker and weaker to the point that it’s too old and financially crippled to credibly defend itself or economically engage with countries in the region.


• This means the US cannot stop providing a strong defense presence in Japan or else “other countries” will replace Japan as a power in Asia.


• To get this done, the US needs to pursue a strategy of (1) Pretending the US-Japan alliance is reciprocal by making reasonable demands for Japanese contributions and by not making military issues an explicit focus of the alliance, i.e. stop making loud public demands, (2) Building up regional institutions on terms the US can accept, and do it now before Japan really starts to look bad, (3) Keeping China (and to a lesser extent South Korea) on board as friendly powers so Japan and China can work together on the second piece of the strategy (though he doesn’t outline how to do this); and (4) End the US “reliance on Japanese savings” (that part is light on details as well; I suspect it’s a hastily added reference to the economics topic du jour).


• If this can be accomplished, a “Beijing-Tokyo axis” can lead efforts to build EU-style integration of the region which will lead to a lasting peace. And they all lived happily ever after.

Got that, Japan? You’re doomed to live out the 21st century as a paralyzed dementia victim, and CSIS is ready to have the US start manipulating you like a ventriloquist’s dummy in America’s efforts to reshape the region.

My brief reaction is that Japan shouldn’t be counted out quite so easily, but America would be foolish not to think realistically in this direction. Funnily enough, he seems to more or less describe America’s existing policy toward Japan (maintain the alliance no matter what), except for a reminder to US leadership that they shouldn’t expect too much of Japan considering where its demographics are headed.

* Glosserman is affiliated with the “Pacific Forum CSIS” located in Honolulu of all places. Sounds like a much more comfortable post than the real CSIS on K Street in Washington.

Ever wonder which parts of Japan gamble the most? No? Well, stick with me and you might learn something about which prefectures are most willing to line up and pay the poor tax.

Each year, Mizuho Bank (which has a special relationship with the lottery from its days as a government bank) tallies the total number of lottery (Takarakuji) tickets sold and divides that number into each prefecture’s population to obtain an average per capita spending total. According to their numbers for fiscal 2007 (as reported in the Nikkei), the top ticket buyers were Tokyo, Osaka, and Kochi prefecture in Shikoku. There was a huge gap between the top of the list (Tokyo’s 12,933 yen) versus the bottom (Yamagata’s 5,328 yen). The top prefectures tended be prefectures that house large cities, such as Aichi.

UPDATE: A typical lottery ticket in Japan costs around 300 yen, meaning that Tokyo residents buy around 43 tickets a year or just about one every week.

Prefectures with the lowest home ownership rates tended to buy more lottery tickets. Tokyo and Osaka, the first and second highest per-capita lottery players, also have the two lowest home ownership ratios, in the same order.  Okinawa has the third lowest, and its residents are Japan’s sixth biggest lottery gamblers. On the other hand, Aichi, another prefecture full of takarakuji hopefuls, had the seventh lowest home ownership ratio. (Bonus fact: Toyama prefecture had the highest home ownership rate in 2003 (around 80%). Toyama residents play it relatively safe with a middling per capita lottery spend of between 7,000-7,999 yen).

The outlier was Kochi prefecture, however, indicating that low home ownership, a signifier of relative poverty, does not make up the only factor explaining the results. An official from Kochi prefecture’s budget division speculated, “Perhaps the prefecture residents’ nature of determination and love of gambling had an impact.”

A brief overview of Japan’s lottery system

Though it only brings in about 1/20 the revenue of the almighty pachinko, Japan’s lottery, with its estimated 15,000 or so ticket booths outside train stations (more booths than pachinko parlors, one for every 8,600 people), has been a highly visible form of legal gambling in Japan throughout the postwar era, along with horse racing, yacht speedboat racing, bicycle racing, and mahjong.

According to Wiki Japan, lottery-style gambling in Japan got its start in the Edo period as Shinto shrines and Buddhist temples offered tomikuji (essentially the same as a lottery) in order to raise funds for repairs. Over the years, tomikuji faced various bans from the authorities, and private-sector lotteries remain criminalized to this day. In July 1945, a desperate wartime government instituted a lottery, but Japan surrendered and chaos reigned before a drawing could even be held. A national government-backed lottery was re-instituted during the US occupation in 1948, though it was abandoned in 1954, leaving only regional lotteries. Takarakuji took its current form in 1964 with the foundation of the Japan Lottery Association, a grouping of the regional lotteries.

According to association data, in fiscal 2007 (the period covered by the above survey) Japanese gamblers bought 1.0442 trillion yen in tickets, or about 8,200 yen per person. The US doesn’t have a national lottery per se, but the UK does – on average, UK residents spent 80 pounds (12,905 yen by the current exchange rate) per capita on national Lotto in 2008. The UK lottery’s press kit (PDF) claims that 70% of adults are regular players (but doesn’t cite a source), while a 2007 poll from Japan’s lottery association found that 55% of those polled had purchased at ticket at least once in the past year. The UK system, in which operations are contracted to a private company, appears to be more efficient than the one in Japan. According to the UK press kit, 10% of every pound spent on lottery tickets goes to operations and expenses (5% in dealer commission, 4.5% in operating costs, and 0.5% in shareholder dividends), versus 14.4% of each ticket in Japan (with 45.8% going to paying winners and 39.8% going into the general accounts of each prefecture and major cities).

The odds of winning a current popular Japanese game Loto 6 is 1 in 6 million, which is comparable to other lotteries I am familiar with in the US (and of course less likely than getting hit by lightning).

See the full list after the jump!

Read the rest of this entry »

(Updated below with Pilling article)

Since today is the 20th anniversary of the Tiananmen square riots (which are being observed in China with a mass ban on various international websites), now is a good time to reflect on the Chinese Communist Party’s spectacular success at staying in power since 1989.  To that end, the FT has some great new articles on the political scene in China and North Korea.

First, think tank senior associate Minxin Pei on how the badguys won after Tiananmen (emphasis added):

How Beijing Kept Its Grip On Power
...
Chinese leaders appear to believe that they have discovered the magic formula for political survival: a one-party regime that embraces capitalism and globalisation. Abroad, the party’s success raises fears that it has established a viable new model for autocratic rule.
...
Clearly, the most important explanation for the party’s apparent resilience is its ability to deliver consistently high growth. However, largely through trial and error, the party has also developed a complementary and quite sophisticated political strategy to strengthen its power base.

A lesson taken from the Tiananmen debacle by the party’s leaders is that elite unity is critical to its survival. The political necessity of launching China’s economic reforms in the late 1970s required the party to form a grand alliance of liberals, technocrats and conservatives. But the liberals and the conservatives constantly clashed during the 1980s, over both the speed and direction of reform.

Disunity at the top sent out mixed signals to Chinese society and, during Tiananmen, paralysed the decision-making process. After Tiananmen, the party purged liberals from its top echelon and formed a technocratic/conservative coalition that has unleashed capitalism but suppressed democracy.

An additional lesson learnt from the party’s near-death experience in Tiananmen was that it must co-opt social elites to expand its base. The pro-democracy movement was led and organised by China’s intelligentsia and college students. The most effective strategy for preventing another Tiananmen, the party apparently reasoned, was to win over elite elements from Chinese society, thus depriving potential opposition of leadership and organisational capacity.

So in the post-Tiananmen era, the party courted the intelligentsia, professionals and entrepreneurs, showering them with perks and political status. The strategy has been so successful that today’s party consists mostly of well-educated bureaucrats, professionals and intellectuals.

Of course, when it comes to those daring to challenge its rule, the party is ruthless. But even in applying its repressive instruments it has learnt how to use them more efficiently. It targets a relatively small group of dissidents but no longer interferes with ordinary people’s private lives. In today’s China, open dissent is stifled but personal freedom flourishes.
...
... Ironically, this political strategy has worked so well that the party is now paying a price for its success. With the technocratic/conservative alliance at the top and the coalition of bureaucrats, professionals, intelligentsia and private businessmen in the middle, the party has evolved into a self-serving elite. Conspicuously, it has no base among the masses.

Next, how Kim Jong Il’s presume successor, Kim Jong-un might not so easily enjoy cult status:

Why three Ps mean end of an era in N Korea
...
It is unlikely he can even become a “Dear Leader” like his father. Cult-status reduces with every step taken away from the “Great Leader”, Kim Il-sung, the nation’s founder who is celebrated for his guerrilla battles against the Japanese in Manchuria in the 1930s.

“The cult system cannot go on through the third generation,” said Kim Tae-woo, researcher at the Korea Institute for Defence Analyses in Seoul.

“For the cult system to be established, three things are necessary – power, personality and policy. But Kim Jong-woon is now only in his 20s, so it is hard to expect the three Ps from him.”

North Korea’s leaders rule by the Confucian notion of “mandate of heaven”. In state media, the firmament often expresses its pleasure with rulers via a rainbow or comet.
...
“I expect the transfer of power will be smooth while Kim Jong-il is alive. But after his death, it will be a collective leadership backed by the military with Kim Jong-woon as a titular leader,” said Choi Choon-heum, senior researcher at the Korea Institute for National Unification.

(Don’t tell anyone, but I reposted both articles here)

Bonus: Via Planet Money, here’s a video of a North Korean market. Seems kind of dirty and destitute, but otherwise about as bustling as some markets I’ve visited in Bangkok or South Korea:

 

UPDATE: Now David Pilling joins the China Tiananmen anniversary fun (also here):

China’s success outstrips democracy for now
By David Pilling
...
Those who imagined in 1989 that the suppression of students marked the death throes of authoritarianism have been bitterly disappointed. Today, the Communist party’s knife is sharper and the hemp less knotty: it rules largely through the consent of a population grateful for its management of a breakneck economy and its restoration of China’s long-lost prestige. If there were elections tomorrow – What a way to mark the 20th anniversary of Tiananmen! – the Communist party would probably win by a landslide.

This has come as a shock to many observers who assumed that the party would be hoist by its own contradictions. If it promoted market reforms, it would open up the forces of freedom and wealth that would serve as its own gravedigger. If it clamped down on liberalisation it would stifle economic growth with the same result. It has not so transpired. The party has it both ways: authoritarian government with increasing, though circumscribed, market liberalisation. The bars of the “birdcage economy” are still intact.
...
... After 20 years, Deng’s narrow view of democracy has prevailed. At some stage, a broader one will follow.

When I checked the news sites this morning I noticed that Andrew Sullivan had linked to this clip of Krauthammer calling for Japan to “declare itself a nuclear state” in response to North Korea’s becoming a “nuclear power,” with the comment “yeah, China will go for that.” For me, the bigger question is whether Japan would go for that. Although the possibility of a nuclear-armed Japan is less taboo than it used to be thanks to repeated broaching of the topic by a loose coalition of right-wing political figures, the public at large is still strongly opposed. For example, a public opinion survey conducted in November 2006 shows 14% in favor, 78% against. Those numbers will likely be shown to have changed slightly in the inevitable followup surveys to come within the next week or two, but I would not expect a radical shift.

Incidentally, take note of Krauthammer’s phrasing: “negotiations with the Japanese to encourage them to declare themselves a nuclear power.” He seems to be working under the widely held assumption that Japan already holds all of the technology necessary to build a nuclear bomb (almost certainly true), and had secretly laid all of the necessary groundwork short of the final stops (possibly, but less certain) in such a way that they could have weapons ready within weeks should they suddenly become permissible.

But even if the technology is ready, I just don’t see it happening. Constitutional revision allowing a more conventional military is slowly becoming more and more possible, but decades of anti-nuclear education will not be overturned as easily, whatever the fantasies of American neo-cons.