Big retail winners in Japan’s downturn

Here is my list of some of the few companies that have found success during the recent economic downturn. Note their domestic orientation and low-priced offerings:

Disneyland – Multiple upward earnings revisions. Popular as alternative to international travel.

Nintendo – Record earnings. Gaming as substitute for an expensive social life. Their strategy to expand the pie of gamers through educational titles and the like has paid off enormously.

McDonald’s – Record earnings. 100 yen burgers for high school girls who want a place to chat and penny-pinching single salarymen who don’t cook for themselves

Fast Retailing – operators of cheap apparel seller Uniqlo, offering reasonably fashionable cheap clothes, plus a popular line of ultra-warm “Heat Tech” thermal underwear.

Nitori – cheap imported furniture, many convenient locations and no IKEA-style assembly requirements, no-pressure shopping experience (contrast with expensive, high-pressure Otsuka Kagu).

Tsutaya – is reporting surging new membership in their Internet rental service (similar to Netflix) is surging, while rentals-plus-online numbers have posted a sixth straight record year. People apparently spend their vacations watching the entire Sex and the City series instead of traveling to Hawaii.

Anecdotally, some of the supposedly high-end shops, such as the Caldee line of imported food stores, seem to be pretty popular. For one, the yen is strong, and for two, even relatively expensive items,  are still cheap compared to the overseas trip you’ve decided to skip this year.

Writing in INSIGHT NOW!, small-business M&A consultant Shin Satake identifies four lines of business that do well in economic downturns:

 1. Education services (people who have lost their jobs turn to retraining to make them more competitive)

2. Medical services (stress is a killer!)

3. Repair/maintenance (people decide to get stuff fixed rather than buy a replacement)

4. “Escapism” businesses – (the desire to escape everyday existence is a self-defense mechanism. Includes entertainment, etc.)

Stimulus or investment? Japan vs. USA

Ever since the start of our current financial disaster various economists and pundits have been comparing first the US banking problems with Japan’s, and then more recently the infrastructure-heavy stimulus program with Japan’s construction state. Today’s NYT has a substantial article that easily marks the most high profile comparison yet. I’m certainly no economist and I’m not even taking the time to look at numbers right now, but my quick take on the issue is that the comparison is being significantly overblown, but it is still a very worthwhile comparison to make, so that Japan’s various successes and mistakes can be absorbed as lessons. See the following summation of Japan’s massive pork spending:

Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.

He agreed with other critics that the 1990s stimulus failed because too much of it went to roads and bridges, overbuilding this already heavily developed nation. Critics also said decisions on how to spend the money were made behind closed doors by bureaucrats, politicians and the construction industry, and often reflected political considerations more than economic. Dr. Ihori said the United States appeared to be striking a better balance by investing in new energy and information-technology infrastructure as well as replacing aging infrastructure.

Japan’s huge boom in public works spending was less a national stimulus program than a gigantic rural welfare program of pork-barrel projects designed to prop up the ailing LDP in its long decline. The money was largely directed not to the areas where it would benefit the largest number of people, but the areas where it would benefit the largest number of politicians. This was not done entirely out purely cynical political motives but also due to a genuine desire to arrest the decline of the rural regions themselves, in the face of continuing urbanization and a decline in Japan’s traditional and lionized (if anachronistic) agricultural lifestyle. Regardless of intent, a huge proportion (I won’t use words like “most” without looking at actual numerical research) of the spending was “stimulus” but not “investment”.

I am very, very wary of the general principal of “economic stimulus.” I am not opposed to government spending, or even large amounts of government spending, as long as it is being spent on something that is actually necessary or build further value in the future, i.e. services or investment. I think this attitude should be obvious from the mass transit funding letter I wrote and posted here a few days ago. In short, I worry that the discussions on spending currently ongoing in Washington may turn into a series of worthless boondoggle projects oriented at unpopulated rural areas, combined with random tax cuts and other expenditures poorly aimed at short-term (i.e. one election cycle) economic recovery, while continuing to ignore the trillions of dollars in outstanding repairs or upgrades as well as vital new investment that the country needs. I think it’s safe to say that politicians are going to spend this money. The question is, what will it buy us? Would we rather have a bunch of bridges to nowhere, vacant museums and amusement parks in virtually deserted rural towns, and paved-over mountain tops, or would we rather have a modern electrical grid, mass transit that at least meets late 20th century standards if not 21st century, a safe and reliable water system, bridges rated to not collapse, and maybe even an adequate system of public health care?

Dai-ichi survey says: Economic concern a factor in decisions on marriage, third children

Speaking of juicy bits, last week the Nikkei evening edition ran a feature in its “Living” (seikatsu) section, reviewing the results of some of the recent research coming out of Dai-ichi Life Research Institute.

During a “monitor” survey (which polls a pool of pre-registered respondents who match a desired profile) conducted in summer 2008, the institute noticed some starkly negative comments in the free answer sections, such as this unmarried, 30-year-old male: “My income is not sufficient to get married. At my current income, I could not even pay my children’s school expenses” or this married woman aged 33: “I want another child, but I am very uneasy in terms of the economy, such as rising prices.”

Noticing that they had never bothered to gather data on how many people think this way, in late September (in the panicky period just after the Lehman collapse) Dai-ichi polled a nationwide sample of 800 men and women aged between 25 and 39 on their attitudes.

The results indicated that an economic downturn had a bigger-than-expected effect on young people’s attitudes toward getting married and having children.

Two thirds of unmarried respondents felt that it will become economically more difficult to get married, and that figure grew among those who felt the economy will worsen over the next few years. More than 90% of married respondents felt that a weaker economy would make raising children more difficult. Most strikingly, married people with two children who feel uneasy about the economy overwhelmingly felt it would be harder to have a third child in a weak economy.

While the above study sounds like front-page material for Duh Magazine (sounded way more interesting when I read it on the train last week), it’s an interesting indication when you consider that Japan’s birth rate (measured using the total fertility rate) closely tracks the rate of economic growth, only the birth rate lags GDP growth by about two years. Also, there is a negative correlation between the unemployment rate and the birth rate.

As might be deduced from the above findings, the government’s ongoing measures to fight the declining birth rate (which focus heavily on daycare subsidies and work-life balance policies), while important, may not succeed without ensuring stable employment and a reasonably bright future.

Interestingly, the article closes out with a warning to the mainstream media – overly dramatizing stories on layoffs of vulnerable temp workers and wage cuts may be “heightening average people’s sense of alarm more than necessary” even though most people’s jobs and life plans are more or less intact.

New Joyo Kanji

The Kanji subcommittee of the national language study committee of the culture commission has announced an addition of 191 kanji to the list, which brings it to a new total of 2131. Looking at the full list of the now officially common kanji, I am actually struck at how common so many of them are. In fact, I went through the list and did a quick count, and I saw at least 125 for which I knew at least 1proper usage in Japanese (i.e. reading plus definition or place name), and a couple more I decided not to count because I only know them in Chinese. If I know this many of the 191, with still well under a decade of study of Japanese as a foreign language, I think it’s a safe bet that pretty much any native-speaker high school student knows almost all of them, plus a LOT more. If nothing else, I think we can safely put to bed the myth that “you only need to know about 2000 kanji to read Japanese fluently” because there are only about 2000 on the list of kanji that high school students are officially required to know. The joyo list really is a joke, and while I’m sure in reality you don’t need to know nearly as many characters to be fluent in reading Japanese as you do in Chinese, the numbers are probably not as far apart as is commonly believed.

Interestingly, 5 were also removed from the list, and the one example they give, 銑, I have no recollection of every seeing before, although I’m going to guess it is some sort of farming implement.

Thanks to Curzon for mailing me the article.

F-U journalism from Matt Taibbi

Following on the heels of yesterday’s post on a 1993 long-form, take-down profile of Gregory Clark, readers might be interested in taking a look at Matt Taibbi. He is a true master of what I call fuck-you journalism, something of a subset of gonzo style. If you thought the reporter for The Australian was a little harsh, you haven’t seen anything. Taibbi has got to be the biggest out-and-out dickhead in the entire business, though I am sure he could find far more biting insults for himself. Some choice bits:

On the death of Yeltsin:

Death of a Drunk
At long last, former Russian president and notorious booze-hound Boris Yeltsin dies

Boris Yeltsin probably had more obituaries ready in the world’s editorial cans than any chronically-ill famous person in history. He has been dying for at least twenty consecutive years now — although he only started dying physically about ten years ago, he has been dying in a moral sense since at least the mid-Eighties. Of course, spiritually speaking, he’s been dead practically since birth…I once visited Boris Yeltsin’s birthplace, in a village in the Talitsky region of the Sverdlovsk district in the Urals, in a tiny outhouse of a village called Butka. I knocked on the door of the shack where Yeltsin was born and stepped in the soft ground where his room had once been. Boris Yeltsin was literally born in mud and raised in shit. He was descended from a long line of drunken peasants who in hundreds of years of non-trying had failed to escape the stinky-ass backwater of the Talitsky region, a barren landscape of mud and weeds whose history is so undistinguished that even the most talented Russian historians struggle to find mention of it in imperial documents.

Reviewing Thomas Friedman’s latest book:

When some time ago a friend of mine told me that Thomas Friedman’s new book, Hot, Flat, and Crowded, was going to be a kind of environmentalist clarion call against American consumerism, I almost died laughing.

Beautiful, I thought. Just when you begin to lose faith in America’s ability to fall for absolutely anything—just when you begin to think we Americans as a race might finally outgrow the lovable credulousness that leads us to fork over our credit card numbers to every half-baked TV pitchman hawking a magic dick-enlarging pill, or a way to make millions on the Internet while sitting at home and pounding doughnuts— along comes Thomas Friedman, porn-stached resident of a positively obscene 114,000 11,400 square foot suburban Maryland mega-monstro-mansion and husband to the heir of one of the largest shopping-mall chains in the world, reinventing himself as an oracle of anti-consumerist conservationism.

Where does a man who needs his own offshore drilling platform just to keep the east wing of his house heated get the balls to write a book chiding America for driving energy inefficient automobiles? Where does a guy whose family bulldozed 2.1 million square feet of pristine Hawaiian wilderness to put a Gap, an Old Navy, a Sears, an Abercrombie and even a motherfucking Foot Locker in paradise get off preaching to the rest of us about the need for a “Green Revolution”? Well, he’ll explain it all to you in 438 crisply written pages for just $27.95, $30.95 if you have the misfortune to be Canadian.

I’ve been unhealthily obsessed with Thomas Friedman for more than a decade now. For most of that time, I just thought he was funny. And admittedly, what I thought was funniest about him was the kind of stuff that only another writer would really care about—in particular his tortured use of the English language. Like George W. Bush with his Bushisms, Friedman came up with lines so hilarious you couldn’t make them up even if you were trying—and when you tried to actually picture the “illustrative” figures of speech he offered to explain himself, what you often ended up with was pure physical comedy of the Buster Keaton/Three Stooges school, with whole nations and peoples slipping and falling on the misplaced banana peels of his literary endeavors.

Remember Friedman’s take on Bush’s Iraq policy? “It’s OK to throw out your steering wheel,” he wrote, “as long as you remember you’re driving without one.” Picture that for a minute. Or how about Friedman’s analysis of America’s foreign policy outlook last May:

The first rule of holes is when you’re in one, stop digging.When you’re in three, bring a lot of shovels.”

First of all, how can any single person be in three holes at once? Secondly, what the fuck is he talking about? If you’re supposed to stop digging when you’re in one hole, why should you dig more in three? How does that even begin to make sense? It’s stuff like this that makes me wonder if the editors over at the New York Times editorial page spend their afternoons dropping acid or drinking rubbing alcohol. Sending a line like that into print is the journalism equivalent of a security guard at a nuke plant waving a pair of mullahs in explosive vests through the front gate. It should never, ever happen.

And on Tom Daschle (Glenn Greenwald dug this up when the tax problems that cost Daschle his cabinet position surfaced):

I know several reporters who are either officially or unofficially on “Whore Factor” duty, watching the rapidly kaleidoscoping transition picture and keeping track of the number of known whores and ghouls who for some reason have been invited to befoul the atmosphere of the next administration.

Obviously there has been some dire news on that front already. When Obama picked Tom Daschle to be the HHS Secretary, I nearly shit my pants. In Washington there are whores and there are whores, and then there is Tom Daschle. Tom Daschle would suck off a corpse for a cheeseburger. True, he is probably only the second-biggest whore for the health care industry in American politics — the biggest being doctor/cat-torturer Bill Frist, whose visit to South Dakota on behalf of John Thune in 2004 was one of the factors in ending Daschle’s tenure in the Senate.

But in picking Daschle — who as an adviser to the K Street law firm Alston and Bird has spent the last four years burning up the sheets with the nation’s fattest insurance and pharmaceutical interests — Obama is essentially announcing that he has no intention of seriously reforming the health care industry. . . .

Regarding Daschle, remember, we’re talking about a guy who not only was a consultant for one of the top health-care law firms in the country, but a board member of the Mayo Clinic (a major recipient of NIH grants) and the husband of one of America’s biggest defense lobbyists — wife Linda Hall lobbies for Lockheed-Martin and Boeing. Does anyone really think that this person is going to come up with a health care proposal that in any way cuts into the profits of the major health care companies?

That image has been burned into my head over the past week or so…

Of course, in Japan Taibbi would find himself up to his ears in defamation suits. In the US, he appears merely to be ignored as a sensationalist who can only get published in Rolling Stone.

Yakuza visibility

One of the distinctive characteristics of Japan’s yakuza, as compared with similar mafia type organizations in other countries around the world, is their sometimes incomprehensible blatantness. Where the American Mafia used to officially deny its own existence, Yamaguchi-gumi, the largest Yakuza “family”, has a sign outside their headquarters and a PR officer.

The other weekend Joe and I were in Osaka and happened to pass through the lobby of the Rihga Royal Hotel in Naka no Shima coming out of the subway and noticed that there were signs out advertising meeting places for two parties with rather unusual names:  昭成会 and 朝日会. 昭成会 (Shou-sei-kai) is obviously a reference to 昭和 (Showa) and 平成 (Heisei), the former and current Emperor/historical period of Japan, and 朝日会 (Asahi) just has a nationalistic ring but could mean almost anything. A quick mobile phone Google confirmed that 昭成会 is a known Yakuza group and Yamaguchi-gumi affiliate based in Ishikawa Prefecture. Asahi-kai is far less obvious. A few minutes of poking around just now showed a medical group and an Asahi newspaper distributor, but no obvious gangs of that name.

So basically, one confirmed Yakuza conference at the Righa Royal Hoten on January 24.

$20 laptop in the near future?

From Financial Times:

FT: India To Follow $2,000 Car With $20 Laptop

India is planning to produce a laptop computer for the knockdown price of about $20, having come up with the Tata Nano, the world’s cheapest car at about $2,000.

India’s “Sakshat” laptop is intended to boost distance learning to help India fulfil its overwhelming educational needs… However, some analysts are sceptical that a $20 laptop would be commercially sustainable and the project has yet to attract a commercial partner.

A prototype will go on show at a National Mission on Education launch in Tirupati, Andhra Pradesh, tomorrow… the laptop has 2Gb Ram capacity and wireless connectivity.

R.P. Agrawal, secretary of secondary and higher education, said last week that the cost of the laptop was about $20 a unit, but he expected that to fall. He also said he expected the units to be commercially available in six months.

We will have to wait and see this prototype, but I am also pretty skeptical, especially considering the lack of details at this point. You have to wonder what features it could have for $20.

Clueless police

Pointless shaming of athletes for marijuana have made international headlines with the Phelps “scandal”, but the ongoing series of sumo related marijuana arrests here in Japan has hit a new low. According to today’s Japan Times:

Wakakirin has allegedly admitted possessing the marijuana with the intention of using it, though police said they doubted his explanation of how he smoked it.

He reportedly told investigators he hollowed out a cigar, blended the tobacco with marijuana and put the mixture back into the cigar and smoked it, but a senior prefectural police official said it isn’t normal to inhale cigars in the same way as smoking marijuana.

Really? A “senior prefectural police official” making public statements on a criminal drug investigation hasn’t heard of a blunt? Someone needs to get the Yokohama police a subscription to MTV so they can watch some hip hop videos. This would just be pure comedy if it didn’t imply that they were casting doubt on Wakakirin’s entire story in an attempt to frame him for the Japanese equivalent of “possession with intent to distribute”, whatever it may actually be called here.

Mass transit pleas sample letter

I’ve posted the sample latter I published here the other day on a few relevant Facebook groups to try and spread the word, but I want to remind any registered-to-vote American readers to follow up on this. I know everyone reading this is a train fan. You’ve either been to Japan or Taiwan or you want to go, and that means you appreciate what real mass transit infrastrucute can do for a county. If you decided to go ahead and send my letter or a modified version, great-and if you decided to write your own, send it to me or post it here to share.

Mass transit plea

Having been rather frustrated by the lack of much serious discussion of guiding any of the so-called stimulus money towards investment in much needed mass transit infrastructure upgrades, I decided to compose a letter to my two Senators and one local Representative asking them to work towards this agenda. I’ve attached my text below, and I implore registered USA voters to send a similar letter to their own congressional delegation, and to pass along a request to potentially interested registered voters you know. So few people actually write politicians on these issues that a surprisingly small number of contacts can, on occasion, spur them to take at least a mild stand on an issue. This is the first time in many years that Congress has even considered taking an interest in mass transit/rail investment and we mustn’t let it pass Continue reading Mass transit plea