Former Deputy Finance Minister of Japan, Eisuke Sakakibara, contrasts Japan’s and the US’s response to the pandemic and talks about the different roles and economic strategies of some of the world’s largest countries.
Transcript
Rob Johnson:
I’m here today with Eisuke Sakakibara, a former deputy finance minister of Japan. He has been a professor at Aoyama University, emphasizing international relations and international finance. I’ve known him for many years. When I used to work in the private sector, with Soros Fund Management, we had interesting discussions-
Eisuke Sakakibara:
Yeah.
Rob Johnson:
… about the strengthening of the yen and how Japanese foreign entities might help alleviate the strengthening of the yen by continuing to hold dollars rather than converting things and repatriating home. We’ve been involved in many discussions, and I will tell you, he is a deep diver, meaning he has taught me a great deal about scuba diving through our conversations over the years. Most recently, Sakakibarasan has been a commissioner on the Spence-Stiglits led Commission on Global Economic Transformation that is sponsored by INET. Sakakibarasan, welcome and thank you for joining me tonight.
Eisuke Sakakibara:
Well, thank you very much for inviting me.
Rob Johnson:
We have now a very, very profound set of challenges, changes in the world with the onset of the pandemic. You have always been a very, very independent thinker. I’m fascinated, because I think many things are being challenged, many things are being unmasked. But why don’t we start with the discussion of how Japan is handling the pandemic and what kind of change in the mindset you’re experiencing in Japan as a result of this crisis?
Eisuke Sakakibara:
Well, compared to other countries, Japan has dealt with the pandemic fairly well. This is partly because of the Japanese way of behaving, because Japanese do not shake hands, they do not hug, they bow, and they take their shoes when they go into the house. Those Japanese traditional sort of behavior has helped to calm down the pandemic compared to other countries.
Rob Johnson:
Have you experienced a disruption, meaning a lockdown, people staying at home rather than going to work, and things like we have going on in the United States currently?
Eisuke Sakakibara:
Not that much. The people has been behaving, pretty much what they have been doing in recent months, so that I do not see any major change in the behavior of the people in recent months.
Rob Johnson:
I see.
Eisuke Sakakibara:
In summary, this pandemic has not really affected the Japanese people that much compared to other countries.
Rob Johnson:
In the run up here to the US presidential election, had tensions between candidate Biden and President Trump over the handling of the pandemic and the very large number of cases and deaths, the United States is less than 5% of the world’s population and it’s almost 25% of the deaths, and more than 25% of the cases that have been. People are very, and it is a great source of political controversy. But as you said, you have certain customs in Japan, and in America, we have this tremendous regard for individual freedom, even if it involves the freedom for you to infect me with a disease that you carry, which I don’t think is a particularly healthy approach, but we are quite burdened by this. Looking at the world now, we see very low interest rates, all the central banks, and very what you might call rising debt to GDP ratios. Some have said that the world must look into the crystal ball through the perspective of Japan, which has been in this place for much longer. Also, some of these countries are seeing an aging population demographic and other things, so that Japan might be what you might call a foreshadowing. The adjustments that you’ve been through may be a foreshadowing for where the rest, many other places in the world outside of Africa are headed. Do you see the Japanese experience as informative for the adjustment patterns that others will go through, say in Europe, and the United States, and elsewhere?
Eisuke Sakakibara:
Yeah, I think so, particularly in terms of the aging. Japan is ahead of other countries, so that what we have experienced will eventually be sort of experienced by other countries. We may be, at least in some sense, an indicator for other countries.
Rob Johnson:
Mm-hmm. Do you think, how would I say, at this juncture, is Japan in a good place looking toward the future?
Eisuke Sakakibara:
Yeah, I think the Japanese situation right now is not necessarily bad. We have been experiencing, on average, 1% growth rate, but with the maturity of the economy, 1% growth rate would be quite sufficient. I think, in general, the Japanese people are quite satisfied with what’s going on at this moment.
Rob Johnson:
Now, I think that Japan as a place, as an individual economy, seems to be in good shape, but we read continuously now about a great deal of turbulence in Asia, whether it’s Modi’s India, or China, US-Chinese relations, there seems to be a very unsettled geopolitical environment. How, from the perspective of a leader in Japan, do you see those challenges opening up at this time?
Eisuke Sakakibara:
Of course the US-China confrontation has affected Japan quite significantly, but Japan is in a very delicate position. In terms of national security, Japan is a US ally. But in terms of the economic relationship, Japan-China’s economic relationship is much stronger than Japan-US economic relationship. In a sense, Japan is in between Japan and China. So far, I think we have been fulfilling that role quite well.
Rob Johnson:
Mm-hmm. Mm-hmm. Is that because of the large foreign direct investment for production in China, or are there many, many aspects to the intertwined nature of the Japanese and Chinese economy?
Eisuke Sakakibara:
Well, foreign investment in China is one factor, but if you sort of follow the history of Japan, Japan has been sort of influenced by Chinese civilization, quite significantly, and that still is the case. Japanese character is Chinese character, right? That Japanese-Chinese relationship has been very old and that it is still continuing.
Rob Johnson:
How does the tension between US and China affect how Japan responds or acts? What are some of the challenges that this presents?
Eisuke Sakakibara:
We don’t want this confrontation to become persistent and become stronger, because we have good relationships with both countries. That confrontation between China and the US does affect Japan in a sense that we are being split between the two countries.
Rob Johnson:
Do you see-
Eisuke Sakakibara:
Yes.
Rob Johnson:
… a split between the two countries getting worse at this point? Or do you think the tension that we are at now is near the high point?
Eisuke Sakakibara:
I think it is near the high point. I think both China and US is quite mature, so that I think at least leaders of the two countries see that further deterioration of the relationship would not benefit neither China or the United States. I am somewhat optimistic about the relationship.
Rob Johnson:
I guess it must be very interesting in the sense that, as you mentioned, the kind of what you might call the Asian philosophy and perspective of the mindset is somewhat different than what I’ll call Cartesian enlightenment thinking that comes from the West.
Eisuke Sakakibara:
Mm-hmm.
Rob Johnson:
Yet the Japanese have been so successful in their interaction with the West.
Eisuke Sakakibara:
Right.
Rob Johnson:
Going back to the years when you and I met, probably in the late 1980s, and even before that, Japan has, what you might call, navigated through, how would I say, the Western customs and practices. Yet, now the world is perhaps migrating back towards a more Eastern philosophy and the kind of simple mechanical, free market approach espoused by the United States, and the UK, and others. It doesn’t, how would I say? It doesn’t seem like it’s rising. It seems like it’s under question, and a bigger role for the state, a relationship between state owned enterprise, and private sector, and other things is more prevalent in Asia. I sense people, particularly emerging countries, are migrating toward that mixed model relative to the American model.
Eisuke Sakakibara:
I agree with you. The American model is market capitalism. You more or less leave many things to the market to determine, but the Chinese model would be what I could call state capitalism. The state intervenes in the market, but in the end, the market dominates the result of the things, so that this mixture of market and state in China seems to be quite strong these days. As you say, people may be migrating to pure sort of market capitalism to Chinese type state capitalism.
Rob Johnson:
I remember years ago, you gave me a book that you wrote.
Eisuke Sakakibara:
Oh, is that right?
Rob Johnson:
It was a book on, maybe I would call different kinds of different kinds of capitalism.
Eisuke Sakakibara:
Oh yeah. Japanese capitalism. Yeah, you’re right.
Rob Johnson:
Yeah. I remember that book being, I think it was called Beyond Capitalism.
Eisuke Sakakibara:
That’s right. That’s right. I remember that.
Rob Johnson:
I learned a great deal from studying Japan all in all, but in particular from you, as a teacher and guide to understanding the practices and the institutions. At the current juncture, what do you see as the role of India? I keep reading how with the One Belt, One Road policy and with the movement into Africa, India feels quite isolated as China is reaching outward and making more and deeper global relationships. What do you see taking place in India and how is it responding to the challenges of the day?
Eisuke Sakakibara:
Yeah, first of all, the Japanese-Indian relationship has been quite favorable for years. The Japanese-Chinese relationship has had some ups and downs, but the Japanese-Indian relationship, somewhat different. It has always been very favorite, and Japan helped India to gain independence, so that Japan-India are very close. That is very important for Japan, because China is to some extent a threat to Japan. That alliance with India is very important for Japan.
Rob Johnson:
In what areas are you intertwined with or involved with India? What are the sectors or the nature of the commerce?
Eisuke Sakakibara:
Yeah, one prominent sector is IT sector? IT. Companies like Wipro, Infosys and Tata Consulting, they are all in Japan doing significant work in this country.
Rob Johnson:
I see.
Eisuke Sakakibara:
I personally was involved with Wipro in India, and I have been helping Wipro to do their operations in Japan.
Rob Johnson:
Oh, that’s interesting. A Premji University has an affiliation with INET and-
Eisuke Sakakibara:
Oh, is that right? I know Mr. Premji very well.
Rob Johnson:
Yeah. Yeah. We had done a joint venture with them in Bangalore, and we have some people who are joint faculty, and some of the Nobel laureates, like Joe Stiglitz and James Heckman, who we work with have been doing-
Eisuke Sakakibara:
Oh, is that right?
Rob Johnson:
… lots of research on early childhood developments or various different challenges that relate to Indian development and the role of the state. I think it’s slowed down a little bit since Modi has come into power.
Eisuke Sakakibara:
Oh, is that right?
Rob Johnson:
It’s was much more vibrant previously, but it seems to be reviving right now, and Gaurav Dalmia, who’s one of our board members-
Eisuke Sakakibara:
I see.
Rob Johnson:
… is really working with me to try to reinvigorate. I think India is a very important place, particularly with regard to climate change and energy transformation, not just for India, but for the whole world.
Eisuke Sakakibara:
Yeah. Mr. Premji is a key person. He has good contact with the Indian government and has a wide relationship with the rest of the world.
Rob Johnson:
Mm-hmm. Mm-hmm. That’s for sure. I guess one of the things that you hear in the multilateral institutions, in Washington, in Geneva, in Brussels and elsewhere, is concern that the US-China relationship now will break down over these tensions and that the ability to collaborate on climate transformation will be quite badly harmed. Obviously India, China, and the United States play a very big role in the carbon emissions that planet Earth will experience over the next 10 to 15 years. Whether we can cooperate, I think is an open question, but a very important one.
Eisuke Sakakibara:
Yeah. I am worried about US-China relationship. As you said, the relationship may deteriorate. But precisely because of that, India is very important. Cooperation with India is very important. India is another big Asian country, which does have a lot of influence.
Rob Johnson:
Yeah. Oh, I mean, they are almost 1.4 billion people at this juncture.
Eisuke Sakakibara:
That’s right. That’s right.
Rob Johnson:
With that many people in an energy system that along with economic development needs to be transformed to be less carbon intensive.
Eisuke Sakakibara:
Oh, that’s right. That’s right.
Rob Johnson:
It matters not only the nature of how energy is produced, but the sheer scale for the challenges of planet Earth. I would hope that the world would understand. Now, I’m often concerned, particularly in Africa and South Asia, that they are asked to change their energy system at a time when there are so many very important needs related to health and survival in these poorer countries. To ask them to transform their energy system and neglect some of these other things, while the wealthier countries are consuming much more energy, like BTUs per capita, is almost criminal. It’s my hope that we can create the awareness that transforming the Indian energy base positively affects the West and Japan.
Eisuke Sakakibara:
Yeah, I think so. I think so.
Rob Johnson:
We all should contribute to making that transformation, because we’re all going to benefit. I think that India, because of its place in the stage of development, does need that help. It does need financial and technological assistances to accomplish the goals that are necessary for the wellbeing of planet Earth.
Eisuke Sakakibara:
Yeah. One key sort of energy is atomic power energy, which could be quite harmful. But Japan is now trying to export atomic energy generation to other countries in Asia. I think that would be helpful.
Rob Johnson:
Back to the Japanese economy. What are the sectors in Japan that are rising? The places in the West, they would say, are your comparative advantage. What’s thriving in the Japanese economy at this point, and what is new and being invested in and built up?
Eisuke Sakakibara:
Well, it used to be the manufacturing sector, but the manufacturing sector has been sort of followed by China, and Indian, and others, so that Japan is slowly moving toward the cyber sector. That has become the key sort of promoter of the Japanese economy. Manufacturing sector is still there, but it’s not what it used to be.
Rob Johnson:
Mm-hmm. Mm-hmm. I remember it was almost ominous in the early to mid-80s that people in Washington thought that Japan was going to take over the world, and the manufacturing sector, particularly, I’m from Detroit, Michigan, the auto industry-
Eisuke Sakakibara:
Oh, I see, I see.
Rob Johnson:
… was quite powerful, as Toyota and others, Nissan and others grew in displacing an American auto industry that was struggling to modernize and evolve.
Eisuke Sakakibara:
Oh, that’s right. That’s right. Toyota, is still quite strong.
Rob Johnson:
Yes, it is. Yes it is. I drive a Toyota Prius, so I speak as a Detroiter, how would I say, may not be considered patriotic to my home city, but-
Eisuke Sakakibara:
Yeah. Good friend of mine. I stayed as a high school student in York as an exchange student. My host family drives Toyota and Honda.
Rob Johnson:
At this juncture, all around the world, the concerns of automation, machine learning and the replacement of labor by artificial intelligence and automation has become a big concern. How is that unfolding in Japan at this point?
Eisuke Sakakibara:
I think the Japanese are quite advanced in robotics, so that robotics sort of operation is very widespread in this country. AI is also another factor which is driving the Japanese economy. The Japanese economy, I think, is changing from the manufacturing industry based toward more sub-industry oriented.
Rob Johnson:
As your population is aging, is the healthcare sector becoming a larger proportion of the gross national product?
Eisuke Sakakibara:
Yeah. Not that conspicuously, but gradually, that will take place. But one thing, the Japanese population is aging, but the Japanese old people are quite healthy, like myself.
Rob Johnson:
Are you still scuba diving?
Eisuke Sakakibara:
Yeah. Yeah. Every summer, I do that.
Rob Johnson:
That’s a great.
Eisuke Sakakibara:
Scuba diving at 80 years is not really that bad. You know?
Rob Johnson:
That’s pretty good. Yeah. Let me ask, why do you think the Japanese people in comparison with other cultures are so healthy? What are the secrets to this vitality and longevity?
Eisuke Sakakibara:
Yeah. One is the cuisine. Japanese food is quite healthy. Fish, vegetables and so on, so that one factor is what we eat. But another is a health sort of insurance scheme that covers the entire nation, so that we could go to the hospital anytime with relatively low cost. That is really helpful.
Rob Johnson:
Yes. From what I understand in studying comparative healthcare systems, the place we’re going to the hospital is less expensive, means that people go in early for preventive care-
Eisuke Sakakibara:
That’s right. That’s right.
Rob Johnson:
… and don’t wait until they’re extremely sick, and damaged, and have long term consequences.
Eisuke Sakakibara:
As a matter of fact, this sort of practice has been quite widespread. We call that human being docs. We go into the docs at the hospital to check various parts of our body. That has become quite popular and ordinary people go into hospital at least once a year to check various parts of their body, which is called human being docs.
Rob Johnson:
Good. I would think you would, therefore, detect things sooner?
Eisuke Sakakibara:
That’s right. That’s right. That’s right.
Rob Johnson:
That would, how would I say, perhaps limit the cost as well as the severity-
Eisuke Sakakibara:
That’s right. That’s right.
Rob Johnson:
… of things that can deter your health in the long term/
Eisuke Sakakibara:
Lots of people do that. Major companies provide that kind of service to all their employees.
Rob Johnson:
Mm-hmm. Mm-hmm. Well, that’s very interesting, I would imagine in places like the United States, they are going to be looking for a better health model in light of the pandemic and it’s-
Eisuke Sakakibara:
Yeah, yeah, yeah.
Rob Johnson:
… the consequences of what’s been revealed and how the incidence of illness really relates to what I will call the class structure of this society. That instead of healthcare being a human right, it’s viewed as a product that the wealthy can have good quality, but the less wealthy are not, how do they say, do not have it as available to them.
Eisuke Sakakibara:
In that sense, you could say that Japanese society is quite egalitarian. Also, 99% of the people are middle class and we don’t have extremely poor people or extremely rich people that much.
Rob Johnson:
Well, I gathered places, like Norway and Japan are thriving and both exhibit those kinds of characteristics relative to say the Anglo Saxon countries.
Eisuke Sakakibara:
That’s right. That’s right.
Rob Johnson:
How is China in that regard? Are they maintaining a broad based system for healthcare, and education, and other things for the population? Or is it more hierarchical, like say the United States?
Eisuke Sakakibara:
I think it is quite hierarchical. China is a big country with a huge population, so that income inequality there is quite big. That’s one thing that China has to overcome, this income disparity. Although it’s a socialist country, class does exist in that country.
Rob Johnson:
Mm-hmm. I once saw a consulting report comparing the governance of America with China. It said in the report, if you took everybody in the House of Representatives, the Senate, everybody under Secretary or higher in the Executive Branch, and the Supreme Court Justices, you put them all together. With a 15 trillion economy, that group of people was worth 6.6 billion.
Eisuke Sakakibara:
6.6. I, see.
Rob Johnson:
It was about 800 people, in all. In China was a 9 trillion economy, and the 72 people in the National People’s Congress were worth almost $70 billion.
Eisuke Sakakibara:
Oh, is that right?
Rob Johnson:
Which is more than 10 times what all of the American administration put together was worth.
Eisuke Sakakibara:
I see, I see.
Rob Johnson:
And that the so-called princelings had an enormous concentration of wealth and also dominated governance. This was right on the cusp of what they began at the time and is now continued as the Anti-corruption Campaign, because they felt that things in the Communist Party were getting to the place where they found it very difficult to represent a broader base of the population, given the concentration of wealth, and the wealth of the members of the National People’s Congress.
Eisuke Sakakibara:
That’s right. That’s right.
Rob Johnson:
I guess that’s a long winded way for me to say that your perception of what was happening in China is consistent with this report that I read about-
Eisuke Sakakibara:
I see. I see.
Rob Johnson:
… the nature of power and inequality within that country.
Eisuke Sakakibara:
Yeah. China, although it claims to be a socialist country, it’s a very class type society. Japan is more socialistic than China.
Rob Johnson:
Mm-hmm. Mm-hmm. In the unfolding of China and India, what are the tensions that exist between those two countries? What are they struggling over? I keep reading about border disputes and other things, what at the core of that?
Eisuke Sakakibara:
Well, there has been border disputes, but the border dispute has always been there, so that I am not that much worried about international intentions between the two countries.
Rob Johnson:
Okay.
Eisuke Sakakibara:
Yeah.
Rob Johnson:
Okay. That’s a squabble, but it’s not something that can be ignited into a larger-
Eisuke Sakakibara:
I don’t see any larger sort of warfare between the two countries.
Rob Johnson:
Yeah. Yeah. How about the naval concerns with the United States Navy, the growing Chinese Navy and various different flashpoints in the Pacific? Is that a bigger source of concern?
Eisuke Sakakibara:
I think so. China is now developing its Navy, and there would be some kind of sort of friction between US 7th Fleet and the Chinese growing Navy in the Asia Ocean.
Rob Johnson:
Yeah. [inaudible 00:31:35]-
Eisuke Sakakibara:
But again, I don’t see any major sort of war or collision between the two countries.
Rob Johnson:
Yeah. I used to work with in the United States Congress, and people tell me that we see news stories every year as the Defense Appropriations Bill is about to pass about the coming challenge of China, so that everybody is inspired to agree to give the Defense Department the money they want.
Eisuke Sakakibara:
I see.
Rob Johnson:
But it comes and goes, according to the budget marketing. I don’t know what the true intelligence is, in that realm, but in the nationalistic fervor that’s taken over in the United States, we do hear more and more about a Chinese Naval threat from key scholars and members of the media.
Eisuke Sakakibara:
Yeah. That kind of sort of reflection tends to be over-emphasized for various reasons.
Rob Johnson:
Yep. I agree. I agree with you. How about is Japan very you, what might call observing or developing strategies in relation to the development of Africa?
Eisuke Sakakibara:
Well, Japanese involvement in Africa has not been that deep, although they’re trying. We should cooperate with India in sort of cooperating with those African countries where Indian influence is quite big.
Rob Johnson:
I think a country Japan, with your sophisticated infrastructure and systems, and the growing importance of technology may play a role. I’ve just been talking with the group that is part of the Alibaba group of Jack Ma, called the Luohan Academy. Long Chen, who is the director of the Luohan Academy, and I had a talk the other day. There is a great deal of hope that technological platforms and mobile payment systems can make up for some of the lack of institutions, like banking, and financial networks, and other things, and create a more integrated market.
Eisuke Sakakibara:
Yes.
Rob Johnson:
They were talking about how, let us say a woman who’s a fashion designer, and she’s not working for a major corporation. In this world, if she has a design that people find inspiring, the ability to see it on the internet and the ability to sell it in many, many different places across the continent is possible.
Eisuke Sakakibara:
I see.
Rob Johnson:
With this internet infrastructure, which otherwise would just be a local market, not a continental market, so that the economies of scale in the bringing a life entrepreneurs who otherwise would not invest themselves fully, because of the, how would I say, the new potential of profitability and vitality may be a new form of development that we haven’t seen in what I might call the East Asian models and others that depended more on manufacturing.
Eisuke Sakakibara:
I think because the internet and the other sort of new schemes, that the world has become much more global than before.
Rob Johnson:
Yeah. Yeah, I think that’s right. I think it’s global with regard to the transfer of goods, the transfer of technology, and obviously finance can move almost at the speed of light, but how about people? In Japan, is there a lot of inward and outward migration of people?
Eisuke Sakakibara:
Japan has not had much of migration for years. Yeah. Japan is an isolated island, so it is difficult for those people to sort of come to Japan navigating on the sea, so that immigrants in this country have been relatively small compared to others, particularly compared to European nations.
Rob Johnson:
Ah, so Admiral Perry is still resented in some places, huh? He tried to break down the barriers. When was that, in the 1860s, as I recall.
Eisuke Sakakibara:
Japan is a very unique country, because we have not had an experience of mixture of the races. For more than 1,000 years, the Japanese race has been here and we have not been mixed with other races that much. Yeah. It’s very unique.
Rob Johnson:
I was going to say, if you watch television in the United States, right now, you can understand the turmoil associated with racial, what we call otherness. I’ve done research papers with a man who’s actually at Premji University, named Arjun Jayadev, where he’s done the geography in the United States of where there is disruption and where there is economic suffering. He then compared that with survey data on economic insecurity. Obviously, they work in lockstep. But the most interesting thing is wherever there is economic insecurity is a geographic location where there is also heightened racial animosity.
Eisuke Sakakibara:
Is that right?
Rob Johnson:
It seems that economic distress ignites otherness-
Eisuke Sakakibara:
I see. I see.
Rob Johnson:
… and racial animosity. These things are not two separate things. They actually exacerbate one another.
Eisuke Sakakibara:
Yeah. Japan and the US are quite a contrast. US does have various diversities, where Japan is quite homogenous, in terms of the race, in terms of various other sorts of traits.
Rob Johnson:
Yes.
Eisuke Sakakibara:
Yeah.
Rob Johnson:
I would say that Scandinavia, in some ways, is similar like that as well.
Eisuke Sakakibara:
I see. Yeah, yeah, yeah.
Rob Johnson:
Have a relatively broad middle class and people of the same ethnic, and religious, and racial-
Eisuke Sakakibara:
That’s right. That’s right. Yeah.
Rob Johnson:
… traditions, or backgrounds. Some of these, what we used to call in America, the melting pot, presents very, very big, big challenges in the modern era. When you look at globalization, you mentioned it’s pervasive now, but how does the nation state, like the Japanese nation, take care of its people, when money has wings and can stay offshore, when the kind of disruptions that flow through your society may be beyond your control, because they may emanate from other places? I know many people are very hostile towards globalization.
Rob Johnson:
In part, I think it’s the fault of our governance, because say in the United States, they say, “Everybody can be better off with globalization,” but the losers are allowed to lose, and there’s no transfers, or no adjustment assistance in America, so that those who lose really lose. In America, we’ve had a few people win a lot and a lot of people lose quite a bit, and so it’s hollowed out the middle class. Peter Temin wrote a wonderful book, called The Vanishing Middle Class. How does Japan handle the pressures of globalization?
Eisuke Sakakibara:
That’s partly true. There are those, as you say, who could sort of benefit from the globalization, but more than half of the people would lose out in this globalization, sort of globalized world, so that the state has to take care of that. But I think in Japan, it has been done fairly well. Social security system is quite sufficient, so that we don’t see any major losses from globalization. Somehow there are some safety nets which would sort of support them.
Rob Johnson:
In essence, those transfers, and those adjustment assistance are part of the Japanese spirit of governance?
Eisuke Sakakibara:
Yeah. I think so.
Rob Johnson:
Much more so than in, say the United States or Great Britain.
Eisuke Sakakibara:
That’s right. That’s right. Yeah. Japan does sort of value the egalitarianism, so that the social security system is built in such a way so that people are quite sort of equal visible with each other, so that we do not have so many extremely rich people, we don’t have so many extremely poor people. 95% would be the middle class in this country.
Rob Johnson:
Mm-hmm. I would imagine. I don’t know this, but I’m asking, that the number of people who are in prison as a percentage of the population must be very low in Japan compared to some of the Western countries?
Eisuke Sakakibara:
Yeah. I think the Japanese crime rate is among the lowest in [inaudible 00:41:43] countries.
Rob Johnson:
I remember the first time that I went to Japan, in about 1985, when I worked on Capitol Hill and I was staying at the Hotel Okura. I said to a man, “Well, is it safe to go out to Roppongi late at night?” Because there were some good music stores, I wanted to go see. Old jazz music that I might be able to buy. He said, “I’ll tell you how dangerous it is.” He said, “You can put your wallet on your head and walk down the street, and if it falls off your head, somebody will pick it up and hand it back to you.”
Eisuke Sakakibara:
Yeah, that happens. When you lose something in Japan, you’ll always get it back.
Rob Johnson:
Yeah. Yeah. Well, that was quite a contrast for a boy that grew up in Detroit, where things were a little more rough and tumble, and as is often the case, in many parts of America. At this point, various traditions and successes in the way Japan has treated its people. I would think, we have this kind of ethic in the United States that what we try to do is emulate success.
Rob Johnson:
What they say, “The better mousetrap wins.” Everybody tries to keep up with the best. Well, it sounds as if, from your perspective, that in Japan, many of these social challenges are much better handled than they are in the West. When is the world going to start to imitate that more successful model?
Eisuke Sakakibara:
Well, ordinary capitalistic country leave things to be determined by the markets. Some people win, some people lose, and that’s the way it is, most of the people think. But the Japanese way of thinking is that the social security system should be built in such a way that the losers are sort of rescued by the state. As I said, there are not many losers in this country. Most of the Japanese people are middle class, maybe more than 90%, and the state healthcare system and various social security systems does help, and it’s very important. To some extent, as you said, Japan is like a Scandinavian country, where the state provides security to its residents.
Rob Johnson:
Yes. It’s interesting that you brought up the Scandinavian countries, because a gentleman used to be a minister years ago. I was a financial speculator when the Swedish krona had trouble, working with Soros back in the 90s. A man named Leif Pagrotsky, who is a delightful individual, became a good friend. He eventually ran the US Consulate for Sweden in the United States. He brought some Swedish people, experts, scholars to New York and invited me to a dinner.
Rob Johnson:
At the dinner, the Swedish scholars were challenging us. What they said was, “In the old days, people would say the American model of supply side flexibility and reallocation of resources was considered the growth model, and the European model was considered to be sclerosis.” Meaning all gummed up, and bogged up, and didn’t make the adjustment, and stagnant.
Eisuke Sakakibara:
I see.
Rob Johnson:
But then he said, “What’s happening now…” President Trump had been in office for about a year, at that time. He said, “What’s happening now is that in America, people are starting to fight against technical change and globalization.”
Eisuke Sakakibara:
I see.
Rob Johnson:
“And all kinds of things, because they know the losers lose.” This man said, There is an article coming out in the New York Times by Peter Goodman, next week, for which I was interviewed and it’s called, We Love the Robots.” What he basically said was technical innovation creates new production possibility frontier. He said, “We don’t protect jobs.”
Eisuke Sakakibara:
That’s right. That’s right.
Rob Johnson:
“We protect people, so that you may have to get retrained, but you’ll have healthcare, you’ll have a pension, your children will be educated. All of these things that guard or protect the quality of life and humanity will be there, but we won’t protect your job. You may have to learn, you may have to transform and evolve so that we can take advantage of the possibilities.” And so the conclusion they gave to me was, in Sweden, they love robots and they are therefore going to keep growing and take advantage of the technology. In America, the social conflict may destroy our ability to-
Eisuke Sakakibara:
I see.
Rob Johnson:
… see the best in technology, and evolve, and continue, so that the growth model of what is success in failure in this era of rampant change from globalization and technology may make the American model-
Eisuke Sakakibara:
I see.
Rob Johnson:
… what you might call less effective and less functional. I thought it was an interesting perspective. I thought [inaudible 00:47:30]-
Eisuke Sakakibara:
Yeah, I agree. American type free market capitalism does create losers. Many American sort of administrations think it’s inevitable. But I think the Swedish model, or a Scandinavia model, tries to sort of decrease the number of the losers, and create a middle class society as a result.
Rob Johnson:
That, how would I say, that feeling of protection may be what gives society the courage to continue to embrace technological change and to evolve?
Eisuke Sakakibara:
I think so. I think so. Yeah.
Rob Johnson:
The resistance, as the Swedes suggested to me, in the United States, may impair our ability to continue to thrive. How does China fit into that scheme? Do they take care of the losers as Japan does or are they closer to the American side of the pendulum?
Eisuke Sakakibara:
Yeah. Well, although China claims to be a socialist country, I think the Chinese system is very close to the US system. They do not take care of the losers.
Rob Johnson:
That’s interesting.
Eisuke Sakakibara:
Yeah.
Rob Johnson:
I once did a survey for INET with a global data intensive firm. We interviewed five places, the UK, the United States, China, India, and continental Europe, about what young people wanted to learn about in economics. What they came back was in continental Europe and India, people wanted to learn about what is the right social design for a good society. In the United States, China and the UK, what the young people wanted to learn about was how to make money.
Eisuke Sakakibara:
Yeah. China, in that sense, is very close to the US.
Rob Johnson:
Yeah, that was the surprising result of the study, which this company called Purpose, an Australian based company, worked with us to understand as we were trying to, how would I say, increase the attractiveness of our Young Scholars Initiative, which has now got approximately 12,000 people participating from various places around the world. But it was fascinating, like you said, the closeness between the US and China, which is a little bit counterintuitive, but there it was. That was fascinating. What do you think the US and China could do to make Japan better off in the next 10 years? How would you ask the US and China to-
Eisuke Sakakibara:
Well China, US-China sort of, the conflicts does not help Japan at all. Japan could be a good mediator. We are both close to the US and China in various fields, so that I think we could take advantage of Japan in order to be a mediator between the US and China. US-China sort of tension does not help, either China, or US and Japan.
Rob Johnson:
Yes. Yes. Well, you are on the cusp as a country of a change in the prime minister. I understand for health related reasons, Prime Minister Abe will be leaving office shortly, and maybe we should explore what kind of new prime ministers have the skills to be the mediator of this big global conflict between US and China.
Eisuke Sakakibara:
Well, the next minister is probably Mr. Suga, who is a cabinet secretary general. He would probably follow Abe’s policy, so that there won’t be any major change of Japanese policies, extended policies in particular.
Rob Johnson:
Okay. There’s what you might call a deep common practice. As the leadership changes, there’ll be a great deal of continuity.
Eisuke Sakakibara:
That’s right. That’s right. Mr. Abe has sort of provided the stability to the Japanese politics and administration. He’s the longest serving prime minister, since the major insurrection, so that the next prime minister, I hope would follow Mr. Abe to sort of keep providing stability to Japanese politics and the Japanese economy.
Rob Johnson:
Yeah. Yeah. That’s interesting. That’s fascinating. I guess my last question comes back to your being a scuba diver. What do we have to do, as citizens, about our oceans and our seas? What kind of policies do someone who cares for the water, for the oceans, for the under sea life and for the coastlines, what kind of things do you pray will be embraced by mankind?
Eisuke Sakakibara:
Well, I don’t see any specific policies to be implemented immediately. But the ocean is a great asset for the human beings, so that we could sort of, we should take policies to protect the soundness of the sea, which is very important. That would be the key to the survival of the human beings.
Rob Johnson:
Yes, that’s what I read. But my understanding is it’s very hard to implement and enforce, because there are so many what you might call common areas. Places like the United Nations can see what to be done, but they don’t have the enforcement power to make sure that it is done.
Eisuke Sakakibara:
That’s right. Countries, like US, and Europe, and Japan should take a leadership in trying to sort of maintain a clean and good ocean.
Rob Johnson:
Yes. Yes. Well, I, how would I say, I’ve experienced the joy of being under the ocean many times. I’ve probably done 400, 500 dives in my life.
Eisuke Sakakibara:
Is that right? I have done quite a lot as well, you know?
Rob Johnson:
Yeah. I knew that. I knew that. I wanted to share with you, there was a famous rock and roll act in America, called The Grateful Dead. The leader was a man named Jerry Garcia. He was known to be, this was 60s and early 70s, one who experimented with psychedelic drugs. Somebody once asked him in a press conference, “Is there anything better than LSD?” He said, “Only one thing, scuba diving.”
Eisuke Sakakibara:
Comparatively, LSD is something.
Rob Johnson:
But just how in that place, it’s almost without gravity, with balance, and all the beautiful motion, and colors, and everything else, Garcia was inspired to put the experience of scuba diving at the top.
Eisuke Sakakibara:
Yeah. Last summer I went to Okinawa, the Southern island of Japan. It was very beautiful. Yeah.
Rob Johnson:
Yeah. Yeah. Well, I want to thank you for joining me tonight.
Eisuke Sakakibara:
Okay.
Rob Johnson:
You’ve taken us on a tour under the sea and around the world from the eyes of Japan. I’m sure that the various people in the audience here will be very grateful, as I am, for your insights. I know as we work together on the Global Commission over the course of the next year, and work on many things related to economics, and education, and transformation, I’m quite sure I will call you to come back for another episode and help us to see things from that vantage point.
Eisuke Sakakibara:
Thank you very much for inviting me. Yep.
Rob Johnson:
It’s been a lovely night and I look forward to our next episode in the not too distant future, perhaps just after the presidential election.
Eisuke Sakakibara:
Okay. Okay. I look forward to that.
Rob Johnson:
Great. Thanks. Bye-bye.
Eisuke Sakakibara:
Thank you very much. Yep.
Rob Johnson:
And check out more from the Institute for New Economic Thinking at ineteconomics.org.
