A transformation in Japan: Strengthening Regulations and Publicity The apocalypse that swept Japan on March 11, 2011 was not only a natural disaster but also a transformative accident that called for a dire change in the roots of Japanese society. Hankyoreh interviewed Terashima Jitsuro to hear his opinions on how Japan is changing after the apocalypse. He is the chairperson of Japan Research Institute, known as Japan`s top economic critic, and gained public attention as `behind-the-scenes brain` for diplomatic policy of the Democratic Party. - An apocalypse swept Japan when it was not even fully recovered from the damages of the economic crisis in 2008 that started in the US. How do you think it will affect the Japanese economy? - - The Lehman shock happened in the finance sector. Meanwhile, the strength of the Japanese economy lies in industries and technology. Financial crisis alone could not make Japan lose its credits or become unable to recover. However, the effects of the disasters were much greater than those of the financial crisis. The biggest threat lies in deindustrialization. Numerous Japanese manufacturing industries as well as the plants and collaborators used to be located in Tohoku region. Will they continue building plants there? Obviously not. The price of electricity will start rising, not to mention various taxes. The exchange rate for yen will remain high. Worsening of the entrepreneurial environment in Japan is inevitable. - Then, do you think manufacturing industry will leave Japan? - Yes, I do. It will move to other Asian countries like Korea or Taiwan. Meanwhile, I consider this phenomenon positive. Japanese enterprises will create a new business model that is cooperative since they inevitably will start collaborating with Korean venture enterprises and establishing technical alliances with China. If the model turns out to be successful, Japanese citizens will also benefit from the change. A new entrepreneurial atmosphere and a new perception of the era will come out of it that Japan has never had. - Korea and Japan are in competition with each other. Historical hostility for each other has not been tenderized, either. Is such optimistic scenario realistic? - If Korea and China prosper, Japan will also benefit from them. The number of tourists alone is enormous. However, they are not recognizing such benefits but busy with criticizing each other in a nationalistic view. The competition between Samsung and Sony is similar to this. Of course, it is unrealistic to say East Asian community will become as successful as EU immediately. The former Prime Minister of Germany I met two years ago, Schmidt, had drawn comparisons between Germany and Japan. He noted that they both were the defeated, but Japan did not have enough allies unlike Germany. He`s right. Despite the defeat, Germany collaborated with France to become a leader of EU that is composed of 28 countries. In the contrary, Japan has not put any effort into making peace with China and Korea. It is a tragedy for Japan to enter 21th century without true allies. They should not just lick the surface of friendship. They need to open up the old wounds and inconvenient truths to talk about them. If that`s too difficult, they at least need to be making small efforts. - After the 3/11 disaster, there have been two major divided streams of prediction suggested by experts. One predicts that if Japan`s economic struggles deepen, people will demand deregulations and tax cuts, resembling the Market Fundamentalism that rooted strongly after the IMF in Korea. The other predicts that the role of the government will be strengthened as the world moves toward community-oriented society just like NGOs had reacted to the Grand Earthquake in Hanshin. What is your take on it? - Fukushima accident has a huge possibility of transforming the Japanese society at its roots. It triggered the need to re-examine the civilized societies. The energy policy is moving toward natural and renewable energy sources. Last June, the Japanese government predicted that nuclear power will account for 50% in total electricity generation, but reduced that figure down to 20% after the accident. They also announced that they will re-examine energy policies entirely. This means that the Government will enforce strict regulations on energy policies. Tokyo Electricity has been subject to fierce criticism for holding fast to the old nuclear power plant models judging from a corporate view that favors revenue generation more than safety. Energy is one of the most fundamental elements in corporate activities. Therefore, strengthened involvement of the Government in the energy sector indicates more intervention by the Government in corporate activities. In other words, neo-liberalism will lose its place in Japan. If not realizing planned economy, the society is becoming quasi-public and regulations will only be strengthened. This change will also promote corporations to go overseas. - Some predict that Japan will be closed, reflecting on the massacre after the Great Earthquake in Gwandong in 1923. - 6000 Koreans living in Japan have been killed in that massacre after the Great Earthquake in Gwandong. We must not, should not, cannot and will not follow that path. The situation is very different now. After the Fukushima accident, countries around Japan including Korea responded with compassion. The Japanese also did not appear as frightened as they did in Gwandong accident. Japan will survive only on the fact that Japan is not a common object of hatred. It is also necessary for the Japanese to utilize this atmosphere for corporate activities. I hope that the Asia Future Forum will be an opportunity for all to contemplate on whether they can sincerely congratulate the prosperity of neighboring countries. The first step in creating a community is the sincere belief that others` prosperity will lead to your own. - Tokyo/Won-Jae Lee, Director, Hankyoreh Economic Research Institute timlast@hani.co.kr Who is Terashima Jitsuro? Terashima Jitsuro is a representative critique of Japan. He started writing in 1970. He maintains close relationships with Democratic politicians such as Ichiro Ojawa, the former Secretary General, and Yukio Hatoyama, the former Prime Minister. He drew the blueprint for `East Asia Community Theory` that the former Prime Minister, Hatoyama, advocated. He graduated from Waseda University and has worked as the director of the original branch and the executive director of the Washington office at Mitsui Inc. Alternatives for Nuclear Free Future - Blooming in Gitakyushu, a Green City. After Fukushima accident, proponents and opponents of nuclear power have been in the most heated conflict ever. While the Prime Minister Naoto Ghan has declared his vision of realizing a `nuclear free society`, some progressive cities have been striving to find specific alternatives. Most importantly, a public awareness has been raised that the local monopoly system of 10 major electricity companies such as Tokyo Electricity must be terminated. In response, alternative renewable energies like solar have been the focus in development. Plans for reconstructing the energy supply systems are becoming more concrete, such as through `smart grid (future-generation energy network). Last June, Japan Ministry of Economy, Trade and Industry had declared that they would experiment with `smart grids` in 4 regions including Kitakyushu. Users can choose energy supply system that is the most suitable for the local traits using the smart grid system. In particular, Kitakyushu is experimenting with varying the open rate and electricity price based on time, seasons and electricity demand and supply predictions. 16.3 billion yen will have been invested in Creating Smart Communities in Kitakyushu Project by 2012 to increase the ratio of alternative energy supply up to 10% and to operate local energy-saving plants. The number of agenda for the project adds up to 38. The goal is to reduce the carbon emissions in Doda region by 50%. Kitakyushu is located in the most northern part of the country. Kitakyushu bears significance in having provided a model for harmonizing cities, humans, development and ecology after the 1970s. Reflecting on the past significance, expectations are held high for Kitakyushu on solving the energy problem in nuclear-free society. As one of the four major industrialized cities in Japan, it has reached its peak in materialistic growth in the 1980s. It has been acting as a weathercock that indicates the direction of Japanese evolution. The Kitakyushu transformation is epic. The coal ashes from the heavy industry complex along the coast and Yahata steel mill that was constructed in 1901 have turned the entire city grey. In the 1960s, it was impossible to fish in the nearby region, Tokai bay, due to too much water pollution. However, starting in the 1970s, the direction of wind shifted from growth to improved quality of life. This changed many things. The local government has been actively raised awareness on the environment among citizens and companies. Effective management of the system for Industry-University Collaboration has prevented further pollution. As a result, Kitakyushu, a city that once was considered as the most polluted one, transformed into a Green City. The transformation was recognized by UNEP and the city received the `Global 500 award` in the 1990s. Haechang Kim, Vice Chair at Hope Institution/ Ph.D in Economics hckim@makehope.org