Pico Iyer in Menlo Park, CA

Oxford-born travel writer and Kyoto then Nara, Japan transplant Pico Iyer was at Kepler's Books in Menlo Park, California tonight. 

Two quotes stood out: 1) There are "72 seasons in Japan and religion in Japan is the seasons, a religion without dogma." 2) "California is about possibility, Japan is about reality."

Iyer lit up when discussing his wife, clearly still in love after decades together. (In the book, he describes her voice as "made for singing" on the very first page.) Why did he settle down after so many years single? A seminal moment occurred when Hiroko explained he's impossible, so she just had to adapt to him. This non-Western philosophy of dating--accepting a person "as is" instead of forcing change--softened Iyer, causing him to adapt to his wife in turn. Out of this dance of reciprocity, and despite his limited Japanese and her average English, came relationship success, travels together, and a daughter. (I'm reminded of Pablo Neruda's lines in Love Sonnet 17: "I love you as one loves certain obscure things, secretly, between the shadow and the soul... I love you directly without problems or pride.")

Interestingly, before discussing his relationship with Hiroko, Iyer discussed playing ping pong at a community center, where everyone tries as hard as possible--but not to win. The idea is to challenge each other and oneself, to adapt to each other's styles, and to be joyful. It's difficult not to draw parallels between Iyer's description of dating and a ping pong match between two equals, playing as hard as they can, never wanting the game to end. If you are a fan of travel and/or Japan, you may enjoy one of Pico Iyer's books. I just bought The Lady and the Monk (1991) and hope to read it before his latest work. 

© Matthew Rafat (2019)

Bonus I: many people outside of Japan are confused by the country. Japan is difficult to understand because outside perspectives differ based on whether one is discussing corporate Japan--an unforgiving, monolithic entity--or familial Japan--its patient, considerate side. 

Familial Japan is like this quote from Yoshimoto Mahoko (aka Banana Yoshimoto): "Quality is always more important than quantity. This is true for everything. Even if you write only one line in your life, if it stays in someone’s mind forever, it is satisfactory."

Corporate Japan is the drunk group of men at the local bar, unnecessarily loud and rigidly opposed to substantive changes. (It's true the Toyota Production System (TPS) is renowned worldwide, but its changes typically modify existing processes, and employee promotions seem based on factors other than merit.) 

Bonus II: an interview with Pico Iyer is HERE, but no transcript posted. 

A Bet on India vs. Japan: Arigato

I made a bet today with an Indian-American investor at the LKY School of Public Policy in Singapore. He is bullish on India and South Korea, whereas I am bullish on Japan. Incredibly, one of his arguments favoring India was citing Pakistan's bankruptcy (on a balance of payments metric) after the U.S. significantly decreased financial aid--as if being next to an allegedly unstable government with nuclear know-how is somehow advantageous. (The idea of being a local hegemon without competition is overrated in sane circles. The goal should be to become much better than your neighbors and trading partners, but not vastly so, lest you cause unpredictable dislocations.) 

From Bloomberg (2018)

Below is the email I sent to memorialize the conversation: 

Ten years from now, January 16, 2029, let’s chat, preferably in person over chai. 

You believe India will be both happier and economically stronger than Japan. I disagree. Japan has no enemies today other than its own past and its own resistance to controlled immigration. 

Meanwhile, India has the Kashmir issue; fluid borders; a nearby Pakistan with nuclear weapons (deployable with covert assistance from Russia); multiple languages; unfortunate racial demarcations because of the Hindu caste system's historical impact; and an economy where agriculture takes the lion’s share of employment. 

Ten years is not enough time to overcome such hurdles. Had you said 2050, I’d consider you competent. As it stands, “head up one’s arse” seems more apt. 

A Muslim in Japan: Interview with Engineer Noman Md Ariful Haque

Born in Bangladesh, Noman studied computer science in the University of Dhaka. He knows C++ and now programs in Android Java. He has lived in Japan for 10 years and currently works in product management for a well-known Japanese company. I met him while we were both in transit in Kuala Lumpur, Malaysia. 

Q: What’s been your experience being a Bangladeshi Muslim engineer in Tokyo?

NH: Most people [immigrants like me] come to Japan for higher education or to find work. People with science backgrounds don’t have as many job opportunities in their own countries, and Japan offers opportunities.

Q: You are a pious Muslim and visibly so. Have you ever experienced discrimination in Japan?

NH: Many Japanese don’t like people outside of Japan, and it is still a very closed society. Nevertheless, there are over 300 mushollas [informal prayer places] in Japan. I speak Japanese, but it’s difficult because the Japanese [people] are not direct in their communications. They don’t like making direct demands, and their communication style is indirect. At the same time, no one bothers anyone else because of religious or other differences. I have heard in the USA, some people might bother you because of the way you look, but in Japan, no one bothers you. Personally, I’m an introvert, and Japan is a good fit for me.

I suppose the older Japanese generation is less friendly than the younger generation. When I've sat next to senior citizens on the train, they've assumed I don’t speak Japanese [and made derogatory comments], and sometimes they've gotten up and walked to a different seat.

Q: What do you like about Japan, as someone who’s lived there for 10 years?

NH: It’s very clean, and most of the people are very gentle. In general, the Japanese are very disciplined, very honest, and good at customer service. I also like Tokyo’s train system very much. And of course, no one bothers you if you’re different.

Q: What attracts you to Islam?

NH: I was born into a Muslim family, and my parents would talk to me about Islam. They would talk about the Creation. I was very impressed when I asked questions about the Creation from scholars at several mosques, and they provided me with the answers I was seeking. Let me try to explain. Think about the soul. The physical body passes away or atrophies. Islam helped me understand everything is there even after the physical body has departed, and even if we do not actively see it. That something is the soul, which enters into a different world.

So this world is very short, and there are really two worlds: one we live in now, and an afterlife. We humans can be remembered at most for three or four generations, so the purpose of life, if we are humble enough to admit it, is to act in a way that comes from true intentions. If we think of ourselves as having a purpose of worshipping Allah, it can give us a different perspective. For me, no other theory explained what happens when the physical departs. This world, the one we live in now, is a time for being tested. God has made different kinds of people, white, black, rich, poor. This is Allah’s way of giving us an exam and finding out which souls are more obedient to Him.

Book Review: Murakami's Norwegian Wood: Sex, Suicide, and Love in 1960s Japan

"Don't feel sorry for yourself. Only assholes do that." 

A cross between Joyce's Ulysses and Kerouac's On the Road, Haruki Marakumi takes the reader on a stumbling, windy journey from teenager to adult in Norwegian Wood (2000). Set in the 1960s, our protagonist Watanabe is out of place at his university but takes on habits--obsessive cleaning, wanton sexual flings, etc.--of his more polished, affluent students. He quickly tires of the pomp and false fronts--characterized by one suicide after another--and sets out to find himself. In the meantime, he is caught between two women: Naoko, a friend in a strange, bitter love triangle who cannot bring herself to consummate her relationship with Watanabe more than once; and Midori, a carefree, unpredictable woman also out of place among affluent classmates but from a working class background that grounds her and her sister. Midori is so captivating, so passionate, the book pales until she enters, like the Kate Winslet character in the 2004 film, Eternal Sunshine of the Spotless Mind. Later, another woman enters the mix and allows Watanabe to move forward, but until the very end, his desires vacillate between a love he cannot have and a love he cannot predict. 

Unfortunately, the translation from Japanese to English creates stilted dialogue. Only Midori's conversations seem unforced. Perhaps Watanabe intended Midori to be the only interesting character in the book, but it's hard to believe he deliberately made all other characters bleak in order to let Midori's light shine that much brighter. If you can tolerate the dreary first 65% of the book, the final 35% is well worth your time. 

NPR on Japan and Cars

Someone from NPR called me this morning. She asked my opinion about why the Japanese stock market had dipped when the auto bailout did not happen. Intuition would indicate that the Japanese car companies would be better off because of less competition.

I told her there were two major reasons for the Japanese stock market's dip.

1. The Japanese yen's strength. Yesterday, the American dollar dipped about 2.5% against almost all other major currencies (FXC, FXF, FXE). Basically, America's citizens lost about 2% of their international purchasing power overnight. This is major news, but you wouldn't know it from the lack of media attention. (Quite frankly, pictures of Weimar-Republic-branded wheelbarrows carrying the American dollar should be on the front page of every major newspaper.)

The Japanese yen is strong in part because Japan has a high savings rate and is the world's second largest economy; however, in a perverse result, Japan's high savings rate works against them because they export so many products to the United States, where our currency is becoming weaker. Basically, Japanese products are going to be too expensive for Americans, so Americans will either buy fewer Japanese cars, CDs, and Nintendos, or the Japanese will have to reduce their prices. Either action will cause lower profits for Japanese companies, which is one reason the Nikkei declined by over 5%.

2. A chain reaction disrupting the global auto market. Car companies are more connected than you might think. A GM bankruptcy impacts a wide array of other companies, like steel manufacturers, chipmakers, etc. Companies that had the Big Three as primary customers would have to lay off workers and stop hiring, which puts less money in the hands of potential car buyers worldwide.

Also, in addition to joint ventures, such as NUMMI, car companies buy materials from the same suppliers. If one supplier, let's say Delphi, loses a major customer like GM, their cash flow is reduced, and they may need to lay off workers, delaying projects, new orders, and even existing orders, further disrupting the auto market.

Globalization means more and more companies, especially large ones, are interconnected. This has advantages and disadvantages. One major disadvantage is that if one large company is reckless, it creates problems for numerous smaller companies. Delphi still exists, but has been in Ch 11 bankruptcy since October 2005. Delphi's bankruptcy filing was probably the writing on the wall for the Big Three.

3. I also said any value left in GM, Chrysler, and Ford was in their finance arms. In plain sight, American car companies became subprime banks. They were practically giving away their products in exchange for a stream of steady cash payments, with interest. All those 0% financing commercials? That's the equivalent of a "no money down," ARM home mortgage, but on a smaller scale. Car loan interest is where the Big Three receive a large chunk of their income, because margins on non-SUV autos have been consistently declining. Like the banks, GM and Ford took on too many subprime borrowers and overestimated expected income streams. The result is now all too predictable.

Capitulation, Japanese-Style

Apparently, Japan's market has now gone down to 1982 levels. Oh, it gets even worse--DJIA futures are down 352+ points last time I looked. [It got worse--see chart above.]

http://www.bloomberg.com/apps/news?pid=20601101&sid=aRTtcZqFRnII

Sigh. I wish I could go to sleep and wake up in May 2009, when I think the Dow will be back up to 10,000. In any case, I call capitulation. I called it too early before, but I call it now. October 24, 2008. Capitulation.

Update on October 24, 2008: no 1,000 point drop today, but it's still a bad day--DJIA still down 200+ points.

What the Japanese Stock Market Tells Us

Remember the Japanese and their banking problems? Japan is much different from the U.S., but this chart does not bode well for the U.S. stock market. Japan currently has the world's third largest GDP (on a purchasing power parity basis). Check out this article:

http://news.bbc.co.uk/1/hi/special_report/1997/asian_economic_woes/34500.stm

The Japanese economy was growing at a headlong rate, and companies were expanding and investing as never before.

The trouble was that much of this investment was being financed by an extraordinary boom in property and share prices. Property and shares were used as security for huge bank loans - and when the property markets and stock markets suddenly crashed at the beginning of the nineties the whole spiral of borrowing, asset price inflation and investment came to a full stop.

And despite many government initiatives to kick start demand, Japan's economy has remained fairly stagnant for the last six years. The stock market has been flat too, making it difficult for companies...to make profits.

Sound familiar? Defensive investors know that consumers will always need health care and consumer staples (e.g., Unilever products); however, investors looking for more than a 5 to 7% annual return are evaluating other options. After all, the key to getting high returns is determining the next high growth economic area and/or product.

U.S. companies realized earlier than most Americans that their growth would rely on non-U.S. countries. As a result, most major companies have shifted their emphasis overseas while lobbying for fewer trade restrictions. Now that the American consumer appears to be down and out, the question is whether the world economy can finally gain traction without the U.S. The most obvious way this decoupling will occur is if the American dollar is devalued, creating incentives for other countries to buy American products. If a Chinese yuan buys quite a bit of American goods, the Chinese consumer will feel flush and may start spending more, allowing the world economy to have more than one major source of income. A similar scenario can also play out with the Indian and Brazilian consumers. In fact, non-U.S. citizens must spend more in order to maintain economic stability.

Once you realize how small the American population is--only 5% of the world population--it's fairly easy to see that the most growth will come from abroad. As a result, trade restrictions will harm U.S. companies and their ability to expand and get their products into the hands of other countries' consumers. American companies that fail to achieve high growth rates will lay off workers in order to become more efficient. Thus, improving the job market means helping American companies gain more consumers, which means giving them more access to non-U.S. consumers. To achieve easy access to the international market, we have to negotiate with other countries and have fewer restrictions to encourage a free flow of ideas, money, and traffic. As much as we may hate to admit it, reducing trade restrictions and devaluing the American dollar may actually stabilize the world economy in the long run.

At the end of the day, what choice do we have, really? The American consumer is tapped out. Other countries' consumers must step up to the plate, and we need to encourage them to do so. In an era where the world economy requires more trust between countries, the latest failure of the Doha Development Round is an ominous portent. Thankfully, the failure of governments is not determinative.

The American corporations that succeed will be the ones who understand that the American consumer is but one small slice of a very large worldwide pie. In an era of cynicism, skepticism, and security fears, we must regain our confidence and look to maximize our international footprint through trade and superior products. The "Post-American world" can no longer be an amorphous, distant concept if we are to succeed--Americans must begin to see the world as one large marketplace in which they have the advantage because of their greater access to technology (Google, Yahoo, eBay, Intel, etc. all made in the U.S.A.); the world's common language (English); an above average health care system (better health means more productivity); and entrepreneurship (it can take less than a week to set up a small business in California--for fun, compare that time with India and its small business rules/red tape).

I never thought I would advocate a weaker domestic currency, but sad times create sad consequences. The time has come to work harder and re-gain our stature in the world. When the non-U.S. buyers come, America must welcome them with open arms and the American attitude formerly known as optimistic. America is down, but as long as we have immigrants arriving and hoping for a better future, you cannot count America out. For better or worse, we are still the world's major repository for dreams. That's why I don't see a Japan-style economic morass happening in America--Japan is getting older and has never liked immigration. As long as we stay away from protectionism and encourage responsible immigration, we will do just fine.