Photo by F-L-E-X under the Creative Commons Attribution license
Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.
June is a very special month for me. It marks my anniversary of coming to Japan. And this year it’s a big and special one–I arrived in Japan exactly 25 years ago, in mid-June 1986. The plan was to stay for three months on a summer internship stint. But I never left. In fact, I still have my return ticket issued 25 years ago. Unfortunately, the airline went bankrupt somewhere along the way. So I guess I’m stuck.
Quite a coincidence, but this year my 25 years in Japan works out to be exactly half of my life. Of my professional life, it’s much more than that–basically all of it. For better or for worse, I’m stuck and have become a Japan expert. And yes, I still absolutely love being here.
But what have I really learned over the past 25 years? As an economist and investor, it could not have been more exciting. I lived through the “bubble economy,” suffered through the crash, experienced a full-blown banking crisis and saw the destructive forces of a liquidity trap unfold. Also, I was fortunate enough to have been invited to spend many hours on various government advisory panels and blue-ribbon committees. There I got a chance to debate with Japan’s best and brightest a whole variety of policy topics, ranking from tax reform and “big bang” financial system reform, to counter measures against deflation, to the merits of robots versus imported labor. Make no mistake, there is absolutely no lack of debate on public policy amongst the elite of Japan. In fact, there is too much of it, perhaps too intense and too detail-obsessed, in my personal opinion.
So I do not want to boast, but I have been around a bit in Japan over the past 25 years, and what I learned from it all I want to summarize in my two big rules to understanding Japan.
- Never-ever underestimate the ability and willingness of the Japanese people to suffer together.
- Never-ever underestimate the ability and willingness of the ruling elite to make sure rule number one is applied.
Case in Point – Daylight Savings Time
The triple disaster that struck March 11 provides many excellent case studies that prove the point. Look at the daylight-savings time “problem.” The disaster has left Tokyo with the threat that its electricity power supply may fall short of demand. At the same time, many Tokyo shop-owners and small businesses have been pushed to the brink of bankruptcy by the post-disaster plunge in consumer spending.
A government order to enforce daylight savings time would be a rational and obvious countermeasure against both problems. We know from the U.S. and Europe’s long experience with daylight savings time that as much as 5 percent of total daily electricity consumption can be saved for every hour that the clocks are brought forward. This tends to be true for most of the major metropolitan areas like L.A., London, Paris, Berlin or New York.
In Tokyo, the clocks could easily be brought forward by 2 hours, but surely one hour would be a good start. Of course, “peak demand” would not be fixed, the time when it is hottest the day would merely be shifted by one hour or two, and a policy to switch-off air conditioners and have a higher summer room temperature would still have to be implemented. However, Japanese people and workers would enjoy a much cooler start to a “normal” day and, most importantly, would be able to enjoy it being lighter outside for one or two hours. Anybody who has ever been to Europe can testify to the wonders this extra hour or two gives to one’s quality of life. The ability to enjoy outdoor restaurants (Tokyo beer gardens, anyone…), leisure activities and sports all impact of the overall quality of life and serve as a tremendous boost to small and medium-sized restaurants, businesses and service providers.
But to get all this positive energy and spending power, Japan’s ruling elite would have to change the rules. But why do that when instead you can just rely on the Japanese people to “suffer together”?
For an economist, some of the arguments against ordering a switch to daylight savings time are incredible. By now we’ve all heard about the Japanese cows who, supposedly, would be upset and could not produce milk and wagyu (beef) the way they are used to. Try telling that to a prized cheese-maker in France or a champion steak rancher in Texas, and the current wave of global goodwill for Japan could quickly evaporate.
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