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Japan and Britain should renounce inward-looking forces…

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Sir Hugh Cortazzi, Charles Grant and Dr Yoichi Funabashi.

Sir Hugh Cortazzi, Charles Grant and Dr Yoichi Funabashi.

Japan and Britain should renounce inward-looking forces, say senior analysts speaking at Daiwa Foundation event,  By James Brewer 

Speakers at a London forum have called for both the British and Japanese people to shake off insular and narrow-minded attitudes, and for Japanese businesses to reconnect with global markets.

Their warnings – issued on the day of the UK 2015 General Election and just ahead of Prime Minister David Cameron’s new drive to constrain freedom of movement in the European Union – came during a seminar entitled Diversity and Innovation in Japan and the UK. The meeting was one of a series organised by the Daiwa Anglo-Japanese Foundation.

Dr Yoichi Funabashi, chairman of the Rebuild Japan Initiative Foundation, and Charles Grant, director of the London-based Centre for European Reform, said that their respective countries needed to take a hard look at the inward-looking ethos that was permeating society.

Dr Funabashi said that the Japanese business community had become isolated from the rest of the world, in what he called the Galapagos syndrome: flora and fauna observed by Charles Darwin in the Galapagos Islands were highly developed but unable to live outside their environment. Economists initially used the Galapagos term to describe Japan’s mobile phone sector which was built on advanced technology but unable to thrive outside the domestic market. The phenomenon is now said to be symbolic of wider issues in Japan.

Dr Yoichi Funabashi.

Dr Yoichi Funabashi.

Businesses, said Dr Funabashi, had focused heavily on the domestic market, missing out on the big picture of the gobal market, or saying “it does not really matter.” Like the species on the Galapagos Islands, Japanese corporations failed to adapt their business models to the outside world, losing their competitive edge to China and the rest of Asia, said Dr Funabashi.

It was amazing that despite two ‘lost’ economic decades and being still confronted by considerable challenges, Japan had suffered no social unrest. Many of the problems of those decades, such as decreasing competitiveness and economic deflation, could have been better dealt with by greater external and critical examination.

The Rebuild Japan Initiative Foundation initiated its Crisis Management Project in May 2012 after its inaugural project, The Independent Investigation Commission on the Fukushima Nuclear Accident, highlighted vulnerabilities in dealing with crises. This analysed nine crisis scenarios that could easily escalate (for example natural disasters, terrorism, and military clashes) and the ability to handle them.

Dr Funabashi said that in Japanese policy-making,  a highly exclusive official community sought to prevent opposing views being heard.  The vested interests of insiders were prioritised, and differing opinions not taken into account. The lessons were that an insular attitude and an environment that resists external input led to stagnation and eventual decline.

“To overcome that, requires leadership, but unfortunately that leadership has been very much missing for the past 20 years, ” said Dr Funabashi. By definition, globalisation required global leadership to be sufficiently competitive and to collaborate with people in other parts of the world, insisted Dr Funabashi.

To Dr Funabashi, a beacon of inspirational leadership was Akio Morita (1921-1999), co-founder of Sony Corp. Since Mr Morita’s peak of success, a very innovative young generation of entrepreneurs had been missing from Japan, although “now I think that is changing.” Mr Morita’s company gained world authority by producing the first pocket-sized transistor radios, and the first transistor television sets.

Dr Funabashi said that the inward-looking mindset was gathering momentum, particularly among the young generation, which feared that risk-taking could spoil their career. One factor was poor English language ability, so people felt very defensive and insufficiently competitive. A new feature though was the expanding focus of young Japanese people on working and living in India, Indonesia, Vietnam and other Asian countries.

Dr Funabashi said that in Japan, the question of immigration had become taboo, but the country should be serious about inviting in foreign workers in a systematic way. Japan’s fertility rate is low, and the population is likely to reduce to 100m by the middle of the century, and could even decrease to 50m by the end of the century. At its peak in 2008, the figure was 128m, and before that the working population had been decreasing since 1995.  “There has been no instance of population surfacing as a campaign issue, ” lamented the Rebuild Japan foundation leader.

Charles Grant.

Charles Grant.

Mr Grant of the Centre for European Reform said that although the UK had been a model of diversity and innovation, it was becoming more insular and nationalistic, as reflected in the rise of the UK Independence Party and the Scottish National Party. The Centre is “a think-tank devoted to making the European Union work better and strengthening its role in the world” and it says that it is “pro-European but not uncritical.”

Mr Grant asked rhetorically why the British people were so Eurosceptic. The answer was history: the British people were obsessed with World War II “and this gives us a certain sense of smug superiority. Geographically we are on the edge of Europe. Our patterns of trade and investment have been the most global in Europe, which makes us think that Europe is an optional extra.”

Immigration became an issue with the recession of 2008/09/10 when it was exploited by politicians, and the media had highlighted the negative more than the positive sides – “people don’t know the facts. They do not know that immigrants contribute much more to the British economy than they take out. Many fewer of them are on benefits than the English people as a whole. There are a lot of myths about immigrants, and there is also a problem about the political leadership.”

Looking at the question more broadly, he declared: “A lot of the best companies in Silicon Valley have been founded by immigrants. In America, the venture capital industry is much bigger than in Europe, and Japan as well.  On this issue, we can learn from America.”

Ukip had been quite clever in not being a fascist party. Its leader, Nigel Farage, communicated with the common man in the way that David Cameron and former Labour leader Ed Miliband did not. Legalisation of gay marriage had been a big issue for Ukip [which opposed the law and now wants exemptions from conducting ceremonies for dissenting churches] and that was really attempting to pull Britain back to the 1950s.

The European Parliament had grabbed more and more power, said Mr Grant, and made the European Commission scared of it, and that had annoyed the EU member states enormously. Members of the European Parliament were obsessed with their own power, and out of touch with ordinary people. The Germans ran the EU to an extraordinary extent, and it was not healthy for one leader to dominate.

He urged Mr Cameron not to “overbid” in his negotiations with the community.  “If you ask for too much, you will get nowhere.” Mr Cameron had left the European People’s Party, the centre-right bloc in the parliament. “We are going through something like the Vietnam syndrome” – the disengagement by Washington in response to the anti-war movement, and now the aftermath of Tony Blair’s policies and the later intervention in Libya had made the British people quite isolationist, partly because their leaders were parochial.

Mr Grant went on: “You need some friends and allies.  We are not very good at building alliances.” He advised Mr Cameron’s incoming UK government: “Be clubbable.  Clubs have rules. Be nice to people, compromise, do not thump the table. Have ideas, take the initiative: we do not take initiatives at the moment and we are not involved in many areas.  We are very inward-looking at the moment.”

He urged the Prime Minister to “make the case for membership; be prepared to make enemies in his own party, take on Ukip nd hit them hard, and he will win respect.”

Sir Hugh Cortazzi, who chaired the meeting, was in favour of Japan being much more internationally-minded, and of Britain staying within Europe. Sir Hugh is a former British ambassador to Japan, from 1980-84. He asked: “Why are Britain and Japan becoming so inward-looking? People say that the number of Japanese studying overseas has declined and the Japanese no longer wish to live abroad or travel abroad. We have the same in relation to language.” In the UK general election campaign, it was depressing that practically nothing has been said about foreign policy or even about defence. “At least the Japanese have been very much concerned with foreign policy, perhaps too much at times.”

The speakers referred to the way the mass media deals with ‘abroad.’ Dr Funabashi, a former editor-in-chief of a leading newspaper, Asahi Shimbun,  said that the role of the Japanese media was crucial, and newspapers were still able to maintain their foreign correspondents, with London a key centre for European coverage, although over the next decade publications would be forced to reduce their overseas presence. He was worried that some media outlets had inflamed sentiment against China and Korea.

Mr Grant, a former senior journalist at The Economist, said that three-quarters of the UK national newspapers were run on the basis that the journalists were only allowed to write ‘knocking copy’ about the EU. Given that, it was amazing that people still wanted to stay in the EU. At the beginning of the 1980s, much of the media had lots of foreign correspondents. He regretted that the economics of the papers and the impact of the internet had led to the closure of foreign bureaux.

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