The White Peril 白禍

Not only are the two Japan Post subsidiaries related to the mails less profitable than the bank and the insurance company, but they also, according to the Yomiuri, owe back-taxes for Japanese fiscal year 2008, halfway through which the system was privatized:

Following investigations by the Tokyo Regional Taxation Bureau into the two companies, the bureau notified the firms of their unreported earnings for the business year ending March 2008, according to sources.

The companies are expected to be levied about 9.2 billion yen in back taxes, including penalty, corporate and local taxes, the sources said.

The total undeclared income reportedly is more than 20 billion yen.

...

It also said Japan Post Service and Japan Post Network logged 3.53 billion yen and 5.69 billion yen, respectively, to pay for taxes, on the assumption that the two companies would likely have to pay back taxes.

Although Japan Post Group said it had a "difference in understanding" with the bureau, the group said it would abide by the notification.

Well, you know, in Japan, these things are all about perspective.

The Japan Post family of companies released its first financial statements for a full fiscal year since privatization--well, more like partial governmental divestiture, but in today's climate, anything that even resembles a shift in the direction of less federal control of a major industry feels like a refreshing change--and the numbers are mixed:

In the consolidated financial statements for J-FY 2008 Q4 that Japan Post released on 22 May, current income (corresponding to sales revenues) was JPY 19.9617 trillion, current profits were JPY 830.5 billion, and net profits (for the quarter) were JPY 422.7 billion. Since privatization in October 2007, this round is the first release of financial statements for a full fiscal year, and while all four companies operating under the Japan Post umbrella ultimately secured balances in the black, the three remaining companies when Japan Post Insurance is excluded fell short of standing projections. CEO Yoshifumi Nishikawa indicated in an interview that he intends to stay on the pitcher's mound until the two financial subsidiaries [the insurance companies and the savings bank] are in a condition to list their stock, which is planned for as early as J-FY 2010.

It's the two finance-related arms that are making most of the profits; the holding company wants to jack up the contribution from the remaining two companies, one of which runs the post offices and the other of which runs the shipping and courier logistics of the old postal system. The Mainichi has an English version here, which scrambles the order of the original Japanese article but doesn't omit much of the information.

The lead editorial in the Nikkei this morning is headlined "How should Japan contribute to 'demand within Asia'?"

In getting the global economic crisis under control, Asia, which is called the growth center of the 21st Century, looms large. In a 21 May lecture, Prime Minister Taro Aso called for the expansion of "demand within Asia"; how can Japan fulfill a leading role in doing so? The challenges posed and responsibilities thrust upon it are weighty.

The prime minister took as his topic "Toward an Asia that surmounts the economic crisis and soars again," and he stressed that there is a need to shift the Asian economy from the export-driven structure it's had up to now into a structure driven by internal demand. Where that is concerned, the diverse nations and territories of Asia are not likely to dissent.

...

A supplementary-budget proposal for FY 2009 that undertakes additional economic measures on a scale that exceeds the previous maximum of JPY 15 trillion is not under deliberation in the House of Councillors. It's necessary to start taking financial action, but annual expenditures that it's not unrealistic to expect to be tied to money politics will not contribute to an increase in Japan's ability to grow. There's a need to move forward in parallel with structural reforms, such as deregulation, as well.

On the other hand, we will have to accept more from Asian nations and territories--not just imports but also human resources. Pain will accompany the opening of agricultural markets and things, but there's no way to get around it.

In connection with the stability and expansion of Asian financial markets, the prime minister stated, "we want to make the 'yen' something that different countries can use for financing in times of crisis." The idea is to provide emergency loans of Japanese yen to countries that have insufficient foreign currency, but it can also be considered an intention to "internationalize the yen."

In Asia, China has pushed for an economy built on the yuan with trade negotiations with neighboring nations and territories such as ASEAN. These are activities with a view toward a "yuan currency sphere."

China is the 3rd-largest economy in GDP after the United States and Japan. There's a high probability that it will pull ahead of Japan in one or two years. Still, the hurdles to internationalization for the yuan are higher than for the yen.

The prime minister has issued invitations to heads of state of five nations in the Mekong River Basin, such as Thailand and Vietnam, and also announced that he will hold the first "Japan-Mekong Summit" within the year. The nations of the Mekong Basin, which border China, are of major geographic importance.

It is important for Japan to strengthen its tie-ups with and trust from Asian nations and territories and to show some ability to develop a concept for the expansion of demand within Asia. That will also have an effect on the renaissance of the Japanese economy.

I quote the editorial at some length not because it says anything new but because it doesn't. Take away the figures specific to the budget and to China, and this sounds like just about every editorial on the Japanese economy in the last fifteen years: Asia is becoming more important, we need to liberalize our markets and make nice with the neighbors, and that means not being so closed off. The current crisis does change things, and it will be interesting, if that's the word, to follow possible damage to the dollar as the world currency.

But I'm not so sure the yen is a good candidate for a replacement, even in Asia. I've always found it interesting that we in the West are so bent on explaining Japan; in my experience, people from other places in Asia are far more willing to conclude that Japan is just plain weird and leave it at that. Perhaps part of the reason is that they already understand Buddhism and Confucianism and therefore don't get hung up on trying out novel ways of applying them to the Japanese--I don't know. In any case, countries in Asia know they need Japan and have a lot to gain from tapping into its industrial capacity, but they seem to recognize the Japanese political and economic systems as real headaches for outsiders beyond a certain point. And the Nikkei can wag its finger about the necessary but difficult process of making Japan more open to foreigners, but to this point, somehow talk of "internationalization" has rarely resulted in meaningful action. If nothing else, it should be interesting to see how Beijing reacts to Aso's Mekong Basin thing.

You've already been told to watch this, haven't you? I think Jon Stewart's often very funny, but on this particular topic, what Bill Whittle says in response to his statements--which are not only not funny but positively monstrous--cannot be repeated enough. Note that, unless I missed it, he was able to make his case without even mentioning Unit 731 or anything else about the kempeitai, either. He also doesn't mention, regarding the charge that America was just trying to show the Soviet Union who's boss, that it was Japan that had decided it was a good idea to start playing the Soviets off the United States in the first place. (I'm not saying his argument is therefore flawed, only that he hasn't exhausted the material he could have used to support it.)

I adore Japan. I happily took a degree in Japanese literature, and I loved every minute of the eleven years I lived in Tokyo; while I'm very happy to be home, there are many things I miss about it. I work in an all-Japanese office (except for me, obviously). I'm glad we're strategic and military partners now.

But now is not then. War with an implacable enemy requires tough choices, and I'm glad our grandfathers made saving their own people the top priority.

Added later: Whittle also has a blog post with quite a few good comments, including one by Connie du Toit that recommends an episode from the documentary The World at War, which you may remember from when it was broadcast on television.