Interview: November 17, 2002

We always ask our victims the same question: why Japan? How did you come to Japan and become an investment strategist? As we recall, you studied Literature at Balliol [eds. - a college in Oxford].
That’s right. Literature and Law. 

It seems like quite a jump from English Literature and Law to Japanese equities and detective fiction.
Well, I was going to be a lawyer in the mid-to-late-seventies. We have a tradition in Britain of people wanting to get out of Britain. That was how the Empire and all that stuff was actually created, you see. 

I was looking around for various opportunities and a program came up to send people to the Sudan; I was looking at that very seriously. I thought it sounded quite interesting. A friend of mine signed up to go there—he’s my contemporary. He got there, came down with a horrendous case of hepatitis and has been suffering from it ever since…for the past quarter century, in fact. I keep saying to myself, “That could have been me!”

So I decided to go with Japan, which was bubbling away in the background at that stage. There was a program to send young Brits to Japan for a year. That subsequently became known as the JETRO program. We are talking about 1977. These guys, these people—we are not just talking of males here—who took part in these exercise were a fairly unusual, eccentric bunch of people. Obviously oddballs, I think you have to say. A lot of them were martial arts goons, to put it bluntly, though they had a good education as well—which, of course, does not prevent you from being a martial arts goon. But all they wanted to do was to spend day after day at the dojo beating a wooden board with their fists, if not their foreheads. And so this was a good ticket for that. And there were a couple of sort of aesthete type guys who were quite fascinated by Kabuki and the idea of wandering around Kyoto after dark in a kimono, slapping their thighs with a fan—that sort of thing. 

So anyway, suddenly I’m stuck living in this four and half tatami mat room in a company dormitory in the badlands between Osaka and Sakai. I was working for Suntory Corporation, which, as you know, is one of the leading alcoholic drinks companies in Japan. [Click here for a full version of Peter Tasker’s life if in the Bubble years]

Let’s fast forward a bit: you are currently a consultant strategist at DrKW, you have your own investment firm, you write for Newsweek Japan, and you are also a novelist. Are you all those things? Are you first and foremost a novelist? 
Well, I quit being an investment strategist. To be frank, I did it for quite a long time. I’m sort of in semi-retirement, it’s fair to say. My main gig now is fund management, as people entrust their money with us. We try to generate a good return on that money—and I spend quite a bit of my time doing that. Writing is just a hobby, actually.

How do you find time to write?
You can do it, but it takes time. You have to be patient. I don’t ski. I don’t scuba dive. I don’t play tennis. I don’t chase women.

OK, let’s talk about your latest book, then, Dragon Dance [Kodansha International]. Dragon Dance seems to be populated by gaijin-types that one meets in Roppongi. For example, there’s Jake McCloskey, a loser English teacher trading on his Caucasian exoticness to get girls he could never have at home. How true to life are your characters?
Well it’s all based on knowledge and experience. I try not to write characters from life as (a) you encounter legal problems, and (b) just because he’s known to you, doesn’t necessarily mean he’s interesting to anyone else. So I try to mix it up a bit. I take some characteristics maybe from the kind of person you met many times, as you say. It’s not based on any particular person, but based on a syndrome. I tend to do that with a lot of characters. 

OK, then the obvious question is Nozawa, the villain of sorts in your book. Your enka singer/nationalist leader seems an awful lot like Governer Shintaro Ishihara of Tokyo?
He embodies a lot of the attitudes of genuine populist leaders, of which Ishihara is one example in the political world.

Well, there is also Pat Buchanan in the US.
Yeah, I was actually thinking of the characteristics of foreign populists as well, though you want to bring it into the Japanese context, so it can’t be exactly the same. The idea of the Bachelor tax—you actually read the papers and a lot of Japanese people are concerned about the shrinking of the Japanese population. But in fact, the Bachelor tax was introduced by Benito Mussolini. 

I was also thinking of these American country western singers who can be quite jingoistic, and wondering what would be the Japanese example of that. I was also thinking of a Japanese manga artist, Kobayashi Yoshinori; a very talented manga writer, but highly nationalistic. I was trying to fuse all these elements together. Also the Mishima-esque “the world has moved on” element. These days, if you can be popular, like a novelist, particularly a literary novelist like Mishima, it does not have the same voltage as it did a few years ago. 

What would be the equivalent now? It would probably be a rock singer or a TV talent, or something like that—more show biz, out there, in your face. That blended all those things. I put in a lot of attitudes and ideas I picked up from what people were either saying to me face to face or in the press.

You compare Ishihara to the French nationalist LePen in a past Newsweek Japan column. Is your book a warning about the state of Japanese politics?
Yeah, it is worrying for sure. Two things: first, there is a global trend, which might be called a trend toward “anti-globalization.” If the economics don’t work, in historical experience, you get this recrudescence of nationalism or what you might call “cultural particularism.” It’s not like the old nationalism. It’s more like “We are different from all the rest. We have our own way of doing things.” You find that everywhere, even in quite tame countries like Holland, and Denmark — these are the old Social Democrat countries. Nationalists are the anti-immigrant party and are taking part in government.

So that is the first factor: the global move against globalization. If economics ceases to work and there is no prospect for a better standard of living, nationalism or “cultural particularism” is going to rise everywhere, for sure. 

The second factor is that Japan is country with a lot of pride, and that pride has been focused on economic achievement. And now over the past over the past ten years, it’s a lot less viable. In fact, people have had almost no pride in economic achievement over the past ten years. Japanese people are generally proud. So it’s quite easy to channel that into some other form of expression. Which can be quite benign of course; cultural particularism doesn’t need to be a bad thing. But it can be. 

Finally, there is the third factor. In many countries you have a spectrum of political views, which are quite historically based, which go from the left to the right. You can honestly say these are right-wingers and those guys are left-wingers. You can therefore deduce what their views are, as they are historically rooted in those political traditions. If some one has that political orientation, they usually have a whole package of views, and indeed cultural and social attitudes that come together. 

I think Japan is more fluid, in a way, than that. You can’t really say, with exception of someone like Ishihara, a lot of people are left-wing or right-wing. They have a whole mélange of views that change, often quite quickly. Therefore, it’s a more potentially fluid and volatile situation. When Ishihara comes out with these quite inflammatory comments as he has done — like you have to get the army ready to deal with these foreigners in case of earthquake — that in itself is not unusual for a nationalist politician to say. I’m sure LePen has said worse. But what is unusual is that it does not excite much reaction. It’s more or less, “Oh yeah, Ishihara, there he goes again—what a guy.” That’s about it. There is very little political left-right dialectic. 

Is it because they tacitly agree with him?
I don’t think it’s on an intellectual level. There are these various sub-strata of beliefs and feelings that people hold. According to the situation, they can be expressed or not expressed. And that’s what Japanese politicians occasionally make — what they call slips of the lip, shitsugen. They’ll say something outrageous. There was a classic a few days ago with some official in charge of health arguing about these special administrative regions with lots of tax breaks whether it would be OK to put health care in there. The officials actually said that there were a lot of money-making Jews around who wanted to make money on them. I mean, the thing is, the guy who said this may not even be a right-winger politically. That’s the interesting thing.

What about China? Moving away from Japan for a second, a lot of characters in Dragon Dance play almost a Dr. Evil-like role in order to mastermind domination of Japan (and the world) from behind the scenes. Do you really see China as this much of a threat? Do you think that Japan has given up on leadership of Asia?
Well, I don’t think they rationalized it on quite those terms. The thing about the whole China situation is that it happened so quickly, actually. It’s really since the Asian Crisis in 1997. Everybody else in Asia got hurt badly, they either had to de-link with the US dollar, or with the Japanese yen. They basically kept the currency the same but had not generated any GDP growth whatsoever. Nobody could carry on growing except for China. Chinese Industrial output has basically doubled since then; it got absolutely huge. Then the political, military, diplomatic tensions followed from that. The most recent situation with North Korea—how’s this going to be dealt with? It’s basically China and the US getting together and saying, “Well, it’s going to be like this.” If China and the US come to a common agreement on this issue, well, that’s the way it’s going to be. Japan has probably not realized that. I think there is a lot of denial, which is surprising given the ten years of terrible times. Complacency, denial, all sorts of issues: to put it bluntly, Japan thinks it is the most important country in the world, and the US is still targeting it for all sorts of things. In fact, it’s become very marginal; nobody spends much time thinking about the country anymore. 

In the Afterword to your first novel, Silent Thunder (1992), you wrote that the novel was “a vision” of Japan — it was the way you experienced Japan. In Dragon Dance, Japan appears a lot darker, with far more conspiracies. What are you trying to say? To borrow a term from Michael Crichton, is this “non-fictional fiction”? Or is this just a fun potboiler?
Well, I hope it’s a fun potboiler. If it’s not, then I’ve really failed. There’s obviously a subtext, you don’t write for no reason whatsoever. And the scene is the triangle between the US, China, and Japan, and the potential seismic shifts in that triangle. I put that up as an issue that has not been explored in this genre. So there should be lots of shocks and turmoil in these relationships, one way or the other. It’s inherently volatile. 

There’s another subtext as well, different from the political element. It’s about culture and how people can and do interact. Can you actually get to know somebody? Anybody. Whether that person is from a different culture or not, what does it actually mean, how does it work. In short, what is culture? Is it a separate entity?

In the book, on the political level, you have conflict, nationalism, and cultural chauvinism. On the personal level, you’ve got a boy-meets-girl story. In terms of plot, it’s really rather a minor issue. Thematically, it’s quite important. “Boy meets girl” is a way cultures come together in a rather magnetic way. And then at the political level, you have the opposite: we define ourselves by being different from “you people.” So you have the tension. . .something important for me. That’s why I deliberately made the heroine of the book a person who you might call “overly globalized.” She has no home in the world; there’s nowhere in the world she “belongs.” She wants to belong somewhere, but she doesn’t quite realize this. 

Her man is a Japanese of a very non-international sort. He’s not an Americanized Japanese, or a Japanese Brit. He’s a very solid citizen whose been working with a Japanese company and then setup his own business. He’s open to external influences. He’s not cut off. He’s not sealed. And that’s obviously how Japan has progressed—or at least one of the ways it’s progressed in the last 150 years. It’s porous to anything, influence of all sorts, not resisting the rest of the world like China, letting it seep in and taking what’s good, mixing it, melding it. Japan is a kind of melting pot of phenomena, rather then a human being type melting pot. 

What about the economic dimension of the book? Dragon Dance is set in 2006 —Japan is, to put mildly, a hellhole. The economy, to use quotation marks, has “really and truly collapsed” this time. You have posh areas of Tokyo that have become soap lands, red light districts, middle class Japanese are homeless—tell us the truth, is this fiction or reality for 2006?
It’s not a piece of prognostication. You exaggerate some things. If George Orwell wrote 1984 as what he thought what 1984 might be like, it would be pretty damn boring. It’s trying to make a point. 

But, having said that, I was in Ginza recently, and it was pretty dire. It is full of hookers to be frank, and karaoke boxes that you pay three hundred yen for. 

When I think of what it was like in Osaka’s Kita-shinchi in the 1970s or Ginza when it would cost you a couple of hundred thousand yen to just stick your nose in the door of the club. Now it’s full of convenience stores. . .its really awful. Dire. But yeah, I’m obviously exaggerating current trends.

What did you assume did or did not happen for Japan to be in such a state?
I assumed that Koizumi’s half-assed reforms basically botched every thing and blew up the whole economy and the financial system. 

This brings us back from fiction to your “real” profession, economics. When it comes to figuring out how Japan can begin to grow again, views tend to fall between two camps: those who argue that it is a supply-side issue impacting demand (e.g, Richard Katz), and those who see it as strictly a demand-side issue (e.g., Gregory Clark, Miao Miyazawa, Paul Krugman, etc.) Where do you fall on this issue? Do you feel that they have to stop deflation and prop-up the stock market? Or do you think that they should move away from all that by dealing with the non-performing loan issue? Or the third option, unless you see other possibilities, is to go full steam ahead with structural reform across the board with liberalization and competition? What is the most immediate and pressing issue? In other words, how can Japan save itself?
I’ve become more attuned to the demand side as time passes. I’ve slightly changed my view. Six or seven years ago, I thought that structural issues were the be all and end all. But since then I’ve seen lots of structural change and it hasn’t helped at all. It’s actually gotten worse and worse! So that’s where I’ve derived my new stance from. 

As a Brit and European, I don’t think that Japan is an incredibly regulated economy. Obviously it’s highly regulated compared to the United States. But when you compare it to somewhere like Germany where you can’t do any shopping from 3PM on Friday to midday on Monday, Japan is not well regulated at all.

When I first came to Japan, as a Brit in the 1970s, I thought it was incredible. Shops were open all the time. We weren’t allowed into open shops after 5:30PM—trade unions wouldn’t allow it. Walking around at 10PM with all the shops open, I thought, “What are the unions doing? How do they allow this?” While there is no doubt that improvements can be made in terms of regulation of supply-side reform, I think collapse of the asset markets, which have been going for so long now, have really bankrupted the entire economy and need to be fixed. I’m a bit more pessimistic, I suppose, in a deeper sense than many Americans are. They tend to think that if you deregulate, you will necessarily get a better outcome. The idea that there’s all this high growth and high potential from little companies out there—once they get money, they could be the next Microsoft—I think that’s all wrong.

So where do you see GDP growth in the best case scenario? 2% at the most?
One and a half, at the most. But we are a far cry from that. One and a half is not bad. At least you are still growing. We haven’t had anything like that in the past ten or twelve years.

And then the next few years? Stagnation?
You risk implosion. 

So you do see implosion?
Well, policy making is so bad. It’s gotten worse and worse. There’s no cohesion. What you should do is try something. If it doesn’t work, try something else. Right? If it doesn’t work, try something else. That’s the best approach. Nobody really knows what to do. No body knows. Let’s try a few things. If they don’t work, reverse course. 

But instead, they are unable to decide. There is a paralysis. So we just keep re-cycling the same debates over and over again.

What do you think of [Japanese Financial Services and Economic Minister] Heizo Takenaka?
I think he has it all wrong. The road to hell is paved with good intentions. I think he has good intentions, but I think his logic is wrong-headed.

How is he wrong-headed? You shouldn’t let the banks fail or you shouldn’t deal with non-performing loan (NPL) issue at all?
The NPL issue is the result of a bad economy. Going back five or six years you could argue that it was a residue of the “Bubble.” Not anymore. Now it’s a result of the bad economy. Unless you have a way of not creating new bad loans, you won’t get anywhere. 

So you disagree with those who feel that NPLs should just be written off?
They probably should be written off, but that in itself will not help matters.

So what’s going to help?
If you got these banks which are essentially bust, and you go around telling people that they are not bust, it could create a major problem at some point. So that’s bad. You can’t do that. You can have horrendous financial events at any time. That’s wrong—you’ve got to make the banks sound. They tried to that in 1998—but that was only a temporary stopgap. The problem is that no one wants to borrow any money, not that there is any money. That’s another difference in perception. Most foreign observers and reformists believe that there is a credit crunch, that the banks are not providing capital to people who want it. The reality, as I see it, is completely the opposite. I’m talking not as an investor here but as a director of a listed Japanese company [Paris Miki]. No, they are not borrowing any money. If anything, they want to pay it back. 

You’ve seen the data on this?
There’s data. The BOJ does a survey of lending attitudes, the Tankan [a quarterly survey of business confidence]. Given the awareness of the deep recession, the lending institutions are not particularly harsh. 

How are you going to get people to want to borrow some money? The other way we know this to be true is that the problem of Japanese banks not lending is that there are sound banks who should be leaping into the gap and lending money—like Citi group or other foreign banks, but they are not. They are taking deposits, but not lending. . .because there is no demand. 

Could the FSA or the Finance Ministry be imposing rules and restrictions on Citi Bank and other foreign institutions preventing them from doing so?
No. 

Nothing whatsoever?
No. Shinsei Bank is a classic example. They’ve been asked to lend, but they won’t. Lending in this economy. . .anyone who demands money is someone who won’t likely pay it back!

To sum up, is there any way to “save Japan” or should we just make do?
No, no. It can do better than this. If we are getting Japan back to the type of rubbish that people were talking about in the late-1980s, that will never happen again. But if we are talking about getting back to. . . Look at France, they have never done any structural reform, ever. And the government interferes in everything. Even so, they grow. They churn out one and half, two percent, two and half percent GDP growth, all the time. And they’ve got a high standard of living, and they still grow. Why can’t they do that in Japan? 

That’s not paradise, by the way; the French have done everything wrong. They’ve got bust banks too, and they never admitted it. 

One more question related to this topic: the Japanology industry. What do you think is the future of Japan studies? Is its going to revert back to the karate loving eccentric of the 1970s?
I’m not an academic. I’m a practical man. I hesitate to talk about this. Japan studies have been useless from the point of view of the practical man looking for applied knowledge to this country for the past ten years or so. 

What about the stuff coming out of American think tanks and universities?
I’m talking specifically economics/business-related material. No. It’s worse than useless. But I’m not going to mention any particular American think tank or university. Shall we just say that about the amount of verbiage that’s expended on Japan, it’s of limited value.

I think that Japan studies, for people who actually like Japan, and admire the culture and tea houses has some aesthetic value. . .there’s some really great stuff that’s coming out, and I think much of it has not been properly studied in the past. 

You yourself were an open book when you first came to Japan. I’m reminded of the 1960 movie version of H.G. Well’s classic The Time Machine when the protagonist, George (Rod Taylor), returns to the nineteenth century for a brief moment, runs into the library and grabs three books off the bookshelf to bring back to the future as a sort of canon for the new world. No one knows what those three books were, but that was the fun of it all—guessing. Assuming you could wipe the slate clean and do the same for better understanding Japan, what would your three books be? 
Gosh, that’s a hard one. OK, I’ll give you one. Robert Whiting, The Chrysanthemum and the Bat. 

Interesting. Why? 
That’s a book that’s nominally about baseball, even though I know nothing of the sport. I don’t even know what the rules are—a bit like cricket, I suppose, but he’s done a superb job of talking about the personalities that inhabit this world. Also he creates a mini-parable of Japan and the rest of the world interacting with the conflicts and frictions of foreign baseball players coming to Japan. 

They have this player Randy Bass, who was one of their top players ever for the Hanshin Tigers. When it looked like he was about to beat the record held by a Japanese, who is ironically not in fact a Japanese—“Oh” is not a Japanese—they threw so many balls that he couldn’t have a chance to hit a home run. And then his child got very sick, and he rushed off mid-season to the States to take care of his family while his child was having surgery. The baseball team thought this was absolutely terrible, just as they were starting a series of games, their star player decides he needs to go for a month. The guy who was in charge of negotiating his contract killed himself. All misunderstandings, all going completely wrong, but he does justice to both sides.

That’s one book. Your others?
Give me some suggestions. . .

You are self taught on Japan. . .how about in business?
Well, Edwin Reischauer’s The Japanese has to be read. It’s a view that can be read fairly quickly.

How about literature and fiction on Japan?
There’ s not much that’s any good, to be frank.

Well, how about Murakami Haruki or Murakami Ryu? They’ve got somewhat of a dystopic view of Japan.
I don’t really like modern Japanese fiction, although some of their hard-boiled stuff and manga, for example, is pretty good.

I’ll give you a few that are not books. There are a series of manga, which are available in English, called Sanctuary [by Fumimura Sho]. The series is really about Japanese politics. It was done in 1992-93. It was very farsighted on generational conflict in Japan in the political world, and the world of gangsters. It’s some great stuff.

We’ll do the opposite extreme too, which may be more fun for you. What are the three books that you would definitely say, “Please, never read this. It’s just not informative.” 
I don’t think I would ever really say. . .there’s just so much garbage out there. I would not have anything with. . .let me talk in generalities here. . .the word “Confucius” in the title, the other stuff to avoid is anything that implies that the Japanese bureaucrats, really know what they are doing—which would be in serious conflict with the truth. 

You wrote in the Afterword to Silent Thunder that “one of the serious flaws in the work of the ‘revisionist’ school of criticism is that the Japan they are criticizing has already ceased to exist.” Are any revisionist leanings on the market today wishful thinking?
Some of it is. Some of it like Karl van Wolferen’s political analysis, though not so much his economics, is good. You have the thesis, antithesis, and the synthesis. You have guys that say, “This place is fantastic, this place is a paradise.” Then you have the antithesis, which says, “This is a dark conspiracy to take over the world,” and from that a more realistic synthesis is emerging, that people no longer buy the idea that Japan is so sui generis that it does not apply to the rest of the world. 

Almost everything in Japan can be seen within a spectrum of characteristics of all cultures. It’s not already surprising or all that shocking. Anyone who makes out that this is upside down, inside out and the wrong way round from the way it ought to be, is barking up the wrong tree. 

A lot of this is driven by economics. If it looks like your economy is doing incredibly well, people are going to say, “What’s their secret?” It’s like somebody being capable of pulling these beautiful women all the time. You would say, “Well, how does he do it?” It’s quite understandable, human behavior. He must have some kind of secret. We all ask, “What does this guy have that I don’t?” The most different element is going to be the most intriguing. 

If that’s no longer the case, and the economic performance is mediocre, which is like saying this guy doesn’t have much sex appeal, he’s just like us. Then you can look at him in a more balanced, realistic way. What’s so different? Is it this Confucianism—[laughing]…pretty sinister stuff. It’s quite interesting to look at why people do things on their own terms, independent from the outcome. The more realistic, the more hardheaded, the more de-mystified approach – that’s where we’re at now. 

Isn’t that awfully boring when it comes to selling books?
Of course, but that’s the way it should be! If you can create a whole load of hoopla for saying, “These guys are taking over the world by some new fangled method of doing business that no one else has heard of”—“(gulp!) They’ve got the secret!” Not so different from The Protocols of the Elders of Zion type stuff—obviously there’s something very unhealthy about that.