Bending Adversity

Japan and the Art of Survival

Book by David Pilling

Article and Review by GlobalMacroForex

The journey begins with an isolated archipelago under an imperial dictator who kept his society sealed from the outside world.  Despite that, Japan turned into a military power and an economic powerhouse that has commanded the respect of one of the largest market capitalizations in the modern world.  Conquering large parts of Southeast Asia before being eventually defeated in World War 2, Japan bounced back to become one of the top economic powerhouses in the world by the mid 1980s. 

Even after its economic bubble popped, Japan managed to avoid losing its spot as one of the top economies.  It’s a place with a socio-linguistic philosophy that allows Japanese to communicate without even speaking, and even after a tsunami followed by a nuclear meltdown, Japan stands strong.  

You’ll love this book!  David Pilling has a captivating writing style that keeps you glued, as you try to bend the softcover spine since you made it so far before the book had time to warp enough to stay open.  Let’s learn together…

Island Nation

Pilling introduces us to the word ‘shimaguni’ (島国) which means ‘island nation.’  However, the author makes it clear that the cultural idea behind this word is more than vocabulary or geography.  It’s a society-wide mindset that comes from Japan’s past as a cultural “Galapagos islands” of Asia.  When the nation was under imperial control the leaders banned Japanese people from leaving the archipelago. 

This had a number of effects that still exist today.  It fostered an environment of xenophobia, where even Koreans who speak fluent Japanese are not treated fairly.  Japanese society is one of the most unfriendly towards immigrants.  Not only is Japanese a very unique language but Japanese people have very low rates of speaking English, and so are not as integrated with the rest of the world, international business community, or the internet.

However, the shimaguni (島国) factor leads to an amazing sense of pride and community.  In fact, the Japanese support and understand each other so much that it’s said the Japanese are a “hundred million hearts beating as one.”  The Japanese are able to understand each other in ways Westerners find perplexing.  So much of the conversation is in the silence and the “unsaid.” 

With a crime rate next to zero, you could not get robbed if you tried.  The author mentions how you could leave your laptop to go to the bathroom in a busy Tokyo coffee shop and no one would steal it.  The Japanese have too much community, ethnic, and cultural pride with each other to steal or murder.

Join the European Club

Despite the fact that the language borrows from Chinese characters and that Japan was originally inhabited by Koreans who crossed the land bridge, the Japanese don’t fit in with the rest of Asia.   Pilling points out how even stockbrokers say “Asia ex-Japan” because Japan has always tried to join the European Club.  As this global map from Bank of America Merrill Lynch’s Chief Investment Strategist, Michael Hartnett, shows, if you were to size nations based on their stock market capitalizations, Japan has enormous gains from its peer group and is more in the European league.

Post-War Economic Boom

In 1967, Japan overtook Britain, and in the following year, it even surpassed West Germany to become the world’s largest capitalist economy after the US.  Its economic miracle of the post-war boom set Japan out from its neighbors and captivated the attention of the world with its efficient manufacturing setup.  Japan’s unique group-oriented cultural values enabled the government to coordinate people to cooperate with turning the post-war machinery into a manufacturing machine.

But it’s more than success in business that makes Japan different in the eyes of the West.  Japan stood out from its early military victories prior to World War 1 against Russia and China.  Japan looked to Europe and saw what they were doing.  Fearing being conquered itself, it instead turned into the predator.

Then after World War 2, as a result of the American occupation, Japan came under America’s wing.  By so closely interlinking the Japanese system with the largest western nation, this previously isolated archipelago turned into the cultural land-bridge and business gateway to the east.

Overcoming Adversity

One of the major themes of David Pilling’s book is to capture the struggle the Japanese have made in overcoming adversity in the past and now, while still acknowledging the enormous success they have made already.  The Japanese have near a 100% literacy rate in one of the hardest most complex writing systems on earth.  In addition, Japan’s manufacturing powerhouse has enabled it to have a much larger trade surplus than those of other nations, giving Japan a lot of foreign exchange reserves to tap upon in times of need.

But for all the good things Japan has going for it, there are some problems.  Since the bursting of the economic bubble, Japan has entered a lost decade.  Maybe even 2 lost decades.  With economic stagnation, it’s had to rely on exports and carry trading to tap into external growth.  This has created a gap between Japan’s youth and the “salaryman culture” of the generation before them.  Japanese youth feel the struggle of trying to rise up out of the past, but corporations still lick their wounds to clear their balance sheets of toxic debt in a deflationary environment.

This book has so many discussions and interviews that I could not possibly capture Pilling ‘s captivating writing style.  Having just survived a nuclear meltdown and tsunami, after 2 lost decades, Japan is the epitome of a group that stuck together to “bend adversity.”  The author uses the example of a small tree that managed to survive the tsunami and represents the struggle the Japanese have made to stand strong in the face of adversity.