Mentality Problem
05/10/2019 08:00 am MYT
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"The archaic mindset of Japanese society has prevented the Japanese economy from progressing. Unlike China, who has already moved into an advanced phase of civilisation due to her tenacity in looking forward, reactionary Japan is still struggling to keep up with the rest of the world."



The Japanese are famous for being hardworking, loyal, and disciplined. These qualities helped raise Japan out of the ashes of World War II to see it becoming of the manufacturing powers of the world. In the 1980s, Japan was the model for many developing and developed countries. Yet, after the infamous twin asset bubbles went bust about 3 decades ago, the Japanese economy has stagnated despite having implemented unconventional monetary policies and incurring unprecedented amounts of public debt. This is because Japan has a mentality problem. The Japanese holds on fast to traditions, even when the traditions are no longer relevant or, worse still, inflict harm. The anachronistic Japanese are not fond of change. Therefore, reforms in the country are hard to come by.



Japan faces the serious problem of a shrinking and ageing population, from which a vicious cycle has developed. Yet, Japan has been reluctant to remove all obstacles to marriage and child bearing. Article 733 of Japan’s Civil Code forbids women from remarrying within six months after divorce unless a woman is pregnant before the divorce. Article 750 states that a husband and wife must have the same surname after marriage unless the marriage is between a Japanese and a foreigner. In fact, Japan is the only developed country in the world where it is mandatory for married couples to have the same surname. Why is Article 750  an obstacle for marriage and child bearing ?



The first reason is inconvenience. In Japan, either the wife or the husband will have to change her or his surname upon marriage. The change of name means either the wife or the husband has to update many official documents, including bank and credit cards accounts, passports, and certificates of assets. Apart from time cost, the process also involves substantial monetary cost and the inconvenience of mistaken identity, such as when making hotel and airline reservations. The more the assets held or the higher the social status of a person, the greater the inconvenience of a name change.



Secondly, the Japanese society places great importance on continuing the family name. If a woman is the only child or the eldest in a family with only daughters, she is likely to have difficulty getting married. This is because her parents would ask her to marry someone who agrees to adopt her family name otherwise the family line would end. Given that Japan is a patriarchal society, not many males or their families would agree to this condition.



Thirdly, Japan is a conservative society where traditional moral values are still highly respected. Children born to unmarried couples are rare. If a couple wants to start a family, they must first get married. Figure 1 shows that Japan has the second lowest share of births outside marriage among the OECD countries.





The law that required married couples to use the same surname dates back to 1896. Although it was revised in 1947 to allow couples to use either the husband or the wife’s surname, over 90% of the women adopted their husbands’ surname. Over the years, there have been sporadic attempts to challenge Article 750 and demand for couples to have the choice of maintaining their original surname or sharing the same surname. However, due to strong resistance from the powerful Liberal Democratic Party for fear of losing family unity, all such attempts have failed miserably.




Japan is a conservative society where the traditional moral value is still being highly respected. Children born to unmarried couples are rare. If a couple wants to start a family, they must first get married. Japan has the second lowest share of births outside marriage among the OECD countries. (Source: Shutterstock)



The archaic mindset of Japanese society has prevented the Japanese economy from progressing. Unlike China, who has already moved into an advanced phase of civilisation due to her tenacity in looking forward, reactionary Japan is still struggling to keep up with the rest of the world.



3 decades after the twin asset bubbles burst, Japan’s economy continues to struggle. The Bank of Japan's Tankan index for big manufacturers' sentiment fell to a six-year low of 5 in 3Q 2019 from 7 in the previous period (figure 2). Among the non-manufacturing large firms, sentiment weakened to 21, the lowest in 2-1/2 years, from 23 in 2Q 2019.





Housing starts in Japan plunged 7.1%, year-on-year, in Aug 2019, compared with the previous month's drop of 4.1% (figure 3).





Industrial production in Japan plummeted 4.7% in Aug 2019 over the same month in the previous year (figure 4).





Core machinery orders in Japan, which exclude those of ships and electrical equipment, plunged 6.6% in Jul 2019 from a month earlier (figure 5).





The performance of the Nikkei Average nowadays bears no resemblance to Japan’s dismal economic performance, thanks to the government’s artificial support of the Tokyo stock market. Nevertheless, i Capital is retaining its bearish short-term outlook of the Tokyo stock market at a range of 13,000 to 22,500 for the Nikkei Average. Without the massive artificial support from the government, the Nikkei Average would be trading closer to 13,000 than to 21,000. i Capital is also retaining its long-held long-term bearish outlook of the Tokyo stock market, which belongs to a nation of people who could not be bothered to confront its fundamental problems.



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Note from Publisher
i Capital will not be published for the issue dated 17 – 23 Oct, 2019. However, during this period, www.icapital.biz will be updated as usual. Our office’s operating hours will not be affected. Volume 31, number 9 of i Capital will hence be dated 24 – 30 Oct, 2019.

After World War II, Western style democracy has been touted as the political system that every country should adopt. Countries that do not practice democracy are labelled as human rights abusers and dictatorial states. Their leaders are described as tyrants and corruptors. However, the success of China and the many problems that have emerged in the Western democracies have cast serious doubts on the supposed superiority of democracy. For democracy to work, it is assumed that citizens are able to make informed and rationale choices all the time. Not only is this assumption not realistic; also, the fact that more people support an idea does not make the idea the right one or the best.

In addition, human beings are easily influenced by emotional rhetoric and people tend to have herding behaviour. Politicians making remarks that promote hatred and exclusivity are dangerous because these remarks can turn into extreme actions that will totally destroy a country. For those who want to read more about the weakness of democracy, “Against Democracy” by professor Jason Brennan and “The China Model: Political Meritocracy and the Limits of Democracy” by professor Daniel Bell are strongly recommended.
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