Dogs and Demons

A countryside of legendary beauty is ravaged, and what was once reputed to be the richest nation in the world runs out of money To understand how such things can happen, we must come to grips with an issue that disconcerts writers on Japan so badly that when faced with it they ordinarily set down their pens and look away. It is the quality of sheer fantasy.

We have entered a twilight zone where dams and roads carve their way through the landscape without reason and money comes from nowhere and goes nowhere. We cannot dismiss the air of unreality in Japan's public life lightly, as it is the very air that its officials breathe. The facts about much of Japan's social political, and financial life are hidden so well that the truth is nearly impossible to know. This is not just a matter of regret for academic researchers, for a lack of reliable data is the single most significant difference between Japan's democracy and the democracies of the West. Why have so many students of Japan and commentators by and large ignored the issue of how the nation handles information? I believe it is because our cultural biases run much more deeply than we think. While experts on Japan know all about the commonly encountered difference between tatemae (an official stated position) and honne (real intent), they tend to view the discrepancy as a negotiating ploy. It hasn't occurred to them that the fundamental Japanese attitude toward information might differ from what they take for granted in the West. But it does differ, and radically so.

Traditionally, in Japan «truth» has never been sacrosanct, nor do «facts» need to be real, and here we run up against one of the great cultural divides between East and West. We can see the two approaches clashing in the Daiwa Bank scandal of 1995, when the Federal Reserve ordered Daiwa's American branches closed after finding that Daiwa, in collaboration with the Ministry of Finance, had hidden more than a billion dollars of losses from U.S. investigators. MOF reacted angrily with the comment that the Fed had failed to appreciate «cultural differences» between American and Japanese banking. The cultural difference goes back a long way, to a belief that ideal forms are more «true» than actual objects or events that don't fit the ideal. When an Edo-period artist entitled his screen painting A True View of Mount Fuji, he did not mean that his painting closely resembled the real Mount Fuji. Rather, it was a «true view» because it captured the perfect shape that people thought Mount Fuji ought to have. This principle of valuing the ideal above the real is far-reaching, and one may see it at work in the play between tatemae and honne that dominates daily life in Japan. People will strive to uphold the tatemae in the face of blatant facts to the contrary, believing it is important to keep the honne hidden in order to maintain public harmony.

Tatemae requires an element of reserve, for it presumes that not everything need be spelled out. It relies on communication through nonverbal means, and in interpersonal relations there is much to be said for tatemae, for from it springs the flower of harmony. Tatemae helps to make Japanese society peaceful and cohesive, with a relative lack of the aggressive violence, family breakups, and lawsuits that plague the West. The statistics professor Hayashi Chimio puts the case for tatemae very elegantly:

When people say «There's no communication between parents and children,» this is an American way of thinking. In Japan we didn't need spoken communication between parents and children. A glance at the face, a glance at the back, and we understood enough. That was our way of thinking, and it was because we had true communication of the heart. It's when we took as our model a culture relying on words that things went wrong. Although we live in a society replete with problems that words cannot ever solve, we think we can solve them with words, and this is where things go wrong.

Discreet reliance on tatemae is one of Japan's truly excellent features, infusing daily life with a grace and a calm that are rare in the fractious West. The problem arises when tatemae goes beyond its natural limits. As we saw earlier, when Japan began to modernize after 1868, the rallying cry was Wakon Yosai (Japanese spirit, Western technology). Tatemae, the idea that an unruffled surface takes precedence over stating the facts, is an old bit of Wakon, of Japanese spirit, and, like the Wakon of «total control,» it runs into trouble when it does not adapt to modern systems. Tatemae is a charming attitude when it means that everyone should look the other way at a guest's faux pas in the tearoom; it has dangerous and unpredictable results when applied to corporate balance sheets, drug testing, and nuclear-power safety reports.

As we saw earlier, Japanese finance companies lend money to bankrupt borrowers or subsidiaries so that they can continue to pay interest and make bad loans fly off the books. This is to-bashi, «flying» – one popular technique for which is to have a bank sell a troubled property to a subsidiary, to which it then loans the money to pay for the property: real-estate problem solved! The docile Japanese press meekly reports tobashi transactions as if they were real ones; one must learn this in order to understand how to read a Japanese newspaper. A headline announces «Nippon Trust sells choice Kyoto site» or «Hokkaido Bank sells assets to write off loans,» and one might imagine that the banks were disposing of assets. However, in both cases the banks were selling to their own subsidiaries in tobashi transactions. The headlines should have read «Nippon Trust fails to sell choice Kyoto site» and «Hokkaido Bank finds no bona fide buyer to help it write off loans.»

The National Land Agency accepts tobashi sales as real ones, which further distorts land-value statistics. Hence while the agency estimates that land prices have dropped in half from their peak, the results at actual auctions show that the fall is more than 80 percent. This is a classic example of an official statistic based on skewed data, but, unfortunately, we have even less to go by in estimating the true situation in most cases.

Tobashi is only one of several techniques of funshoku kessan, «cosmetic accounting.» Another technique is, as we have seen, «book accounting,» whereby banks value their holdings at purchase value, although they may be worth much less today than what was paid for them. Or unsightly liabilities are simply brushed away, such as pension-fund deficits, which Japanese companies have not had to report, even though they face huge exposure to their underfunded pensions. When all else fails, outright falsification comes into play – with encouragement from the ministries of Finance and of International Trade and Industry. In the Jusen scandal of 1996, when Japan's seven housing-loan corporations (known as Jusen) went bankrupt, leaving bad debts of ¥8 trillion, former MOF men (amakudari, or «descended from heaven,» because after retirement they descend to the management of companies under MOF's control) ran six of the seven Jusen, which together had extended loans of which an astonishing 90 to 98.5 percent were nonperforming. In the years before the final collapse and exposure, the amakudari executives guided the Jusen banks in a game of elaborate trickery. At Juso, for example, the bank showed investigators and lenders three different sets of figures for the total of bad loans: ¥1,254 billion, ¥1,004 billion, or ¥649 billion. MOF was aware of the scale of the Jusen disaster as early as 1992, but it must have chosen to work only with the С List, because a report at that time concluded that the Jusen were «not approaching a state of danger.» This decision to put off the reckoning led to the public's having to pay hundreds of billions of yen more in 1996 to clean up the mess.

Tobashi and «cosmetic accounting» are endemic; one could say they are defining features of Japanese industry. As embarrassing as revelations of serious abuses are when they come, MOF cannot do without either, because Japanese banks are addicted to them. Only with such techniques can the banks maintain the capital-to-assets adequacy ratio of 8 percent mandated by the Bank of International Settlements (BIS), failing which they cannot lend abroad. Nakamori Takakazu of Teikoku Databank estimates that if Japanese banks were to disclose the true state of their finances, their BIS ratios would fall to 2 to 3 percent at best.

As the Japanese economy sank lower and lower during the 1990s, each year the government announced rosy predictions for growth. Likewise, MOF has consistently downplayed the financial crisis, with Vice Minister Sakakibara Eisuke announcing in February 1999 that the crisis would be over «in a week or two.» The wolf is at the door, yet the government keeps crying «Sheep!» It is indeed precisely because MOF has been the Little Boy Who Cried Sheep that experts estimate bad loans to be two or three times higher than the government admits, and the true national debt to be as much as triple the official numbers. Ishizawa Takashi, the chief researcher at Long Term Credit Bank's research institute, says, «Even if we told the truth people would think there is more being hidden. So we put out lower numbers on the assumption people believe the true figure is higher.»

Nevertheless, there is much to be said for tobashi. Tobashi is a form of make-believe in which Japan's banks pretend to have hundreds of billions of dollars that they don't have. But, after all, money is a sort of fiction. If the world banking community agrees to believe that Japan has these billions, then it essentially does.

For the time being, tobashi seems to be working just fine. In any case, Japan's ministries have at their disposal a further «management of information» technique, perhaps the strongest: denial. Shiranu, zonsenu, means «I don't know, I have no knowledge,» and it is the standard response to most inquiries. We saw an example of this when Asahi TV questioned a section chief at the Ministry of Health and Welfare about dioxin pollution, and he responded, «I don't know, I have no idea.» A similar process was at work in the same ministry when for seven years its officials denied that they had any records of AIDS-contaminated blood products which had infected more than 1,400 people with HIV in the 1980s. In March 1996, however, when Health Minister Kan Naoto demanded that the «lost» records be found, they turned up within three days.

The writer Inose Naoki describes an encounter he had with officials of the Water Resources Public Corporation (WRPC), the special government corporation that builds and maintains dams. Inose inquired about a company called Friends of the Rivers, to which the WRPC had been awarding 90 percent of its contracts and most of whose stock was owned by WRPC ex-directors, and this is what the WRPC official told him: «Contracts are assigned by local units across the nation, so we have no way of knowing how many go to Friends of the Rivers. Therefore I cannot answer you.» «But isn't it true that many of your employees have transferred to Friends of the Rivers?» Inose asked. «Job transfers are a matter for each individual employee» was the reply. «If someone transfers in order to make use of his superb ability and expertise acquired while at the Corporation, it is his individual decision. The Corporation can say nothing about these individuals' choices.»

The Corporation «cannot answer you,» «can say nothing.» There is no recourse against this. In 1996, newspapers reported that auditors at government agencies turned down 90 percent of the public requests for audits during the decade from 1985 to 1994. And if a citizens' group presses too hard, documents simply vanish: this is what happened when citizens of Nagano demanded to see the records of the money (between $18 and $60 million) the city spent courting the International Olympic Committee in 1992. City officials put ninety volumes of records in ten big boxes, carried them outside town, and torched them. Yamaguchi Sumikazu, a senior official with the bidding committee, said the books had taken up too much space and contained information «not for the public,» such «who had wined and dined with IOC officials and where.» Neither the tax office nor the city administration asked any questions. Case closed.

One reason for the vast waste and hidden debts in the «special government corporations,» tokushu hojin, is precisely that they don't need to open their books to the public. The WRPc does not publish its balance sheets; neither does the New Tokyo International Airport, nor dozens of other huge special corporations, all of which function in near-total secrecy. For those who believe that reform is on its way to Japan, it was sobering to learn of a law proposed by the Ministry of Justice in 1996 that would tighten, not loosen, the bureaucrats' hold on information. According to the new law, agencies need not divulge information about committee meetings and may even refuse to disclose whether requested information exists.

This brings us to the critical factor in MOF s delay in closing down the Jusen: the Jusen hid their debts so well that they fooled everybody. A high-ranking MOF official admits «it was impossible at the time to get a handle on the scale of the situation.» This was true not only of the Jusen companies but of other banks that went belly-up in the mid-1990s, such as Hyogo Bank and Hanwa Bank, which turned out to have debts ten or twenty times larger than their stated liabilities. Today, the Ministry of Finance cannot find its way out of the labyrinth it created when it encouraged banks and securities firms to cook their books, bribe regulators, and consort with gangsters. It is lost in its own shell game.

Kawai Hayao, a leading academic and government adviser, says, «In Japan, as long as you are convinced you are lying for the good of the group, it's not a lie.» It's all part of what Frank Gibney, Jr., a former Japan bureau chief at Time, calls «the culture of deceit.» A few examples will show how deeply rooted this culture is, and how the policy of hiding unattractive facts prevents citizens from learning the true depth of their nation's problems or doing much about them.

Ladies and gentlemen, step right this way to a junior high school in the town of Machida, outside Tokyo. In 1995, the school board commissioned a study of a large crack that had opened up on the school grounds, since local residents were concerned that the landfill on which the school was built might be sinking. It was, but no need to panic: the board instructed the consulting firm to alter its report. Where the original had read, «It is undeniable that subsidence could re-occur,» the revised version stated, «The filled-in areas can be thought to have stabilized.» To prove this was so, the consultant set up meters at a school far away, in Yamanashi Prefecture, calibrated them to show no tilt, and attached photos of those meters to the report. So, although the Machida crack was 120 meters long, 10 to 20 centimeters wide, and up to 3 meters deep-and growing-the land was, according to the report, magically ceasing to sink. This fiction troubled very few people, for the school board granted another large contract to the same consultant immediately after it was revealed that the report had been doctored. A company representative commented, «We just want to avoid misunderstandings and make the phrasing of the text easy to understand.»

Government officials work hard to make sure that reports are easy to understand and eyesores pleasant to look at. Here is another example. At Suishohama Beach in Fukui, on the Sea of Japan, a large nuclear power plant regrettably detracts somewhat from the beach's picturesque charm. So while preparing its tourist poster, officials simply air-brushed the plant out of the picture. «[We did it] believing the beauty of the natural sea can be stressed when artificial things are removed,» they said.

Police departments provide special training materials to educate officers in how to shield the public from situations that they would be better off not knowing about. In November 1999, on the heels of a scandal in which Kanagawa police destroyed evidence in order to protect an officer who was taking drugs, newspapers found that the Kanagawa Police Department had an official thirteen-page manual expressly for covering up scandals, entitled «Guidelines for Measures to Cope with Disgraceful and Other Events.»

All this should come as no surprise – it's the natural consequence of Japan's political structure, which puts officialdom more or less above the law. What is surprising is that the media, in a democratic country with legally mandated freedom of the press, collude in these deceptions. It comes down to the fact that the press is essentially a cartel. Reporters belong to press clubs that specialize in police or finance or politics, and so forth (which do not admit foreigners), and these clubs dutifully publish handouts from the police or the politicians in exchange for access to precious information. If a reporter shows any true independence, the agency or politician can exclude him from further press conferences.

Shinoda Hiroyuki, the chief editor of Tsukuru magazine, says, «Investigative reporting isn't rewarded.» In fact, it is often punished. Kawabe Katsurou is the reporter who in 1991 led TBS Television to investigate the trucking company Sagawa Kyu-bin's connections to gangsters and politicians. By 1993, prosecutors had filed charges against Kanemaru Shin, one of the nation's most powerful politicians, and soon thereafter the government fell. But far from rewarding Kawabe, TBS transferred him to the accounts department in 1996, and eventually he quit. Today, he survives precariously as a freelance journalist. «Many journalists have become like salarymen,» Kawabe says. «They want to avoid the difficult cases that will cause trouble.»

In the old days, the populace waited for their feudal masters to issue the O-sumitsuki, the Honorable Touch of the Brush, a written proclamation against which there was no recourse. The function of the press today is to publicize modern O-sumitsuki issued by major companies and bureaucrats. It means that you must read the newspapers with great care, as it's easy to mistake official propaganda for the real thing. Okadome Yasunori, the editor of the controversial but widely read monthly Uwasa no Shinso (Truth of Rumors), says, «With such a close relationship between the power and the media, journalists can be easily manipulated and controlled. Just study the front-page articles of major Japanese dailies. They are almost identical. Why? Because they just print what they are given.»

For example, Nihon Keizai Shimbun (Nikkei) is Japan's leading economic journal. Nikkei gives out technology awards every year, and in 1995 its winners included, along with Windows 95, NTT's PHS handphone and Matsushita's HDTV. Though both were notoriously unsuccessful-PHS is an enormous money-loser, and one could fairly say that HDTV (high-definition television with an analog rather than digital base) ranks as one of the biggest technological flops of the twentieth century-both are favorites of the Ministry of International Trade and Industry, so Nikkei dutifully celebrated them.

The most entertaining rooms in the press wing of the Hall of Mirrors are the television studios where producers cook up documentaries. So common is the staging of fake news reports that it has its own name, yarase, meaning literally «made to do it.» Japanese television is filled with faked events. In a mild version of yarase, villagers dress up in clothes they never wear to enact festivals that died out years ago. For truly sensational effect, television producers will go much further, as in reports of young girls tearfully admitting to being prostitutes – in what turn out to be paid acting stints. In November 1999, one of the longest-running and most elaborate yarase came to light when it was revealed that Fuji Television, over a period of six months had paid prostitutes and call girls ¥30,000 per appearance to act as wives on its supposedly true-life series, Loving Couples, Divorcing Couples. Nor is yarase limited to television. In 1989, the president of Asahi Shimbun newspaper resigned after it came to light that a photographer had defaced coral in Okinawa in order to create evidence for a news story on how divers were damaging the reef.

The most elaborate yarase often involve foreign reporting. Here's how Far Eastern Economic Review describes a report on Tibet by NHK, Japan's national broadcasting company: «[In 1992] an NHK documentary on harsh living conditions in the Tibetan Himalayas featured a sand avalanche, footage of a monk praying for an end to a three-month dry spell, and an explanation that his horse had died of thirst. NHK later admitted that a crew member had deliberately caused the avalanche; it had rained twice during the filming; and the monk, whom it paid, did not own the dead horse.»

The common thread in the yarase for foreign documentaries is to show how poor, miserable, seedy, or violent life is elsewhere, with the implied message being that life in Japan is really very nice. For reports on the United States, scenes of low life and violence are obligatory, and a practiced producer can manage to set these up almost anywhere. In 1994, NHK did a special on the city of Missoula, Montana, a state famed for its natural beauty and national parks. Most of the program, however, took place in a seedy bar, which offered just the atmosphere NHK felt was right for America. Here's how the program was filmed, according to a Missoula citizen:

The camera is focused on the door, waiting for a man to come in. He looks nervous and is squeezing out some tears. The camera follows him as he comes up to the bar, and sits down, then moves in for a close-up on his tears. He looks up and confesses that he has just been mugged... Making it even more suspicious was the man's claim to have been beaten, struck several times in his face, which had not a mark on it. His face was as clean as a baby's behind. Then we learn he had had his money and clothes and Amtrak [train] ticket stolen, even though he is carrying a beautiful new bag that wasn't taken. And Amtrak doesn't come through Missoula. It doesn't come anywhere near Missoula.

Yarase documentaries and government misinformation do succeed to some extent in quelling people's misgivings about their country but unfortunately some pretty scary skeletons are hidden in Japan's bureaucratic closets. At a sinister agency called Donen, the hiding of information becomes downright terrifying. Donen, a Japanese acronym for the Power Reactor and Nuclear Fuel Development Corporation, manages Japan's nuclear-power program.

At Monju, the fast-breeder nuclear reactor near Tsuruga, which suffered a major leak of liquid sodium from its cooling system in 1995, Donen officials first stated that the leakage was «minimal.» It later turned out to be more than three tons, the largest accident of its type in the world. But they could easily remedy the trouble by hiding the evidence: Donen staff edited film taken at the scene, releasing only an innocuous five minutes' worth and cutting out fifteen minutes that showed serious damage, including the thermometer on the leaking pipes and icicle-like extrusions of sodium.

Donen's attitude to the public at the time of the Monju scandal says much about officials who take for granted that they can always hide behind a wall of denial. The day after the accident, the chairman of the Tsuruga city council went to visit the Monju plant – and Donen officials simply shut the door in his face. Kishimoto Konosuke, the chairman of Tsuruga's Atomic and Thermal Energy Committee, said, «Donen was more concerned with concealing the accident than with explaining to us what was happening. That shows what they think of us.»

Still, there was widespread public anger and concern over Monju (which remained shut down for the rest of the decade), yet the same scenario repeated itself in March 1997, this time when drums filled with nuclear waste caught fire and exploded at a plant at Tokai City north of Tokyo, releasing high levels of radioactivity into the environment. In May 1994, newspapers had revealed that seventy kilograms of plutonium dust and waste had gathered in the pipes and conveyors of the Tokai plant; Donen had known of the missing plutonium (enough to build as many as twenty nuclear bombs) but did nothing about it until the International Atomic Energy Agency (IAEA) demanded an accounting. To this day, Donen claims to have no idea where the plutonium is clustered or how to remove it. «We know that the plutonium is there,» an official said. «It's just held up in the system.»

Given that several nuclear bombs' worth of plutonium dust were lost somewhere inside the Tokai plant, there was great public concern over the Tokai fire. Yet Donen's initial report was a shambles, in some places saying, «Radioactive material was released,» and in others, «No radioactive material was released»; claiming that workers had reconfirmed in the morning that the fire was under control, though they had not (managers had pressured the workers to change their stories); misstating the amount of leaked radioactive material, which turned out to be larger than reported by a factor of twenty. Incredibly, on the day of the explosion, sixty-four people, including science and engineering students and foreign trainees, toured the complex, even visiting one building only a hundred meters from the site of the fire – and nobody ever informed them of the accident.

Several weeks later, Donen revealed that it waited thirty hours before reporting a leak of radioactive tritium at an advanced thermal reactor, Fugen. This was an improvement, though, because in eleven cases of tritium leaks during the previous two and a half years, Donen had made no reports at all. Reform, however, was on the way: Donen was «disbanded» and renamed Genden in May 1998, supposedly to appease an angry public. Today, under this new name, the nuclear agency continues to operate with the same staff, offices, and philosophy as before.

Nor is it only government agencies such as Donen-Genden that are falling behind in nuclear safety. The same problems beset private industry. The troubles at the Tokai plant came to a head at 10:35 a.m. on September 30, 1999, when employees at a fuel-processing plant managed by JCO, a private contractor, dumped so much uranium into a settling basin that it reached critical mass and exploded into uncontrolled nuclear fission. It was Japan's worst nuclear accident ever – the world's worst since Chernobyl – resulting in the sequestration of tens of thousands of people living in the area near the plant. The explosion was a tragedy for forty-nine workers who were exposed to radiation (three of them critically) but at the same time a comedy of errors, misinformation, and mistakes. It turned out that Tokai's nuclear plant had not repaired its safety equipment for more than seventeen years. The workers used a secret manual prepared by JCO's managers that bypassed safety regulations in several critical areas: essentially, material that workers should have disposed of via dissolution cylinders and pumps was carried out manually with a bucket.

Measures to deal with the accident could be described by no other word than primitive. Firefighters rushed to the scene after the explosion was reported, but since they had not been told that a nuclear accident had occurred they did not bring along protective suits, although their fire station had them – and they were all contaminated with radiation. In the early hours, no local hospital could be found to handle the victims even though Tokai has fifteen nuclear facilities. There was no neutron measurer in the entire city, so prefectural officials had to call in an outside agency to provide one; measurements were finally made at 5 p.m., nearly seven hours after the disaster. Those measurements showed levels of 4.5 millisieverts of neutrons per hour, when the limit for safe exposure is 1 millisievert per year, and from this officials realized for the first time that a fission reaction was still going on! Many other measurements, such as for isotope iodine 131, weren't made until as many as five days later.

The accident at Tokai came as a shock to other nuclear-energy-producing nations. The director of the China National Nuclear Corporation commented, «Improving management techniques is the key lesson China should learn from the Japan accident, since the leak happened not because of nuclear technology but because of poor management and human error.» And, indeed, poor management, combined with official denial, was at the root of the disaster. «Oh no, a serious accident can't happen here,» a top Japanese nuclear official declared some hours after the fission reaction at Tokai had taken place.

The level of sheer fiction in Japan's nuclear industry can be gauged from the story of how Donen misused most of its budget for renovation work between 1993 and 1997. The problem lay in 2,000 drums of low-level radioactive waste stored at Tokai, which began rusting in pits filled with rainwater. Records show that the problem dated to the 1970s, but only in 1993 did Donen begin to take action, asking for money to remove the drums from the pits and to build sheds for temporary storage. So far so good. Four years and ¥1 billion later, ponen still had not taken the drums out of the pits or built the sheds. Nobody knows where the money went-semipublic agencies like Donen are not required to make their budgets public – but the suspicion was that Donen secretly spent it doing patchwork waterproofing in the pits to hide evidence of radioactive leakage. There is no problem, the agency said. One official remarked, «The water level has not dropped, so radioactive material is not leaking outside.»

Donen went on to request more money for 1998, stating that renovation was going smoothly, and asking for ¥71 million to remove the sheds it had never built! It even attached drawings to show how it was reinforcing the inner walls of the storage pits. The Donen official in charge of technology to protect the environment from radioactive waste said, «It's true that the storage pits will eventually be reinforced. So I thought it would be all right if details of the project were different from what we had stated in our request for budgetary approval.»

When Donen gets money from the government to remove sheds it never built and shore up the walls of pits it never drained, we are definitely moving into the territory of Escher and Kafka. A final surreal touch is provided by an animated video produced by Donen to show children that plutonium isn't as dangerous as activists say. «A small character named Pu (the chemical symbol of plutonium), who looks like an extra from 'The Jetsons,' gives his friend a glass of plutonium water and says it's safe to drink. His friend, duly impressed, drinks no less than six cups of the substance before declaring, 'I feel refreshed!' »

There is a lesson to be learned from Donen's madness, and it is that if you disguise the truth long enough you eventually lose touch with reality yourself. This happened at MOF, which can no longer figure out the true state of bank finances, and it happened to the nuclear industry, which doesn't know the standard techniques of nuclear-plant management common elsewhere in the world. Why invest in technology when with a stroke of the pen an official can bring fires under control and make leaks dry up? At Tokai in 1997, so unconcerned were Donen officials that seven maintenance employees played golf on the day of the fire – and went back to play another round the day after.

Japan is like the spaceship in 2001: A Space Odyssey. The computer Hal runs all life systems aboard the ship with benevolent wisdom, speaking to the crew through the public-address system in a resolutely calm and cheerful manner. Later, when Hal goes mad and starts murdering people, he continues to placidly assure crew members in an unwaveringly upbeat voice that all is well, wishing them a good day. In Japan, articles in magazines paid for by the bureaucrats who cement over rivers and lakes assure the public that their natural environment is still beautiful. Bureaucrats at Donen instruct children that plutonium is safe to drink. Every day in Japan we hear the soothing voice of Hal telling us not to worry. Since 1993, the government has predicted economic rebound every year, despite an ever-deepening recession. In February 1999, as the nation prepared to inject $65 billion into the banks, with the prospect of even larger bailouts ahead, Yanagisawa Hakuo, the chairman of the Financial Revitalization Committee, announced, «By the end of March, the bad loans will be completely cleared and we will have confidence at home and overseas.» Problem over, have a good day.

While it runs against the conventional wisdom that Japan is a technological leader, there is no question that Japan has fallen drastically behind in the technology of nuclear-power management and safety. Let's examine what happened at the Tokai plant in 1997 more closely. Workers checked the state of the blaze by looking in the window – they used no other monitoring devices and did not check again. A team of three people, including an untrained local fireman, entered the building with no protection and proceeded to seal it up – with duct tape! Dozens of other workers were sent into or near the site, unprotected by masks, and inhaled radioactive fumes. In the 1999 fission incident at Tokai, rescue workers were not warned to wear protective suits, neither measuring devices nor hospital care was readily available, and national authorities had no disaster plan to cope with the emergency.

What is in the manual for nuclear facilities in Japan has been duct tape or, in the case of the nuclear plant in Hamaoka, in Shizuoka Prefecture, paper towels, which were used to wipe up a hydrogen peroxide solution that had been spilled during cleaning of radioactively contaminated areas there. So many paper towels accumulated by January 1996 that they spontaneously combusted. This is reminiscent of the situations concerning waste removal after the Kobe earthquake (no shields or other safeguards), dioxin (no data), leachate from chemical waste pools (no waterproofing), and oil spills (cleaned up by women with bamboo ladles and blankets).

Since the 1970s, Japanese quality has become a byword, and many a book and article has been penned on the subject of Kaizen, «improvement,» a form of corporate culture in which employers encourage their workers to submit ideas that will polish and improve efficiency. The writers on Kaizen, however, overlooked one weakness in this approach, which seemed minor at the time but has seriously impacted Japan's technology. Kaizen's emphasis is entirely on positive recommendations; there is no mechanism to deal with negative criticism, no way to disclose faults or mistakes – and this leads to a fundamental problem of information. People keep silent about embarrassing errors, with the result that problems are never solved. Kato Hisatake, professor of ethics at Kyoto University, argues that the Tokai fission disaster came about because although people knew for years that the wrong procedures were being followed nobody said a word. In the United States, he said, "in the case of the Three-Mile Island accident, whistle-blowing helped prevent a far worse disaster."

The problem is endemic in Japanese industry, as is evidenced by a survey made by Professor Kato, in which he asked workers in Tokyo if they would disclose wrongdoing in their company; 99 percent said they would not. A major case of such a cover-up surfaced in July 2000, when police found that for twenty-three years Mitsubishi Motors had hidden from investigators most of its documents on customer complaints. At first Mitsubishi kept its records in a company locker room, but after 1992 it created a state-of-the-art computer system for storing dual records: those to be reported to regulators, and those to be kept secret. Only after inspectors discovered the ruse did Mitsubishi begin to deal with suspected problems, recalling over 700,000 cars for defects including bad brakes, fuel leaks, and failing clutches. A similar scandal arose in June 2000 at giant milk producer Snow Brand, whose tainted milk poisoned 14,000 people, as the result of careless sanitation procedures that had gone unchecked for decades.

At Tokai's nuclear plant, Mitsubishi Motors, and Snow Brand, no worker or manager ever drew attention to a situation dozens or even hundreds of people must have been aware of for many years. Meanwhile, complacent officials meekly took the information they were served and never bothered to investigate. Multiply these stories by the tens of thousands and one begins to get a shadowy view of slowly accumulating dysfunction afflicting almost every field in modern Japan. From the outside, the machine of Kaizen still looks bright and shiny but inside, an accretion of bad information is gumming up the works.

On February 17, 1996, the Mainichi Daily News ran an article headlined «DA [Defense Agency] chief richest among Cabinet ministers,» and then listed his and other ministers' assets. However, they were not valued at actual market prices, ministers are not culpable if they give false reports, and the assets did not include business interests. In other words, the official numbers had near-zero credibility – yet the newspaper diligently computed rankings and averages for the group, and publishes similar rankings every year.

These small bits of misinformation pile up into mountains of misleading statistics, which lead government planners, businessmen, and journalists to very wrong conclusions. Journalists, beware – reporting on Japan is like walking on quicksand. Take an innocent-looking number like the unemployment rate. With unemployment hovering around 3 percent in Japan for most of the 1980s and early 1990s, it would seem that Japan's unemployment has been far below the 5 or 6 percent reported for the United States.

But was it really? Japan uses its own formula to calculate unemployment, with several important differences. For example, in the United States you are unemployed if you were out of work for the previous month; in Japan, it is for the previous week. While economists differ on the exact numbers, everyone agrees that the Japanese rate would rise by 2 to 4 percent if it were calculated in the American way. Japanese officials publicly admit that employment data are as unreliable as corporate balance sheets; in early 1999, Labor Minister Amari Akira, when pressed to provide realistic information, responded, «It's my corporate secret.» And yet – and this is the notable part of the story – journalists continue to use the Japanese unemployment figures and to compare them with the American ones without warning their readers that they are comparing apples and oranges. Karel van Wolferen writes: «Systematic misinformation is a policy tool in Japan. Unsuspecting foreign economists, especially those of the neo-classical persuasion who must be reassured that Japan, after all, is not embarrassing evidence contradicting mainstream theory, are easy targets... We simply do not know, even approximately, the level of unemployment, the amount of problem loans, assets and debts in most corporate sectors.»

Suppose you were a delegate at the Third UN Convention on Climate Control, which was held in Kyoto in December 1997. You would have been delighted to learn that according to a report issued by its Environment Agency, Japan spent a total of ¥11 trillion for projects aimed at averting global warming. However, if you took a closer look at the agency's report, you would have discovered that of ¥9.3 trillion labeled «finding ways to reduce emissions of carbon dioxide,» ¥8.35 trillion went into the construction and maintenance of roads. The Natural Resources and Energy Agency spent an additional ¥400 billion promoting nuclear energy. Of ¥1.2 trillion listed as spent for «preservation and enhancement of forests,» about half went into labor expended in stripping the native forest cover and replanting it with sugi monoculture and paying the enormous interest on debts piled up by the Forestry Agency in this ill-fated project. Money spent on solar- and wind-power generation came to only ¥90 billion. «The report is not ideal in terms of representing the current state of affairs,» an Environment Agency official admitted. Indeed, the agency's report inflated the true numbers by a factor of 120.

Skewed numbers are endemic in every field, and as we have seen, the discrepancies can be huge. Official estimates of the bad debt crisis went from ¥27 trillion in the early 1990s to ¥35 trillion in ]996,¥60 trillion in 1997, and¥77 trillion in 1999 – and even then MOF was far from admitting the true figure, which might he double that amount. The national budget, as solemnly announced every spring by the press, is not all that it seems. There is a «second budget,» called Zaito (or FILP, Fiscal Investment and Loan Program), out of which MOF distributes funds independently of parliamentary control. Zaito, which is almost never reported in the newspapers – indeed, many people have never even heard of it – amounts to as much as 60 percent of the official budget. We shall have more to say about Zaito in chapter 6.

In the case of medical costs, Japan's expenditures appear to be far below those of the United States-but that's because published costs do not include the payments of ¥100,000-200,000 that patients customarily hand to their doctors in plain white envelopes when they have surgery. There is no way to calculate how much under-the-table money boosts Japan's national medical bill. Indeed, medicine is a statistical Alice in Wonderland where the numbers verge on comedy As for drug testing, the Ministry of Health and Welfare has never enforced scientific protocols, and payoffs from drug companies to doctors are commonplace, with the result that Japanese medical results have become a laughingstock in world medical journals.

It is no exaggeration to say that no technical or academic field in Japan stands on firm factual ground. In November 2000, Mainichi Shimbun revealed that Fujimura Shinichi, Japan's leading archaeologist, had been caught red-handed burying prehistoric artifacts at an excavation site. He later «discovered» these artifacts and used them as evidence that human habitation in Japan occurred one hundred thousand years earlier than previously thought. Fujimura had worked on 180 sites; the scandal undoes much of the work of prehistoric archaeology in Japan over the last fifteen years. No one knows how the mess can ever be cleaned up.

In short, everywhere you look you find that information i n Japan is not to be trusted. I will admit to a twinge of fear myself, for this book is filled with statistics whose accuracy I cannot gauge.

Sapio magazine calls Japan Joho Sakoku, "a closed country f or information." This blockage-or screening-of information about the rest of the world happens not just because of overt government controls but because of systemic bottlenecks encountered everywhere. News arrives in Japan, and then, like a shipment of bananas held up at port, it rots on the dock. With the exception of a few industrial areas where it is vitally important for Japan to acquire the latest techniques from the West, information rarely makes it into daily life, beyond the television screen or the newspaper headline. This is because for new concepts from abroad to be put into practice, certain prerequisites must be met.

One is the active involvement of foreigners. When Shogun Hideyoshi imported new ceramics techniques to Japan at the end of the sixteenth century, he shipped entire villages of Koreans to Japan and settled them in Kyushu. In early Meiji (1868-1900), Japan brought over hundreds of yatoi gaikokujin, "hired foreigners," who designed railroads, factories, schools, and hospitals, and trained tens of thousands of students. Indeed, the very term used by Sapio magazine, sakoku ("closed country"), is an old one, dating to the shogunal edict that closed Japan in the early 1600s; despite the opening in the Meiji period, the tradition never died. After the yatoi gaikokujin served their purpose, the government sent most of them away, and for a good century foreigners have not been permitted to have influence in Japanese society.

In the 1990s, the Ministry of Education forced national universities to dismiss foreign teachers, including those who had been in Japan a long time, and to hire new teachers from abroad only on short-term contracts. Foreigners who had lived in Japan for a decade or more, who could speak the language, and who were familiar with local issues could presumably teach their students dangerous foreign knowledge. This policy is still in force as Japan enters the twenty-first century. Even so, academia is wide open compared with medicine, law, and other skilled professions. No foreign architect of stature, such as I. M. Pei, resides in Japan. Foreign architects come to Japan on short-term contracts, erect a skyscraper or a museum, and then leave. But subtle and sophisticated approaches to services and design – the core elements of modern building technology-cannot be transmitted in this way. Japan is left with the empty shells of architectural ideas, the hardware without the software.

The second requirement for making use of information is a hungry public. As taught in the ancient Chinese classic IChing, the symbol of education is a claw over an egg: the parent taps on the egg from outside at the same moment that the chick pecks from the inside. In Japan, the chick is not pecking. In order for a business or a government agency to use information, the people in charge must realize they need it. But, soothed by the reassuring voice of Hal, surprisingly few executives recognize that their businesses or agencies are in a state of crisis.

The third requirement is a solid statistical base. New data make sense only if they stand upon solid old information. For example, foreign dioxin studies can be useful only if the Environment Agency has done its homework and knows which neighborhoods are contaminated and to what degree. Lacking this information, once you've brought in the foreign studies there is little you can do with them. It made sense for Hideyoshi to bring Korean potters to Japan because there was a demand for Korean pottery. Not so for much of the information Japan receives from abroad today. What use, for example, does Japan have for number-crunching techniques developed by trading houses in New York when the numbers that Japanes companies put in their financial statements are largely fictional.

This attitude toward information has proved to be an obstacle to Japanese use of the Internet. Log on to the Interne home pages of important Japanese entities and you will find few meager pages, as poor in quality as in quantity, consisting mostly of slogans. From university home pages, for example you would never get a clue to any serious data, such as Tokyo University's budget, Keio University's assets, the makeup of the faculty, a cross section of the student body, and so forth, only «What Our University Stands For.» Most serious information about these schools is secret, not available in any medium, much less on the Internet. In the end, you would find it difficult – perhaps even impossible – to put your hand on any practical information about these universities. In doing research for this book, I have found a striking contrast between the availability of information in Japan and in the United States an Europe. Visit the U.S. Army Corps of Engineers Web site, for example, and you will find yourself deluged with so many pages of data that you can hardly process it. Japan's Construction Ministry and the River Bureau provide a few pages of slogans, and some dead links.

As of summer 2000, both the Tokyo and Osaka stock exchange sites failed to offer any information of substance (for example, the value of new or secondary listings) and did not even have something so rudimentary as a ticker with current index levels. By contrast, the Singapore exchange's Web page was light-years ahead. The failure of the Internet to bring openness to Japan bodes ill for the nation's future. Take, for example, the concept of «industrial secrecy.» In the old manufacturing economy, it was in every company's interest to patent its techniques or, even better, to lock them up in a vault and keep them absolutely hidden from outsiders. And Japan was very good at that- One journalist, praising the Japanese for their efficiency in keeping secrets, commented, «Patents are only for a time; a secret is forever.» But in the new economy people don't have time to wait forever. Time moves too fast; today's secret is tomorrow's failed idea. The explosion of software and new Internet technologies bursting out of Silicon Valley has been a collaborative effort in which a young engineer calls up his friend and says, «I have these parts of the puzzle, but I'm missing other parts. What do you think?» His friend listens, supplies another piece, and everyone benefits. In Japan, such free and easy give-and-take is nearly inconceivable. Hobbled by secrecy, new ideas in Japan will continue to come slowly – and in the new economy there is no greater sin than to be slow.

One could say that Japan poses a fascinating challenge to the very idea of the modern state at the start of the twenty-first century. Information – its processing, analysis, collection, and distribution – stands at the core of postindustrial technology. Or does it? Japan has made a big bet otherwise. Wisdom in the West has it that high quantities of precision data and the ability to analyze them are what make banks and investment houses succeed, nuclear power plants run safely, universities function well, archaeologists build up a credible picture of the past, engineers design efficiently, doctors prescribe drugs properly, factories produce safe cars and hygienic milk, and citizens play a responsible role in politics. From that perspective, one would expect that the lack of such information – a preponderance of fuzzy information – would become an increasing liability.

The value of factual data would seem to be only common sense, and for all that traditional Japan valued the ideal above the real, canny merchants in Edo days well understood the importance of keeping their accounts straight. The seventeenth-century novelist Saikaku comments, «I have yet to see the man who can record entries in his ledger any which way or ignore details in his calculations and still make a successful living.» One could argue that the modern Japanese bureaucracy's utter disdain for facts is something new-a tenet from traditional culture that was carried to extremes. It could result from something as simple as the fact that officials got away with it. In Saikaku's day, sloppy accounting soon dragged a shopkeeper into trouble. In present-day Japan, bureaucracies with unlimited funding and no public accountability can hide their mistakes for decades.

Nevertheless, authoritarian leaders in East Asia favor the modern Japanese model of development. They see merit in having the bureaucracy keep information secret and manipulate it for the national good, not letting the public get involved in wasteful disputes over policy. For these leaders, freedom of information is chaotic, controlled information more efficient. Until now, the dialogue on this issue has been carried on between Asian authoritarians and Western liberals largely in political terms: whether people deserve or have a human right to be informed. In Japan's case, it might be helpful to disregard these political aspects for a moment and question whether such control of information really does make government and business more efficient. Those who favor information managed by the bureaucracy assume that while the general public stays in the dark, all-knowing officials will guide the nation with an unerring hand.

For Japan, the results of such a policy are now coming in, and they indicate that, far from being all-knowing, Japan's bureaucracy no longer has a clear understanding of the activities under its control. What we see is officialdom that is confused, lazy, and behind the times, leading to incredible blunders in the management of everything from nuclear plants to drug regimens and pension funds. Until a decade ago, very few people noticed that there was anything going wrong in Japan; rather, the emphasis was on Japan's «efficiency.» It is now becoming possible to see what happens to a nation that develops without the critical ingredient of reliable information.

Much money and millions of words have been spent on the question of whether Japan will catch up with the West in new information industries. But few have even noticed that Japan has a fundamental problem with information itself: it's often lacking and, when it does exist, is fuzzy at its best, bogus at its worst. In this respect, Japan's traditional culture stands squarely at odds with modernity – and the problem will persist. The issue of hidden or falsified information strikes at such deeply rooted social attitudes that the nation may never entirely come to grips with it. Because of this, one may confidently predict that in the coming decades Japan will continue to have trouble digesting new ideas from abroad – and will find it more and more difficult to manage its own increasingly baroque and byzantine internal systems. The nation is in for one long, ongoing stomachache.

For the time being, bureaucrats and foreign academics alike are tiptoeing around embarrassing situations, «as one who steps on dog dung in the dark.» This is comfortable for those in charge, since it relieves them of any urgency to solve Japan's pressing problems. Defaulted bank loans, unemployment, rising national debt, lost plutonium, out-of-date analog television, waste dumps in the countryside, tilting schoolyards, ugly beachfronts, global warming, defective cars, poisonous milk – Japan has them firmly under control. There is just one little problem with this approach. Abraham Lincoln pointed it out once to a delegation that came to the White House urging him to do something he felt wasn't feasible. He asked the members of the delegation, «How many legs will a sheep have if you call the tail a leg?» They answered, «Five.» "You are mistaken," Lincoln said, «for calling a tail a leg don't make it so.»