April 25, 2011 | Opinion

The View from Tokyo

Hugh Patrick, director of the Center on Japanese Economy and Business, reflects on Japan in the aftermath of disaster.


I was sitting in my room on the 35th floor of a hotel in downtown Tokyo on Friday, March 11, when at 2:46 p.m. the building began to shake and sway. The shaking grew stronger, and wouldn’t stop. I couldn’t move. It was very scary. The shaking lasted a long two minutes, and the swaying of the earthquake-proof building 10 minutes or so; it seemed an eternity. Once the swaying finally ended, I went to the window to see if buildings had collapsed or if there were fires. But it all looked the same. I was safe, the building was safe, and people were safe. And that was essentially true for everyone in Tokyo.

Yet Japan now faces its worst crisis since World War II. The 9.0 earthquake in Tohoku was the largest in Japan’s recorded history, but the extraordinarily enormous tsunami that followed caused the most devastation. Like everyone in Tokyo and the rest of the world, I was riveted by the heart-rending, continuously updated reports of death, disaster, and destruction of property, some 450,000 people homeless, most in temporary evacuation shelters. But my most compelling and enduring impression is of the great strengths of the Japanese people and their society. People have been calm, orderly, flexible, stoic, pragmatic, honest, resolute, helpful, and determined to prevail.

Lack of information in this suddenly uncertain, potentially threatened Tokyo quickly became people’s major cause of anxiety. Everyone wanted to know whether family and friends were safe, and their homes OK. On March 14, people reported to work in a somber Tokyo as everyone voluntarily conserved electricity. An unprecedented 262 significant aftershocks were recorded in that first week, but no one seemed to worry much about these daily jolts. It was easy to get around Tokyo — taxis were abundant, subways were working, and traffic was light since gasoline supplies were short.

As the week progressed, the greatest concern became the possibility of dangerous radioactive air spreading to Tokyo, though the actual recorded levels of radiation were very low. The partial meltdown at the four nuclear reactors at Tokyo Electric Power Company’s (TEPCO) Fukushima Daichi power facility soon made it clear that Fukushima will now join Chernobyl, Windscale, and Three Mile Island as one of the world’s most significant nuclear accidents. Like most Japanese in Tokyo, I was (and am) persuaded that even in the highly unlikely worst case scenario, Tokyo’s air will not become dangerous. Likewise, radioactive milk and vegetables from Fukushima seem to be a localized problem, well under control. Of course, reports of temporarily higher levels of radioactive iodine-131 in Tokyo tap water on March 23 was a shock and brought a run on bottled water. While not directly dangerous to Tokyo, radioactive water going into the ocean at Fukushima has posed a new problem.

The government has provided a great deal of factual information, and academics and other specialists appear on TV to analyze the available evidence about the Fukushima situation. I was also deeply reassured by the presentations at the special symposium held by CJEB at Columbia Business School on March 22, including the talk by David Brenner, the Higgins Professor of Radiation Biophysics, on the low risk of dangerous exposure to radiation for almost all Japanese people. Nevertheless, until TEPCO brings the Fukushima nuclear reactor problem under control, the psychological costs to Tokyo residents are likely to be substantial, if latent.

I was in Japan for the 25th anniversary conference of the Business School’s Center on Japanese Economy and Business (CJEB), to be held on March 16, which, like virtually every event in Tokyo — conferences, seminars, graduation ceremonies — was postponed (or cancelled). I continued to have scheduled appointments with sponsors and colleagues in Tokyo, and then on March 21 I went to Kobe a few days early and then, as scheduled, to Tottori and Shimane prefectures on the Japan Sea. Life was very normal in these places. Hotels, stores, and streets were as crowded as usual, lights were bright. The ambiance was quite different than Tokyo. While people deeply sympathized with those suffering from the triple disasters, Fukushima seemed (and is) far away.

Context is important. Though the loss of life and property has been great and devastating, some US media outlets have ignorantly sensationalized aspects of these disasters, including the economic impact. The three most afflicted Tohoku prefectures — Iwate, Miyagi, and Fukushima — have a population of 5.7 million, 4.5 percent of Japan’s population of 127.5 million, and a 4 percent share of Japan’s GDP.

This disaster did, however, reveal the extent to which Japanese companies have relied upon companies from Tohoku as sole or dominant suppliers of very specific components. This is the case not only for the automobile industry but for a range of items, such as resins for packaging computer chips, material for binding processed food packages, and train engine brushes. The efficiencies of supply chain management based on production economies of scale and just-in-time low inventories will have to be rethought. It is too early to determine how quickly such supply interruptions will be overcome, and what their macroeconomic impact will be.

In the near term, Japan’s GDP growth will decelerate as both consumption and production are reduced, but in the longer run, reconstruction and new investment expenditures will generate greater demand and growth. The Tokyo region and northeastern Japan will likely face electricity shortages and rolling blackouts, especially in the summer, but it is too early to determine how well they will be managed.

Whether this crisis will shock Japan out of its two decades of economic lethargy depends upon Japanese political will and Keynesian animal spirits. Given Japan’s historically demonstrated capabilities to rebound from adversity, I am not pessimistic. This is certainly not the end of Japan — it’s a new beginning.

Hugh Patrick is the Robert D. Calkins Professor of International Business Emeritus, the director of the Center on Japanese Economy and Business at Columbia Business School, and a senior scholar at the Jerome A. Chazen Institute for International Business.

For more information about the Center and its events, including the rescheduled 25th Anniversary conference, visit CJEB. You can download a longer version of this piece here (PDF, 170KB).

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