Category Archives: Work

The Third Arrow

The Japanese government messed up. Low interest rates and high currency were not a problem. Low interest rates are a consequence of high competition for capital. After all the low-hanging fruit has been picked, what’s left is the opportunities that offer lower rates of return. Low rates are a natural occurrence in a developed market. Even negative rates are not that unusual – the Swiss just issued their first negative-rate government bond. The Euro is so volatile that people are willing to pay the Swiss to keep their money safe. The same status had formerly been accorded to the yen as a reserve currency. Higher inflation rates in Asian economies lead people and governments to be willing to pay in the form of negative interest rates to have their money safe.

Reducing the value of the yen by 50% puts money on the balance sheets of exporters and big companies that already have high overseas sales, but hinders companies from making overseas investments. The economy previously grew through exporting, and the Japanese government is trying to promote growth by promoting exports. This is an inefficient way of promoting export, at that, since all production inputs that must be imported end up costing more. Yet, by simply doing nothing, the high yen would have encouraged foreign investment, as foreign assets looked cheap and banks and companies sought a higher rate of return.

Companies in Japan were dependent on domestic consumption, failed to generate enough demand for products overseas, and failed to invest in production capacity overseas. Companies like HGST, Sony, or Toyota that invested in overseas sales and production capacity continued to do well through the period of high yen and low interest rates. Companies like NTT, dependent on a declining domestic market, have not done well. The effect of inflating the currency has been to benefit those companies who were already doing well, while at the same time to discourage foreign investment by making foreign assets more expensive.

Politically, as China is expanding its soft power with its launch of the Asian Infrastructure Investment Bank, Japan is decreasing its ability to lend or invest abroad by devaluing its currency.

With domestic consumption saturated, no amount of domestic investment will create a larger rate of return. Japan has an excess of capital. It is squandering it by devaluing the currency. Stop. The government should not be concerned with trying to grow the domestic economy, which is already saturated. People already throw away expensive items like large screen TVs in order to make room for new ones. How many more TVs can they use? Instead of playing with numbers and destroying capital with QE, the government should be concerned with enabling the profitable employment of capital.

MNCs get higher return on capital by outsourcing production in developing economies and investing in production capacity there. Think Intel, Apple, Toyota. Allowing the yen to remain high would continue to encourage companies to invest overseas.

Domestically, the government could improve the way capital is employed.

  1. It should be made easier to fire people (companies are ever-hesitant to hire people because it’s hard to get rid of them).
  2. Bankruptcy law should be reformed so that entrepreneurs have true limited-liability. Wide experimentation necessarily leads to a few successes and many failures, as Silicon Valley can attest to.
  3. Retirement age should be raised in order to relieve strain on the pension system. It is currently 60.
  4. Labor practices should be reformed so that it is easier to be a parent, including making it easier to take paternity leave and making it easier for women to rejoin the work-force if they take time off to raise children.
  5. There is a shortage of daycare centers. Access to daycare should be improved by allowing the easier conversion of defunct elementary schools to publicly-subsidized daycare centers.
  6. The cost of raising a child should be reduced by making high-school free. Why spend billions in QE when the same billions can be spent to improve education?

It’s time to learn new tricks. What got Japan here was domestic consumption and domestic investment. Forget about the numbers. What’s important is to keep things interesting for young people. Otherwise, who’s going to have children? I met a college graduate recently who decided to take a job as a hotel concierge. That’s what it’s come to. The system is so locked, there is so little opportunity for experimentation and growth, there are so few positions in society open for people who are coming of age, that college graduates are deciding to take jobs as hotel concierges. The government must make structural reforms to remove obstacles toward the natural redeployment of capital, instead of caffeinating the economy to continue to run in the way of the past.

As for young people with a college education, I would say: leave and get experience elsewhere. A concierge job is fine, if it’s what you want to do, but it was definitely not what the guy I met was hoping for. Why fight in a little world with other college-educated people for a little job that is entirely confined to Shinjuku, doesn’t require a college education, and doesn’t teach you to be anything else? Leave. Is it better to be a concierge in Japan business development manager overseas? You get to choose: comfort or experience? Directly apply to the overseas branch and get some experience at a job that you actually want to do. There are so few people doing this sort of thing that you will actually face no competition.

And after you have gotten foreign language and cultural experience, the long-term demographic trend in Japan will still not have changed. The domestic market will still be shrinking. The excess of Japanese capital will still be looking for higher returns. Companies will be looking for linguistically and culturally competent people to be their face to the outside. You will have new ideas and ways of thinking that you would not have learned if you had stayed behind. It will be hard, but you will have a greater appreciation for what is good and bad about Japan after spending some time on the outside. You will be ready. There will be no competition.






「哦, Chechnya。你不是意思是烏哥蘭?」


Silencing the Ego

After 1 1/2 weeks in the states, a taste of Japan in the ANA airport lounge before my flight to Taipei. I ordered noodles at the noodle bar, where there is a noren curtain concealing my and my server’s faces from each other.

Irasshaimase, said my server. Kitsune soba, I ordered.
Some activity behind the counter, and she presented my noodles.

It is not common for such a noren curtain to be in such a place, but that it is there does not feel restrictive at all.

In Japan, people do not seek for personal recognition, but seek to perform their role well with a respectful distance. It is not so much self-effacement as it is an emphasis on doing a quality job, and it is refreshing.

Once I tried to strike up a conversation with a barber while getting my hair cut. After a few pleasantries, he said that he would prefer not to talk. An unusual reaction, but entirely consistent – he would simply prefer to concentrate on doing a good job cutting my hair.

Old Projects

Having lunch with five co-workers from my old company was one of the best things I’ve done recently. Among other things, I heard about the progress of projects that I had worked on was comforting – some of the goals that I had been working toward were realized, and one of the pilot products that I had developed has continued to evolve, still providing a steady stream of revenue for the company. It was comforting to think that my unaccomplished goals were eventually deemed important enough to achieve by others, and that what I had worked on was important enough that people were still working on it, three years later.
There was a sad piece of news – one of my co-workers from the quality assurance (QA) team had been laid-off for poor performance. As I recall, it had taken me awhile to get used to working with him. He would become very nervous in front of customers, and wasn’t very good at managing failure analysis. But, after I got used to things, things were fine. I learned to play a greater role in managing failure analysis – he wasn’t good at deciding what to do, but he was good at doing. And each thing we worked on, I tried to make him think a little bit more. I believe that I left him a more capable person than when we started working together.
I would take his data, make a bright, shiny presentation, and take it to the customer, since he wasn’t good at presenting data, nor at talking in front of the customer. As a field engineer, I had to review presentations and visit the customer anyway, so it was only slightly more work for me to cover for his weaknesses. Things worked well, and since we sat right next to each other at the office, we would joke around with each other during the work day, about girls, about movies – different things to break up the routine. The QA lab was separated from the rest of the office by a wall of glass, and it reminded me of a penguin exhibit at a zoo where visitors could look through the glass and see penguins going about their daily routine, so I made a sign that said “please don’t feed the animals” and stuck it to the glass – kind of a mean thing to do, but it was funny.
When I think of my successor, I realize that he probably wasn’t able to cover for the weaknesses of the QA engineer. So, as an indirect result of my having left the company, my QA co-worker lost his job.
These HR ranking systems where they try to rank your performance in relation to your peers can be silly and undignified. I can disdain them without it being sour grapes because I have done well with them. (Sour grapes is when someone disdains grapes that are out of reach by saying “they’re sour anyway.”) Truly, people work and progress as a team. The emphasis should be on how we can best work together, rather than who is most able. Ranking systems can give people tunnel vision, as they work on things only in their job description. And yet, there must be a meritocracy, there must be a way to allow people to progress and grow, and to encourage them to do so. I don’t have the answer, but when I think of working with my former co-worker in QA, I feel that an injustice has been done. If there was a failure in work of the team, it was due as much to the inability of my successor to take on incrementally more responsibility as it was the QA engineer’s lack of finesse, but HR looks only at the job description, and uncompensated weaknesses can eclipse ability.
Strange, how persistent my partiality to work identities can be, nearly three years after I have left my previous company. A younger me would have thought it odd to give this much thought to company business outside of office hours, but the current me thinks that, as much time as I have sweated and communed with people at work, I’d be inhuman not to care.