Toshiba is only the latest example of corporate chieftains running amok with scant accountability. How is it that the CEO of deadly airbag maker Takata, Shigehisa Takada, still has a job? For the same

For these creeps the crime is not futzing the figures, selling dud airbags and poisoning a huge area with radiation.

The way they think the real crime was getting caught.

Standard M.O. for this writer, take a global problem and issue (in this case corporate accountability) and then when the problem occurs in Japan claim the causes are Japan specific, usually riffing on some variation of "insular culture". An understandable angle to take back in the '90s when Japan was the first country to hit the wall of the neo-liberal, "free market", credit expansion economic growth model and nobody understood what was going on, but well past its sell-by date now. As for the gratuitous Fukushima reference, I'm sure the writer knows full well that the accident was caused by the "nuclear village", the "cozy relationships", and the "belief in the myth of nuclear safety", all forcing the brave Naoto Kan to shut down the entire industry to save Japan from the imminent peril. I know he knows because he was one of the inventors of this narrative. You can't turn around now and say "Actually the accident was really caused by the criminal acts of the management of TEPCO, you can ignore all that other stuff". Well actually I guess you can say that, if you have an extreme case of cognitive dissonance and want to have your cake and eat it too.

Japan Inc answers to no one. Seems right to me.

Standard M.O. for this writer, take a global problem and issue (in this case corporate accountability) and then when the problem occurs in Japan claim the causes are Japan specific, usually riffing on some variation of "insular culture". An understandable angle to take back in the '90s when Japan was the first country to hit the wall of the neo-liberal, "free market", credit expansion economic growth model and nobody understood what was going on, but well past its sell-by date now. As for the gratuitous Fukushima reference, I'm sure the writer knows full well that the accident was caused by the "nuclear village", the "cozy relationships", and the "belief in the myth of nuclear safety", all forcing the brave Naoto Kan to shut down the entire industry to save Japan from the imminent peril. I know he knows because he was one of the inventors of this narrative. You can't turn around now and say "Actually the accident was really caused by the criminal acts of the management of TEPCO, you can ignore all that other stuff". Well actually I guess you can say that, if you have an extreme case of cognitive dissonance and want to have your cake and eat it too.

I guess you don't work for a Japanese company, where the boss is always right, and were no decision, however small, can be made without the permission of someone higher up. I guess you don't know about the rigid seniority-based promotion systems used in Japanese companies, in which you promoted on a fixed schedule, regardless of how well you work, or don't work. This system means that no one under the age of 60 has any authority in the company. I guess you don't know that the president of a Japanese company can choose board members loyal to him, and he can deny board seats to outsiders, even if they are major stock holders. He can fire any board member who disagrees with him, and of course he can count on the other members to support him. The chairmen of Japan Inc are the power in this country.

There has never been a free market in Japan, ever. Imports are tariffed heavily, price fixing and corporate collusion are rampant throughout the country. Conflicts of interest like amakudari jobs for politicians and bureaucrats are ignored, anti-trust laws are almost non-existent.

The reference to Tepco is valid, and underlines the weakness of the heirarchical structure of Japanese companies. No one can deviate from the structure or chain-of-command. If a problem is discovered, it can paralyse a company as it figures out who is responsible for making any decision to solve the problem. Every department and every task has a person assigned to it, and a procedure to follow when something happens. When something unexpected happens, or there is a task or procedure which does not have someone assigned to handle it, it throws the who system into chaos. Fukushima is the poster child of this situation. If no one is assigned to check the condition of the backup batteries, they are not checked. If no one is assigned to authorise the purchase of new batteries, the batteries are never purchased. Every person does his assigned task, he doesn't think to do something he isn't assigned to do. I guess no one is aware that of all the countries which use nuclear power, Japan had the worst record for problems?

sangetsu03 always nails it. Would very much enjoy a beer and some banter with you one day, my friend.

Pasek often is a bit sensationalist but he NAILS this one, it is 150%++++++ correct

Guy J,

I wonder if you have ever lived in Japan, it is so BLATANTLY obvious that J-Inc is immune to criticism & penalty for all the illegal stuff that goes on. And so much that SHOULD be illegal is codified into govt & regulatory authorities, its so blatantly obvious that K/B, bid rigging, price fixing, amakudari etc etc etc are ALL accepted by the powers that be here & so ingrained most locals simply think its "normal"

Toshiba is simply next, there are a LOT more accounting fiasco's just waiting to be un-earthed, but no one will do jail time in all likelihood

From Toshiba's website:

Toshiba Group promotes corporate governance based on the fundamental policy and objectives of enhancing management efficiency, increasing transparency and maximizing corporate value from the shareholders' perspective.

Break this down: Toshiba Group promotes corporate governance based on... maximizing corporate value from the shareholders' perspective.

As Japanese (and many German, for that matter) companies are more stakeholder- than shareholder-centric, will Toshiba actually be judged to have (in swelling the taxman's coffers instead of shareholders' pocketbooks) committed a heinous act?

Or is that just the Anglo-Saxon perspective?

Japan Inc. answers to no one.

Hence the biggest weakness of Japan society as it navigates an ever-changing world in the 21st century. The structure that was at the heart of the Japan Miracle, is now just a huge albatross around its neck. The corporate culture that helped it rebuild -- lack of price competition, protected markets, corporate malfeasance, cross share-holdings -- is being exposed for all the world to see as Japan tries to compete with more nimbler, more competitive companies.

I guess you don't work for a Japanese company,

Guy J, I wonder if you have ever lived in Japan,

Both very smart observations. Guy lives in a parallel-universe version of Japan where nothing is really a problem, since the government can just keep spending money to prop up the broken Japan Inc. model as long as it wants, since "the debt is held internally".

The structure that was at the heart of the Japan Miracle...

There never was a Japan miracle. Japan's growth of the 60's to the 80's was not fueled by innovation, or superior business practices. Japan grew because it had no competition in the low-labor cost manufacturing market, and because Japan Inc was able to twist the arm of the government to manipulate the value of the yen, and further increase the cost of imports through tariffs. This made Japanese goods cheaper in foreign countries, and made foreign goods expensive in Japan. In the early years, Japan's population was still growing, adding an increasing supply of consumers and workers to the economy.

Most of corporate Japan's income came from (and still comes from) the domestic market, which was closed off to outsiders via currency manipulation and the heavy tariffs on imported goods. On goods which were not tariffed, or which were still cheap despite a weak yen, they were simply kept out (ever seen a Samsung TV in Japan?)

In the 80's the Plaza Accord stopped the currency manipulation, Korea began competing with Japan, China was beginning it's ascent, Black Monday hit Wall Street, and then the "bubble economy" burst. The so-called "miracle" ended. Japan could no longer tilt the field in it's favor, or pay off the referees to compete, it actually had to compete in the open market. But more than 20 years later, it is still unable to do so.

So now we end up with an overpriced economy where the high cost of living is driving down the population. We have Japanese companies which are still being run the same way they were when Johnson was president. We have a government which continues to spend on the same scale it did when Japan thought it would become the world's number-one economy, but can now only finance it's debts by printing money, and buying and selling debt from and to itself. Most of this money ends up in the hands of Japan Inc, who are the main suppliers of everything in Japan, and which is the main reason that they are still around.

Often success isn't related to what one does, but what others don't do. When I opened my company in Japan, I had no competitors in my market, I made a lot of money. But others have caught on, and are competing head-to-head with me. As a result I have had to change and adapt. But the big boys in Japan do not change, and they don't adapt. They are being left behind, and since they control most of Japan's economy, Japan is being left behind with them.

not sure i agree. this is not a uniquely Japanese problem. and Toshiba folks did on purpose. surely no one is suggesting Takada deliberately made their airbags faulty?

Guy lives in a parallel-universe version of Japan where nothing is really a problem, since the government can just keep spending money to prop up the broken Japan Inc. model as long as it wants, since "the debt is held internally".

No, I have never said there is no problem because the "debt is held internally". I said there is no problem. The USA shows whether the debt is held internally or externally is irrelevant anyways.

I do love the -10 rating from the Pesek fans though, as it proves my point. I did not say there are no problems in Japan in the way companies operate, or that things could not be improved. I said that blaming those Japan specific problems for EVERY SINGLE THING that happens in Japan is an outdated meme from the 1990's when Japan was the first country where the economic system started to break down, and it seemed logical to think the problems were uniquely Japanese. That same breakdown has now occurred in every country, (it only happened in Japan faster due to the actions of the Bank of Japan), but reading Pesek and his fans it appears they appear not to have clued in to such basic facts yet. It's always "Bad Japan must change and be like all the other wonderful countries like mine "WHERE THE EXACT SAME THINGS ARE HAPPENING!", as with the point of this quote, corporate crime and lack of corporate accountability. These are not Japanese issues they are 21st century global issues. If people want to claim Japanese culture makes the country more susceptible to the problem, go ahead. But correlation is not causation, and the "evil Japan Inc." meme has gotten really old.

As for Fukushima, you can claim the cause was a systemic failure of the Japanese nuclear industry. You can claim the cause was an act of criminal negligence by the TEPCO management. You can claim it was neither, and sometimes stuff just happens. But you can't, as Pesek does, claim it was both, it was either one or the other. Which of course explains why there were no charges and never will be, as it would make the industry wide shutdown an act with no legal basis and open the government up to massive lawsuits from the other power companies.

Guy,

Ok after reading the above I will take that as a yes you haven't lived in Japan.

No, I have never said there is no problem because the "debt is held internally". I said there is no problem.

Actually there is a huge problem when a country's debt is held internally, especially in a country like Japan where institutional investors whose boards are populated by amakudari bureaucrats and politicians can use their depositors money to invest in bonds which the government issues to buy products and services from the same investors. It is a huge problem because when the debt is not sold on the open market, the rates may not realistically reflect the actual risk of the issuer of the bonds. This allows the bond rates to be held artificially low, and encourages the bond issuers to take on more debt than they otherwise would.

Other countries which sell their debt on the international market must manage their economies well enough to attract buyers for their bonds. We can all see how well Japan is managing it's economy, and how being able to hold their own debt has done nothing more than allow the government to further mismanage the economy whilst accumulating the largest amount of debt relative to GDP of any developed country.

And furthermore, this debt is now so undesirable that even the institutional investors are shedding themselves of it, and the government must buy and sell bonds to and from itself. It is ludicrous, and anyone who thinks there is nothing wrong with this situation is an utter fool.