The Japanese Economic Miracle

Japan, if there's any spot on Earth, is considered one of the worst, if not the worst, in the world. I swear, I don't know why people settled there in the first place! Five times the size of Japan is not fit for any kind of exploitation (geological faults, volcanoes, and constant disasters). Most of Japan's 6852 islands don't have any natural resources except for some fish in the sea and pearls from ancient times. Even earthquakes don't spare your enemy. The last earthquake in 2011, caused by a tsunami, led to a major Japanese crisis named Fukushima leakage. So, in short, it's a country in hell 😃

But what makes a country like this the third-largest economy in the world, with a Gross Domestic Product (GDP) of $4.843 trillion, after the United States and China? If we compare the size of Japan to any of its islands, multiplied by the population, Japan would emerge as the undisputed top economy.

So, here's the gist of the story...

Centuries ago, during the Edo period, there was a period of rule called the Edo period - every few years, an emperor would come, and the period would begin with his name. This period lasted nearly 270 years, ruling Japan under the feudal system known worldwide at the time. They called it in Japan (the feudal military shogunate). It was like a rich, dominant, and despotic man ruling— the emperor. Or the emperor's regent (and the emperor was his deterrent at the time). Below him were a few soldiers called samurai. Then there were a few courtiers from the nobility and hypocritical religious men who were servants to the rulers' boots. Then came the small traders, farmers, and craftsmen, and these were the ones who were sucked dry and were oppressed.

The Edo period was the longest period of isolation in Japan's history, with no communication with the outside world. So, Japan was in isolation and not on the map. This system led to the poverty of the people and continued revolutions against the rulers until they divided the country into pieces, each governed by the next.

After that came the Meiji period, when an emperor came who could overcome the closed feudal rulers (the shoguns) and establish a new, beneficial, and resilient period. 😊 Built on military armament and colonial expansion. And since Japanese civilization is essentially based on the dignity of the Japanese themselves and the word of the individual fighter (samurai means victory or death), they managed to build an army with which they conquered the Russian Empire, taking North Korea and South Korea from it at the beginning of the last century.

Japan continued to expand and spread until it reached the capital of China and wreaked havoc on its people with killing, burning, looting, and torture. So, some of the poor countries in East and South Asia surrendered from the horrors they heard about the Japanese army on its way to them. This force consisted of more than 5 million fighters until the Second World War. These countries are like the Philippines, Indonesia, Thailand, Malaysia, Singapore, Vietnam, Myanmar, Laos, Cambodia.

When Japan became too strong, someone had to put it in its place. So, America bombed it with two atomic bombs (Hiroshima and Nagasaki) because Japan was not willing to surrender even after the war ended, and Germany and Italy surrendered. But after the bombs and their horrors, they surrendered on a silver platter.

After Japan's surrender and when it lost all the countries it had occupied, America took over and effectively occupied it with nearly 300,000 soldiers and put a military leadership on it led by General Douglas MacArthur (the Americans' genius in Japan). I'd like to tell you something very nice: the Japanese emperor, who ruled before World War II and who refused to surrender and who bombed America's harbor (Harper) with his imperial aircraft and kept fighting it throughout World War II, do you know him? His name was Hirohito. He ruled from 1926 until 1989. So, this man saw Japan at the height of its military glory in the beginning and its technological glory as it caught up with the modern developed world.

Let's go back to MacArthur, the military ruler of Japan. Why was he a genius? Because he refused all voices calling for the trial of the emperor, whether from the people or from the war parties. And also, the Japanese royal family wanted to leave the rule imposed on them. But MacArthur convinced them to stay and gave them all the respect and admiration. And lots of money. This is because the man knew that he would not be safe from the Japanese if they felt that the Americans had gathered on their leadership and were the source of their pride. And he also made some laws to protect all Japanese war criminals. He ruled for 7 years, during which he established the capitalist system, close to the old feudal family system of Japan.

Remember the story of the Marshall Plan, which was activated during the Cold War between America and the Soviets? This plan was giving money and support in dollars to the countries that America did not want the Soviets to penetrate. Among the leading countries were Western Europe. And also our beloved Japan. Wants money... take it. Wants military support... take it. Wants science and technology... take it. Until the Japanese sponge drank the American capitalist system from its fullness.

In 1951, the Peace Treaty with Japan was signed, and America left Japan. Its influence remained on aspects of Japanese life (((except for the personality))). The constitutional monarchic system was activated (the emperor is present but ceremonial, and the one who governs is the cabinet). So, a man named Hayato Ikeda was appointed as the prime minister of the post-war government.

So, what's his story?

(Hayato Ikeda) is considered the chief architect of the Japanese economic miracle (known as Johnson). What did this man do? Simply put, he said to the Japanese people, "Hey, guys, anyone who is a Japanese person, our Lord wants money, let him start a project and come to take it without guarantees, and until the company's value is half established." This was called by economists the principle of (excessive borrowing). The central bank lends to subsidiary banks with imaginary guarantees against loss and reduces taxes and reduces interest rates on loans to the lowest level. And encourage national industries and prevent the flooding of foreign industries into the domestic market. And they started with heavy industries like iron, steel, and shipbuilding with American and European technology at the beginning.

And a new system appeared called (keiretsu), which means no to monopolies... against the old monopolistic system called (zaibatsu). So, local company blocs emerged, but without monopolies. For example, you will find Toyota, Nissan, Honda, and Mitsubishi working in cars like sweetness, and no one closes on anyone. And the competition between them technologically and technically until today, and all Japanese share in stocks with different richness and poverty.

From 1951 to 1984, Japanese companies bought around 42,000 technology contracts from America alone for $17 billion (a ridiculous amount compared to the budget allocated by America for scientific research in one year). And they came up with a Japanese principle that said, "We now want to sell more milk than we sell cows." And the first contracts ever were to buy Sony the transistor radio technology from American plants. The American transistor developed it, reduced its cost, and made it smaller. And Sony transistor radios and their headphones were in every pocket and on their side 😃

And Uncle Ikeda worked tirelessly to liberalize trade (anyone buys and sells anything to any country without restrictions). But the press got on his case and couldn't appreciate that he only liberalized 40% of Japan's total trade. Because they were afraid of the American and European invasion of Japan in the form of products... And this is the difference between this farsighted man and ordinary people... He had confidence in Japanese products and that they could conquer the world... And they didn't... And his prophecy was fulfilled, but only after he left.

The Japanese industry, since the beginning of the sixties until now, has been implementing a system called "Total Quality Management," known as "The Five Zeros": (Zero Inventory, Zero Defects, Zero Paperwork, Zero Breakdowns, Zero Delays). Japanese products come out flawlessly, and it's enough to write the words "Made in Japan" on a piece of paper to know that it's a shield that keeps troubles away. The Japanese economy jumped from a total of 91 billion dollars in 1965 to 1065 billion dollars (meaning a trillion and some change) in 1980.

This prosperity spread to every aspect of life in Japan, from education, where vocational training became more important than academic pursuits, to health (with Japanese people having one of the longest life expectancies), and individual income soared. Even sanitation workers earned as much as government ministers in other countries.

Respect for work, time, and cleanliness became as sacred as religion, and the Japanese individual became highly valued, akin to precious gemstones. It's rare to find a Japanese person working abroad compared to Americans scattered worldwide.

But is Japan an angelic country that never loses its way? No. Whenever a mistake occurs, they delve deeply into its impact, how to remedy it, and then find its cause, even if it's a personal error. No one is above the law, and accountability is clear.

Take, for example, the Yakuza mafia. Emerging in the 17th century, these marginalized groups were formed by disgraced samurais who turned to criminal activities. Their hierarchical family structure resembles a mafia movie, and their influence even reached the Prime Minister before World War II.

Regarding corporate losses and cover-ups, Japan faced significant losses in the late 2011s, but the government intervened to prevent market turmoil. Other companies suffered due to the entry of South Korean competitors into new technological fields.

Despite these challenges, Japan remained resilient. Its economy, once dominant globally, faced new competition, but Japan adapted by opening branches in countries with cheaper labor. This led to most Japanese products now being manufactured outside Japan.

Japan faced criticisms and predictions of economic decline, yet it continued to thrive. From the early 2010s, it maintained its position as the world's third-largest economy, after the United States and China.

In conclusion, Japan's success story is comprehensive and integrated, focusing on the individual, society, and the state, both internally and externally. Japanese people are hardworking, respectful, and their country is well-prepared to weather any storm, despite natural risks. Their collective experiences, especially those of successful Japanese companies, offer valuable lessons in perseverance and resilience.