below the buzzing metropolis of tokyo in the depths of a high rise building is a microcosm of an agricultural revolution. in a facility staffed by former freeters looking for a source of lasting employment, there are six rooms dedicated the the seeding, germination, and successful growth of various vegetables. why is this anything exciting, you might ask?

while for the last century large scale indoor cultivation has been commonly practiced around the world and indoor greenhouses and grow rooms are used by people as varied as researchers to marijuana growers, what is interesting about this experiment is the intent and unintended consquences. pasona o2, unlike its counterparts has among it goals the employment of that portion of disaffected japanese youth. in addition it is a live testing of the marginal transformation of land to capital in an urban environment.

while at first this may seem unexciting, to me it is intriguing for two reasons. first of all it is an introduction to a field of steady work for moderately educated youth to introduce themselves to both industrial and agricultural technology. while these are seemingly dying arts they are also heavily subsidized industries and thus a safe bet. secondly, while the proprietors may not see this as the future of farming, it was an object of debate in an environmental economics class in which i once enrolled. in an area where land prices are high and the soil quality is poor enough that it must be continually augmented by expensive fertilizers, there could conceivably be a situation, provided a cheap source of electricity, where hydroponic gardens in skyscapers could be the source of food to a nation and the nations to which it exports.

hat tip to pruned

With the government looking determined to push through a tax reform bill that JP reported on last week, it might come as something of a surprise to hear that it’s being reported tonight that they have agreed to drop the bill, or at least the clause concerning “road-designated tax revenues”, which has been facing stiff opposition and causing the oft-stated ‘confusion’ in parliament.

That Mainichi article linked above might lead you to believe that consumers in Japan can now look forward to cheaper gasoline at the pump. But I for one won’t be holding my breath.

Kyodo reports rather fuller details, including -

The withdrawal comes after the ruling and opposition camps accepted [House of Representatives Speaker Yohei] Kono’s offer made earlier in the day to resolve the tense confrontation over the bill in the lower house, a senior opposition lawmaker said. The offer calls for withdrawing the stopgap bill and seeking “some kind of conclusion within this fiscal year” through March on a separate bill to maintain the special taxes for 10 years beyond their expiration on March 31.

There’s no suggestion of nixing the gas tax, or lowering the rate. All this does is free up parliamentary time, by postponing a spat that sounds like it was beginning to get out of hand -

Prior to the deliberations at the financial committee, about 50 DPJ members blocked the passage near the committee room, holding up signs which read ”Road interests versus people’s lives.” In the committee meeting, opposition lawmakers protested against holding a vote, seizing the committee head’s microphone and slamming desks.

There’s clearly other pressing business the government wants to get round to (keep your eyes open) and could do without such strident hindrance. But it can only be seen as a postponement - the government will resubmit the issue in a bill in some other form in the near future, and in the face of further opposition, are likely to force it through.

Just when soaring energy costs are sending gasoline prices over the 150-yen-per-liter mark and the economy is beginning to sputter, the Japanese government is faced with a monumental decision about whether to extend “temporary” tax measures meant to finance road construction and maintenance that went into effect 40 years ago, and which have doubled since they were initially implemented.

Of course the smart and logical thing to do would be to let the taxes expire or lower them somewhat to give people some relief and to spur economic activity. But, as we all know, no politician anywhere will ever agree to the elimination of a revenue source, especially in Japan where a docile populace seems to have made “No pain, no gain” the national motto.

That is why the government has submitted a tax reform bill that includes a measure calling for a continuation of special additional gasoline and other auto-related taxes for another 10 years.

Tokyo Governor Shintaro Ishihara has gone on record saying that the U.S. will abandon Japan in the future to forge stronger ties with China because the two countries worship money.

“The U.S. will gravitate more and more toward China at the expense of Japan as it seeks short-term benefit,” Ishihara, 75, said in an interview with Bloomberg Television Jan. 9. “American and Chinese people share a similar value for just money, money, money.”

Japan’s adoption of U.S.-style capitalism has led to a wealth gap between urban and rural areas, he added. The co-author of the 1989 bestseller “The Japan That Can Say No,” also reiterated his view that the country should scrap its security treaty with the U.S. and strengthen its military.

Ishihara also claimed that many of Japan’s current woes are due to embrace of American-style capitalism by former Primer Minister Junichiro Koizumi and opposition leader Ichiro Ozawa.

“It was Ozawa who created a regional gap,” he said. “Ozawa ruined Japanese farming villages along with small and medium companies.”

Former Prime Minister Junichiro Koizumi’s push to privatize parts of Japan’s postal system and boost competition were also a mistake, he said.

Only time will tell whether Koizumi’s reforms were good for Japan, but out here in the Tochigi countryside I hear nothing but complaints against the ex-Prime Minister. Many people out in the rural areas feel betrayed by Koizumi’s reforms and harbor deep bitterness against him and the “Koizumi children.”

If you’re thinking of flying in to or out of Japan after April this year, then this news is for you.

The Japan News Review reports that both JAL (Japan Airlines) and ANA (All Nippon Airways) are set to hike all their fares from April.

Travellers heading from Japan to North America will see a 13 percent increase, while those leaving for South America, Asia and Oceania will see a 10 percent increase. The extent of the price raise for flights to Europe is as of yet undecided.

The cynical among you may make much of an entirely tenuous link between these fares going up in April and Golden Week being in May. Tenuous, at best. Unrelated even.

Not that long ago Japan’s environment ministry was mulling a 2,400-yen tax on each ton of carbon emitted by households using kerosene and liquefied petroleum gas, which are the main heating and cooking fuels in Japan. Even the head of the Japan Association of Corporate Executives (Keizai Doyukai) got into the act, saying that Japan needs “higher rates of the carbon tax to be imposed on goods and services.”

Now we hear that Japanese government has reportedly set aside 215 billion yen as an emergency relief package to aid people and small businesses affected by soaring crude oil prices.

The package includes eased lending terms for small enterprises, subsidies for ship, bus and airline operators that serve rural areas, and further discounts in nighttime expressway tolls.

On top of this, Tokyo plans to hand out more money to local governments in colder areas of the nation so they can aid low-income people in their areas.

No one among us is unaffected by the rise in oil prices, so it is a mystery why the government is singling out only specific individuals and businesses for special treatment. You would think that if the government really wanted to help people, they would simply cut the taxes that currently double the consumer price of gasoline and kerosene at the pump.

Taxi fares have gone up 7%, a rare instance of inflation in a country where prices generally stay the same for years.

Unlike the U.S., Japan is a very centralized place where change always happens from the top down, and I found it interesting to note that the decision to allow the raise in rates for the whole country was handled by a single government ministry in Tokyo, not decided on a local level as you might expect. The higher rates are to give drivers a long-overdue raise, since most of them are earning what they made in the 1980s, and with no custom of tipping in Japan to help make up the difference.

Not every taxi company is raising their rates, however — some are keeping them the same, which effectively introduces price competition in an industry where none existed before.

While most of the world takes it for granted that taxi drivers will usually be from some often unpronounceable country, that’s not the case at all here, where virtually 100% of drivers are Japanese — after all, would you get into a cab driven by someone who couldn’t read kanji? Once, I did catch a TV show about an American who had decided to become a taxi driver and had passed all the required tests, but the fact that this was rare enough to make national TV shows how uncommon this is.

That’s the title of a Newsweek article that explores why Japan is not more of a powerhouse on the world technological stage.

Japan is a technological powerhouse. If you exult in brilliantly bizarre gadgetry, engineering wonkery and prodigious feats of craftsmanship, you’ll feel right at home. It’s also an extremely sophisticated business environment. The Japanese domestic market is big and nuanced; Japanese consumers are notoriously finicky and demanding.

On the face of things, it would all seem to add up to an entrepreneurial paradise, a playground of creativity and innovation. Japan spent $130 billion on research and development last year (more as a percentage of GDP than the United States or the EU, putting it in third place globally behind Sweden and Finland). It registers, far and away, more patents than any other country—even more than the United States, with more than twice the population.

So you’d think Japan would be confident about its technological future, but you’d be wrong. These days, big business, academia, think tanks, government and the media, as well as the average Japanese salaryman, are all brooding about the state of their economy in the digital era. The educational system is going down the tubes, it’s said, generating math and science scores that increasingly lag behind other OECD countries. The government is gridlocked, stalling urgently needed economic reform. Managers are mired in old mentalities, while imaginative newcomers can’t find the space or the capital to develop their ideas. It’s a syndrome that’s sometimes summed up in a single, angst-ridden question: how come we weren’t the ones who invented the iPod?

Tokyo is no longer a member of the list of the 10 most expensive cities in the world for expatriates. The reasons given were the decline in value of the yen (which is currently climbing) and low inflation.

Tokyo, the world’s biggest city, slipped from 10th to 13th in the survey by ECA International, which measures the cost of food, basic items including drink and tobacco, and other costs such as clothing and electrical goods.

Seoul remains Asia’s most expensive city, moving to 7th from 8th in the global rankings. Taipei fell six places to 94th in the world, or 6th in Asia, the survey said.

Hong Kong remained the 5th most expensive city to live in Asia, while Singapore rose 10 places to 122nd globally and ninth in the region, because of a stronger Singapore dollar.

World’s 10 Most Expensive Cities

1. Luanda, Angola
2. Oslo, Norway
3. Moscow, Russia
4. Stavanger, Norway
5. Copenhagen, Denmark
6. Kinshasa, Congo Democratic Rep.
7. Seoul, Korea Republic
8. Libreville, Gabon
9. Geneva, Switzerland
10. London, U.K.

In an editorial titled, “Another tradition fading,” The Japan Times reports on a recent Cabinet office survey that reveals that more than 50 percent of Japanese men think women should not stay at home and function solely as housewives.

In 1979, the percentage supporting women’s traditional house-bound role was 72 percent, and only 20 percent disagreed with that. In 1992, the ratio had increased slightly to 30 percent against house-bound wives. If this trend continues, in the next 10 years or so, the numbers reflecting new attitudes are likely to climb even further. Of course, that depends on the economy, which is one of the prime reasons for this change in long-held beliefs.

After the “bubble” years, it became a necessity for many families to have two incomes to cover the bills. With ongoing change in family structures, especially the higher divorce rate, having a wife stay at home without working became an expensive luxury.

Still, Japanese women put their family before their career (men put their careers first), and women prepare meals 85 percent of the time.

It seems like only yesterday that we were constantly hearing stories about how the Japanese people saved “too much” and about how something “had to be done” in order to pry some of the cash out of the nation’s bank accounts and get it back into circulation.

Now it’s the other way around, and economists are predicting dire days ahead as the rate of savings in Japan has followed the nation’s finances in general down a long, steady slide.

What a difference an economic bust makes.

Now Japanese toy maker TOMY claims to have an answer to Japan’s savings drought with its new “Savings Bomb” bank, which is slated to go on sale here next week.

The Savings Bomb is designed to “explode” and scatter its contents all over the place if it is not fed coins over some preset interval.

The battery-powered toy — designed as a cartoon-style, ball-shaped black bomb with a skull and crossbones logo — lights up, makes a noise, shakes violently and scatters coins if it is not topped up for a long time.

“Users must pick up and collect the scattered coins and reflect on their laziness,” the Japanese company said.

Here’s hoping that TOMY’s new toy will lead to an economic boom.

Price: Around 3,000 yen

Back in the days of the Japanese “bubble economy” of the late 1980s, everyone, including the government, had so much money they literally did not know what to do with it. Flush with cash, Japan’s national government decided to give local municipalities throughout the nation 100 million cash each to “foster local industries.” (Don’t ask me why they didn’t simply cut taxes.)

In many cases, the windfalls were squandered on strange monuments to the stupidity of local politicians, such as modern-art museums and classic concert halls in the middle of nowhere, and blocks of gold that served no other purpose than something people could come in and gaze at.

Kuroishi in Aomori Prefecture decided at the time that the best use for its 100 million yen was a 50-centimeter-tall, 58-kilogram pure gold statue created in the form of a Japanese kokeshi doll.

Now that the boom has gone bust, Kuroishi is strapped for cash and looking for a buyer for their gold kokeshi. Anyone have a cool million they don’t know what to do with?

The word on the tax front is that the Fukuda cabinet is floating the idea of raising the Japanese consumption tax from the current 5% to somewhere in the range of 11% to 17 %.

To keep Japan’s medical and elderly care at current levels, a consumption tax raise up to 11-17%, up from the current 5% may become necessary, the Cabinet announced Wednesday at a Council on Economic and Fiscal Policy briefing, the Asahi Shimbun reports.

The Council predicted the price tag on upholding medical and elderly care will have come to some 14-31 trillion yen in necessary tax increases by the fiscal year of 2025. Chief Cabinet Secretary Nobutaka Machimura and Kaoru Yosano, chairman of the LDP’s taxation commitee has also expressed support of a tax raise in order to sustain the Japanese welfare system.

“We cannot allow ourselves to cut down on social security, even if we are unable to keep up with the economical situation,” Prime Minister Yasuo Fukuda said at the briefing. “It has been decided sine June, by the Abe Cabinet, that we would look into a possible tax raise.“

“I don’t think there is anybody who thought we would be able to keep the consumption tax at 5%, in the long run,” LDP Chief Cabinet Secretary Machimura commented at the same press conference.

The consumption tax was introduced in 1988 at a level of 3%. Opponents feared that once implemented, the temptation would always be there to continue raise the rate, no matter what it became. . . Politicians promised that they would never, ever raise it above 3%. . . And the world goes round and round. . .

Goldman Sachs seems to be betting they will.

Goldman Sachs Group Inc. will add to its ¥2 trillion in Japanese properties acquired since 1998, betting real estate is short of its peak after a two-year rally.

Goldman, Wall Street’s most profitable securities firm, plans to invest about ¥200 billion this year in Japanese property, said Toshinobu Kasai, a managing director who oversees the firm’s real estate investments in the country.

“Capital inflows will likely increase as various funds continue to be attracted to the Japanese property market,” Kasai said in an interview. “As competition intensifies for these funds, some will enter and some will have to retreat.”

Japanese commercial land prices are advancing for the first time since the property bubble burst in 1991, crippling the world’s second-biggest economy with three recessions in the following 15 years. Goldman in August spent more than ¥47 billion buying two buildings in Ginza, the central Tokyo district with Japan’s priciest real estate.

A bank in Gifu prefecture has begun marketing a loan specifically aimed at those “who feel the pinch when they untie the knot“.

Ogaki Kyoritsu Bank (OKB) is targeting the growing number of middle-aged couples who are planning to divorce with its Life Plan R E.

OKB will offer loans of anywhere from 100,000 yen to 5 million yen to cover the cost of such expenses as lump sum alimony payments, distribution of property and court costs.

According to the Mainichi report, “OKB officials say about 20,000 couples divorced last year in the three prefectures that make up the Tokai region”.

The cynical among you can probably hear their marketing man urging them to tap the divorcee market. But you’d be wrong. They are in fact the Knights in Shining Armour of the banking world, saving potential divorcees from the clutches of evil consumer credit companies and their “usurious rates of interest”…

Reader Heather Meadows sends in a link that details the trials and tribulations of a Japanese housewife who wipes out her family’s savings while trying to make a buck on the Internet.

Since the credit crisis started shaking the world financial markets this summer, many professional traders have taken big losses. Another, less likely group of investors has, too: middle-class Japanese homemakers who moonlight as amateur currency speculators.

Ms. Itoh is one of them. Ms. Itoh, a homemaker in the central city of Nagoya, did not want her full name used because her husband still does not know. After cleaning the dinner dishes, she would spend her evenings buying and selling British pounds and Australian dollars.

When the turmoil struck the currency markets last month, Ms. Itoh spent a sleepless week as market losses wiped out her holdings. She lost nearly all her family’s $100,000 in savings.

“I wanted to add to our savings, but instead I got in over my head,” Ms. Itoh, 36, said.

A survey by the Japanese Ministry of Health, Labor and Welfare had revealed that there are 5,400 people across the country who are basically homeless and spend their nights at Internet and manga cafes, and other temporary venues. About half of the people who live this way are those without regular employment.

Those in their 20s form the largest age group, followed by people in their 50s. The figures highlight employment problems that are affecting middle-aged and elderly people as well as those in their 20s.

About 60,900 people stay overnight at Internet cafes every day, the survey found. More than half of them are customers using computers and other cafe services, but there are also an estimated 5,400 homeless people who stay overnight at the cafes for more than half of the week.

The Economist has an excellent report titled Demise of the depato in which they discuss the past, present, and future of Japan’s large department stores.

ONCE, Japan’s department stores were symbols of modernity. In 1673 Mitsukoshi, the oldest, introduced the then-radical innovation of fixed prices. At the turn of the last century, its flagship store was the first building in Japan to have central heating and escalators, and one of the first big shops in the country to allow customers to wear shoes.

Nowadays, however, depato, as department stores are known in Japanese, seem stodgy. Customers are deserting them in favour of speciality clothing stores and malls. Moreover, consumer spending is flat and the population is declining. Sales have fallen across the industry for a decade, and profits with them. Goldman Sachs, an investment bank, expects them to fall further this year. Because productivity is low and operating costs are high, earnings are meagre. Mitsukoshi, for one, has posted losses for six consecutive years. The value of the land on which its stores sit is now thought to be higher than that of the company itself.

Read the rest here.

The Mainichi reports that a square metre of land in Tokyo’s Ginza district can now fetch just short of 25 million yen.

According to the National Tax Agency, this makes it “the most expensive plot of land facing a major road in Japan”, which seems a rather odd designation, but it’s number one nevertheless. Land prices have risen by up to 33% in that area in the last year.

Ahead of Sunday’s upper house elections, the ruling LDP (Jiminto) are nervous, we are told. And if the Japan Times (JT) are right, they have just cause to be. This report in the JT tells of a desire for change coming from an unexpected quarter - the farming sector.

The very factors that kept the farmers staunch LDP voters in the past are now turning them to the DPJ (Minshuto). As well as those things swaying other voters away from the ruling LDP, namely the countless scandals and the pensions fiasco, some farmers are also angry that present government policy is hitting them in the wallet and, in general, are concerned that it puts the future of the whole farming sector at risk.

Photo: Hiroko Nakata, via JT

The traditional LDP agricultural policy of heavy subsidies, protectionism and strangling supply to inflate prices was enough to buy the huge farming vote. And as long that continued, the farmers voted and forgave all else. But the JT says “seeds sown by former PM Koizumi are now bearing fruit”. Now that they’re exposed to a bit of competition, farmers are beginning to feel vulnerable.

Facing global pressure to liberalize agricultural trade, Koizumi promoted food imports and scrapped a policy to shore up rice prices in favor of price competition. Farmers say prices were already edging down in earlier decades, and Koizumi only increased the strain after taking office in 2001. Frustration with LDP policy is now bubbling to the surface.

DPJ leader Ichiro Ozawa has been paying frequent pre-election visits to communities like these.

In contrast with the LDP’s policy of propping up rice prices by controlling supply, and also prodding farmers to combine their operations to cut costs, the DPJ’s proposal is more attractive to many farmers — letting them grow rice freely but subsidizing them for any drop in market prices that might ensue.

The DPJ sees that as a compromise necessary to help Japan’s farmers stay afloat in a competitive global market while ensuring a homegrown food supply.

I’m no expert on the economics of farming, and can’t say whether the DPJ policy is in any sense ‘better’, but the implications are clear. If traditionally conservative voters in a strongly conservative constituency can consider such a change, the desire for change in the political landscape could run a lot deeper.