 Okay, we're back to your live. It's one o'clock here in Honolulu and we're talking to Steve Searcher. He's in Japan in Kobe, Japan at Kansai Gaida University and he joins us every couple of weeks and we talk about how things are doing, looking to the east in Japan. So, Steve, you know, I opened the Japan Times, which is done by the Yomiuri Shimbun, and I saw a lot of articles about COVID. COVID seems to be occupying the national consciousness these days, no? Oh, absolutely. It's first and foremost the number one story in Japan. Today, it has been that way for the last few months or so. It's affecting everybody, everybody. Kids, if you have children, of course, they're not going to school. Most of us, I think 60 or 70% of us are now working at home. The economy is taking a dive. As we talked about in previous shows, Japan went into a recession in Q1, Q4 last year, 2019, with negative growth. This is before Corona, right? So, Japan was already on the downward trajectory and Q1, excuse me, we don't have the final numbers for Q1, but they're predicting five to six percent negative growth, which I don't believe it'll be much higher than that. And then for Q2, they're beginning to signal that it's going to be a bloodbath and that the negative growth will be in double digits up around 20, 22%. So, Japan is moving into a severe recession. And most of the press, they talk about the Lehman crisis, the 2008-2009 recession, grand recession, they call it the Lehman crisis here. They picked up on that name to describe it. They're saying, this is nothing. The Lehman crisis is nothing compared to what Japan will be going through in the next year or so. So, yeah, it's the number one story. It's all of us. So, you know, I don't like Abe very much. I try and avoid listening to him, but last night I actually listened to him to see what he had to say. He actually extended the national emergency in Japan for an additional month through the end of May. It was due to end in a couple of days. That was the target set a month or so ago, and now it's been extended for one more month. So, by far, this is the number one issue, number one topic that everybody is paying attention to. That's interesting. You know, you say they say four or five percent, and it's much more. They say extended to the end of the month, it'll be much more. They don't want to, you know, get people too excited about this because, you know, it's a matter of public confidence, and confidence translates into the economy immediately or really soon anyway. Let me give you a fact, Jay. This affects me, since I'm an educator. So many part-time jobs have been wiped out. These are restaurants, you know, service-related jobs, and the majority of those jobs are held by students. They're part-time jobs. They call them Arbite, so I think it comes to rise from a German word. That's the word that they use to describe it. Arbite, sure. Arbite means work in German. Okay. Yeah, that's what Japan borrows from many different languages, primarily English, but every once in a while Portuguese and German or other languages, French will appear. So those jobs are gone. And the deal in Japan, as I observe it to Kansai Gaida, is that the parents pay for the tuition, but the students pay for everything else. That's the deal. So in order to pay for the other things, like food, for example, the students have to work, and now they cannot work. So there was a survey just a few days ago. Twenty percent of Japanese college students may drop out because of this interruption in their study. Maybe they weren't that happy to begin with, but now that they can't afford to live, they can't afford to go to school, we could have a drop of 20 percent if the survey is correct. Is the government not helping them? Not so much the students. No, I don't think so. The support services are for regular workers that can demonstrate that their incomes have gone down significantly. There is a nationwide subsidy program, kind of like what's going on in the United States. Have you got your money yet, by the way, Jay? Oh, no. And I'm not standing, but the door waiting for it. So everyone in Japan, all 125 million of us, including foreigners, are going to get 100,000 yen sometime in the next couple of months or so. So the students are eligible for that, but that's a drop in the bucket. When does that translate to in dollars? Oh, sorry. That's about, in the current exchange rate, about $900 or so, $920. Somewhere in that range. So it's not a small amount, but it's certainly not a large enough amount to sustain a student through a semester if they can't work. So that's a signal of how disruptive the COVID is here in Japan. As you feel that you, you know, sometimes I wonder about this myself. Do you feel that you're being unnecessarily pessimistic? Could you be a little wrong? I try and be down the middle. I've done that in my business career. I try not to be too much too pessimistic, overly pessimistic, or overly optimistic. You know, this is quite serious. And, you know, you can see it in the GDP numbers. If indeed this quarter, the Japan economy shrinks by a fifth, and that's going to impact many, many different industries. Even the stalwarts like Toyota, they're laying people off right now and all companies have stopped hiring. There's just no hiring going on whatsoever right now. Everyone's in a holding pattern. So will we get out of this? Yeah, as an optimist, eventually I believe we will. When will that be? Will it be later this year? Some economists are predicting the turnaround in Q3, that there'll be 10% growth. After the 22% drop in Q2, that I believe is overly optimistic. I think this year is going to be rough. Then it'll be 2021 before things turn around in Japan. Well, you're a professor of business and entrepreneurship and all that. And not only that, you're kind of a comparative business professor because you're associated with the Shiloh School also and American business. So you have a clarity. Most people who only had a foot in one camp and out the other wouldn't have. So you could see, you've been there for a while, you could see the economy declining prior to COVID. But now it's really declining much quicker with really no safety that under it. And I'm wondering what Japan looks like to you as you look down the pike. I mean, what is it going to be, soup kitchens? Is it going to be the demise of the big, I forget the term you use for the big Japanese corporations? Katsus. Okay. Yeah, those are the interconnected businesses that are usually focused on a bank. Yeah. We're going to have a reshaping of the essential structure of the Japanese business community. Well, I hope so. This is a silver lining in all of this. Japan has been very slow to adapt to modern business trends, especially when it comes to technology. And this virus and the repercussions of it in Japan is exposing that so clearly that nobody can deny it any longer. I've been complaining for years about how Japan is not investing in IT infrastructure. It just isn't doing it. If you look at the relative percentages that companies spend on R&D, Japan's usually at a half, maybe a third of a major mainstream American or European countries. So through this crisis, companies, the government, and universities too, my environment, are all recognizing that, hey, we need to up our game. So yes, there could be dramatic change, but some of that change could be for the better. Let me give you a small example. I think I mentioned to you a couple of weeks ago that Japanese business custom for official documents include a chop, what's called in Japanese a hunkle. You actually have to stamp the paper. It has to go through various organizations, and each of them have to put their stamp on it. And then finally, the shot show, the number one guy will put his stamp, and then all the stamps are assembled. Okay, we're good to go. So right now we're at the stay at home edict, right? It's a national emergency. Everyone's being told to stay at home, don't go out unless it's for food or other things, necessary things. But business people are getting on the trains, they're still quite crowded, and they're going into the office because they have to push their official stamp on these contracts on this official paperwork to make payments and collect money and so forth. This is 2000 years old. This comes from China. It's just so far outdated, but it continues on. But now Abe has recognized that this is an interruption in his policy. It's actually forcing people to come to work when he's telling them to stay home. And he's also recognized that this can be totally replaced by technology, totally. And there's 20 companies in Japan that exist today, they could do this. So now he's announced that this will end. So that's one very small example of how these business traditions that have been holding Japan back and have not been changed just because the companies and the culture seems to be very slow to adapt to change. Now through the coronavirus, it's so clear that this is outdated and needs to be changed. It is happening. So before you go to the coronavirus, and I do want to talk about that, what about these other culture points that Hawaii is more Akamai about Japan than most other places? And so, for example, the consensus model of management and business, you have a large group of people. I mean, in the day back in the 80s, when Japanese companies, and I want to say Taishoku, wasn't that the name? Big corporation. When they came here to buy property, usually by property, there'd be 10 or 15 executives. And only one really ran it, but you had to look around the room carefully before you figured out who was the one. And it was all apparently on the consensus model. Then there was this whole thing about cradle to grave. You joined the company out of school, you go through your whole life till you retire, and it's unruffled, it's straight line. And you didn't really have to do anything as long as you kept your nose clean. And your career would be established on the basis of momentum instead of real quality. And then the thing about the room with the window, remember the room with the window. If you did something bad, you'd get a room with a window where you could look at the window. It would be a room, but you'd be at the desk next to the window, which is a signal that the next step would be to go out the window. But there were all these cultural things that seemed inconsistent with creativity, inconsistent with good corporate culture. And they kept on happening through the time that the Japanese were buying all their properties here. And I wonder if those things are on the block now, whether those things might change. Yeah, well, that's a big question. You addressed several key aspects of Japanese culture and Japanese business culture. In terms of lifetime employment, I think that's still something that there's an image of. But I think when people look at it very closely, they realize that that doesn't exist anymore. Because the companies laying people off right now are the companies that would not have done that maybe 10 or 15 years ago, like Toyota, like Hitachi, those types of companies. So I think young people recognize that lifetime employment is not something they may want to have, but it's not something that they may get. So that is changing. 40% of the young people when they graduate, they move into part-time jobs. There aren't enough full-time jobs for them to actually be employed. So they get caught in this kind of Starbucks part-time job phenomenon. This has been going on for 20, 25 years now. So that's the reality. I think people recognize that. In terms of Japanese business culture, I'm in a Japanese university. So what you described, I live every day. That may be changing slightly through the virus, through the COVID episode, but not really. In the end, there's one person who controls everything. When I want to try and accomplish something, I have to go through many, many, many people. It's a foreigner. Even though I've been here a long time, I recognize that it's still kind of impatient. I like to get things done quicker than generally I can do. So that, I doubt, will change all that much because that is really quite fundamental to how this country works. If you put it in perspective, J, after World War II, this country was just devastated. And then by 1968, it was the number two economy in the world. So it worked amazingly well during that period of time to rebuild the country and turn it into this fantastic success. And it's still number three in the world. But these types of things are now a drag from my perspective as an outsider. Are they going to change anytime soon? I don't think so. So on your right, when I was negotiating with Hitachi, it was me. This is when I was working for Hula Packard. I mean, sometimes I would bring along a Japanese colleague and he was there just to give me moral support because I was the one doing all the negotiation. And there would probably be anywhere from eight to 10 to 12 people on the other side. And because I lived in Japan before, I knew the one person and he never spoke. The guy who doesn't speak is the one who has the most power. That's right. Yeah. Yeah. Yeah. So I teach my students about this as well. So that will not change. That is just how things are done here. So that's fundamental to who Japanese people are, I think, and how Japanese operations work here. Yeah. So some things will change. So Honka will go away. There's another discussion right now to change the Japanese academic calendar to the Western calendar. Right now, the academic year in Japan starts in April. So it puts it at odds with the rest of the world. So the spring semester for us starts in January. For them, it starts in April, which is totally out of sync. So that prevents foreign students from coming here in the spring. And it's hard for high level universities to pull in visiting professors because they have the split schedule they have to deal with. So there's some discussion to kind of harmonize Japan academic calendar. So there will be some changes that are good, I think, that are going to come out of this. But in terms of the fundamental business culture, fundamental Japanese culture, Hosti says that doesn't change. You can argue with that, but his theory is that culture changes, or if it does change, it's very, very, very slow. Well, you talked about the the Arbite group of young people who work at part-time jobs, who do not have careers attached to them and all that. And that's, you know, that's different because back when I was looking at it, which is not that many years ago, that was really not the way a Japanese graduate would want to spend his time. So it's a certain deterioration. Also, in terms of crime and violation of social norms, it was not permissible. All of Japan would be ashamed of anyone who broke a social norm, come to find in the last, what, 10 or 20 years, a lot of people break social norms. And, you know, they do crime and they get prosecuted and it's, gee, it sounds like the U.S., as a matter of fact. But it's different, okay? Now, I give you that snapshot, which has already had, you know, a decade or two of deterioration from the old way. And then you take no jobs, take companies that are unraveling, that really are going to be different and smaller and more efficient if they survive in the future. And you people on the street, what does Japan look like then? I mean, is it soup kitchens? Is it social unrest? It's going to be a different Japan, isn't it? You have to remember, Jay, that despite all of this turn down, this is still a very rich country. There's tremendous reserves of cash available, and the monetary policy of the Japanese government, this goes way back. Obviously, he's been doing this since he's been in power, which is, I think, around eight years now. It's stimulus, monetary stimulus. The Bank of Japan now owns 40%. The last I read, owns 40% of all Japanese stocks. So the Bank of Japan is printing money, creating money, and buying Japanese stocks to uphold the economy. They've been doing this for years and years and years. So there's this money machine. Actually, the US is doing this now too. The US has become similar in economic policy to Japan. The Fed is now buying stocks and bonds. This is a part of the whole stimulus effort that's going under these special circumstances in Japan. So the US fiscal monetary policy is the same as what Japan's been doing now for a long, long time. So there are tremendous reserves. Japanese people, especially the older generation, have a lot of money in the savings accounts. So there's a buffer built into society that I think will prevent the worst case scenario from occurring that you're describing. I'm actually more worried about the states because there, you have 40%, 50% of the people are living paycheck to paycheck. And those paychecks now are, in some cases, are gone. What's going to happen there? I think the US economy, even though it's much, much bigger, from a consumer perspective, consumer savings perspective, is more at risk than Japan. That's my sense of it, Jay. Let's turn to what you started on a little while ago. That is the Japanese effort at dealing with COVID. What steps have been taken? How effective have they been? Well, there are subsidies of businesses and for consumers. There's loans available. There is the payment that I told you about that's going out. So all 125 million Japanese will be made in the next couple of months or so. At every level, the government is saying we want to help you. We want to do as much as we can. Abbey last night was helping about $10 billion fund that's going to be created to help small businesses because they're the ones that are really at risk. Those are the ones that are more on the thin line between operation and bankruptcy. So there's a lot of effort. I'm a little bit isolated from that aspect of the Japanese economy since I'm in a university environment. Our school is financially sound. There's no issues, really, one way or the other about that. So there is a lot of investment in the society from the government. There's a lot of generosity being exhibited by companies and donating, for example, protective gear because we also have the same issue here in Japan that the healthcare people who are on the front line, there's enough masks in Japan. There's no shortage, but there's not enough protective gear. So Japanese companies are creating this, they're turning their manufacturing to making these ponchos or whatever they may be and giving them free. So I think there's a sense that there's an effort on the part of society, government, business, and so forth to try and overcome this. I'm not abiding by the social distancing, abiding by the mask obligation and for that matter, having testing. I mean, the problems that the U.S. has had continue essentially. And I wonder if those problems exist in Japan and whether the Japanese response is better than the U.S.? Well, maybe relatively. The government has asked for social interaction to drop by 80%. That comes from the science. Apparently, if you get to below that number, the spread of the virus goes down dramatically. Has Japan achieved that? No. You can use a mobile phone. They do this in the States too, right? And measure activity. The cellular companies can measure people as they move around supposedly anonymously, but, Jay, they know where you are right now. I know. They know you're talking to me right now. But anyway. It's okay. I'm proud of that. Okay. Thank you. So the numbers are in the 60, 65% range. So they're not quite to the extent that the government has asked, but it's not too bad. But if you go out, like I live close to a park, they're jammed. People are getting, you know, they're buggy, staying home all the time. So especially when you have kids. So they're not adhering to that. Most people are wearing masks. This is, I was reading in America that this has become a personal freedom issue in America to wear a mask or not. But in Japan, it has a mask wearing culture. Every spring, people have hay fever because of the pine trees that are up in the hills. They cut down all the natural trees and put in pine. So they have a tremendous allergy problem in Japan. So at this time of year, usually 40% of the people are wearing masks anyway. So there's no issue there. So I would say probably 90% of people are wearing masks now when they're outside. But there are exceptions. There's a basketball court right across the street from where we are right here. And there were 10 kids out there playing no masks. You know, the security guard came by the university and kicked them out because you're not supposed to be exercising. So individuals are making decisions to kind of do what they've done in the past. But I would say for the most part, most people are adhering to the requests from the government. Is there talk of a second wave? Yeah, maybe in the fall, potentially. So there's some articles that I've read about that that this is what we're going through here will be repeated down the way. I think in the pandemic that occurred in the early 1900s, that my mother was actually telling me that her mother, grandmother, who was in San Francisco at that time and saw all of this, said the first wave was bad. The second wave was even worse. And that came through in the following year. So it was a two year episode for that particular epidemic. So yeah, there's some recognition that that may occur again. But the numbers, they are kind of moderating. They're not going down, which is why the national emergency has been extended. But there's a sense that society overall is cooperating for the most part, not not to the level the government is asking. But the majority of people are adhering to it. Well, as you said, Japan is a very high tech place. It has a lot of well educated people in science. And that would include bio, biotechnology, bio chemistry, medical research. And so you mentioned a couple of times ago, a couple of our shows about a drug called, as I recall the name was Avagon, which is a laboratory owned by Fujifilm, which is a therapeutic rather than a vaccine. But Query, any more news about them? I haven't read so much about that. I mean, they are moving forward and they're offering to distribute the drug worldwide. So that's very, very good. They mentioned 20 different countries that they're going to distribute the drug to. But not too much. What about other drugs? What about the Red Desivirs coming up, you know? Yeah, that's the one that the government is focusing on right now, because that seems to have the best prospects. So Japan is negotiating with Gilead, I think is the name of the company. Maybe I'm mispronouncing that to try and bring that particular drug into Japan. But again, Japan's numbers, it's about 13, 14,000. I haven't checked in the last couple of days. I was reading, Jay, for your own mental health, you shouldn't look at the stats every day. I mean, I guess you have to because it's your job. I was a consumer report sent out this thing, how to maintain your mental health. And this one thing it said is don't check the news every day. But still, you know, on balance, Japan is relatively moderate. We're still in the 13 to 15,000 range in terms of number of infections. And that's what that's less than a day in America, right? America's 20,000 a day or plus, isn't it? Yeah. Yeah. Well, I think we're number one, I think in terms of cases, that's really too bad. Well, you know, we talked about this article that appeared in the Times comparing various countries. And some areas have done very well. Some areas have not done very well. And what we don't know is why, why some areas do well. It's probably got a lot to do with a lot of things like social distancing and so forth. Right. And culture. Yep. I think that's a factor. I think Japan is more science oriented. There's no dispute in this country when when doctors come on the TV and say, this is what needs to be done. You know, that doesn't get questioned in the same way I've observed it is in United States. And also Japan is not as fundamentally based in religion. I mean, this is more of an agnostic country. So we don't have that counterbalance that you have in the United States religious interests. And certainly we don't have people who are carrying machine guns and going into the state government offices. There's none of that kind of pushback whatsoever. There's been no protests. I don't think people are happy about everything that's going on here. And then the government response has been ineffective in some cases. Certainly we're slow. But we haven't had that kind of mass resistance or symbolic resistance or anti science approach or you know, religious that's great to hear. I mean, the anti vaxxers or anything like that, fortunately, I value I think everybody values the Japan culture for that for the sense of orderliness and respect. But let's talk about you that sort of missing a feeling on you. So you're not teaching per se. You're using you're using zoom to teach. And you're not having meetings with students or or what you have where we can't we are no longer able to meet with students once the national emergency was instituted last month that stopped. So all my interaction with students is through like us right now through technology. The students seem to be managing it fairly well. I think I've mentioned I'm teaching an online course with the University of Hawaii West Oahu with Professor Sepuda. We decided to do that last summer. So we're it's like I was prescient somehow. Yeah. Yeah, great. Exactly. I said, you know, maybe we should try experimenting with online education and now everybody's experimenting with online education. So the students seem to be managing, you know, they're hold the ones that remain in Japan are hold up in their dorms. I'm a little concerned about their mental health and their physical condition. But for the most part, they seem to be managing okay. And I'm getting some feedback from my classes, their group work. Surprisingly, Jay, I thought it would be rough and you know, we deteriorate because now these students are spread out all over the world. There's someone who were in Europe, you know, in the United States and summer here in Japan. It's actually better. I think they're recognizing they're facing a challenge. So they're make making more of an effort to collaborate with each other. I'm just surprised. The feedback has been much higher than normal. You know, that's one question and it has to be my last question. We're almost out of time. As you know, okay, everybody got into this kind of blush thing, but we're going to deal with this. We're going to find, you know, energy and strength to deal with it. And we're going to do this together to statement of our ability to do things together. And that lasts for a few weeks, maybe, but you know, I'm wondering when that comes to an end. And when people get tired of that and they become, you know, become less interested in doing that because they can't see the end. They can't see the light at the end of the tunnel. The government tries to make you feel that, oh, yeah, there's some good things happening and maybe there are, but I don't think a lot of people are persuaded. So the question is, do you see that happening among your students and the people you associate with that, you know, they're getting a little antsy about this and they don't feel the end is going to be any time soon. Right. I need to do a little bit more research on that. Maybe the next time we have the show, I can give you a better answer there because like for example on Thursday, those students that I've had in the collaboration with West Oahu, I'm going to talk to them and ask them, what do you think about this? How did it go for you? So there's eight students on our side, four are foreigners, two, there's three Europeans and one American and they had been, they'd taken online courses before. So for them, it wasn't a big deal. But I have four Japanese students who had never, they're the only students in all of Kansai Gada, 13,000 students that have ever taken an online course. So I'm going to talk to them and see what they think about that. And then we're going to do a survey with all of our foreign students as well to try and get a sense of this. Yeah. The premise of your question is right, that students somehow, even though it defies my common sense, they feel closer to each other because they've gone through this experience even though they don't even see each other. It's all been like you and I talking right now. And will that carry over beyond this particular semester or the next? Yeah, beyond maybe on June or June, because it's a fair chance that there won't be any great news. So anyway, we can talk about that. And I would also like to discuss with you, some of the purposes of your inquiries around how they feel about the reopening and how they feel about a resumption of normal educational and economic activity. Yeah, the part of the message last night, I know we're running out of time for Mabe, is that yes, the national emergency is going to continue. But some organizations, some businesses will open like libraries. They're beginning around the edges to begin to open up things. So they're going to go, if my sense of how Japan will open, it'll be very, very slow, step by step, very cautiously done, and to make sure that the numbers don't suddenly jump up. That's my guess as to how things will occur here. It won't be, I guess like in Florida, where they just, okay, let's get back to business. It'll be much more incremental because that fits better with how things are done here in general. Yeah, oh, we'll be watching. We'll be watching to see how it goes. So next time, next time, Steve, looking forward to that conversation. Yeah, very much. So thank you, Jay. It's always fun to talk with you. And I, the number of books, have you read all those books, Jay? The ones that are behind you there? I just want to ask that question. Have you read them? I'm working my way, I'm working my way through the shelves. Okay. Thanks for asking, Steve. You're welcome. Steve Searcher, Kansai Kodai University. Thank you. Always a pleasure, Jay. Thank you. Bye-bye.