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Author: akiokawato

  • Shoot the Pianist: The Fate of Today’s Central Banker

    The Bank of Japan is widely expected to raise interest rates to 1 percent at its policy meeting on the 15th. Inflationary pressures have been building, and the widening interest-rate gap between Japan and the United States has helped push the yen into what often seems like an endless decline.

    .

    Then, today, came a surprise: BOJ Governor Kazuo Ueda would reportedly miss the meeting because of a sudden illness requiring surgery…..

    Aha! Could this be a case of “Shoot the Pianist”? The phrase comes from the title of the 1960 film Shoot the Piano Player—in other words, get rid of the entertainer who is playing the tune you don’t like.

    Prime Minister Sanae Takaichi has made no secret of her preference for economic stimulus: expansive fiscal policy and relatively low interest rates. So perhaps, one might joke, someone decided that the easiest way to stop an inconvenient BOJ rate hike was to remove Governor Ueda from the stage…Pure speculation, of course. At least, I hope so.

    .

    Interestingly, disappearing central bankers are not unique to Japan.

    In Russia, Governor Elvira Nabiullina—who has spent the last several years trying to save the Russian economy from runaway war-driven inflation—has also vanished from public view for more than a week. Illness is said to be the reason.

    Nabiullina has kept interest rates painfully high in an effort to tame inflation, earning herself no shortage of enemies in both political and business circles. So, was she, too, made a victim of “shoot the pianist”? One hopes not.

    And I wish good health to the newly appointed Chair of the Federal Reserve Mr. Warsh.

  • The Summer Russia Chose Freedom

    .                                      Akio KAWATO

    When people think of Russia today, they usually think of dictatorship, imperial ambitions, and the long shadow of Vladimir Putin. Yet there was a time when things looked very different.

    .

    After Mikhail Gorbachev launched his reforms in 1985, Soviet and Russian society began moving toward openness and democracy. That process reached its peak in August 1991, when mass gatherings of Moscow citizens helped defeat a hardline coup attempt.

    The moment was brief and largely emotional.

    .

    By December of that same year, the Soviet Union had collapsed. In January, prices were liberalized, and within two years Russia was hit by an astonishing 6,000 percent inflation rate. The dream quickly turned sour.

    Still, those days revealed something important: Russians, too, yearn for freedom and democracy. They are people with whom we can deeply sympathize.

    .

    In 1991, I was serving at the Japanese Embassy in Moscow, responsible for public affairs and cultural relations.

    Early in the morning of August 19, I was awakened by a phone call from the head of our political section.

    “A coup has taken place. Get to the embassy immediately.”

    Come to think of it, the vehicle that had rattled past my apartment only moments earlier had been tanks.

    When I got into my car and drove out, the asphalt was scarred with fresh tank tracks.

    .

    What followed was a whirlwind. My Russian friends immediately sided against the hardline coup plotters. They began distributing leaflets in the streets. By nightfall, young people had gathered around the gleaming white building of the Russian Republic’s Supreme Soviet—the legislature of the Russian Socialist Republic, then still formally part of the Soviet Union—where Boris Yeltsin and his supporters had barricaded themselves.

    The weather was surprisingly cold for August. The young people sat around campfires, as if they were on a camping trip, singing folk songs to guitars as they tried to keep warm.

    .

    On August 21, the coup collapsed. Late that night, Gorbachev and his family returned to Moscow from the Crimean resort where they had effectively been held under house arrest. But by then public loyalty had already shifted decisively to Yeltsin, who had been elected President of the Russian Socialist Republic the year before in a direct popular vote.

    The Soviet Union itself would formally cease to exist four months later.

    .

    I still remember the fresh sky after the rain on August 22. Muscovites carried themselves with a new confidence. They felt they had changed their country with their own hands—even though, in reality, most had done little more than watch events unfold.

    Even the young Russian janitor, who normally swept the grounds of our foreign apartment complex with the expression of a man wondering why he had been cursed with such work, suddenly stood straighter, his face brighter than usual.

    .

    “Freedom!” The word echoed constantly on television during those romantic days. That was the starting point of the next thirty years of Russian history.

    The first ten years were the chaotic Yeltsin era, when almost anything seemed possible (at first only). The next twenty were the conservative age of Putin.

    Yeltsin’s dissolution of the Soviet Communist Party and his democratization campaign produced a political landscape crowded with parties but incapable of making decisions. His market reforms generated 6,000 percent inflation in only two years. Privatization of state enterprises created powerful oligarchs and staggering inequalities.

    .

    The public quickly turned against the Yeltsin government. The arguments that emerged during those years—about democracy, markets, national identity, and later anti-Americanism—have been repeated ever since and still form the foundation of contemporary Russian political culture.

    In many ways, the Putin era has simply frozen and hardened the contradictory legacy of the Yeltsin reforms.

    .

    Now, partly because of the Ukrainean war the Russian authorities have tightened control so thoroughly that not even weeds are allowed to grow. After thirty years of circling back, Russia has arrived at something not so different from the Taliban’s return to power in Afghanistan: a society that rejects Western-style democracy and has, in many respects, reverted to a Soviet-style political mindset.

    .

    Most Russian industrial production remains dominated by state-controlled enterprises. In some respects that is understandable; compared with major Western corporations, Russian companies are often far smaller in both revenue and profits. Competing in cutting-edge technological development is extraordinarily difficult under those circumstances. State support becomes almost unavoidable.

    .

    Moreover, after more than seventy years of communist and bureaucratic economic management, Russia still suffers from a severe shortage of people capable of running enterprises as modern businesses.

    There are promising fields—nanomaterials, software applications, and a handful of others—but unless Russia opens itself to global competition the way China once did, a “Soviet Union 2.0” will struggle to reach the twenty-second century.

    .

    But let me return to that coup thirty years ago.

    I once wrote a sweeping novel about the Soviet Union and Russia of that era titled Land of Legend…Land of Dream (You can find the English translation at https://www.amazon.co.jp/Land-Legend-Dream-English-ebook/dp/B003CFB53G).

    Set against the backdrop of revolutionary change, it follows the fate of a colorful (fictitious) Russian journalist, Ilya Makoshin, and his family.

    The book was published in Russian, and my publisher promoted it as a modern-day Doctor Zhivago. That comparison even prompted a phone call—more protest than compliment—from a grandson of its author, Boris Pasternak.

    Still, I remain fond of the novel.

    .

    To convey the atmosphere of those extraordinary days, I would like to reproduce a passage here.

    .


    (The protagonist, Ilya, has just launched his own newspaper and is helping shape the spirit of the age. On the day of the coup he is painting his dacha outside Moscow when news of the coup reaches him. He rushes into the city, heading for the Russian parliament building—the famous White House where Yeltsin’s supporters have gathered.)

    .

    —–As Ilya emerged from the metro station at Smolenskaya, he saw a barricade of trolleybuses blocking the Garden Ring.

    There were no soldiers in sight. Instead, crowds of spectators milled about, shouting slogans with the enthusiasm of people who seemed half-drunk on the historic events unfolding before their eyes.

    Among them walked an Asian monk in bright yellow robes, beating a hand drum and loudly preaching peace.

    .

    In front of the parliament building stood tanks and armored vehicles belonging to the coup plotters, but the building was guarded by improvised barricades made from metal pipes and fencing, and fleets of taxis whose drivers had arrived to support the defenders.

    Yet the atmosphere felt less like a revolution than an outdoor rock concert.

    .

    Young people warmed themselves around bonfires, listening to cassette players and guitars. Middle-aged women wandered through the crowd distributing mountains of homemade pirozhki.

    Soldiers chatted with civilians. Officers accepted copies of Yeltsin’s appeals and stood reading them thoughtfully.

    One drunken, unemployed-looking man threw open his shirt and shouted at a tank crew: “Go ahead—shoot! You can’t do it, can you? You’re Russian, and so am I!”

    .

    On a makeshift stage, the comedian Gennady Khazanov drew roaring laughter by mocking Gorbachev and imitating the trembling hands (because of fear and alcoholism) of coup leader Vice President Gennady Yanayev.

    Nearby, the poet Yevgeny Yevtushenko—widely viewed as a political weather vane—nervously read a poem praising the resistance while receiving a somewhat cool reception from the younger crowd.

    .

    As democratic politicians shouted through megaphones, Ilya suddenly heard the familiar gravelly voice of Alliluyev, a fictional nouveau riche. Ilya smiled despite himself. That man has come all the way here just to show off.

    “I’m Alliluyev! I don’t do things halfway! Come on, take it!” he shouted, throwing hundred-ruble notes into the crowd.

    .

    Later, inside the parliament building, Ilya learns from his friend Safronchuk, a government official, that Gorbachev may have known about the coup plans in advance.

    .

    “What on earth does that mean?”

    “I’d like to know myself.”

    “Good God. Well, what’s done is done. But things are moving in a direction nobody expected. The Communist Party and the Soviet Union are finished. The people who tried to save them have destroyed them with their own hands.”

    .

    Leaving Safronchuk’s office, Ilya walks down a dim corridor. A tall young woman appears in the distance, her long blond hair flowing beneath a hat and trench coat. Aurora.

    She had once worked for the KGB, spying on Ilya. Then she had fallen in love with him and even borne his child. After that, she vanished.

    Now she stands before him, tears shining in her eyes.

    .

    “Ilya, my Ilyushenka. My sun. My hero. I wanted to see you so badly. One last time. Forgive me, Ilyushenka. Forgive me—for our child.”

    “Our child? You mean my child?”

    .

    Before he can say more, Aurora throws herself into his arms and kisses him through her tears.

    Around them, armed guards and government officials hurry past carrying documents.

    A voice blares through the building:

    “Enemy forces are approaching. Enemy forces are approaching. All women are requested to evacuate. Gas masks will be distributed to male personnel. Report to your floor supervisors immediately.”

    .

    Neither of them hears a word.

    .


    On August 21, it became clear that the coup had failed.

    By evening the rain had stopped. The setting sun cast a fresh glow on the rain-washed red brick buildings.

    At a nearby intersection, a young woman in yellow shorts and a T-shirt skated past on roller skates, smiling as she handed out leaflets announcing the coup’s defeat. Even the melancholy accordion music of a beggar on the sidewalk somehow sounded cheerful.

    People walked through the city with bright expressions. There was pride in their faces—the pride of believing they had opened a new era with their own hands.

    For a brief moment, the Russian people seemed to be enjoying a honeymoon with the goddess of freedom and reform under Yeltsin.

    .

    It was a strange feeling.

    As if a hole had suddenly opened in one’s heart—and yet at the same time everything felt bright, fresh, and full of possibility.

    A new age had begun.

    .

    At dawn the following day, the motorcycle gang known as the Hell Wolves—led by Aurora—rode along Komsomolsky Avenue toward Lenin Hills.

    There they turned and formed a line.

    Far below them, the eastern sky over Moscow slowly turned red.

    The sun of a new era rose over the horizon.

    .

    The Hell Wolves sounded their horns together in farewell to their leader.

    “Take care of yourselves! Goodbye, everyone!” Aurora shouted.

    Then she twisted the throttle. Her red BMW burst from the deep forests of Lenin Hills and soared into the air.

    .

    Below lay Moscow, asleep with all its desires, despairs, and hopes.

    Beyond it stretched the vast Russian plain, blue and seemingly endless.

    Aurora fell toward the Moscow River, her blond hair shining in the sunlight, her crimson motorcycle beside her.

    The dog chained to the Little Bear had been set free, and the end of the world—as the old legend foretold—was about to begin.

    ————

    .

    And indeed, something very much like the end of the world arrived in 1992 and 1993: a Russia colored by money, violence, and shattered dreams.

  • The Steakhouse in Delhi

    When people think of Delhi, one image that comes to mind—at least for those who visited 25 years ago—is that of cows. Sacred cows. White cows. They wandered calmly through the streets while rickshaws, motorcycles, three-wheelers, cars, and trucks squeezed past one another in every direction. It was Indian chaos at its finest.

    .

    Yet when I returned about five years ago, the cows had somehow vanished.

    I asked several Indians what had happened. Most gave evasive answers. But an Indian journalist I met at a symposium was refreshingly candid.

    “They’ve either been eaten or exported,” he said matter-of-factly.

    According to him, many of the sacred cows are exported to Muslim-majority Bangladesh. India, somewhat surprisingly, has become one of the world’s major beef exporters. The sacred cow has been transformed into an economic resource.

    .

    And there is more.

    I am told that steak restaurants are now becoming fashionable in Delhi. Next time I visit, I may have to investigate for myself.

    Years ago, even at McDonald’s, you could not find a proper beef hamburger. And the curries I was served morning, noon, and night seemed to consist entirely of veg—vegetarian dishes. After a while, it became a challenge to maintain enthusiasm.

    .

    Civilization advances, and beef becomes more plentiful.

  • From Network-Centric Warfare to AI Warfare

    In the 1990s, under the guidance of thinkers such as Andrew Marshall and Arthur Cebrowski, the U.S. military developed an advanced operational concept known as Network-Centric Warfare.

    The idea was to connect large reconnaissance and strike drones such as the Predator, cruise missiles, ground forces, and other military assets through communications networks. Information from the battlefield would be gathered and transmitted to command centers in the United States, where commanders could issue orders to forces operating thousands of miles away in places such as Afghanistan. For many years, this system helped guarantee America’s military superiority.

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    Since then, however, innovation within the U.S. defense establishment has slowed. Weapons development has increasingly been dominated by a handful of large defense contractors, creating a system that often consumes enormous amounts of time and money while becoming increasingly rigid.

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    The Age of Startup-Driven Innovation

    Palantir’s AI Command System TITAN

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    Artificial intelligence has now begun to transform the concept of Network-Centric Warfare.

    AI systems can gather and analyze enormous quantities of information and generate operational recommendations. They can help determine when, where, and with what weapons a target should be attacked, and then transmit recommendations or even commands through military networks.

    Initially, the U.S. Department of Defense entrusted part of this effort to Google. However, following internal opposition from employees, work increasingly shifted to companies such as Palantir Technologies. Programs associated with this evolution include Project Maven and TITAN (Tactical Intelligence Targeting Access Node).

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    Reports suggest that elements of these systems were tested during the recent conflict with Iran. U.S. forces reportedly struck multiple targets almost simultaneously while also intercepting incoming Iranian missiles and drones.

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    The challenge is that targets cannot always be identified reliably through satellites and sensors alone. Another concern is that if too much decision-making authority is delegated to AI systems, military planners may find themselves consuming large quantities of weapons and ammunition at a very rapid pace.

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    As a result, it is reported that the U.S. military has already used up about one-third of its stockpile of Tomahawk cruise missiles in the initial stages of the attack on Iran, and is now in a situation where it cannot fulfill its contracts with European countries and Japan.

    Accordingly, the United States now faces growing pressure to maintain large stockpiles not only of Tomahawk cruise missiles but also of many other categories of munitions and military equipment.

    If countries beyond the United States adopt systems similar to TITAN, they too may begin accumulating massive weapons inventories. Military production could expand dramatically, potentially creating conditions reminiscent of the Industrial Revolution in the 19th century. The current enthusiasm for AI-related stocks in the U.S. market may, consciously or unconsciously, reflect expectations that reach this far into the future.

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    Ukraine and Palantir

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    One particularly interesting development is that Palantir has already established a close working relationship with Ukraine.

    Palantir CEO Alex Karp recently visited Ukraine. Around the same time, Eric Schmidt—who played a major role in advancing AI initiatives at Google before moving into venture investing—also visited the country.

    .

    This naturally raises questions about whether American technology firms are helping shape some of Ukraine’s recent military tactics, including large-scale drone operations against Russian targets.

    Defense Minister Mikhailo Fedorov (35) comes from the IT sector and has strong connections within the U.S. IT industry. However, military officers, including Commander-in-Chief Oleksandr Syrsky, remain attached to traditional close-quarters combat, making it difficult to know how fully AI-driven concepts have been embraced throughout the armed forces.

    .

    In any case, Ukraine, like Iran, has become one of the world’s most important testing grounds for emerging military technologies.

    The Ukrainian government appears well aware of this reality. It has even suggested that battlefield data could become a valuable national asset. Such data might include information about how soldiers react when pursued by drones, what evasive maneuvers they attempt, and which methods prove effective or ineffective against them.

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    When AI gets access to Nuclear Weapons

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    Allowing AI systems to influence decisions about when and where to use military force creates obvious risks.

    Imagine an AI system concluding that a country might be preparing to use nuclear weapons. It could reason that the safest course of action would be to strike first against suspected launch facilities before those weapons could be deployed.

    In such a scenario, speed becomes everything. The side that attacks first may appear to gain an advantage. Yet that very logic could trigger the catastrophe it was trying to prevent.

    An AI-driven decision to strike a nuclear facility could rapidly escalate into a full-scale nuclear conflict. For that reason, humanity may need robust safeguards to ensure that human beings remain firmly in the decision-making chain. Lest thousands of nuclear warheads be launched within minutes, there must be mechanisms that allow human judgment to intervene before events spiral beyond control.

  • Has the Japanese Economy Really Been Shrinking?


    (This column originally appeared in the November 2021 issue of my newsletter “Kaleidoscope of Civilization.” The basic situation has not changed much since then, so I am reposting it here.)

    . .Akio KAWATO

    Ever since the 2010 publication of the book The Real Cause of Deflation: Economies Move with Population Waves, a powerful idea has taken root in Japan: that the Japanese economy must inevitably shrink because the working-age population is declining.

    .

    However, when you look around now, the picture is not so simple.

    Over the past twenty years, the quality of newly built housing in Japan has improved dramatically. Anyone who travels to the United States or Europe quickly notices that in many ways the quality of life in Japan is ahead: the convenience and cleanliness of public transportation, the diversity of food, and the level of customer service.

    .

    Japan’s official development assistance (ODA) to developing countries has recently fallen to fourth place in the world, but the country still provides roughly $16 billion a year. Particularly valued are Japan’s long-term, low-interest yen loans for infrastructure projects. These loans still amount to around one $6.5 billion annually, financed largely by repayments from earlier loans that are then lent out again.

    .

    Even so, Japan’s GDP has barely grown, whether measured in yen or dollars. At this rate, Japan could eventually be overtaken by Germany and fall to fourth place in the world economy. So I began thinking about why this is happening.

    Leaving China aside for the moment, let us first look at the United States and Europe.

    .

    In Britain, the 1986 “Big Bang” reforms dramatically loosened financial regulations, allowing the financial industry to grow into a sector accounting for roughly 10 percent of GDP. The United States also pursued major deregulation in the late 1990s. The barriers between banks and securities firms were removed, and banks were allowed to engage in highly leveraged investment and speculative activity. Money supply expanded rapidly during this period.

    .

    This raises a question: have the United States and Europe partly inflated their GDP through financial expansion? Looking at the statistics, the answer seems to be partly yes.

    Definitions and calculation methods differ by country, so the numbers are only rough comparisons. But in 2020, finance and insurance accounted for 6.8 percent of U.S. GDP. In Japan, the figure was 4.1 percent in 2019. At first glance, the gap does not appear very large.

    But America’s economy is roughly four times the size of Japan’s, so in absolute terms the difference becomes enormous — close to $ 0.8 trillion.

    .

    Japan remains far more dependent on manufacturing. In 2019, manufacturing still accounted for roughly 20 percent of GDP. In the United States, the figure was about 11 percent in 2020, though even then America’s manufacturing output exceeded Japan’s by roughly $ 0.87 trillion in absolute size.

    .

    Manufacturing, agriculture, forestry, fisheries, and mining create the fundamental base of wealth. Finance, transportation, and other service industries expand and multiply wealth on top of that base.

    This makes one want to conclude that Japan’s economy is fundamentally solid because its manufacturing base remains strong. What is more, Japan earns steady returns from overseas investments, and with a declining population, perhaps GDP does not need to grow very much anyway.

    .

    But there is a problem: government spending needs continue to rise. Defense budgets and social security costs (healthcare and nursing care) are among them. The tax base — whether manufacturing, finance, or other industries — must become much larger.

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    In 2018, U.S. GDP grew by 2.9 percent. The single largest contribution came from the “professional and business services” sector, which added 0.71 percentage points to growth. This category includes consulting firms, accounting services, and similar industries.

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    At the same time, American manufacturing contributed 0.46 percentage points to GDP growth in 2018, making it the second-largest contributor to economic expansion.

    .

    In short, it is true that the United States benefited enormously from financial deregulation and monetary expansion. But finance alone did not produce America’s GDP growth. The modernization and expansion of manufacturing also played a major role.

    .

    The Undervalued Yen and the “Over-Shrinking” of Japan

    At the same time, the undervaluation of the yen in recent years has steadily reduced Japan’s apparent economic weight when measured in dollars.

    In Japan, even a decent hotel in Kyoto can often cost under 10,000 yen ($ 64) a night. In Europe or America, a comparable hotel can easily exceed $300.

    According to the “Big Mac Index” published by The Economist, the yen’s actual purchasing power is closer to 69 yen per dollar. If Japan’s GDP were converted into dollars at that rate, the economy would appear roughly 67 percent larger than it does today.

    On top of that one should consider Japan’s approximately $ 1. 8 trillion in overseas direct investments — factories and businesses abroad that generate value every year. About $ 0. 13 trillion flows back into Japan annually in the form of licensing fees and other income, while the rest is reinvested overseas.

    .

    Add all this together, and Japan’s true economic strength may be closer to $ 8.7 trillion. On that basis, Japan’s per capita income would rise from around 24th place in the world to roughly 4th place.

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    So why does Japan still feel as though it were shrinking?

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    Because we have trapped ourselves psychologically. Companies hesitate to raise prices because they fear consumers will stop buying. As a result, profits remain weak, investment does not increase, and wages stagnate. In effect, we are collectively making the economy smaller.

    At some point, this vicious cycle has to be broken.

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    If people constantly believe that Japan is shrinking, they become more cautious and defensive — which only facilitate a real decline.

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    Japan should stop binding itself with this self-defeating mentality. Even today, Japan still possesses many of the historical and social conditions necessary for economic growth.

  • Can IWON Optical Communication Technology Become Japan’s Savior?

    . KAWATO Akio

    IWON stands for Innovative Optical & Wireless Network, an optical communications technology now being developed by NTT.

    Light is also a form of electromagnetic wave, but it has several advantages over conventional radio-based communications. Above all, it allows vastly larger data capacity and longer-distance transmission. Data transmission capacity, NTT alleges, could increase by as much as 125 times, while power efficiency may improve by a factor of 100.

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    With conventional electrical wiring, faster speeds and longer transmission distances mean sharply rising power consumption. Optical systems, however, can transmit huge volumes of data with only minimal increases in electricity use.

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    Because of this large capacity and velocity of data transmission, urban and suburban data centers can be linked together and operated almost as if they were a single integrated facility. Such an integrated IT infrastructure could become an efficient “brain” for autonomous driving systems.

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    Some in Japan argue that this technology should be combined with the 2-nanometer semiconductors that Rapidus is now preparing to manufacture at its new plant in Hokkaido. Their vision is for Japan to build an advantage by producing ultra-miniaturized AI-capable semiconductors and deploying them in autonomous vehicles, medical equipment, weapons systems, and other advanced technologies. If realized, this would create a high-speed, low-power integrated system linking data centers directly with end-user devices.

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    But companies in other countries are pursuing much the same goal. Even if NTT or Japan gains an edge, the advantage is unlikely to last long. It may resemble the top ranks of sumo or professional tennis: the leading players are closely matched, winning and losing against one another while the overall level of competition steadily rises.

    .

    My buddy ChatGPT puts it this way:

    “There is no reason to assume that Japan is somehow doomed to lose advanced technology competition because the national character supposedly lacks imagination. If Japan can build eco-systems that allow people to take risks — especially in finance and investment — and if society becomes more tolerant of failure, it can compete perfectly well.”

  • “Civilizational Rupture”

    About twenty-five years ago, I published a collection of essays titled Toward a World Where Meaning Disintegrates. It traced the social transformations unfolding in Russia, Western Europe, the United States, Uzbekistan, and Japan.

    What I tried to argue there was that several of the core values that had sustained the modern world were beginning to lose their absolute authority.

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    For example, some of the nation-states established in the seventeenth century were losing their ethnic and cultural cohesion and gradually turning into multiethnic states. Lofty ideals such as freedom and democracy were badly tarnished after the United States attempted to impose them by force—or through regime-change operations—on former socialist and Middle Eastern countries. The result was not prosperity but chaos, deeper poverty, and even torture, as seen in Iraq. More recently, the rise of a figure like Trump—at times almost fascistic in style—has further damaged the moral prestige of those ideals.

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    Western Europe, meanwhile, had long preserved its cultural identity by treating Greco-Roman civilization as its spiritual homeland. Greek, Latin, and the classics were once central to higher education. But as those studies ceased to be required for university entrance, that cultural continuity faded, and Europeans themselves became increasingly shallow and flavorless.

    That, broadly speaking, was the argument of my book above.

    .

    Yet today, what I increasingly feel is not merely the weakening of the “modern age” created by the Industrial Revolution, nor simply the loosening of modern political forms such as the nation-state and democracy. What I sense is something far more fundamental: a complete shift of paradigm—not a gentle “civilizational transition,” but an actual dismantling, a “civilizational rupture,” perhaps even a rupture in the human species itself.

    .

    It may become a transformation so radical that generations before and after it will no longer even be able to understand one another. At times it feels as though a massive tsunami is approaching, ready to sweep everything away. One is left with a strange emptiness, a feeling that perhaps nothing we do will prevent this.

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    The spread of AI and robotics—making human labor increasingly unnecessary—is only one example of this rupture. More unsettling is the possibility that human beings themselves may cease to be human in the traditional sense. Genetic engineering is advancing rapidly. A society in which people can redesign both the appearance and internal makeup of the human body may be ideal in medical terms, but in every other respect its consequences are impossible to foresee.

    .

    Before speaking further about humanity itself, however, it is worth considering how IT, AI, and robotics are likely to transform the very structure of corporations.

    In Japan, companies and family businesses that survive for one or even two centuries are still regarded as admirable institutions. Yet the internet, robotics, and AI are likely to radically alter what a corporation is. Japanese society has long regarded admission to an elite university followed by employment at a large corporation as the supreme path to a stable life. But the traditional large corporation—with its vast internal hierarchy and self-contained functions—may soon become unnecessary, or even harmful, across many industries. Japanese banks have already undergone massive restructuring.

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    Interestingly enough, even major consulting firms have recently begun large-scale layoffs. Until now, consultants largely existed to help giant corporations that had lost the ability to reform themselves. They proposed rationalization plans that management could use to crush internal resistance and entrenched interests.

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    But the real challenge in management today is no longer how to streamline existing organizations. The question now is what entirely new products and technologies should be developed, produced, and sold—and how organizations themselves must evolve in response. These are problems that cannot be solved without deep technological knowledge. Many consultants lacking scientific or engineering literacy may simply have become obsolete.

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    Take Fujifilm, for example. When it abandoned photographic film and shifted aggressively toward digital technologies and medical equipment, outside consulting firms probably had little meaningful advice to offer.

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    Returning to the human question: sooner or later, physical appearance and even intellectual ability may become matters of genetic customization ordered by parents—or by individuals themselves. A world filled with Alain Delons, Catherine Deneuves, Einsteins, Trumps (if you wish), or three-meter-tall basketball players would resemble a permanent global cosplay convention. In such a world, it may become impossible to know what is authentic anymore.

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    And what kind of society emerges when human life expectancy keeps expanding indefinitely? That lies beyond imagination. Companies where one still has a boss at ninety years old. A society in which active workers must support pensioners over 120. A world where eighty-year-olds still have children whose ages overlap with those of their eldest grandchildren. The mind begins to spin. Categories collapse.

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    Meanwhile, while advanced countries race ever further into this future, they remain surrounded by societies that are, in many respects, still pre-nineteenth-century states. Many are only now constructing the earliest forms of the nation-state. They seek external expansion through state power, and some turn to terrorism or regional conflict against the advanced nations closest at hand.

    Japan, in trying to defend itself against such pressures, faces a contradiction of its own: in preparing countermeasures, it risks falling back into premodern patterns of behavior itself.

  • Inequality? Perhaps. But the Rich Already Pay Most of the Income Tax

                                      .Akio KAWATO

    In today’s advanced economies, discussion of “inequality” has become almost constant. Manufacturing has declined, while finance, IT, and other sectors increasingly concentrate income in the hands of a relatively small elite.

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    In the United States, the top 10 percent of earners now receive roughly 45–50 percent of national income. In Britain, the figure is around 35–40 percent; in Japan, about 30–35 percent (ChatGPT, UNDP estimates). Measured by the Gini coefficient—where zero represents complete equality and one represents complete inequality—the United States stands at roughly 0.39–0.42, Britain at 0.34–0.36, and Japan at around 0.32–0.34.

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    The political consequences are visible everywhere. Lower-income voters, frustrated by stagnating living standards, increasingly support populist politicians promising redistribution or national protection. In the United States, that means Donald Trump. In Europe, parties such as Alternative for Germany in Germany and National Rally in France have grown by channeling public anger—often less by solving economic problems than by redirecting frustration toward foreigners, immigrants, or external enemies.

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    Yet the Rich Already Pay Most of the Income Tax

    .

    The other day I came across figures that made me do a double take. Americans often complain that the wealthy evade taxes through loopholes and aggressive accounting. Yet according to the Internal Revenue Service and related data, the top 1 percent of earners pay roughly 40–45 percent of all US federal income tax revenue, while the top 10 percent pay well over 70 percent.

    That, incidentally, explains why affluent Americans are perpetually demanding tax cuts and fiercely resisting tax hikes intended to fund expanded welfare programs.

    .

    Japan is somewhat harder to measure because detailed tax data by income bracket are limited. But there are statistics for those who file tax returns directly. According to surveys by Japan’s National Tax Agency, people earning more than ¥10 million annually account for roughly 60 percent of income tax payments. Include everyone earning more than ¥4 million, and the share rises to nearly 75 percent.

    .

    The real question is how much salaried workers—most of whom never file individual tax returns—actually contribute overall. Here Japan’s resident tax becomes important. Unlike national income tax, local resident taxes are not strongly progressive. As a result, lower-income households often feel the burden more acutely. (Me too.)

    .

    Then come social insurance premiums: pensions, health insurance, and long-term care contributions. These further intensify the sense of unfairness among lower- and middle-income workers because the contribution ceilings mean that, proportionally speaking, higher earners eventually pay a smaller share of their income.

    .

    To be fair, Japan’s healthcare system remains comparatively equitable and relatively inexpensive. Unlike in the United States, medical bankruptcy is rare. But even here, younger and healthier working-age Japanese—who tend not to need much medical care in the first place—often feel they are paying heavily into a system from which they receive relatively little.

  • Comedic Variants for European Serious Operas

    The other day I went to see Wagner’s Lohengrin—performed by the Nikikai Opera Company with the Tokyo Metropolitan Symphony Orchestra. The performance itself was magnificent. But the opera? The libretto struck me as Wagnerian in the worst sense: childish, contrived, and absurdly solemn. And musically this is still early Wagner—endless repetitions of the same booming triads: do-mi-sol, so-shi-re, over and over.

    It got so dull that my mind drifted toward mischief. I began imagining a series of “slapstick opera rewrites.”

    .

    Lohengrin

    Lohengrin glides majestically onto the stage aboard his swan.

    But then, under the crushing weight of the knight’s armor, the swan slowly begins sinking into the swamp.

    Down… down… down…

    Flailing helplessly, the Swan Knight cries out to Princess Elsa:
    “Help! Somebody help me!”

    .

    Das Rheingold

    Near Bonn in Germany rise the “Seven Mountains” of Snow White fame, and beside the Rhine towers the cliff of Drachenfels—the Dragon’s Rock. There, according to legend, the Rhine maidens guard the treasure of the Nibelungs.

    Tens of years ago, the Bolshoi Theatre staged Das Rheingold, and I went to see it.

    In Act One, the Rhine maidens are suspended from ropes, swimming through the air—supposedly underwater. The pulleys creak:
    Geeeek… clank… geeeek…

    Unfortunately the maidens were all heavyweights. Instead of enjoying Wagner’s music, the audience sat in terror wondering whether the ropes would snap and send the Rhine maidens crashing onto the stage.

    This, by the way, is a true story.

    .

    Carmen

    Next comes Carmen.

    You know the scene in the mountains where Carmen tells fortunes with cards?

    Well, in this version, every single draw is a winning hand. Carmen wins a fortune.

    Flush with cash, she reaches the final act outside the bullring, where Don José comes to kill her. Calmly, she hands him an enormous severance payment.

    “This,” she sings, “is compensation for your love.”

    Then she adds:
    “Now go back to the countryside and live peacefully with your Micaëla (in Japanese this sounds like severance payment).”

    With a flourish of her skirts she disappears into the arena.

    Don José remains standing there, stunned, clutching bundles of banknotes, while cheers roar from inside the bullring.

    .

    Madama Butterfly

    Final act.

    Pinkerton returns secretly to Nagasaki after several years and sneaks over to Butterfly’s house to spy on her.

    But his American wife has followed him.

    When she discovers the truth, she slaps him across the face and screams:
    “You shameless beast!”

    Rejected by Butterfly, ignored by his son, and abandoned by respectable society, Pinkerton eventually survives in Meiji Japan as a lowly pimp.

    .

    The Magic Flute

    Prince Tamino falls in love with Pamina after seeing the photograph given to him by the Queen of the Night.

    Determined to rescue her from the villain Sarastro, he storms the castle.

    But when the soprano playing Pamina finally appears onstage, Tamino recoils in horror.

    “That’s not the woman in the picture! This is marriage fraud!”

    And he storms out.

    .

    Rigoletto

    That night, the Duke of Mantua did not rape Gilda, Rigoletto’s daughter.

    No.

    It was poor, powerless, hunchbacked Rigoletto himself who sacrificed his own body to save her.

    .

    Aida

    Radamès and Aida are sealed alive inside the underground tomb.

    They sing gloriously of eternal love.

    But after four hours, practical necessities begin to intrude.

    Desperately searching through the darkness for somewhere to relieve himself, Radamès suddenly encounters Xi Jinping, who has arrived in Egypt courtesy of the Belt and Road Initiative.

    Raising a finger solemnly, Xi declares:
    “Without a toilet revolution, there can be no new civilization!”

    .

    The Sukiyaki Song and Beethoven

    This is not opera, but I have long suspected something deeply suspicious about Beethoven’s Piano Concerto No. 5, the “Emperor.”

    The main theme of the first movement sounds unmistakably like Sukiyaki Song—better known in Japan as “Ue o Muite Arukō (Let’s Walk with Our Heads Held High).”

    Listen carefully:

    “Ue o muite… chan-cha-chan…
    Arukō yo… chan-cha-chan…”

    I am convinced Beethoven stole it outright.

    .

    And those were the thoughts that drifted through my head while half-listening to Lohengrin.

  • Gulf Security After the Iran War


    Akio KAWATO

    .

    Back in March, the American geopolitical analyst Andrew Korybko wrote something interesting. Citing a report by Reuters, he argued that the Gulf states — having been drawn into a war with Iran without prior consultation and having suffered both economic and military damage in the process — were beginning to question whether they should continue relying on the United States for their security.

    The Gulf monarchies were, in a very real sense, pushed to the brink of losing the modern societies they had painstakingly built. As a result, a new idea has begun to emerge: instead of depending entirely on Washington, could the Gulf states construct a regional security framework that includes Iran itself?

    .

    This desire for a “security system without the United States” is not unique to the Gulf. Similar thinking has been spreading among the European members of NATO as well. Around the world, there is a growing fashion for discussing strategic autonomy from America.

    .

    Still, such sentiments have surfaced many times before, only to fade away once the immediate crisis passed.

    .

    In the Gulf case, much will depend on how the confrontation with Iran ultimately ends. Even if reconciliation with Tehran becomes possible, a fundamental question remains: can Iran actually be trusted?

    And if matters deteriorate again, do the Gulf states possess any credible means of deterring Iranian military power on their own? In other words, many will conclude that the continued presence of American forces remains necessary as a deterrent against Iran.

    Meanwhile, Israel will almost certainly work to ensure that U.S. forces remain in the region.

    .

    Under such circumstances, if anyone seriously wishes to create an “Iran–Gulf reconciliation” framework without direct American leadership, Chinese involvement would probably become indispensable.

    Alternatively, Pakistan — which has reportedly been acting as a mediator in the current ceasefire negotiations — could join an Iran–Gulf security mechanism as a kind of proxy for China.

    .

    But India would likely find it intolerable for its rival Pakistan, together with China, to establish a strategic foothold in the Gulf region.

    .

    If that happens, the major importers of Gulf oil — namely Japan, South Korea, and Australia — could also end up participating in some form of agreement aimed at preserving stability in the Gulf.

    That would be a very large and consequential undertaking indeed.