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Closed Minds

By Ichiro Suzuki

Entering the third year of the global fight against the coronavirus, the world is showing what it has learned from the past two years, about how to deal with the virus, or to live with it. The omicron variant is highly infectious but is inflicting much lighter damages to human bodies than its predecessors. It is said that the next variant might be taken as a seasonal flu. More than a few countries are lifting pandemic-related restrictions on lives of people, such as border closure, and isolation and mask-wearing requirements.

Not Japan. The Japanese government continues to enforce restrictions on people’s daily life though there have never been full lock-downs that totally confine people in their houses. Restrictions are especially draconian at the border. As soon as a report of a new variant omicron broke out in late November, Prime Minister Kishida has closed the border from entry of foreign nationals. The public hailed to his decision. PM Kishida had to act quickly and decisively, having been in office only for two months at the time of the omicron’s outbreak. After all, his predecessor Yoshihide Suga ended up with resigning amid intense media attacks for his alleged failure to contain the coronavirus. In fact, Mr. Suga’s track record on the virus was very good, especially compared to European and North American countries. Nonetheless, the hostile media and his poor communication ability created an impression that he was failing in a battle against COVID-19. Mr. Suga’s early exit from his position has brought Mr. Kishida to the prime minister’s mansion much, much sooner than his initial expectations. Having witnessed his predecessor’s fall, PM Kishida holds onto his tight policy on COVID probably until the upcoming House of Councilors (upper house) election in July. He had lots of luck in the House of Representative (lower house) election last October amid precipitous falls of daily infections. After this July, he can relax a bit since there is no national election until the summer of 2025. So he has to navigate carefully, putting off all the major or controversial issues until after the election.

While voters in general are happy about restrictions on their lives, there are many people clamoring for lifting them. The business world has been pushing the government to open up the border for some time. While proliferation of video-conferencing probably has made many pre-COVID era business trips obsolete, not all the negotiations and deal-makings can be done on the Internet. Not only the Japan Business Federation (Keidanren) but also the U.S. Chambers of Commerce are pushing the Japanese government to open up. SMEs and farmers are in big troubles since they have been dependent on Asian workers. The Ministry of Education and Science has not issued student visas for two years while some Japanese students, though not many, continue to leave the country to study abroad. Foreign students who are enrolled in Japanese universities are limited to online lectures accessed from their home country. It is estimated that up to 150,000 students are waiting to enter Japan for education purpose. Some have given up their hope to study in Japan and choosing other countries that are easier to enter.

However, these are none of voters’ concerns. They simply want as low infection cases as possible, if elimination is not realistic. Japan has been one of the safer countries to live amid the pandemic. Such safety is added to the list of factors that make people inward-looking, including cleanliness of the cities, low crime rate, low prices, good food, good people, etc. Voters’ risk-aversion is consistent with their choice of assets in their household finances; principal-guaranteed bank deposits or Japanese government bonds at best that shield them from a painful experience of losing money. Of course, this excessive risk avoidance comes at the expense of chances of earning higher returns. Unlike household financial assets, this risk-aversion on the pandemic has international consequences through reduced contacts with the rest of the world, that limit inflows of not only goods but also people and ideas. It is Japanese voters’ choice on which foreigners have no say. But such a choice have consequences to the country. Under the Tokugawa Shoguns, Japan essentially closed the country to foreign trade for two and a half centuries through 1858. While Japan was looking totally inward and enjoying unprecedented duration of peacetime, Europe and the United States went through spectacular modernization of their economies, primarily through the first industrial revolution. When the country became reopen to a flow of people and goods, Japan found itself hopelessly behind the West. If the Japanese voters pursue too much coziness in their closed lives, they might have to go through the same 19th century experience. The last few days, PM Kishida mulls easing restrictions including opening up the border, in the face of moves in the rest of the world. But can he really deliver something that doesn’t disappoint the market in the absence of voters’ support?

About the author: Mr. Suzuki is a retired banking executive based in Tokyo, Japan.

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