For many at the time, it seemed the disaster would trigger a national rejuvenation, freeing Japan from the previous two decades of economic stagnation and political torpor. It was hoped and expected that Japan would rise from the rubble and debris with renewed dynamism and strengthened bonds of national unity and social cohesion.
Japan certainly rose to the occasion — considering the scale and nature of the tragedy — and managed to address the immediate challenges of emergency relief, aid and assistance with impressive care and speed. The country achieved a great deal in a very short period of time by restoring damaged or destroyed services and rebuilding physical infrastructure. The major rail and road networks and most phone systems were rapidly re-connected. Water, gas and electricity services had been fully restored within a few months (in all areas except those restricted due to high radiation danger), and airports and ports were again made operational.
But these positive accounts do not represent the whole story.
The economic shock, for example, was far from trivial. Losses from the earthquake and tsunami alone were conservatively estimated at around 3.5 per cent of GDP. Although the area directly affected by the disaster contributed only around 2.5 per cent of Japanese GDP and manufacturing output, the broader negative economic impact was expected to be substantially more, due to supply chain linkages. A GDP forecast for year 2011 changed from 1.4 per cent (before the earthquake) to 0.4 per cent (after the earthquake).
Immediate disruptions to various industries, particularly the automotive industry, were quite severe, both in Japan and globally. One damaged factory, for example, had previously produced around half the world’s supply of a critical microchip for automobiles, and this disruption affected the entire global automotive industry. The economy has shown greater resilience than expected, registering 0.9 per cent growth, but this positive outcome was offset by the current account deficit recorded in January. The deficit was largely due to a strong yen and a surge in natural gas imports required to meet energy gaps from disabled nuclear power plants — and was the first since 1980.
In addition to these economic troubles, some 350,000 evacuees have still not been resettled, and there is much dissatisfaction about the slower-than-expected pace of reconstruction. Former prime minister Naoto Kan and his government were unable to present a strong reconstruction strategy that could harness the huge surge of community support in the immediate aftermath of the disaster. The major opposition parties, for their part, undermined efforts to raise finances through a reconstruction tax, instead demanding cuts to social welfare programs. Divisions within the government’s own ranks ensured that no consensus emerged. The result was political and policy paralysis, which delayed the passage of legislation to fund the urgent reconstruction effort for several months.
Financing options were also constrained because of tensions between the government and the Bank of Japan (BOJ). The bank’s prompt action helped maintain financial stability in the immediate aftermath of the disaster. But government bond sales to the central bank — an alternative or supplement to the proposed reconstruction tax — were stalled, and this delayed much-needed finances. The BOJ, arguably driven by obsessive concern with possible inflation and fears that investors may lose confidence in Japanese bonds, maintained its refusal to directly purchase government bonds and did not back down from this stance.
But the ongoing crisis at the Fukushima power plant continues to cast a pall over the Japanese social and political landscape more than any of these other concerns. Huge piles of debris still litter the tsunami-hit areas, as attempts to disperse the refuse have run into resistance from communities fearful of radiation damage. Many people have no realistic possibility of going back to their destroyed homes and towns. And agricultural produce from a wide surrounding area is now under suspicion of radiation contamination.
There is a visible and widespread disillusionment with the government and Japan’s nuclear industry, as well as the traditional political establishment more generally. The Japanese people had long accepted the government’s and power companies’ repeated assurances that ‘all was well and under control’ with nuclear power plants. But the close alliance between government, high bureaucrats (including industry regulators) and the powerful nuclear industry had covered up the real dangers, underestimated the risks and underinvested in essential safety measures. The Japanese public have reacted with a deep sense of betrayal and fury, sensing that they have been lied to and deliberately misled. This is probably the most profound way in which the disaster has changed Japan.
It is obvious that any move to minimise nuclear risks and reduce Japan’s reliance on nuclear energy will necessarily require a medium-term strategy, given the size of Japan’s economy and its current high level of dependence on nuclear power. The Fukushima accident brought home the folly of relying on nuclear energy in one of the world’s most geologically unstable, disaster-prone countries. And as the public backlash against the nuclear industry shows no signs of abating, many nuclear plants — which contributed 30 per cent of Japan’s energy before the disasters — remain idle or have been forced to close owing to public pressure. Kan himself openly supported a switch away from nuclear power, having previously endorsed a national energy policy which would have seen nuclear power supply the majority of Japanese energy needs. Kan has paid a heavy political price for his policy switch; after losing support from the traditional Japanese political establishment, he was deposed and replaced by Yoshihiko Noda, who now argues for restarting the idle plants and who is in favour of a more ‘nuanced’ national energy strategy.
The continuing stalemate over the reopening of nuclear plants is only one symptom of a much deeper breakdown in trust between the community and the political and corporate establishment. In a recent opinion poll none of the major parties was able to gain 20 per cent support, and around 50 per cent of respondents expressed a lack of confidence in any of the parties. With a stagnant economy, rising levels of inequality, high youth unemployment and a deepening sense of pessimism about the future, the vision of a rejuvenated Japan that would turn the 3/11 tragedy into a springboard for national revival appears to have been a mirage. But Japan remains an affluent and educated country, which possesses vast reservoirs of social capital. Consequently, the change in public mood and the revival of political activism may well be a harbinger for a more profound transformation of Japanese society and its economy.
Dr Sisira Jayasuria is Professor at the School of Economics, La Trobe University.
Dr Nobuaki Yamashita is a lecturer at the School of Economics, La Trobe University.