Thursday, December 9, 2010

Reinventing the Wheelchair

Reading Scientific American this morning I spied the innovation that won their annual World Changing Ideas Video Contest: the Leveraged Freedom Chair designed by MIT Mobility Lab.

It's a three-wheeled human-powered wheelchair that goes faster than normal and also navigates difficult terrain—rutted roads, cobblestones, trash-strewn slums. The genius resides in the vertical hand levers: Users simply grab higher or lower depending on how much torque or speed they need. It's like being able to change gears.

The drivetrain consists of common bicycle parts and so is "manufacturable and repairable anywhere in the developing world," according to MIT. Sometimes low-tech solutions are the most appropriate.

Wednesday, November 24, 2010

Introducing: More Like This

Policy Innovations is pleased to announce the debut of "More Like This," a new article series by our friend John Haffner. John will be profiling clean energy leaders and other green innovators in China over the next several months.

As you can read in his introduction to the series, the motivation is triple: 1. Give these pioneers some of the recognition they deserve; 2. Convey the flavor of life in contemporary China; and 3. Inspire similar leadership in others.

The first article is a frank discussion with Kongjian Yu, an award-winning landscape architect whose designs strive to incorporate energy efficiency and natural beauty.

Yu feels that China's rapid urbanization suffers from what he calls the "'little feet' aesthetic"—showcase buildings built on shaky conceptual foundations. "These ornamental buildings can't carry their own weight. We have little feet but a jumbo body of consumption and GDP growth. Chinese have this dream of being urbanized. But the buildings aren't green."

Also of note on U.S.-China relations is our coverage of "Rare Earths Diplomacy" by Sean Daly. He looks at what we should expect in the rare minerals market and how it could impact production of the wind turbines and hybrid cars we associate with a clean technology economy.

Enjoy, and have a great Thanksgiving.

Thursday, November 4, 2010

Moving to the Japan Society in NY

Dear Friends,

As some of you know, I am leaving Carnegie Council next week to take a senior program position at the Japan Society in New York.

It was a tough decision to leave Carnegie—especially after nearly 5 years of exciting programming and research projects with a fantastic team. Ultimately my decision was formed by a personal desire to help Japan revive.

Over the course of a decade of writing seriously about Asia, my analysis has zeroed in on two empirical sources: data and interviews (rather than theory or conjecture). In my writing on Japan, I have tried my best to convey accurately what Japanese people tell me about their country. As a result, perhaps ironically, the tone of my articles and speeches has become increasingly pessimistic. I recently had dinner with the chief economist of a major bank in Tokyo who asked me, "Devin, what will it take for you to stop being so gloomy about Japan?" My answer was: "I will stop being gloomy when Japanese people stop being gloomy about Japan." It's time to cheer up.

There is an expression in the nonprofit sector: It takes as much effort to find support for a small project as it does for a big one. We might as well aim for the sky. I hope that in a small way at my new post I can help provide a platform for innovation and ideas for positive change in Japan and the US-Japan relationship.

As always, I will look forward to your insights, guidance, and collaboration.



Photo by William Cho.

Tuesday, October 19, 2010

Kevin Kelly on What Technology Wants

What Technology Wants, Kevin KellyWhen asked at the Carnegie Council why he doesn't use social media such as Twitter, author Kevin Kelly said he is in a phase where he prefers getting to the bottom of things to staying on top of them. Fair enough. After hearing him preview his new tome What Technology Wants, I think he's on to something.

The title is intentionally provocative, though Kelly does not imply that machines are conscious. He more seeks to discover how technology is situated in the universe, how it functions like an organism, with its own tendencies and urges, and thus its ability to exert influence.

Technology, or the "technium" as he dubs our interconnected system of hardware and culture, "wants" something in the way a plant wants sunlight.

These desires are grounded, he believes, in pure physics and are exemplified in a number of trends. While evolution may not be teleological, it does have directionality. So far the indications are that technology wants what life wants (p. 270, emphasis mine):

Increasing efficiency
Increasing opportunity
Increasing emergence
Increasing complexity
Increasing diversity
Increasing specialization
Increasing ubiquity
Increasing freedom
Increasing mutualism
Increasing beauty
Increasing sentience
Increasing structure
Increasing evolvability

Kelly calls these traits "exotropic" because they all tend toward greater organization, as opposed to entropy, which dissipates energy and disorganizes systems.

Does this directionality also have an ethical arrow? Kelly seems to think yes. The key for him is that these processes continuously unlock new possibilities, new choices. If there is a net increase in creation versus destruction of choice, then the world is on balance improving. The ethical obligation is thus to increase technology to unlock global genius so that everybody can express their special mix of talents. The social corollary is that technology exerts a development imperative, albeit a slim one. "The dark side of technology cannot be avoided," writes Kelly. "It may even be nearly half the technium" (p. 79).

The dark side downside can be seen in the persistent, almost tyrannical, wastefulness of technologies such as the automobile. Kelly calculates, for example, that three-fourths of our energy use is to service the technologies themselves. Larry Burns made a similar point at our recent Sustainable Societies panel when he cited the minuscule fraction of gasoline energy that actually moves the passenger to her destination—most of the energy moves the car itself and much is lost as heat. Kelly estimates that cars are about 1 percent effective when seen in this light.

Kelly also touches on the privacy question and thus tangentially on government 2.0—the movement to use data and technology to encourage more efficient and accountable public systems. Clearly there is a trend toward personalization of our media consumption and our devices. Yet total personalization of technology requires symmetrical and reciprocal transparency on the part of the technology providers, or else an imbalance of power results. You could even say that technology wants WikiLeaks, to balance the opacity of national governments and secretive corporations.

Given this taste of his arguments, it seems What Technology Wants will make for a quite interesting read.

Sunday, September 26, 2010

James Farrer on China-Japan Tensions

We are pleased to publish this guest post below from James Farrer on the current tensions between China and Japan:

It was a bitter pill for the Democratic Party of Japan (DJP), no matter how they swallowed it. By releasing a Chinese fishing boat captain detained by Japan without a trial, Japanese Prime Minster Kan Naoto was clearly bowing under Chinese pressure. The captain had been arrested by the Japanese coast guard for allegedly ramming his boat into Japanese coast guard vessels while in territorial waters claimed both by China and Japan. The Japanese government appeared to buckle and released the captain to China on Saturday. According to an unnamed official in the prime minister's office quoted in the Asahi Shimbun on Sunday (9/26/2010), "The Chinese could have recalled their ambassador, or cut off diplomatic relations. There was no other possible landing point."

Within Japan this was a shocking turning point in bilateral relations, a sudden strategic victory for a rising China that could lead to many scenarios, including the possibility that China would send fishery administration or even military ships to patrol the waters off the disputed islands and back out of an agreement to jointly develop undersea gas fields in the area. An official in the foreign ministry quoted in Sunday's Asahi, said: "There's no telling how overbearing the Chinese are going to be after this. There’s nothing to be done about it, this will go on for the next twenty years."

The Japanese public seems to have reacted three ways to the release of the captain. One group, the sort who usually read the business-economics newspaper Nikkei Shimbun was undoubtedly relieved to see the government release the captain last Saturday. As Chinese sanctions escalated into the economic sphere, including a stoppage of the export of rare metals to Japan, the worry was that this political spat would seriously effect Japan's increasingly important economic relationship with China. It was this economic group that seemed to be making the decisions in Tokyo last week, hoping that pragmatism and mutual economic interests would prevail. The danger of this view, expressed to me by one Japanese reporter I spoke to, is that in thee economic sphere the Chinese now see Japan as needing China more than China needs Japan, and will continually try to push this advantage on various fronts. Recent strikes against Japanese companies in China are a sign that more economic pressure can be expected.

Another segment of the public, who are more likely to read the relatively liberal Asahi Shimbun, was relieved, but also dismayed. This more internationally-minded group, including many Democratic Party supporters, had hoped for the past few years that Japan and China were actually improving their relations. Now the DPJ's China policy seems to be in tatters. Talk of an "East Asian Community" and a "mutual strategic relationship" seems naive in this tense atmosphere, to say nothing of the rhetoric of "fraternal love" of the previous Prime Minister Hatoyama Yukio. Now, there is a depressing sense that no relief from Chinese pressure is forthcoming. The Chinese government is now demanding an apology and recompense for the trouble caused in the case of the hapless fisherman. This may be perceived in Japan as a signal that the Chinese government has no interest, or perhaps no incentive, in improving relations with Japan. Most troubling of all to the Japanese internationalists, the recent actions against Japan included halting exchanges between school children, and canceling tours to Japan, acts that inflame tensions between the citizens of the two countries at the societal not simply the political level. Many Japanese China-watchers are convinced that twenty years of anti-Japanese education in China (especially under the leadership of Jiang Zemin) have produced an atmosphere in China in which anti-Japanese rhetoric is all-purpose political medicine that the Chinese government can apply to any problem, domestic or foreign. If this is the case, there will be little chance for true detente.

In general the leftist and liberal segments of the Japanese public are worried that China has reacted only tepidly to the efforts of the DPJ to improve relations between the two countries. One of the most baffling acts involved the Chinese navy conducting exercises near Okinawa at about the time Japan was debating the agreement to shift U.S. forces within Okinawa. The Chinese naval exercises seemed timed perfectly to embarrass both the peacenik and pro-China wings of the DPJ, which subsequently beat a retreat to the relative security of the US alliance. The U.S. bases in Okinawa will stay put, and it seems likely that the hawks within the DPJ (a party which includes an extremely broad spectrum of politicians from socialists to rightists) will have a greater say in foreign policy.

Only one group seems genuinely energized by these events. This is the small but loud, and perhaps growing, right wing in Japan. Right wingers in Japan, like the so-called angry youth in China, thrive on Sino-Japanese tensions of any kind. Much of their online rhetoric is racist and dehumanizing, and aimed at stirring up anti-foreigner tensions within Japanese society as well as in Japan's relations with China and Korea. The more rational right wing sees this as a chance to bash the government of Kan, who will likely pay a heavy price for kowtowing to Beijing. The conservative Sankei Shimbun even went after the Asahi Shimbun for not towing a strict enough line on Japanese sovereignty claims for the disputed islands. The mainstream conservative Yomiuri criticized the weakness of the prime minister’s actions as not standing up for Japan’s territorial integrity.

Read in the Western press these events may seem inconsequential. Westerners forget that China and Japan have one of the largest bilateral trade relationships in the world, and profound mutual interests at the societal and political levels. Living as I do between Tokyo and Shanghai, as so many thousands of people do these days (Japanese, Chinese and others), we can only hope that both governments find a way of managing the seemingly irresolvable territorial dispute, and perhaps even return to the policies of engagement that began between the previous Prime Minister Hatoyama Yukio and Chinese Premier Wen Jiabao.

James Farrer is Director, Institute of Comparative Culture, Sophia University, Tokyo, Japan. Photo from huneycuttaddison.

Wednesday, September 22, 2010

Cyber Nationalists or Critical Netizens?

Yifan Xu reports for Policy Innovations on a survey of Chinese Internet users.

Is the Internet spreading and intensifying nationalism among the Chinese public? A nationwide opinion survey conducted in 2008 by the Research Center of Contemporary China sheds some light on the issue. Respondents were asked to indicate their level of agreement with nationalistic statements such as "the world would be a better place if people from other countries were more like the Chinese," and nationalist policies such as "China should limit the import of foreign products in order to protect its national economy."

The results show that Chinese netizens with higher education and income levels are less likely to be nationalistic and are less supportive of protectionist policies. In particular, for the statement "the world would be a better place if people from other countries were more like the Chinese," using the Internet decreases the probability of agreement by 10.7 percent; expressing oneself online reduces the probability of agreement by 10.3 percent; and using government websites reduces the probability of agreement by 17.6 percent.

This suggests that the old cyber-libertarian dream of the Internet serving as a catalyst for political reform may still have some elements of truth. At least the Chinese Communist Party must think so, given its extensive censorship of the Internet.

When Google withdrew its business from China in early 2010, Chinese netizens made a few sarcastic comments comparing the CCP's Internet censorship with the "closing door" policy of the Qing Dynasty—just like the Qing governors struggled to maintain the great Chinese Empire, the CCP is trying to create a "great Chinese Intranet." The CCP's logic is simple: the Internet makes possible negative information and news about the Party, which was previously unavailable from the traditional mass media.

In recent years, Chinese political dissidents have been actively using the Internet to reach out to ordinary people as well as foreign populations. For instance, while human rights activist Hu Jia was under house arrest, he remained active via emails and blogs, and posted a series of video diaries on YouTube. The Internet is in fact thick with opinions from nationalists and anti-nationalists alike.

The most interesting survey finding is that people who have used the Internet to access a government website—to get information, make a comment, or lodge a complaint—are even less likely to be nationalistic. This could be a spillover effect from dissatisfaction with the government.

The August 2010 Zhouqu landslide provides an interesting contrast. Generally speaking, disastrous events cause a nationalistic surge. In the 2008 survey, following the Wenchuan earthquake, respondents were more likely to agree with nationalistic statement. Yet the Zhouqu landslide has led to wide criticism of the government online. Netizens accused the government of working harder to promote a positive image of itself than to mount an effective rescue effort.

As New York Times columnist Nicholas D. Kristof observed in 2002, nationalism in China is a double-edged sword: "it has potential not just for conferring legitimacy on the government but also for taking it away." Armed with personal computers, critical netizens are able to quickly spread anti-nationalist discourse and protests in a decentralized fashion. Should that happen in China, the cyber-libertarian dream may materialize.

[PHOTO CREDIT: March oh! (CC).]

Friday, September 17, 2010

Kei Hiruta on Japan's Political Philosophy Boom

We are pleased to publish below a guest post by Carnegie-Uehiro Fellow Kei Hiruta.

Observers of Japanese society may be surprised to see an emerging interest in political philosophy in Japan. Mainstream newspapers and popular magazines have been busy interviewing philosophy professors; and bookstores across the country are holding or planning to hold philosophy book fairs. Why is this happening and what is the likely outcome?

The cause of this boom is thanks to Harvard professor Michael Sandel. His renowned lectures at Harvard were recently broadcast on NHK (Japan Broadcasting Corporation) and turned out to be enormously popular. The Japanese translation of his book, Justice: What's the Right Thing to Do? has sold about 400,000 copies since its publication in May 2010, and his visit to Japan in late August was enthusiastically welcomed. Yet the boom is more than a Sandel boom; he may be an academic superstar, but he isn't the only actor in the drama.

The kind of political philosophy Sandel exemplifies is indeed new to most of the populace. The relevant distinction here is not so much between Japanese and Western philosophy but between Continental and Anglophone. Because of the strong and persistent German influence over the humanities and social science in Japan, joined by the popularity of postmodern theoretical literature in the last three decades, the analytical and normatively-oriented mode of philosophizing—so familiar to those based at Harvard, Oxford, St. Andrews, or Australian National University—strikes the Japanese audience as refreshingly down-to-earth. In his lecture at the University of Tokyo, Sandel asked whether it is fair that the Major League Baseball player Ichiro Suzuki should be paid 42 times more than the President of the United States or 400 times more than the average Japanese school teacher. This surprised and excited those who had thought that political philosophers would always ask fanciful and impractical questions such as, "What does Karl Marx mean by commodity fetishism?"

The political philosophy boom, like all booms, promises too much. In a recent special issue of the popular magazine Weekly Toyo Keizai, the discipline is reported to offer guidance on tackling various problems, including Japan's continuously high suicide rate and the uncertain future of capitalism. Yet psychologists are better qualified to address the first problem, and political philosophers are as clueless as economists about the second one.

Does this mean that the boom will be followed by disillusionment? Perhaps. A boom brings opportunities to make money, and bad philosophy is already piling up in the market to drive good ones out. If this trend continues, the boom will turn into a bubble.

That would be an unfortunate end of the story because the Japanese have a wide range of social and political issues that can be illuminated by philosophical reflection. Should we abolish the death penalty? Should we accept more immigrants? How should a country deal with historical injustices? Does gender equality require a legal right for a married couple to have different surnames? How should we control pornography without unduly restricting the freedom of expression? These are but a few samples of the issues that have long been on the Japanese political agenda and yet are still in want of reasoned argument. This, without exaggeration, is what political philosophy is able to offer.

What the current boom shows is that ideas are in demand in Japan to assist people to consider, both individually and collectively, how to live in a society where the "second lost decade" seems like it will be followed by a third one. We have every reason to hope that the demand will be met and the boom will turn into something more enduring. Whether the hope will come true is yet to be seen.

Kei Hiruta is Carnegie-Uehiro fellow at the Carnegie Council for Ethics in International Affairs and a research associate in the Uehiro Centre for Practical Ethics at Oxford University.

Monday, August 9, 2010

Alexandra Harney on the Mummification of Japan

Our friend Alexandra Harney has given us permission to repost a piece called "The Mummification of Japan," which she wrote in her blog The China Price during her recent trip in Japan:

I'm in Osaka this weekend to appear on Yomiuri TV's Wake Up Plus, that rare beast: an intelligent TV show. The story of the moment in Japan is the nationwide hunt for missing centenarians, following the discovery of a modern-day mummy in his bed, 30 years after his death. Officials suspect that a relative did not notify the government of his passing in order to receive the man's benefits.

For the moment, the debate in the Japanese media (including Wake Up Plus) is focused on three main elements: the government's failure to detect which of its benefit-receiving citizens are living and which are dead; the Japanese tendency to leave family matters to the family; and the fact that Japan's privacy laws hinder investigations into this kind of fraud. To me, the tenor of the debate itself reflects Japan's self-flagellating tendency to blame the government and politicians in the first instance.

The fact is that these missing pensioners are a reflection of how deeply and painfully Japan's long stagnation has affected its oldest and youngest citizens. Trite as it sounds, I'll recount a conversation I had with a taxi driver here in Osaka yesterday: at 65, he receives about US$1200 a month in pension benefits from the government. His rent accounts for half of this, and after utilities, his cell phone bill and food, there isn't much left. So he continues to work as a taxi driver, taking home about $1800 a month. (One might wonder how he is allowed to work while receiving public benefits, but the benefits, like the minimum wage, were not meant for people to depend on entirely, I believe.) $36,000 a year isn't bad by global standards, but consider that this man might live for another 30 years and this is as good as it will get for him. While he is clearly putting money aside for his retirement, he expects he will have to move into a smaller apartment when he retires. This is not the fancy globe-trotting retirement that I, at least, had imagined for Japan.

While we hear much talk about China getting old before it gets rich, Japanese people are getting poor before they get old. Younger Japanese will not receive the $1200 a month that that taxi driver gets; they will likely receive much less.

Putting aside the fact that pension fraud is a crime, one larger issue behind these missing old people and their mummified remains is that younger Japanese need to rely on their parents' retirement benefits because the economy is not providing sufficient job opportunities.

Every trip to Japan is more depressing than the last these days; I stay in hotels that will, without the help of big spending Chinese tourists, likely lay fallow, listen to music from pianos that play themselves, pass through ghostly tourist districts designed for a wealthier country. Japan is no longer the country it once was. Policymakers in other rapidly aging countries (and those that struggle to create new jobs, like the US) should take notice.

Tuesday, July 27, 2010

Brewing in Japan: Interview with Bryan Baird of Baird Beer

Earlier this month during a trip to Japan, I traveled to the coastal city of Numazu to visit Baird Brewing Company, one of the country's most innovative new craft breweries. When I arrived, I had the fortune to meet Bryan and Sayuri Baird, who founded the brewery in 2000. Bryan answered some questions about brewing in Japan:

After graduating from Johns Hopkins SAIS, what inspired you to get into the brewing business and why Japan?

I attended SAIS in the Japan Studies program and enrolled with the full intent of returning to Japan in some professional capacity upon graduation. My first job was with the Tokyo office of the American Electronics Association. Craft beer, or ji-biiru as it was called, was receiving great attention in Japan at the time because it was a brand new thing—small-scale brewing was made possible with deregulation that happened during the Hosokawa government in which minimum production requirements necessary for a brewing license were lowered dramatically from 2000 kl per year to 60 kl. I didn't love working as a sarariman (salary man); I always had been a passionate beer drinker; and I respected Japanese society for the reverence it paid to craftsmanship. Therefore, I felt that craft beer was an industry that suited both me and Japan.

Why did you choose to locate your brewery in the city of Numazu?

After attending brewing school in California, my first industry job with a brewing equipment company brought me to Numazu. Our ultimate dream, of course, was to launch our own craft brewing company. For a variety of reasons, we judged Numazu to be a very good place to inaugurate a craft beer business. We thus stayed and here we still are today.

How did your initial brewing learning process take place?

The first thing I did, and the smartest, was to immediately enroll in brewing school. I attended the American Brewers Guild's 3-month intensive brewing science and engineering program, which also combined with a practical apprenticeship. My apprenticeship was done at the Redhook Brewery in Seattle. I thus had very good initial training. Being a good brewer, though, is very much dependent on the interplay of theoretical knowledge and practical experience. To gain more practical experience I cobbled together a tiny brewing system out of re-welded used kegs, set it up on our veranda and began brewing pilot batch after pilot batch. This was the actual system with which we launched our original brewery-pub. It was so tiny (30-liter batches) that I had to brew with great frequency and this helped me to accrue invaluable experience in a very short time.

Who were your inspirations?

My greatest business inspiration is Warren Buffet. The principles and values he espouses I embrace wholeheartedly.

Which breweries do you admire most?

Fritz Maytag of Anchor Brewing in San Francisco (although he just recently sold the business) and Ken Grossman of Sierre Nevada Brewing in Chico, California are probably my two biggest industry heroes. Some of my favorite breweries now include Russian River, Firestone Walker, and Victory. Piece Brewery and Pizzeria in Chicago and the Pelican Pub & Brewery in Oregon are two outstanding brewery-pubs.

What is your beer's concept?

With each and every Baird Beer we seek to craft a full-flavored beer of character. We define character simply: Character is the interplay of balance and complexity. Industrial beer tends to be well balanced (i.e. it can be drunk in quantity without inducing palate fatigue) but fully lacking in complexity (i.e. the flavor is one-dimensional and you pretty much know everything about the beer upon the first sip). Poorly made craft beer tends to be complex but it lacks balance. Great craft beer possesses both. For us, the key to achieving this character is minimal processing. Therefore, we begin by selecting ingredients that are minimally processed (e.g. traditional floor-malted barley, whole flower hops, fresh whole fruit, etc.). Then, we strive to brew with these ingredients in as simple and unprocessed a way as possible (e.g. we do not filter Baird Beer and we secondarily ferment and naturally carbonate it in the package from which it will be dispensed—much like Champagne).

How is the beer Japanese?

We enjoy lovely soft water in Numazu that really contributes a round and balanced house character to our beers. In the Japanese esthetic, harmonious balance is greatly prized. I think Baird Beer is a liquid embodiment of that Japanese esthetic value.

What were some of the initial challenges you overcame as a microbrewer in Japan?

Japanese ji-biiru (craft beer) boomed out of the gate in 1994 but was already turning into a bust by the time we were getting into it around 1997. There was, and still is, simply too much bad craft beer in Japan and not enough really good stuff. Thus, we had to overcome the largely negative image that the industry garnered for itself in its initial years. The other major challenge was simply that we were brewing a kind of beer that had never really existed in Japan before and people really didn't know what to make of it and us. The key to growing sales in a nascent market like craft beer in Japan is, in addition to great product, constant consumer education. The more that consumers understand about beer and about how and why we approach it the way we do, the more open they are to the experience. This sort of education, though, takes time and requires persistence.

Is it easier for a foreigner to introduce a revolutionary product like microbrewery beer to Japan?

That's a good question. My answer is yes, so long as it is the right foreigner. By "right" I mean someone who comprehensively understands Japan, who can deal with Japanese people with cultural, social and lingustic understanding, and who genuinely likes and respects Japan. This is the type of foreigner that places like Johns Hopkins SAIS help to nurture. When you are this type of foreigner you get to participate in Japanese society on a deep and meaningful level but without having to face the same sort and degree of social and cultural constrictions that the Japanese themselves must often deal with. This kind of social liberation can be turned into a very valuable business asset.

How did your business start to take off?

The initial turning point for our business happened 2–3 years into it when we realized there was a definite market for what we were brewing, only it wasn't in Numazu but rather in Tokyo. This led us to purchase larger brewing equipment and begin bottling and kegging our beer for distribution in the Tokyo market. The more we sold in Tokyo, the more frequently Tokyo beer enthusiasts would make the pilgrimage to our pub in Numazu. This eventually led us to open pubs in Tokyo itself. By doing well in Tokyo and selling throughout Japan, the local market then began to wake up. Finally, ten years into it, we seem to have gained real traction and achieved that magical sort of critical mass. Our three gold medals in the 2010 World Beer Cup certainly didn't hurt things either.

What is the current state of the Japanese big beer and microbrewery market?

The big industrial brewers in Japan are in for some dark years, I am afraid. The simple fact is the overall Japan beer market is shrinking. This is because the population is both aging and not growing. As one gets older, one drinks less. I would not want to be an industrial brewer in Japan. As for craft beer in Japan, there are still way too many sub-par players. These poor performers need to be weeded out and this is happening gradually.

What do you see for the future of beer in Japan?

For good Japan craft brewers, as well as importers of excellent world craft beers, I believe the future is bright. People seem to be wanting more quality if not more quantity, and there seems to be at least a partial movement away from purely mass-produced and mass-marketed goods to premium niche goods crafted by shokunin (artisans). Currently in Japan, craft beer does not account for even 1 percent of the overall beer market. U.S. craft beer, on the other hand, accounts for more than 4 percent of the U.S. market by volume and more than 7 percent by dollar. I can see Japan craft beer achieving similar numbers in the Japan beer market within the next 10–20 years.

What advice do you have for aspiring entrepreneurs in Japan?

My advice is quite simple: Possess abundant reserves of passion, persistence, perseverance, integrity, and guts. Also, possessing sufficient "Japan skill" is critical to succeeding in business in Japan. Frankly, these Japan skills take longer and are harder to acquire than most industry-specific skills. Most foreign business people who do not do well here fail because of insufficiency on the Japan skill front.

Wednesday, July 14, 2010

Will a Rudderless Japan Drift into Crisis?

Japan Needs a Captain

The upper house election in Japan last Sunday dealt a huge blow to the ruling Democratic Party of Japan (DPJ), leaving the country with a "twisted" parliament and no clear path forward. In contrast to the previous decades of nearly uninterrupted single-party rule, the new, messier political environment is a positive sign for Japanese democracy.

But this difficult transition to a new mode of governing comes at a time when strong leadership is needed to address a possible sovereign debt crisis that could hit within five years. Ironically, the DPJ's defeat last Sunday was partly the result of Prime Minister Naoto Kan's flip-flopping over a consumption tax that was meant to help stave off any problems emanating from its exceptionally large debt-to-GDP ratio (near 200 percent). Most voters support the tax but the prime minister buckled under criticism on the issue, fostering the impression that he is simply an opportunist. The party's loss may have made prospects for reform "an uphill battle."

I had the chance to talk with people from media, politics, government, business, and academia in Japan during the week leading up to election day. Consistent with the polls, many of the people I spoke with were undecided about which party to support, and the murky election result may delay financial reforms. Rating agencies Standard & Poor's and Fitch have warned of possible credit rating downgrades due to Japan's expected political gridlock, which may hinder the country's ability to reign in its sovereign debt.

Hatoyama's Parting Gift

Yet there is good news. While the lower house election last August was a rejection of the long-ruling Liberal Democratic Party (LDP), last week's upper house election was about real issues while also serving as a referendum on the DPJ's 10 months in power. A political monopoly has been replaced by a period of what Japan expert Gerald Curtis calls political "creative destruction." One DPJ staffer told me that the current, more pluralistic public debate over policy issues was the legacy of former Prime Minister Yukio Hatoyama.

Whether or not by design, the two administrations of Kan and Hatoyama have put on the table thorny issues, including the logistical details and strategic importance of the U.S.-Japan alliance and the previously unpopular idea of a consumption tax, which led to the downfall of the Ryutaro Hashimoto administration more than ten years ago. I was told the DPJ expression for this expanded public square is "the new public."

Meanwhile, the new smaller parties actually stand for something other than an unbridled thirst for power. In particular, Your Party, analogous perhaps to American libertarians, seeks an inflation target and to shrink the government thus unleashing Japan's entrepreneurial spirit and creating jobs. Your Party did quite well, gaining ten seats. It appeals to a common frustration in Japan with government in general and is populated with stars from Tully's Coffee Japan, JP Morgan Chase, and the Ministry of Economy, Trade and Industry (METI).

The outcome is a real multi-party system. But contrary to hollow calls for a revolution last fall, this is the new reality: the slow democratic politics of compromise.

Drifting into Troubled Waters?

Nevertheless, the slowness of Japan's new politics could launch the country adrift into a debt crisis. Although 95 percent of Japanese government bonds are held by domestic investors, several factors could create risks. First, with Japan's low savings ratio and low economic growth, if its aging population starts to draw on its savings, the government may be forced to rely on foreign funders who will demand higher interest rates. Second, a deteriorating Japanese current account, due to a stronger yen or weaker global demand for Japanese products, would also reduce a source of debt funding. Reuters has quoted one analyst as predicting a current account deficit by 2016. Finally, it isn't clear whether a consumption tax would generate enough revenue or whether the tax would only dampen an already stagnant economy.

But whatever happens, five to ten years seems to be the critical time horizon. The next lower house election will take place in 2013 and by 2015 Japan is expected to shift toward external funding of its debt and will therefore face higher interest rates.

"Three to four years from now I expect a sovereign debt crisis to hit Japan and long-term interest rates to surge," former Bank of Japan board member Teizo Taya said in a May interview with Reuters. Taya also believes that the five percent foreign holdings of Japanese debt would be sufficient to trigger a crisis if there were a sell off.

One government official echoed these views when I visited Tokyo last week, saying the current account was the figure to watch. But interestingly he said that while some had hoped the election of the DPJ would have provided the "shock" to the Japanese system to bring about economic reform, the DPJ's failures over money scandals, mishandling the U.S. alliance, and the consumption tax have killed that hope. Instead, he and his colleagues are looking to a debt crisis to provide the necessary shock for economic reform. Changes could occur in Japan's tax structure (reducing corporate taxes and increasing consumption taxes over time) as well as in its industrial policy to spur growth. Can't change occur without the need for a crisis?

"The Deadlocked Japanese Economy"

Underneath the sovereign debt risk is an economy that is in irons. Just as its political system faces drift, so does Japan's economy, according to a METI report released last month.

METI minister Masayuki Naoshima puts it this way last month when he unveiled his ministry's new industrial vision: "Some people say that the Japanese economy is recovering from the economic and financial crisis triggered by the Lehman Shock the year before last. However, in reality, many Japanese people probably find no improvement in the sense of stagnation they feel in their everyday lives. They even seem unable to see any new light for the future. I believe the reason for this lies in the uncertainty about 'what will drive Japan's revenue and employment in the future.'"

Naoshima goes on to underscore the economic conundrums Japan faces: People think that Japanese people save too much, thus dampening demand, but actually the household savings ratio is one of the lowest among major economies; on the flip side, domestic consumption is stagnant since wages haven't risen in the past decade; an export-led recovery may seem appealing but Japan's export ratio is low by international standards and stagnant wages in the past 20 years call into question the country's industrial structure; specializing in high tech products would also seem logical but Japan's global market share "has rapidly declined" and low levels of profitability suggest that the business model for Japanese industries that has "caused them to lag behind the world."

In response to these challenges, government officials told me last week that the broad strategy is to globalize Japan, making its social systems, ports, and infrastructure attractive to businesses that create value and jobs. Naoshima puts it like this: "If Japan wants to save itself from decline, Japan has no other choice but to aggressively push forward with globalization. However, if Japan pursues only globalization without taking action to stop the decline in its international competitiveness as a business location, Japan will lose both domestic jobs and added value."

A major element of this strategy will be to "globalize human resources." This means the country's education system must be modified in order to create a more worldly mentality among the next generation of leaders, thus slowing the inward-looking direction or "Galapagos syndrome" as I have called it. One of the most creative proposals I heard last week is to encourage university students to study abroad by offering a ten-year income tax break to those who take advantage of the program. As these more cosmopolitan leaders enter the job market, they must find companies with a more globalized governance structure, diverse board of directors, and global business strategy, one official told me.

Japan Needs More Mavericks

It's nearly a cliché to say that in Japan, the nail that sticks out gets hammered down. Harmony and conformity are prized in big organizations. But these qualities can also lead to stagnation. Entrepreneurship requires a bit of rebelliousness.

During my trip last week, I traveled to Numazu for a day to visit one of the most innovative breweries in Japan. Baird Brewing Company is a joint partnership company that was founded in 2000, and in recent years has received much acclaim for its high quality, creative beers. I had the great fortune to meet the company's founders Bryan and Sayuri Baird, a husband and wife team. Bryan graduated from Johns Hopkins SAIS in the early 1990s and came to Tokyo to enter the corporate world but had another calling. "I didn't know much about brewing at the time but I knew how to study," he said. Using passion and determination, he founded the company with some friends. For the first few years, his beers were dismissed as too challenging. His customers were initially afraid to try something new. For the same reasons, Bryan's competitors in Japan were brewing up pale, uninspired, safe lagers. Bryan stuck to his principles and kept making a great product that emphasized Japan's proud tradition of craftsmanship (monozukuri) until his customer base caught up with him.

"The Japanese people need to overcome their fears and be the nails that stick out," Bryan told me. Bryan is an entrepreneur who embodies what Japan needs—globalized human capital creating a business that adds value and jobs. Another notable maverick who has been globalizing Japan includes Rakuten CEO Hiroshi Mikitani who is making English the official language at Japan's biggest online retailer. Fast Retailing, Nissan Motor, and Toyota Motor also are moving in the direction of adopting English at the workplace.

In politics, LDP star Taro Kono recently published a book on how he is going to revive his party. The main message is: As a nail that has stuck out in the LDP, he knows how the party can revive the economy. Japanese culture is famous for its perseverance and the country's history proves it. The country needs some major changes in order to prosper. For it to create real change, Japan needs more mavericks. And to pilot away from the rough waters, it will need a bold leader; it needs a captain.

Photo by quatro.sinko

A Renewable Super-Grid for Europe?

I encourage you to read this interesting interview with German energy analyst Gregor Czisch on the potential for a cost-neutral renewable super-grid linking Europe and North Africa. I've selected a few key quotes here highlighting the policy and geopolitical concerns.

The gas pipelines currently in use act exactly like a super-grid, transporting gas from Sahara and from Siberia to Europe. There is no conceptual difference from transmitting electricity instead of gas.
The scenario with renewable electricity would be instead much more secure, because the sources can be diversified, with less dependency from single countries.
If we look at the recent Copenhagen debates: instead of developing new ideas, they are still discussing about the trading of CO2 emissions, carbon limits, carbon-taxes and other old-style proposals which hardly are effective because they are too much based on the unrealistic believe [sic] in the positive market forces and neglect the inelastic behavior of the consumers in the case of energy consumption.

We further need a harmonized regulation to support the financing of these projects, for example a common European feed-in tariff able to cover the cost for production and transmission of the electricity.

To import 10% of its electricity demand from wind energy in Morocco, Europe would have to invest about 3% of its GDP in wind generators in Morocco. This corresponds to roughly 200% of the Moroccan GDP. Such a decision would boost the local economy, creating jobs, local competences and industries.
It would be a clear sign towards a systematical change in the way we live together, because it would not be a fragmented intervention or a temporary help for a developing country, but a sustainable investment in order to serve for a mutual interest in the long term.

Monday, June 28, 2010

Musical Deck Chairs, or The Bureaucratic Shuffle

Drawing on his public diplomacy and State Department background, my colleague Joshua S. Fouts analyzes the bureaucratic implications of my "Pragmatic Overdose" essay on how the Obama administration is struggling to articulate a coherent global development policy. His comments are reposted from The Imagination Age.

From Evan's essay:
Security Should Not Define Development

Obama's advisors want to energize U.S. development policy by framing it in terms of American national security, calling development a "strategic imperative." This makes it sound important, but in reality it will backfire. The common wisdom is that poverty breeds instability. The problem is that scarce development dollars are not necessarily best spent in conflict zones. In fact, American development policy is hampered by the wars in Afghanistan, Iraq, and Pakistan, which attract a disproportionate share of expertise and resources. These three countries are nowhere near the wealth threshold above which democracies tend to stabilize. They would be risky development investments even without conflict. The tradeoff is thus development projects where they might better flourish.
Evan's point is well-made. But it's an issue that will be challenging to the culture of the State Department, where I used to work. Development policy is closely related to cultural relations work (sometimes called public diplomacy) which suffers from a similar dilemma in these kinds of bureaucratic associations.
New Values, Not New Bureaucracy

As it stands, Obama's "New Way Forward" is more bureaucratic shuffle than fresh ethical vision—coordination between departments is necessary, but not sufficient. His team must dig deeper into the fault lines of American foreign policy and take advantage of a crucial chance to redefine America's global engagement.

We won't see a new way forward until the United States views other nations as equal peers in the quest to realize a good life, instead of treating them as instruments in pursuit of American national security or favorable trade. To achieve this, the State Department must stake out its own values—beneficial immigration flows, fair trade, and regional green energy innovation—instead of cutting turf from Defense and other departments.
Herein lies the dilemma. The State Department's "own values" are clouded by layers of historic turf wars fighting for the level of financial investment and support it needs to do its work. After decades of decreasing budgets relative to that of the Defense Department a culture of insecurity has been bred in the State Department. When I was there in the 1990s, the insecurity and desire to demonstrate relevance compared to the well-funded Defense Department was palpable.

The rhetoric hasn't changed much since I left in 1997, as I discovered last week when I was inducted as a Next Generation Fellow of The American Assembly. During round-table discussions about US cultural outreach efforts throughout the day with other fellows and observers, one participant, a public diplomacy foreign service officer, declared that we "should not have another discussion about bringing back the USIA." The dissolution of the USIA is a topic that gets brought up constantly during such discussions.

For readers who don't know, the USIA was the State Department's quasi-independent cultural outreach arm, which was dismantled in 1999 when Congress and the Clinton Administration decided (incorrectly, as the events of September 11, 2001 would soon prove) that we had won the war of global public opinion. The remaining parts of USIA that survived were folded into the new Public Diplomacy cone of the State Department.

Since then, the public diplomacy officers with successful careers are those who adopted the rhetoric quoted above. The logic is simple in an organization as bureaucratic as the State Department: Where you stand depends on where you sit.

The USIA, in theory, was a great agency, but the fact is that it always remained beholden to the State Department and was thus limited in its ability to influence perceptions of the United States. The debate about bringing back the USIA is a time consuming one during events aimed at enhancing cultural relations and, further, completely misses the point, namely that influence can no longer be imposed by rhetoric in the modern world. If an agency is created to address this need, the United States and global community would be far better served by a new method and approach.

Wouldn't it be more innovative, creative, productive, and, yes, more American, to champion investment in intercultural dialogue programs be they independent or governmental? The fact of the matter is, US government investment in cultural relations relative to defense is, at best, an afterthought. Worse, it is a joke, compared to the efforts of other countries. No US foreign service officer should be proudly defending the State Department from creating another USIA. They should be demanding increased funding for cultural relations by any means necessary.

Evan's essay is yet another reminder that bureaucracy does not change. I used to believe that the work of cultural relations and development were well-placed in the State Department. I now believe that we would be better served adopting the UK model by creating an independent cultural relations entity like the British Council. (Dancing Ink Productions is currently collaborating with the British Council on the development of a global creative space within the digital culture for real world cultural relations benefit.)

Based on an earlier report by retired foreign service office John Brown, it sounds like the Obama Administration agrees: Obama's Public Diplomacy Chief of Staff recently told Brown that people interested in doing applied cultural relations work should not look to the State Department for careers but should go to NGOs.

Encouraging passionate US citizens who are concerned about improving ties with other cultures to take their work elsewhere is entirely self defeating for the United States and will cripple us further in the global arena. The Obama Administration needs to support cultural relations financially as well. Government investment in fighting wars overseas should be considered just as important as preventing them by improving cultural understanding between people.

Sadly, there is no domestic constituency for cultural relations work in the US. So the likelihood of increased investment in this critical part of our interaction with the world will be left in the hands of others.


Sunday, June 27, 2010

American Beer Mythology, Revised

Faithful members of the Church of Real Beer (also known by their self-effacing nickname "beer geeks") can recite a common beer mythology. It goes something like this: Back before Prohibition, America was one of the greatest beer countries in the world, producing wholesome ales in thousands of quaint breweries around the country. Back then, America commanded the respect it deserved as a great beer-producing nation. Then came Prohibition, which Americans brought upon themselves, and they were thus kicked out of the beer Garden of Eden. After the United States realized that Prohibition only led to organized crime and moonshine, it was too late. The beer hiatus during Prohibition gave "big beer" a window to elbow out the smaller craft breweries. Through bribery, trickery, and thuggery, large brewing enterprises like Anheuser-Busch, Pabst, Miller, and Schlitz forced Americans to drink thin, watery lager and by the 1970s, there was nothing left but this swill. America became a beer laughing stock. But a miracle happened. A visionary named Fritz Maytag had a epiphany and decided his calling was to restore America's beer tradition. Maytag resurrected an old brewery in San Francisco, sparking a beer restoration in the 1980s that led to the founding of venerable breweries such as Sierra Nevada Brewing Company, Boston Beer Company (Samuel Adams), Mendocino Brewing Company, and Brooklyn Brewery. Through hard work and devotion to the movement, beer geeks have supported a return to America's great beer tradition and won over many converts.

A version of this mythic history of American beer appears in the introduction of Maureen Ogle's fascinating social history of the United States through beer Ambitious Brew: The Story of American Beer. In this impressively researched book, Ogle sets out to debunk the beer geek gospel. Her book creates what one might call American beer history revisionism.

Ogle is a historian. The business of being a historian is to create new histories or new interpretations. In Ogle's new beer history, the world of good and evil is turned upside down. The heroes of Ogle's book are the villains in the beer geek worldview: Adolphus Busch and Frederick Pabst, the German-born founders of Anheuser-Busch and Pabst Brewing Company respectively. Her core argument is that contrary to the belief that these two companies came to dominate the U.S. market through intimidation, cost-cutting, and swollen marketing budgets, in fact A-B and Pabst prevailed through hard work, quality, consistency, innovation, and ultimately adapting to tastes and giving the people what they wanted. The big breweries relied on these traits to overcome several obstacles, proving their worth.

To add to these two excellent reviews, I would like to describe some of the business drama that Ogle outlines in her book. A big challenge that the breweries faced and overcame was to keep beer fresh in markets outside of the breweries' local market. Determined to expand the market and grow their company, Busch and Anheuser by 1872 were shipping bottled beer to the Southwest of the United States, "making them the first Americans to exploit the commercial possibilites of Pasteur's ideas" on pasteurization. By 1879 A-B was shipping its products to every state in the United States--thanks to the innovative use of refrigerator cars--and even to India, Japan, and South America, and Europe in small quantities.

Another challenge early in U.S. beer history was the luxury tax. At the end of the Civil War, the Union Congress needed revenue and in 1862 began taxing items such as billiard tables, liquor, and beer--at one dollar per barrel. The German brewers in America wanted to show their patriotism but still hoped for a lower tax. Several Eastern U.S. brewers met in New York City to strategize and convinced Congress to lower the tax to 60 cents per barrel--thus inspiring the formation "of the nation's first trade and lobby of any kind, the United States Brewers' Association."

A third and reoccurring challenge to beer in America has been the varying forms of temperance movements. The 50 years following the American Revolution, according to Ogle, "proved as intoxicating as cheap whisky." Society saw the emergence of the confidence man (or con man) who spun "outrageous schemes" to trick people out of their money. Americans started to wonder about their nation's moral integrity. "Self-doubt and self-examination inspired action. In the 1820s and 1830s, hordes of well-meaning crusaders launched a multi-armed effort to reform and perfect the American character... the jewel in the reform's thorny crown was temperance."

This temperance movement in the 1800s eventually collapsed but it produced an "unintended, profound consequence that shaped brewing for the next fifty years." That is it drew attention to the virtues of Germans and their lager; the two lived together in harmony and moderation without the social evils Americans feared. German lager seemed to be the moderate answer between the problems temperance created and moral degradation liquor seemed to spur. Scientists, doctors, and others came to the German lager beer's camp, stating how in effect it was not intoxicating. Harper's Weekly even joined the bandwagon stating, "Good lager is pronounced by the [scientific] faculty to be a mild tonic, calculated, on the average, to be rather beneficial than injurious to the system." By the mid 1800s, lager beer saloons and gardens could be found in cities all over the country.

A later temperance movement succeeded in creating Prohibition. The success of the Anti-Saloon League had to do with the times in America, again a time of moral reflection after another revolution (industrial). "As one dry put it, 'You may exercise your personal liberty only in so far as you do not place additional burdens upon your neighbor, or upon the State.'" To many, alcohol seemed to do just that, Ogle writes. On January 16, 1919 the Eighteenth Amendment of the U.S. Constitution established Prohibition in the United States until it was repealed in 1933 by the Twenty-first Amendement.

Interestingly, one of the finest American microbreweries, the 21st Amendment Brewery, named after the Amendment that repealed Prohibition, explains their namesake on their website. The story harkens to the beer geek mythos:

In 1920, Prohibition wiped out this culture and put the “local” out of business. For 13 years, social interaction was largely driven underground, to the speakeasies, where regular citizens became a nation of outlaws.

But with the passage of the 21st Amendment, repealing Prohibition, we, as a society, were able to begin the slow climb back to reclaiming the essence of the neighborhood gathering place. At the 21st Amendment, they celebrate the culture of the great breweries of old, making unique, hand crafted beers, great food, and providing a comfortable, welcoming atmosphere that invites conversation, interaction and a sense of community.

A final cultural wave helped give birth to the beloved microbrew. In the 1970s, only one-third of Americans trusted the government, down from 80 percent in the 1950s. In the early 1970s, writes Ogle, Americans rejected all things corporate and establishment, "thanks to the Vietnam war, crushing recession, and Watergate." The expression "small is beautiful" captured the feeling. It was in this environment that Fritz Maytag, who in 1965 bought the Steam Beer Brewing Company on a whim, was to succeed. Maytag, the great grandson of Maytag corporation founder Frederick Maytag I, was living in San Francisco and studying Japanese at Stanford's graduate program but pined for something meaningful. "That 'something' landed in his lap" in August 1965 when he leaned about the brewery was about to close.

In the rest of the book, the apostles of the microbrewery movement make appearances, including Jim Koch of Boston Beer Company, who controversially used contracting brewing to expand production of his beers, Charlie Papazian, the founder of the Association of Brewers and author of perhaps the most famous homebrew cook book The Joy of Home Brewing, and Sam Calagione, the founder of Delaware's Dogfish Head Brewery, which has pushed the innovation envelope by brewing with exotic ingredients such as raisins, ginger, and cocoa powder. Koch and Calagione, by the way, have been competing to produce the world's strongest beer; last I checked Koch was winning with his Utopias at 25.6 percent alcohol. And after Anheuser-Busch was sold to InBev in 2008, Koch's Boston Beer Company became the largest American-owned brewery, a title that Adolphus Busch had fought hard to achieve 100 years before.

Photo by Herkie.

Friday, June 18, 2010

Joi Ito on Fundraising for Nonprofits

Reposted from: Joi Ito / CC BY 3.0

Yesterday I attended a meeting called "The Future of Fundraising" organized by Jennifer McCrea with the Hauser Center for Nonprofit Organizations at Harvard University. It was at the Harvard Club in New York.

It was a small group with a bunch of heavy hitters including some of the best fund raisers in the world. I learned a tremendous amount and was very energized after the meeting.

Some notes from the meeting.

Good executive directors (ED) were also the main fund raisers and they generally loved fund raising. In fact, there was a strong opinion of many that any ED who wasn't excited about fund raising, shouldn't be the ED.

Fund raising is about relationships and building relationships and is very different from sales and marketing in normal for-profits.

In a non-profit, you're not selling some good or service to a customer. What you're doing is helping the donor fulfill or pursue a dream or a cause. In order to be successful you have to have a understand the donor and become part of their world view.

Many non-profits think of donors as a funding source to pay for programs that execute on their mission. In fact, donors should be part of the mission. Good non-profits integrate the funding model directly into the mission. Churches are usually MUCH better at raising money than the natural history museum because "giving" is an integral part of the church-going experience whereas the natural history museum usually tries to collect money from the outside to allow them to run their mission internally.

When trying to understand a world view of someone, it is useful to try to categorize their world view and there may be seven basic world views.

The following "Seven Philanthropic World Views" were presented by Gunther M. Weil.

World ViewPhilanthropic Values & Motive
Alien/ThreatenedSurvival & Security
Family/Socialfamily tradition, care/nurture, status/image
Organizational/Transactionalfinancial metrics & accountability, productivity, efficiency
Self-Actualization/Serviceself-discovery, empathy, altruism, service
Collaborativesocial justice, innovation, collaboration
Symbioticsociety transformation, prophetic vision, wisdom & spirituality
Global Transformationglobal transformational human rights, global ecology, macroeconomics

Once you understand someone's world view, it's much easier to try to understand why they would give and whether there is something in what we do that helps them advance their world view.

Another key point in all of the stories about successful fund raising was that good fund raisers loved their work. Their work was to get to know people. How are their kids? What's their dogs name? Do they have extra tickets to the ballgame? Do they need extra tickets to the ball game? The feelings have to be genuine, respectful and they have to care. You need people who LIKE people. You never ask for money in the first meeting, but you never leave a meeting without asking for SOMETHING. Also, you should offer something too. Always have a followup action. But most importantly, walk away knowing the world view of the person and begin developing trust. The partnerships with donors is a long term relationship involving lots of dialog and exchange where the giving to the organization is only one piece.

All of the top fund raisers took two vacations. One with their families and another with their families and their donors. Working with donors means becoming part of their private lives. It's not just a day job.

One organization sent a message to all of their donors during the Haiti crisis asking them to give to an NGO that they had vetted. They didn't ask for any money for themselves. This had a hugely positive effect and the donors trust in the group increased. Wallets aren't zero sum.

Long term donors and their relationship with the organization is a partnership. This is true of individuals, government program officers and foundation program officers.

One thing to keep in mind is that the world view of the organization that they're in (or family) and the person themselves can sometimes be different and teasing all of this out and helping them solve for this is also key. It's important not to try to force our story and lead with what we need, but rather to understand what the donor needs and see how we fit into the solution.

A key term that kept coming up was "tribe". We're trying to make a tribe of donors and supporters and they all need to feel like they're participants, not just funders for some group of people who go off and do stuff.

Having said that, there is also a lot of analysis. One non-profit would somehow get all of the names and annual incomes of targeted high-net-worth individuals and do a 3 hour call with the board to figure out who would approach who and strategize the approach to each person.

In most cases, board members developed relationships directly with the donors and rarely did the development person successfully email "on behalf" of the board member. A good development staff member usually provided support, analytics and tracking.

The message is very important. It's important to evoke an emotional and visual idea of what we do, rather than the detailed explanation of what we do. The metaphor that resonated was "what is in the frame" no what is written on the plaque below the picture.

My apologies for these rambling style of these notes, but I thought I'd get them out while they were fresh on my mind. I wanted to share because fundraising is a key component to success for non-profits and it is one of the things I get asked about the most.

Reposted from Joi Ito.

The Hypocrisy Clause

Guest post by Timothy A. Wise of TripleCrisis

Trade officials in the Obama Administration have made it abundantly clear that they will move forward in the WTO's Doha Round of negotiations only if the larger developing countries agree to open their economies more to U.S. exports. As Kevin Gallagher pointed out on the Triple Crisis Blog ("Obama's New Trade Agenda"), the administration's trade policies, and its announced goal of doubling U.S. exports, backtrack from those of the Bush Administration, renege on the basic principles of the Doha Development Round, and undermine precisely the kind of multilateralism President Obama claims to stand for.

Such intransigence does not bode well for the WTO, nor does it give much hope that the Obama Administration will use the current TransPacific Partnership negotiations to forge what it promises will be a "21st century trade agreement."

Clearly, a creative new approach is needed to break the trade deadlocks. I offer a modest proposal here: Instead of negotiating reductions in tariffs and farm subsidies, it's time to negotiate reductions in hypocrisy. I call it the Hypocrisy Clause, which mandates phased reductions in "trade-distorting hypocrisy," with the greatest reductions coming from the most developed hypocrites.

Why focus on hypocrisy? Ask the unemployed workers who voted for Obama based on his campaign commitment to reform NAFTA and future trade agreements.

Ask any developing country negotiator. Ask the Brazilians, who have been waiting six years for the U.S. government to respect the WTO ruling that U.S. cotton subsidies violate WTO rules. The U.S. has flaunted the WTO finding, appealing twice (and losing), and now Obama's trade officials have the gall say they'll step up enforcement of existing trade rules. They even cut a side deal with Brazil to stave off Brazil's approved retaliatory trade measures, further delaying compliance with WTO rules. Meanwhile, Mexico waits for its NAFTA partner to comply with the NAFTA ruling on Mexican trucks entering the U.S.

But if you want to know why we should negotiate hypocrisy reductions, ask the so-called "Cotton 4" countries in Africa. Their cotton farmers have suffered more than Brazil's from the U.S failure to respect the WTO ruling. Now they listen as U.S. negotiators insist that no movement on cotton can occur until the larger Doha agreement is signed, in direct contradiction of the 2005 Hong Kong commitments to treat cotton "ambitiously, expeditiously and specifically" ahead of the broader Doha agreement.

Who cares what the rules are or what the negotiators agree to if the rich countries then just do what they want?

Under my Hypocrisy Clause, that stops. The United States, as a developed country that has benefited greatly over many years from its past hypocrisy, would have to eliminate such actions immediately. So would the European Union, whose own hypocrisy may not compare with current U.S. levels (much to the EU's delight) but still offers large trade-distorting benefits. The EU could start by scaling back its export subsidies for dairy products, which it raised last year to dump surplus milk despite its loudly proclaimed commitment to end all export subsidies under Doha.

Under the proposed Hypocrisy Clause, rich countries will have to reduce or eliminate "trade-distorting hypocrisy." Hypocritical acts and negotiating positions deemed non-trade-distorting will still be permitted. (Otherwise there would be no politicians to negotiate.)

But what about middle-income hypocrisy? Isn't Brazil one of the world's largest agro-export powers with a well-cultivated reputation for defending the interests of other countries' small-scale farmers? Isn't Brazil also guilty of hypocrisy? Absolutely. In fact, as part of its side agreement on cotton with the United States, Brazil got a multi-million dollar fund for investment in its cotton sector. Talk about hypocrisy: Africa's Cotton 4 will now have to compete in global markets not only with subsidized U.S. cotton but with Brazilian cotton subsidized by the United States!

Middle-income countries such as Brazil, which have only recently begun to benefit economically from their hypocrisy in international negotiations, will have to reduce such trade-distorting actions, but they will be given more time. This reflects the Doha principle of "special and differentiated treatment" for developing countries, with reduction schedules that demand "less than full reciprocity" from developing country hypocrites.

And the Least Developed Countries? Their governments will be allowed to be as hypocritical as they want, since their countries have yet to benefit economically from such positions.

Does my Hypocrisy Clause proposal stand any chance of success, given the rampant hypocrisy in global trade negotiations? It has at least as good a chance as the current efforts to negotiate fair tariff and subsidy reductions when the world's largest trading partner won't respect the Doha mandate, doesn't comply with existing WTO rulings, and demands further liberalization in developing countries' financial sectors after its own deregulated financial sector nearly provoked a global depression.

If rich countries are going to keep using trade negotiations to "kick away the ladder" of development, outlawing the very trade measures they themselves relied on to grow, then we're better off abandoning the pretense of negotiating about industrial tariffs, agricultural subsidies, and service-sector liberalization.

Instead, let's cut the hypocrisy.

[PHOTO CREDIT: Harvesting cotton in Brazil, by Farming Matters (CC).]

Wednesday, June 9, 2010

Obama Did Not "Take Down" Hatoyama

Hatoyama brought himself down.

Last night I was interviewed by Jim Swanson of Progressive News Radio. We talked about U.S.-Japan relations after Japanese Prime Minister Yukio Hatoyama stepped down from office last week, and about what we might expect under the new Naoto Kan administration. You can listen to our conversation here.

One of the topics we covered during the interview was a narrative that appeared in several publications immediately after Hatoyama's resignation advancing the notion that somehow U.S. President Obama was responsible for Hatoyama's political demise. Never mind the distasteful samurai references to Hatoyama "falling on his sword" and committing "ritual suicide." Blaming Obama for Hatoyama's fall not only ignores the facts, it is patronizing to Japan.

The argument I take issue with essentially says the following: The United States had developed a cozy relationship with the Liberal Democratic Party during that party's decades of nearly uninterrupted rule in Japan. After the Democratic Party of Japan defeated the LDP in the August 2009 general election, the U.S. government got nervous that it no longer had a vassal in East Asia that would obey U.S. wishes and advance U.S. policy—even though the DPJ and the Obama Administration shared many philosophical views and the U.S. and Japan share many core security interests. Hatoyama's move to renegotiate an agreement that the United States and Japan had made in 2006 over the relocation of a U.S. marine base in Okinawa convinced Obama, the argument goes, to greet Hatoyama in international forums with an "icy posture," causing Obama to "lose face," eventually forcing the Japanese leader to resign. (Variations of this argument can be found in The Huffington Post, The New York Times, Slate magazine, Foreign Policy in Focus, and elsewhere.)

If only it were that easy. Wouldn't it be nice if President Obama were able to take down leaders of countries just by being "icy" toward them? Imagine the power. The United States could simply shape international politics through sheer will. If Obama had such supernatural powers, wouldn't he use them to eliminate troublesome figures like Kim Jong Il instead of allies like Japan? Perhaps like any superhero he must keep them secret to avoid unintended consequences. But that is also part of the Obama-is-to-blame narrative: The United States should be careful when using its power for it may face unnamed "consequences." At least this whole notion dispels the dubious "America in decline" school of thought.

The blame-Obama narrative also assumes no independent agency in Japan and therefore sounds U.S.-centric, narcissistic, and uninformed about what has actually been happening in Japan over the past eight months. Since the day Hatoyama came into office Japanese people have poked fun at the politician, calling him an "alien," "a professor," a "momma's boy," and a "pigeon"—a play off his name (see the video above of the prime minister during his last days in office imitating a pigeon).

Meanwhile, Hatoyama was wishy-washy on other things, including pocketbook issues like highway tolls and cash subsidies for families with children. Other money problems included Hatoyama's own campaign funds scandal and a ballooning budget deficit. Hatoyama's failed attempt to renegotiate the relocation of the Okinawa marine base demonstrated to Japanese voters that he lacked leadership skills and failed to appreciate Japan's security needs. It is understandable that Hatoyama would want to reopen the Okinawa base issue, but I believe he could have done so with much more tact, leaving himself room to maneuver in case things didn't look good. At the least, he should have sought a viable political alternative domestically before announcing to his ally that the 2006 agreement was off. As Obama's Asia advisor Jeffrey Bader put it this week at a meeting in Washington:

Secretary Gates visited Japan in October and made clear that the FRF (Futenma Relocation Framework) remained the best option, that walking away from it would damage the alliance. There was criticism of Secretary Gates' so-called "confrontational" approach. In fact, someone on the Japanese side chose to leak virtually the entire transcript of Gates' first meeting with FM Okada to Kyodo News, giving the appearance that Gates was seeking a public confrontation when he was in fact speaking frankly in a private meeting.

As we all know, PM Hatoyama decided in December Japan would not implement the FRF as agreed upon. He said Japan would reach agreement with us on a new proposal by the end of May and made clear his preference was to relocate the MCAS Futenma off Okinawa--if not off Japan altogether.

We thought this was a mistake, for various reasons. We made clear our disagreement to the Japanese government. At the same time, we did not reject Hatoyama's proposal to talk. We would have preferred to stay with the option so arduously negotiated over 15 years, and continued to say it was the "best" option, but we did not insist that it was the "only" option. Rather, we showed respect and understanding of the politics of Japan and the needs of the new government. We were frankly skeptical that delay would produce more positive results. But, that is how allies should treat each other, particularly in the "alliance of equals" about which Hatoyama spoke and which President Obama has accepted.

Hatoyama's mishandling of Japan's relationship with the United States and his flip-flopping on domestic issues precipitated a steady decline in his administration's public support from percentages in the 70s to below 20 at the end of his time in office. People I interviewed in Japan were predicting Hatoyama's undoing and Naoto Kan's ascent as early as November 2009, just a couple of months into Hatoyama's term.

The Japanese people's attitude toward security is paradoxical. Most Japanese understand that the alliance is important for the security of Japan (America and President Obama have been quite popular in Japan since Obama took office). Many Japanese want a more independent foreign policy but they are also reluctant to devote more funding to making that a reality given the country's extremely high levels of government debt. Making things worse, Japan is facing a declining population and is unlikely to open its borders to large numbers of immigrants. So the default position is to rely to a large degree on the United States, a proven, trustworthy ally.

On top of that, the blame-Obama sound bite is mostly an English press phenomenon, and has little resonance with the Japanese media. Foreign pressure (gaiatsu) can have a role in advancing change in Japan, but it needs a domestic constituency for it to actually work. The Japanese have been expecting Hatoyama's resignation for months given his poor performance in office. As a democracy, Japan was able to move on to a more promising leader. To blame foreign leaders for Hatoyama's fall would belittle Japanese democracy.