A Cautionary Tale

A Cautionary Tale Neoliberal Discourse and the pedagogic function of the mediated Lost Japan narrative during the financial crisis. PhD thesis Theodore Bonnah Doshisha University This work is licensed under the Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/ or send a letter to Creative Commons, PO Box 1866, Mountain View, CA 94042, USA. Acknowledgments Although the PhD student may feel very alone at times, a doctoral thesis is almost never a lone effort. In my case in particular there were many to give thanks, but which I left unsaid in the crazy final days of my PhD studies. I would like to apologize here to all those I shamefully left without a proper expression of my gratitude, and respectfully offer the following acknowledgments. First, I owe a great debt to my wife Tomiko, who kept my body and soul together as I laboured under the twin burdens of PhD research and teaching a full course load at university. The dark time was just as hard on you as it was on me, and we both spent many frustrating and lonely nights apart in the same house. You have my apologies, my thanks, and my love. I give this equally to my son, Leo, who was thankfully too young to see the stress his parents were under. Thanks and love as well are due to my mother Phoebe, her husband Terry, and my siblings Victor, Philip, and Terrilyn, all who were too far to see my distress, but always near to my heart. Heartfelt thanks also to my father Victor and his wife, Donna, who cheered me on from afar. Love and thanks as well to Phyllis and Willie, Cathy, Candy, Jim, Clinton and Tinlaw. Second, the many work colleagues and fellow doctoral students kept me going with the personal and professional encouragement, which kept a smile on my face and a fire to finish in my belly. Most deserving of recognition are Dr. Yusuke Okada, Dr. Daniel Mills, Dr. Will Baber, Dr. Simon Springer, Dr. Thomas Amundrud, Alexandre Gouttefangeas, Dr. Moeko Mina, and Kana Hanada. Merci les potes. Last and greatest, none of this would have been possible without the superhuman efforts of Dr. Anne Gonon to push me out of my comfort zones, to open my eyes to new ways of seeing, and make me master my thoughts and perceptions. The polite fiction of a PhD masks the hundreds of books and articles she lead me through, the theoretical and analytical techniques she nurtured in me, and the compassion she engendered in me as an academic. Je vous remercie de tout mon coeur, madame. Theodore Bonnah, PhD April 2017 Table of contents Introduction 1 Chapter One 1 - From Discourse Criticism to Analysis of Narrative 15 1 Neoliberalism: Meanings and Issues 15 2 Neoliberal Discourse 37 3 Defining Neoliberal Narratives 56 4 Tools of Analysis 84 Chapter Two - The Objects of Lost Japan 87 1 The Financial Crisis and Media Narrative 87 2 The Three Neoliberal Objects of Lost Japan 109 Object 1: Denying the Nature of the Crisis 109 Object 2: State critique 141 Object 3: American Freedom to Fail 158 Chapter Three - Cautionary Tales and the Culture Industry 167 1 The Reassuring Orientalist Other 167 2 Why This Form of Mediated Narrative? 209 3 Lost Japan as Neoliberal Morality Tale 218 4 Reconsidering The Field of Neoliberal Research 240 Conclusion 259 Bibliography 278 i Introduction Background When the story of the financial crisis broke open across media outlets in the US in early 2008, I had just moved back to Japan from North America. To my surprise, instead of focusing on the US financial system where the dysfunctions had taken place, or uncovering the history of deregulation that had lead to creation of the ‘toxic assets’ that precipitated the housing crisis and the ensuing credit crunch, American news media and think-tank depictions instead focused on the analogy with Japan and whether the US would become like this ‘lost’ nation. From the moment the story of the crisis was first promulgated in American ‘economic journalism,’ a hybrid and complex genre written less by journalists and more by economists and financial advisers, the popularity of this Lost Japan thesis was peculiarly conspicuous. In this analogy, a different set of images and associations were deployed to describe largely the same problems in both nations: references to Japanese ‘zombie’ banks were contrasted with America’s ‘toxic assets', while the uncooperative and faceless members of the Bank of Japan were replaced with the ‘activist’1 Federal Reserve chairman Ben Bernanke. The rhetorical strategy of depersonalizing Japan’s crisis while giving the US one a human face is just one indication of the discursive structure of this line of media story. Reading a succession of such ‘Lost Japan’ retellings in the NY Times, the Wall Street Journal, the Congressional Research 1 As asserted by Richard Katz (2009) in “Katz Replies.” Foreign Affairs. May/June 2009. 1 Service, and many other places, I realized that through the analogy of Lost Japan, US power elites were trying to adapt an old story to their new reality. Indeed, they were constructing reality through their narrative, giving sense to the Byzantine financial events of the crisis and consequently suggesting a course of action that accorded with their neoliberal worldview. The media dominance of the Lost Japan analogy struck me as peculiar for three reasons. First, it was certainly not a news story, as its basic tenets had been set down a decade before when Milton Friedman (1997) wrote "RX for Japan," a monetarist opinion piece for the Wall Street Journal. "RX for Japan" preceded an avalanche of more academic assessments of Japan’s crisis by well known economists such as Paul Krugman (1998), Ben Bernanke (1999) and a host of others. It was this initial iteration of Lost Japan that set the narrative tropes of Japanese 'crony capitalism', their indecisive financial institutions, and lack of free market fundamentals, all contrasted with American competitiveness. This initial telling of Lost Japan bolstered the careers of many of the above economists, who would later be called into service as ‘experts’ when the 2007 crisis hit and the analogy would be revived. From a journalistic standpoint, as a news story in response to a massive economic crisis requiring immediate action, rehashing Lost Japan would appear to be a poor choice. Second, having lived in Japan for a decade at this point, I could hardly see in the narrative or its entailing discourse the country where I lived and worked. Having acquaintances working in a Japanese bank, hearing stories of reforms and restructuring, and living a style at odds with the neoliberal ‘race to the bottom’ critiqued in US academia and media, Japan seemed to me far from lost, especially in comparison to the US itself. This is not to say Japan was without its own problems, but branding as ‘lost’ a country still in the top three globally and with 2 a higher degree of wealth equality than America2 seemed besides the point or misguided. Also, framing Japan as lost due to its supposed divergence from free market economics seems to ignore Japan's equally capitalist nature. Considering that Japan was sufficiently imbricated in global finances enough to undergo the boom and bust cycle that made it an analogical cypher for the US, the analogy itself would seem to repudiate the contrasts it established. Finally, the most glaring incongruity was the obscuring of America itself in US media responses to the crisis. One would expect during such a time that a society or nation would take a long look at itself, to do real soul-searching and make changes for the betterment of society, as had happened during the Great Depression. Instead, American media focused on a constructed Japanese Other instead of the troubled American Self, with reassuring claims of American exceptionalism and 'fresh thinking' that glossed over the 'financial innovation' that had lead to the banking and credit crises. More than any other reason, this mediated (i.e. constructed) shift of media attention at a time when it was needed most called to me for inquiry. To claim Japan is 'lost' in comparison to the US, whose blind adherence to free market principles set the stage for the recession that rivals and arguably surpasses Japan's lost decades, implies a myopia whose cause lies in the blinders of market interests. Indeed, as the financial crisis has made apparent, America is still on the ‘right track’ for the top earners. This tendency is symbolized in the well-publicized, emblematic 2008 incident when the CEOs of America’s ‘big three’ automotive manufacturers came to Washington in their private jet seeking a $25 billion dollar bailout. This neoliberal culture of elite entitlement is similarly seen in the proposal for a $3.6 billion dollar bonuses for failing bank CEOs, a notion that New York governor Andrew Cuomo (2008) calls a culture of "heads I 2 Compare the Japanese Gini coefficient of 41.1 for the US and 32.1 for Japan according to World Bank figures for 2012 (http://wdi.worldbank.org/table/2.9). 3 win, tails you lose” (1). The question is thus not of ‘returning to business as usual’ after the crisis – the crisis IS business as usual for neoliberals. Philip Mirowski3 attests that “crisis is the preferred field of action for neoliberals, since that offers more latitude for introduction of bold experimental “reforms” that only precipitate further crises down the road” (2). Considering the many unresolved structural problems that remain in the wake of the financial crisis noted by Stephen Mihm and Nouriel Roubini (2011) among others, Mirowski’s judgment seems apt.

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