Japan

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Sometimes we all need to change the window we look out of to forget politics, work, relationships or finances. Bathe your feet in hot water while you dine. Find your place of peace. This is 東府や(Toofuya) in the Izu Peninsula. 静岡県伊豆市吉奈98 Bakery & Table

#MakeShimaneGreatAgain

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In CM’s Make Japan Great Again report we noted that Shimane Prefecture has had the slowest population growth in almost 100 years. Shimane has seen its population fall 3% since that time. The issue is not just that Japan has a declining population rate, the regions are depopulating at too fast a pace. Without wanting to get too technical Shimane Prefecture is hosting a drive to get people to move there as it provides great childcare facilities and jobs! Half the battle of such drives, as well intentioned as they are, is who jumps first. While available daycare slots in the big smoke of Tokyo are hard to find, the population is still growing giving much better optionality for the long term.

I will be attending the seminar as I’m curious what other bait will be offered. Indeed Shimane, as lovely as it is to visit,  one wonders what excitement awaits with a population in decline. I was there in September – as was the last time I visited – there is nothing to speak of worth setting up a new life. At least Shimane is facing up to its reality and for that they deserve the full accolades of trying to resuscitate a region that is the same as it was 100 years ago.

Terrorism in Japan

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Can anyone recognize the person in this picture?

 Most foreigners won’t know her. Her name is Fusako Shigenobu. She looks harmless and sweet enough. The girl next door? She is actually the Japanese equivalent of Ulrike Meinhof. Shigenobu founded the Japanese Red Army (JRA) in 1971 at the tender age of 26. The JRA was responsible for a spate of hijackings, hostage takings, airport massacres and bombings in the 1970s and 1980s. It was closely aligned to the Popular Front for the Liberation of Palestine (PFLP). Although she claimed the group disbanded in 2011 it has since been renamed the Movement Rentai. Many are not aware another Japanese terrorist organisation bombed Mitsubishi Heavy Industries HQ in 1974. Aum Shinrikyo is perhaps the freshest in many memories for the 1995 sarin gas attacks on Tokyo’s subway. Japan is a safe country to be sure but that does not mean it is immune to future attacks.

CM – Terrorism in Japan

Sadly Japan is suckling on the bosom of (a false sense) of security. The above link contains CM’s full study.

Crime in Japan – Yakuza, the Police and other crime

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CM – Crime in Japan – Yakuza Police Other Crime

Once again, due to numerous requests see the above link for the full report and the summary below.

In our Crime in Japan series parts 1 & 2  we covered the jump in crime resulting from seniors breaking into prison and the rapid breakdown in the nuclear family leading to a surge in domestic violence and child abuse. In this report we cast our focus on the resources of the police and whether the change in crime is impacting their ability to hunt down Yakuza (gangsters), thwart drug use and possession, prevent murder and stop the leap in financial crime where insurance fraud alone is up 2,000% in 6 years and suspicious transactions breaking new records.

The Japanese National Police Agency (JNPA) has been the victim of budget cutbacks. Some 80% of the ¥3.2 trillion budget is spoken for by staff salaries. There are approximately 295,000 staff (including administration) but actual officer numbers have remained relatively stagnant at around 258,000. With an aging police force, retirees are putting pressure on hiring new recruits. Japan does have a low level of crime on a global basis and 197 police per 100,000 citizens reflects that.

Japan has budgeted approximately ¥232 billion to run its jails in 2016. The cost of incarceration runs to around ¥3.8mn per inmate which is around double what one could get through the welfare system. The theft of a ¥500 sandwich could lead to a ¥8mn tax bill to provide for a 2 year sentence. Courts are dealing out harsher sentences however drug related offences generally range inside 2 years behind bars. Many Japanese have been in the media crossfire for repeated drug offences and the courts have had no choice but to incarcerate them when ‘good behaviour’ probation periods have failed. Prison capacity has grown 50% in the last decade to meet the coming crime wave.

Drugs in Japan are an interesting topic. Meth was originally synthesised from ephedrine in 1893 by a Japanese chemist Dr. Nagayoshi Nagai. 26 years later, a pharmacologist by the name of Akira Ogata managed to turn it into crystalline form i.e. crystal meth.

When World War II got under way Japanese soldiers (especially kamikaze pilots) were given crystal meth (branded Hiropon) which not only kept them ‘wired’ but reduced hunger. As the war ended, Japan was left with excess supplies of Hiropon. Food supplies were few and returning soldiers added to the shortage. However little was known of the side effects and the government had an epidemic on its hands in the late 1940s. Luckily there is a solution being developed by the Japanese biotech company MediciNova (4875) which is in late stage trials in the US with a formula that weans drug users from their addiction.

One of the surprising statistics has been the trend in gangster (Yakuza) incarceration in Japan. While police have seen a surge in consultations (aka complaints) surrounding gangster activity, arrest rates have fallen by 30%. Is it because the police are so tied down by the surge in stalking, domestic violence, child abuse and larcenous geriatrics?

People with mental disabilities committing crime are also rising sharply, up 62% in the last decade. Apart from schizophrenia or medically diagnosed mental health issues, addiction to alcohol or substance abuse can also get an offender classified as mentally disable if they break the law.

Financial crime is becoming far more prevalent. From petty scams to sophisticated insurance and bank fraud, such offences are surging. Reported fraud related to bank transfers has doubled between 2010 and 2014 to 13,400 cases with the amount of money transacted surging 5-fold to ¥56.5bn.

Murder rates in Japan have remained relatively mute. The homicide rate in 2014 was 938 down from 1362 in 2006. As a ratio, Japan has 0.7 murders for 100,000 people versus 91 for Honduras (the highest) or 4.7 in the US. However Japan has not been immune to home grown massacres.

Foreigners as a percentage of crime in Japan continues its long downward march. Much of the crime is related to petty theft and visa overstays. Chinese, Vietnamese and Brazilians make up 60% of foreigner arrests in Japan. Foreigners as a percentage of inmates has also dropped sharply from 8% of the prison population to 5.5%. Chinese, Brazilians and Iranians make up half of gaijin inmates.

The incidence of crime continues to rise in Japan. As discussed in our previous reports we can see that crime rates (e.g. shoplifting, theft, child abuse, domestic violence, assault, stalking etc.), while small on a global scale, are rising at such a speed it seems to be taxing a police force struggling with worsening manpower issues. It would seem to make sense that despite growing reports of suspicious activity by organised crime, arrest rates are falling. Furthermore retiring demographics in the police force suggest that ‘street knowledge’ gained through decades of leads (e.g. informants) may not so easily be transferred to the new recruits. Throw financial fraud increasingly perpetrated by cyber criminals on top, perhaps the Police need to invest in sophisticated systems rather than just hire more cops on the beat? The face of crime has changed.

 

Crime in Japan – Breakdown of the Nuclear Family

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CM – Crime in Japan – Breakdown of the Nuclear Family

Following on from pensioner crime in Japan, this eye-opening report on the breakdown of traditional families points to a future unlike what many may not fathom. The link above contains the full report with a short summary can be found below.

Did you know that 25% of all marriages in Japan are couples that marry due to unplanned pregnancies? In Okinawa that rate is 42.4% Did you also know that 25% of all households with children in Japan are single-parent? The perception of the dutiful wife getting up at 4am to make breakfast for her samurai salaryman husband are virtually non-existent and half of divorces happen in age groups 55 years old and above. 25% of divorces occur in the 65yo+ cohort. The government changed the law in 2007 entitling wives to up to half of their ex-husband’s pension. Still the trend was rising sharply even before its introduction. Mrs Watanabe has had enough of her salaryman and wants out.

Domestic violence (DV) is seeing a very sharp upturn in Japan. Between 2010 and 2014, victims of DV have soared 60.6% against women and 650.1% against men. Most cases (over 60%) of DV were marital related. Recognizing the growing problem, The police have even developed a new category of DV which defines a divorced couple who are living under the same roof. Economic conditions for some families has become so tight that the stress of living with someone they do not want to be with now gets its own category, scoring over 6,000 cases alone in 2014.

Between 2010 and 2014, total reported stalking cases surged 36.6% to 24,837. 50% of stalking incidents recorded were related to partners (including former partners).

The Ministry for Health, Labor & Welfare (MHLW) has 208 child consultation centres which fielded over 88,000 cases in 2014, a 20.5%YoY increase or 22x the level of 20 years ago. Despite a 2.4x jump in social workers inside these child consultation centres over the last two decades they can’t keep up with the demand. The Japan National Police Agency (JNPA) statistics show a sharp jump in arrests for child abuse, 80% being due to physical violence causing injury. In 2013, 36 abused children died with 16 of them under 1 year old. Police note that child abuse is being driven by the breakdown in traditional family, unemployment and poverty, stats which we showed earlier to be rising steadily.

Crime in Japan is a problem that will not simply disappear with the evolving mix of aging demographics, poverty, unemployment, underemployment and economic stagnation. We note that the previous jump in Japanese crime started in 1997 and ran to a peak in 2003. Unemployment was a factor. In the crime boom of 2010-2016, we note that the unemployment rate has fallen but it masks disturbing trends in lower paid part-time work which is putting families under financial stress.

There is the smell of fear in the workplace. In the period 2002 to 2013, labour disputes almost trebled. Bullying and harassment (which are obviously less palatable for companies to have floating in the public domain) as a percent of total disputes has ballooned from 5.8% to almost 20% over the same period.

Another dilemma in the data is the employment referrals by government unemployment agencies for middle or advanced aged staff (45yo+) which shows that around 25% of them end up with work in a fixed term capacity of more than 4 months.

Ironically active retraining of inmates to help them find new careers after release occurs in prison. Why isn’t more being spent on finding ways to redeploy those out of prison? The idea that any job will do is a recipe for failure and cannot be relied upon as a sustainable program. Most vocational training by Hello Work, the government unemployment insurance agency, is broad and non-specific. Any specific job training will be ‘paid for’ which ultimately is limited to an unemployed person’s financial status and confidence a job will be attainable at the end of it.

Crime in Japan – Geriatric Jailbirds

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CM – Crime in Japan – Geriatric Jailbirds

I have been asked by several people to rehash a report I wrote on elderly crime in Japan back in Feb 2016. The above link contains the entire report. Below is a brief summary.

While retirement for many of us is some way into the future, common sense would dictate that once we reach it, committing crime is probably furthest from our minds. Hugging one’s grandchildren is surely a better option than talking to them through a glass window. If you are in prison you are supposed to be old when you leave not when you enter it. Not so in Japan.

The incidence of crime committed by the elderly is soaring. 35% of all arrests for shop-lifting involve the retiree demographic, up from 20% (2001). Since 2001, their representative percentage of the prison population has doubled and 40% of repeat offenders among the elderly have committed crimes six times or more in order to return as a guest of His Excellency. While much of it is petty crime, there seems a deliberate attempt to ‘break into prison’ as a way to survive. A roof over their head, three square meals a day, no utility bills and unlimited free health care. The only real negative being the harsh prison rules about when one can talk to fellow inmates. To the state, one inmate costs ¥3.8mn to incarcerate and we estimate around ¥300,000 in court and administration fees per incarceration. Furthermore supplemental healthcare to the prison system has doubled in the last 7 years. We study the economics of what might drive someone to make the choice to commit crime and look at the government’s current funding for income support. Is it being spent wisely?

Such has been the overpopulation in prisons, the government has had to increase capacity by 50% in the last decade and boost the incidence of early release and parole to create space for what one can only guess is a way of developing state sponsored retirement villages. Female prisons are already full but the MoJ wants to increase the number of female prison guards to prepare for the anticipated increase in elderly crime.

At the last (average) count in 2010, there were 4,069 elderly inmates. While that is only 14 people per 100,000 aged over 65 that rate has been climbing from 12 in 2004 and around 8 in 2000. We estimate at the 5.4% compound growth rates experienced to date, that 31 people per 100,000 is possible by 2036. At that rate, 11,636 elderly citizens would be in jail at a cost to the government of ¥42bn per annum as health cost related budgets have been appropriated at around ¥120,000 per elderly inmate.

‘Supplemental welfare’ or income support paid by the Japanese government is approximately ¥3.6 trillion per annum and spread across 5.9mn people (an average of ¥605,000 per person). ¥1.7 trillion of that total is for medical and nursing care (c.¥1.2mn per person). Note this portion of healthcare is separate from the ¥36 trillion annual healthcare budget.

What are the economic sums that drive a pensioner to consider committing crime? We surmise that a measly base pension of ¥780,000 (US$7,000) per annum won’t get one very far. When throwing on top of that healthcare, rent, utilities and food it is not hard to get someone into net-negative income territory. Sure, supplemental income through part time work may close the gap but perhaps that some are resigned to their fate to consider jail as an option.

There is another elephant in the room. Suicides among pensioners are now 40% of the total, up from 27% in 1983. One gets the feeling that all of the things that retirees had come to expect from a society is in reality against their long-entrenched cultural thinking. Wives of retirees now make up 6% of all reported suicides. They are obviously not adjusting to having the bread winner at home every day. We break down suicides by prefecture and show the clear link to elderly populations, low population growth and relatively smaller GDP compared to national averages. The economic malaise in the regions contradicts a vibrant Tokyo and much of what is going on does not get reported. Domestic violence committed by the elderly has surged 2.4x in the last 5 years. The number of murders committed are even higher.

Solutions are hard to fathom. By 2060, 40% of the population will be above 65 years of age. Would Japan be better off building large scale dormitories that would include medical facilities in return for pension sacrifice? This way these pensioners could trade off prison life for state sponsored shelters at one would expect a fraction of the cost of adding to prison population. Surely if the government met potential pickpocketing pensioners half way then it would be preferable to both parties on cost and shame grounds. Would a Benesse (9783) be interested in running a public-private initiative (PPI) to help the government build such centres given they are already investing in old age care facilities? Benesse wants to expand its elderly care business to 20% of the group total by 2020. The government has taken this approach of PPI with building day-care centres as JP Holdings (2749) has benefitted greatly from. The government needs to think of how to revitalise the regional areas. With slowing economic growth, working age employees flock to the cities where jobs are more likely. It exacerbates the pressure on the regions to survive and poses longer term risks for the companies in the region to sustain employment. PPI projects in the regions makes sense from a variety of perspectives which we discuss might alleviate the pressure

Yakuza gang hands out treats to 800 kids during Halloween

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Ironically in today’s day and age the mafia/yakuza/la cosa nostra embodies more about family and loyalty to blood than many of today’s units where the largest crime committed is probably adultery. In Kobe City, the Yamaguchi-gumi (Japan’s largest Yakuza group) handed out sweets to around 800 attendees on October 31st. While the Hyogo Prefectural Police requested they stop this action in order that they don’t wrongfully trick kids into thinking they’re good guys sadly the mobsters declined and went on ahead.

It was only several decades ago that the Japanese police actually enlisted the help of Japanese yakuza groups to help kick out the Chinese and Korean mafia groups operating inside the land of the rising sun. The sort of if we find a dead body in a dumpster we’ll file it but won’t investigate type of police work.

In the end the police let the show go on – perhaps a sign that crime eventually does pay!