The Impact of the Yakuza on Modern Japan

The Yakuza have for centuries been an integral part of Japanese culture. The same is true for modern times, but what has been happening with the Yakuza recently? Japan experienced a recession last decade, that was ultimately caused by criminal elements in Japan. The effects of the crash of 1990 are still felt in Japan today and it is in my view that the Yakuza are essentially responsible for the aftermath.

Japan reached its height of economic success, as the world's second largest economy, in the early 1990s. During this time, Japan experienced an economic crash, which occurred primarily as a result of over-inflated asset prices. The Yakuza and other criminal elements were heavily involved in the boom and bust years leading up to the 1990s: During the 1980s, criminal organizations and corrupt politicians in Japan borrowed massive amounts - billions of dollars worth - of loans, which were never repaid. These "bad loans" led to the inevitable collapse of Japan's financial markets in the early 1990s, and extremely low stock and property value in Japan.

Nowadays, Japan is a relatively cheap place to live in the modernised world, thanks to the devalue of property over the past two decades. This would not have happened were it not for the crash, which was for the most part caused by the Yakuza.

Kattoulas has basically argued in his report for the Far Eastern Economic Review entitled The Yakuza recession that the Yakuza and corrupt politians were largely responsible for the economic recession of the 1990's: "[it has been estimated that] up to 50% of the bad debts held by Japanese banks could be impossible to recover because they involve organized crime and corrupt politicians."

Williams and Savano outline various threats posed by transnational criminal organizations, and some of the threats listed can be applied to the Yakuza during the boom and bust period in Japan: The threat to national economies, where although sometimes beneficial to the economy, they argue, criminal organizations tend to "make economic management a much more difficult task, as they can encourage inflationary pressures, a distorted sectoral development, and spending on luxury products by a few when the greatest need is for a wider distribution of resources within the society"; The threat to financial institutions, whereby infiltration of financial institutions leads to a situation where they can "no longer serve either the public interest or that of their shareholders, and reduction of management can lead to the misuse of funds". The threat to individuals is just as important, as "violence is often perpetrated on individuals by criminal organizations". This is often the case when important people are "disappeared", or die under mysterious circumstances. In many instances, the death or disappearance of an important person is not investigated properly.

Since the collapse of Japan's bubble economy at the end of the Showa period, the Yakuza have been faced with two main challenges: The economic recession in Japan, wherein it is increasingly difficult for the criminal organizations to make money, and the introduction in 1992 of the boryokudan countermeasures law (botaiho). Hill argued that as a result of the botaiho and economic recession in Japan, the Yakuza have been forced further underground and deal with drugs and organized theft: "the collapse of Japan's bubble economy in 1990... had profound consequences for boryokudan groups rendering many activities unviable, whilst simultaneously creating new opportunities".

Maruko offers the same view, that the relationship between the Yakuza and the state is changing. She also mentions that the Yakuza have been "forced underground", and are "turning increasingly to drug trafficking as well as to activities which they have not been very engaged, such as robbery".

The economic, political and social implications of the crash of 1990 and the introduction in 1992 of the boryokudan countermeasures law are of importance in understanding modern Japan. There has been a decline in the membership of the Yakuza as a result of these two events, and the Yakuza is also now less visible. Notwithstanding, the Yakuza is still active in a range of criminal activities, including racketeering and extortion.

Japanese society, in general, accepts the presence of the Yakuza. The Yakuza are, in fact, an older organization than for example the police force or even the Japanese government, with roots dating back to the feudal era. Thus, the Japanese are more or less accepting of the presence and authority of the Yakuza, and as with other modern Asian societies, the activities of criminal organizations have been embedded within the social fabric of Japan. Of course, that is not to say that the Yakuza are free to exercise their own will with regard to crime in Japan in the modern age, but that society is more accepting of the criminal organization and its activities.

The Yakuza has made a profound impact on Japan's economy, government and society in modern times. They contributed to the cause of a recession, instigated a government countermeasure and were basically forced underground within the last twenty years. Although decreasing in membership, the Yakuza nonetheless have made a profound impact on modern Japanese society.

Luthor Laine is a former scholar and professional Japanese/English Translator. You can reach him at http://www.rusasan.com/

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Impact of Japan's Earthquake on World and Indian Economy

Japan was hit by an earthquake of magnitude 8.9 on March 11. This massive earthquake led to major human tragedy in Japan killing more than 30000 people, leaving many injured, and many other still missing. The earthquake and the tsunami also struck nuclear installations in Fakushima Dai-chi power plant. Because of disruption in the power supply, the coolant cannot be supplied to the nuclear reactors in the required amount, which raises the risk of radiation leak. Already traces of radiations have been detected in some of the food items and the water in Tokyo, which is located 220 KM south of the Fakushima.

Impact on Japanese Economy - Since Japan meets about 30% of its energy from nuclear based power plant, power supply to most of the parts in the country has been affected leading to closure of many factories. There has also been widespread damage to the infrastructure because of which there has been supply disruptions of many of the critical raw material components. Most of the automakers including Toyota, Honda, and Nissan have closed their plants for the lack of raw materials, and the reduced power supply. Manufacturers of semiconductors, LCD displays, batteries etc have also shut down their plants for at least next 2-3 weeks. Some of the major ports of Japan have been affected by the crisis impacting both the exports and imports based industries in the country. According to one estimate, cost of reconstruction is expected to cross $300 Billion. Japan will find it difficult to fund this construction because of its high debt which is already 200% of its GDP. Also the country has witnessed lacklustre growth over last two decades, and this earthquake triggered crisis might further push Japanese economy in downward spiral.

Impact on World's economy - Japan is the third largest economy in the World, after US and China. It is also the second largest buyer of US funds. Since Japan will need money to fund its reconstruction, it might cash in the US bonds. This will force US fed to buy these bonds, and which will induce liquidity crunch in the US market. Similarly Japanese investment firms have made lots of investment across world's capital markets. The pullout of the Japanese fund might lead to fall in stock prices in these markets in short term. The other major impact of Japan's earthquake will be on the crude oil. Since most of the nuclear power plants of Japan have went offline, Japan will depend more and more on crude oil to meet its energy needs. Japan has number of oil fired power plants, and to meet its energy needs, it might buy more oil from the world market. The crude oil prices, which were already on upward trend, will see a further spike as a result of this. The rise in crude oil prices will impact the world's economy in short term. Japan is the major producer of many of the items including auto components, semiconductors, LCD displays etc. Disruptions to the production of these major items will lead to the supply chain disruptions of these items in the world market. This will delay the production of high end gadgets like smart phones, iPads, LCD TV, laptops etc and cars. This will make a dent in the manufacturers' profit.

Impact on India economy - Indian stock market dropped by 0.8% on the news of Japanese earthquake. But the market recovered next day. Killer earthquake which hit Japan is expected to have a marginal impact on the Indian economy. Most direct impact will be the pull out of Japan's investments in the Indian capital market. Japanese investment firms will draw money from the Indian market to fund the Japanese reconstruction. This will have a negative impact on the stock market in short term. Japanese have also made investment in number of important infrastructure projects in the country such as Delhi Metro, Delhi Mumbai corridor etc. These projects might see delay because of lack of availability of funds. Surge in the crude oil prices because of increased demand of oil in Japan will also impact the Indian economy which is already reeling under inflation. Automobile companies will be negatively affected by the crisis, since they depend on Japan for the supply of many of their critical auto components. Also because of increase in the value of Yen (as a result of lack of yen supply), there will be an increase in the cost of these auto components. Japan's refinery capacities have also been affected by the quake. This will have positive effect on Indian petrochemical firms such as Reliance. Indian IT industry will be marginally impacted by the crisis, since most of the IT firms derive only 1-2% of their revenue from Japanese market. Only IT firm which has high exposure to Japan market is Nucleus Software Exports which derives 30% of its revenue from the country. Crisis will have a minor impact on Indian exports, since Japan accounts for less than 3% of total Indian exports. Thus the recent earthquakes which hit Japan will have marginal impact on Indian economy

Senior Associate at www.365businessdays.com

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