Land of the rising shun? Immigration and Japan’s politics

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1:05The Economist

1:12Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. And I'm Rosie Bloor. Every weekday, we provide a fresh perspective on the events shaping your world.

1:27It's a NATO member country. It's got a strategic position in a region that's gearing up for serious great power tensions. Problem is, Iceland doesn't even have an army. Yet. And many of us love the flexibility of working from home. But bosses aren't so keen. They want us back where they can see us. The question is, what really affects company culture and performance?

2:04But first...

2:12Japanese politics isn't usually known for dramatic upsets. The Liberal Democratic Party, or LDP, has commanded the political system since its founding in 1955. But that era may be on the wane. In yesterday's upper house elections, the LDP and its junior coalition partner lost their majority.

2:35Prime Minister Ishibe Shigeru said he solemnly accepted the result. It's a big blow for Mr. Ishibe, for the LDP, but it's also a sign of how Japan's politics is changing fast. Opera House elections in Japan usually don't generate that much excitement, but this one turned out to be a big story. Moeka Iida is a reporter and researcher for The Economist and is based in Tokyo. The ruling Liberal Democratic Party and its junior partner lost its majority for the first time in over a decade. This is a big blow for Prime Minister Ishibe Shigeru, who came into office last October and saw his ruling coalition lose its majority in the lower house election as well last year.

3:18So the Prime Minister's party lost its majority in both houses now. What does that mean for him and for politics in general? So to be very clear, the LDP is still the largest political force in Japanese politics. The center-left opposition is very weak and unable to pose a serious challenge. So it's not like the LDP has been unseated. They're still the ruling party, but the results have been pretty disastrous.

3:48Ishiba just held a press conference earlier today, a day after the election. he stated his intention to stay on and he mentioned that there's a need to avoid creating a leadership vacuum especially at a time when Japan faces a lot of challenges including terrorist negotiation with America but there are already calls for him to step down so I would say his days in office are pretty much numbered beyond the LDP's fate the results are emblematic of how Japanese politics is entering a very unstable era this is a country where the LDP has dominated for over seven decades but we're starting to see the LDP's grip on power fall.

4:24And another thing that the result signaled is this arrival of social media-led populism in Japan. We saw this party called Sunset, or in English they go by the Do-It-Yourself Party, who ran on a Japanese-first platform, clearly inspired by the MAGA movement and Trump in America, gained significant number of seats as well. And what was it that voters were actually voting on? What were the talking points of the election? So a big talking point of this election was inflation and economic policy was at the center of the debate. Japan's economy is going through a major transition. Japan has been in a deflationary environment for decades, but now we start to see prices going up.

5:03And we also had this rice crisis beginning last year as well. And these rising prices have been a huge shock to the general public. And in response to that, political parties across the political spectrum, from the hard right to the hard left, have started offering these fiscal promises. A big talking point during the campaign period was this idea of slashing the country's 10 % consumption tax. And what was also interesting about this campaign is we start seeing immigration be featured as a hot-button issue. Japan's immigrant population is much smaller compared to Western countries like America or Europe.

5:39But despite Japan's reputation, its foreign population is increasing steadily. So you mentioned the LDP has been dominant in Japanese politics for seven decades. What's gone wrong here? How has it lost its grip? All of this began with the assassination of Abe Shinzo, a former prime minister, in the summer of 2022. The assassination revealed the LDP's ties to a group called the Unification Church, also known as the Moonies, which is a cult-like group. And then soon after, there was a political fund scandal that further tainted the party's image. This was really disappointing for voters and gave people the impression that the LDP is corrupt and out of touch.

6:18There are also structural changes that are influencing the LDP's grip on power. So in Japan, legacy media like newspapers and broadcasters are still very influential. But nonetheless, younger people are drawn to online sources like YouTube and Instagram and TikTok. and that is opening the door for younger political parties to speak directly to voters and appeal to them as an alternative to establish mainstream parties. And this idea of modernizing or innovating campaign methods is something that the LDP has struggled to do. And Moika, we've spoken on the show before about the shifts in Japanese politics.

6:55Tell me how the newer parties sort of figure into it. Yes, so we've seen this inkling of social media-led populism in Japan, especially by these minor candidates who put themselves against the political establishment or the political elite. But previously, we've seen this in smaller local elections, but we're really starting to see this phenomenon manifest in national politics as well. Sanseito, this hard right party I mentioned earlier, managed to rise to prominence with this Japanese first messaging, clearly inspired by Trump. So I attended some campaign speeches. I went to this area called Saitama, which is very famous for its large foreign population.

7:38During their speeches, they were talking tough on immigration and talking about rising crime and how foreigners are harassing women and rich Chinese people are buying up land and so on, making all these kinds of dubious claims. And the audience was cheering. And I'd like to reiterate that while the momentum of Sanseito is very striking, just to be clear that in absolute terms, there's still a minor force in the parliament. But the rise of Sanseito has got people in Japan wondering, is this style of anti-immigration populism, the kind of populism we see in Western countries, is that here to stay in Japan as well?

8:16And we're not just seeing populism rise from the right, we're also seeing it from the left. So during the campaign period, we've seen opposition parties, including left-wing parties, make all these almost irresponsible, reckless fiscal promises like slashing taxes and so on without suggesting where they're going to get that funding. And these parties have also managed to use their social media savvy to appeal to frustrated voters. But in the shorter term, right now, the LDP is in a very sticky spot. What's going to happen with it, do you think? So in terms of the leadership, Ishiba has said that he doesn't intend to step down, but there are already calls from within his party for him to resign.

8:55So there might be an announcement in the upcoming days. I would say again that his days in office are numbered. In the meantime, the ruling LDP is going to try to bring in another party to expand its coalition. But so far, the leaders of the potential partners have rejected the idea. So it's very unclear if this is going to happen either. So there are still a lot of uncertainties about what's going to happen short term. But what's very clear is that Japanese politics is entering a much messier era. Moika, thanks very much for joining us. Thank you so much for having me, Jason.

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11:11I'm on a training exercise with Isen's Coast Guards. There are five Coast Guard officers in the helicopter with me. They're wearing black overalls with yellow helmets. And there's a constant din of radio chatter between them. Jacob Judah writes about Europe. And they're on a training exercise to essentially drop one of their men on a volcano to practice rescuing a tourist who's broken their leg on the rim of a caldera. And this is one of the jobs Iceland's Coast Guard does, but he does a whole motley of other ones, including protecting Iceland's underwater infrastructure, but also everything that in another country a military would do.

11:48this makes Iceland pretty unique in Europe Iceland is not a microstate but it doesn't have an army and essentially it outsources its defence to NATO and especially the United States now at the moment obviously with the debate in Europe changing that means Iceland is in many ways swimming against the tide Iceland's coast guards when you speak to them they're quite clear that they just don't have enough resources to cover a sea space that is three times the size of the UK they only have two serious ships one plane, three helicopters so now that debate that has been raging in Europe ever since the war in Ukraine began has finally arrived in Iceland.

12:21Icelanders are having to decide, OK, what's next? So explain exactly why Iceland is in such a strange strategic role. So Iceland straddles this part of the North Atlantic between Scotland and Greenland, and that controls the approaches both into the Arctic and back into the North Atlantic. Now for the Americans, this is a crucial place because it means that they have a view over whatever comes in and out. And one of the things that are growling beneath the waves are Russian submarines. And the Americans have men in Iceland whose entire job it is to look for them. Because in the opening phases of any war with Russia, finding Russian submarines, some of which will be carrying nuclear weapons, will be the most important task.

13:01So, Jacob, let's back up a bit. Why doesn't Iceland have an army? Right. So when Iceland joined NATO in 1949, it did so on the premise that we are too small and we're too poor. And this is not something that we can do, basically. and the major powers of NATO went, it's more important to have Iceland inside the fold rather than outside the fold. So ever since, the Americans have essentially underwritten Icelandic defence. So the premise in Icelandic defence policy is that were anything to happen, the Americans, the Brits, the Norwegians would flood in and defend us. That's still essentially the case.

13:33But with the debate in Europe changing, the Americans calling out laggards who are not spending enough money on defence, it makes Iceland look a little bit like a free rider and that's something that Icelanders really bristle at. They don't want to be seen as a free rider. While in Reykjavik, I spoke with Iceland's foreign minister, Thúgadur Káčein Gunnarsdáttir, and she told me that Iceland needs to get serious. But we know and we are realistic here in Iceland. We have to do more if something happens in the North Atlantic. That means we have to invest more in infrastructure here in Iceland. We have to strengthen our coast guard more.

14:08we have to build harbours and roads that you can rely on during war, for example. So some of the debate now that's happening in Reykjavik is we need to boost our defence spending from what has been 0.2 % of GDP, which is frankly minuscule by European standards, to something that is more in line with other European countries. I mean, even Luxembourg, which is a country which is not much bigger than Iceland, has 900 men and makes a token contribution to NATO. And so when it sits at the table with Trump and Keir Starmer, at least other powers look at them and go, yes, you're doing your part. Whereas with the Icelanders, I think that's become a little bit more of an awkward conversation for them.

14:44So is there the political will in Iceland now to actually spend more on defence and create an army? So in many ways, these are two different questions. Spending on defence, yes. I think Iceland realises that the time has come. People are talking now about 1.5%. So in Europe, people are talking about 5 % of GDP on defence. Obviously, Iceland doesn't have an army. and 1.5 % of that would become what's called in NATO defence-related expenditure. That's roads, coast guards, the soft side of security. So that's what Iceland now wants to spend on. The second question, should Iceland create a military, is much more controversial.

15:19If you ask most Icelanders, they go, look, we need to spend more, but creating an army is running before we can walk. Let's do the simple things. Let's fund the coast guard. Let's make sure that they have what they need. Let's also make sure that if there is a crisis in the next few years and the Americans were to flood in, Norwegians would flood in, as is the Icelandic defence policy. They have somewhere to go because Icelandic harbours are quite small. How do ordinary Icelanders feel about the possible creation of an Icelandic army? Overall, I think the reaction is quite bemused. There are some, for example, Arna Sigur Jonsson, who was formerly the most senior Icelandic defence official, he has written a book recently in Iceland saying, we need to take the plunge, we need to create an army.

16:00The point is, and the weakness we have, in my opinion, is that they are unwilling and unable to accept the fact that complete outsourcing of the defence of Iceland is unacceptable and irresponsible. And there are in Icelandic newspapers, a small cottage industry now, of op-ed writers who are arguing with the consensus opinion in Iceland, as it's been since Iceland joined NATO. But overall, Icelanders, I think, are relatively sceptical. But that could always change. I mean, I think people are sceptical until there's a crisis and then they realise that something needs to be done. As you said, the US provides defence for Iceland and we know that Trump doesn't particularly like free riders.

16:44Has the US said anything about Iceland's role now? No. In many ways, actually, when I was in Iceland, John Bolton, the former national security adviser, gave a long interview to one of the Icelandic newspapers and his recommendation to Reykjavik was keep your head down. Don't draw attention to yourself because all you need, as in many countries have discovered with Trump, is for a paper to be put across his desk saying Iceland is a free rider, the US pays for everything. And then suddenly you have a crisis in your defence policy. But for the Americans, I mean, Iceland is just so important. Iceland in many ways is not like the rest of Europe.

17:16It's more akin to Greenland. So Greenland and Iceland are much more important for American homeland defence rather than defence of Europe. And so for the Americans, ultimately, making sure that Iceland continues on what it is already doing is slightly more important than somewhat upsetting the boat. Iceland is going through a little bit of a whiplash, we say, and they're just waiting to see how geopolitical cards fall. Jacob, thank you so much for talking to me. Thank you.

17:49So I work in the office four days a week We have one day working from home But I never work from home because I enjoy working in the office Since the pandemic, many of us have enjoyed working from home more often I think between two or three, depending on how much life admin you've got going on Now some bosses are pushing for a full-time return to the office. I think it's core to the way we work to be together, otherwise we can't solve any problems. But asking people to go back might affect company culture in some surprising ways. Bosses are worried about company culture because it affects productivity.

18:29Patrick Lane is a senior digital editor at The Economist. All the things that go into the way people work, the way they work together, the atmosphere in a company, all those things can affect how innovative a company is, how productive it is, and in the end, how profitable it is. Company culture is quite a fuzzy term, isn't it? What does it really mean? I think that to bosses, it really means anything that makes the company more productive in the way that people work. The boss of Uber earlier this year, when he said that everybody at the ride tailing companies should come back into work at least three days a week said this isn't just about productivity metrics.

19:09Now it is and it isn't because in the end what you want your employees to be is as productive as possible and if you think that having them in the office, having them be together, chatting over the proverbial water cooler makes them more productive then that's what you'll want. So we know that bosses want to get people back into the office and away from working from home, what benefits do they really think that will bring? They think that if people are spending more time together, that they're closer together, people will riff off each other's ideas, there'll be more creativity, there'll be more spark.

19:44If you like, something in the air when people are together that's much harder to reproduce when people are further apart. And is there evidence that that actually works? Yes, there is. There was a study of tens of thousands of Microsoft employees back in 2020, which found that working from home made employees less dynamic. There's also some evidence that it's harder to integrate new staff. You know, it's okay to work from home when you know your colleagues, you've been with them a long time, but when you're new to a place, then it can be much harder to get going. Now, we at The Economist, we were interested enough in this that we thought we'd have a good look at it.

20:21So we did a bit of our own research. We actually brought two databases together. One was about measures of culture, which was from Culture X, which is a research firm based in the United States. And they looked at glass door reviews that employees had written about lots and lots of companies. And they weren't looking at marks out of 10. They were looking at the sort of language that people were using when they were writing about their companies. And things that were, according to the academic literature, associated with company culture. So they might be how agile the company was, how toxic or otherwise the atmosphere was at work, how good work-life balance was, and that sort of thing.

21:03The other database that we used looked straightforwardly at rules for working from home. That we took from Work Forward, which is an advisory firm, and they put firms into three buckets, whether they didn't require people to come to the office at all, whether they required to come in part-time, say three days a week, or whether they required them to come in full-time. The results showed that firms that require staff to come in full-time, that is the strictest ones, tended to be more agile. That is, they tended to respond faster to changes in the marketplace. They also showed that those strictest firms were less highly rated than other companies by their employees on things like how much support people felt they had on work-life balance and on the toxicity of the work atmosphere.

21:53So presumably then the idea of bosses wanting everyone in because they're productive is really negating a large part of what company culture actually is for most employees. Well I think you've put your finger on something there because culture is possibly one thing to employees and it's another thing to employers. That may be what's underlying it. Making people coming to the office more often probably does make them more productive. It does make them more collaborative. But there is a trade-off here because if people are less satisfied with the way they work, if they were more happy working at home a bit more of the time, then job satisfaction will fall and job turnover might rise and that might make it harder to hold on to employees as time goes on.

22:34And also different people as employees think of different aspects of work as being more important than others. So if what you really want is to be in a fast charging, really quick moving company and you're rewarded accordingly, which is very important, then that may be the place for you. Also, you have to be very careful about assigning causality here. There is a correlation between being more agile and being in the office full time. but whether that means that being in the office full-time makes you more agile or whether more agile companies really really want you to be in the office full-time you really can't tell.