Japan's Bell Tolls for Us All

Ultimately, Japan’s disaster is not about financial and economic loss, but about people and human suffering. Let us hear Japan’s bell tolling and recall that it tolls for us too.

Tragedy in Japan (photo credit: Damir Sagolj)
Tragedy in Japan
(photo credit: Damir Sagolj)
IN HIS FAMOUS 17TH-CENTURY poem, John Donne warned, “never send to know for whom the bell tolls; it tolls for thee.” On Friday, March 11, a powerful 9.0 magnitude earthquake and ensuing tsunami struck northern Japan, wreaking destruction and death and threatening a catastrophic meltdown of five nuclear plants in Fukushima.
Japan’s bell of warning has tolled. Israel and the world would do well to listen to its messages intently.
Disaster Preparedness: Like Japan, Israel sits on a fault line, the Dead Sea Rift, where tectonic plates clash. The last major earthquake in the Holy Land was in 1927. Ben-Gurion University geologist Dr. Ron Avni notes: “There is a very high probability that sometime in the next two decades there will be a major earthquake.”
How prepared is Israel, if a disaster strikes similar to Japan’s? Master Plan 38, which offers incentives to homeowners to quakeproof their buildings, has had poor results so far. In contrast, a quake-sensing seismography early warning system exists, which sends SMS messages to all cell phone owners from five to 30 seconds before the onset of a quake – enough time to get outdoors.
But Prof. Avi Kirschenbaum, a disaster preparedness expert at the Technion, told “The Jerusalem Post’s” Gil Shefler that if a magnitude 7 or 8 quake strikes Israel, it could cause more damage and loss of life than any war Israel has fought. Is Israel ready to deal with a major quake? “I can tell you very clearly, we’re not!” says Kirschenbaum.
Global Economy: Japan’s economy is the world’s third largest, having lost its secondplace ranking to China last year. Normally, when a rich nation with $43,000 per capita Gross Domestic Product (GDP) and nearly 10 percent of total world GDP is in crisis, the world economy is affected. But Japan is a net exporter, meaning that it soaks up demand from the rest of the world, rather than providing it. Moreover, Japan’s economy has been shrinking, with GDP falling by 5 percent in 2009, though it recovered some of that drop in 2010. So Japan has not contributed much, if at all, to global GDP growth for years.
However, in highly interdependent global capital markets, Japan’s earthquake caused aftershocks in stock prices. When rumors of a Fukushima reactor meltdown swept around the world, stock prices crashed, causing a cumulative $450 billion loss in 15 minutes! (Stocks later rebounded.) After initial tumbles, Tel Aviv Stock Exchange stocks resumed their climb and ended up 1.3 percent for the week of March 13-17.
Japan’s Economy: Japan had an enormous property bubble in the 1980s. MIT Professor Lester Thurow once estimated that at its peak, the few hundred acres of land surrounding the emperor’s palace in central Tokyo were worth, at market prices, more than all the real estate in California. The bubble burst in 1990, the Nikkei 225-stock index fell by 75 percent, and Japan has struggled to recover ever since. Japan’s government has spent huge amounts of money to stimulate the economy, creating a mountain of debt, double that (in proportion to GDP) of Greece.
The spending had little effect. Japan now faces another enormous bulge of government spending for reconstruction, which it can ill afford, because of the existing debt. Israel’s debt is a third of Japan’s, in proportion to GDP. Countries, like people, need to prepare for rainy days; you never know when you might need your nest egg.
Israel’s Economy: Israel imports far more from Japan than it exports. Imports, mostly cars, totaled $1.8 b. in 2010, compared with $656 m. in exports. So it is doubtful whether Israel’s economy will be hurt by Japan’s crisis. A few key companies will, however, be affected. Israel’s major exporters to Japan are Iscar (cutting tools), Teva (generic drugs), Orbotech (optical inspection of circuit boards and panel displays), Netafim (drip irrigation), Haifa Chemicals (chemicals) and Comverse (software). According to Orah Koren, a reporter for the business daily “The Marker,” 540 Israeli exporters sell goods and services to Japan. Iscar chair Eitan Wertheimer was due to travel to Japan to open a new plant in Fukushima, together with Iscar owner Warren Buffett. Though the plant was damaged, and closed, Wertheimer says he hopes to go anyway and promises it will be rebuilt.
Children: About 160,000 babies are born in Israel yearly, a birth rate of 23 per thousand. In contrast Japan’s birth rate is only seven per thousand. This is why the heartwrenching scenes on television showed so many elderly people. And, proportionally, there are more elderly in the three northern prefectures where the disaster happened than in more youthful Tokyo. By 2050, it is projected that four Japanese in 10 will be 65 or older. This inverted age pyramid will make reconstruction far harder.
Nuclear Energy: Plans were afoot, led by the Israel Electric Corporation, to design and build a nuclear reactor at Shivta, in the Negev. Prime Minister Benjamin Netanyahu has now ordered the plans shelved. The viability of this plant was always highly doubtful, in light of the electric company’s shaky finances and losses.
Exchange Rates: Weirdly, the Japanese yen soared after the earthquake, peaking at an all-time high of 76 yen per dollar before dropping. Why in the world would a country’s currency rise in value after a crushing disaster? Foreign exchange speculators thought that in the wake of the crisis, Japan’s businesses and companies would likely repatriate their assets from America and abroad, selling dollars and euros and buying yen, to pay for reconstruction. This speculative play boosted demand for yen, causing it to rise, and led to a meeting of the Group of Seven. Together they decided to help Japan by driving the yen down through buying dollars and selling yen. The last thing Japan needs is an overvalued expensive currency that hurts exports by driving their dollar prices up.
Israel’s currency, too, has appreciated. An influx of foreign investment last year strengthened the shekel relative to the US dollar. From a trough of NIS 4.20 per dollar in March 2009, the shekel rose in value to about NIS 3.60 in March, despite very large dollar purchases by the Bank of Israel aimed at helping exporters by moderating the shekel’s appreciation. As a result of these purchases, Israel’s foreign exchange reserves rose sharply, from $60.6 b.in Dec. 2009 to $73.8 b. in February, a rise of 22 percent. No Group of Seven decision will help Israel battle its currency’s appreciation. It is up to the Bank of Israel.
Political Leadership: Since September 2006 Japan has had five prime ministers. None lasted more than a year. All seemed weak and ineffectual. In 2008 Yuhio Hatoyama’s Democratic Party defeated the long-reigning Liberal Democrats; he lasted only 10 months before yielding to Naoto Kan. Kan has dressed himself and his cabinet in blue jumpsuits, to symbolize readiness for action, but the result, in my view, was comic. Kan has not yet gone to the disaster site and seems dazed by the extent of the damage and loss of life.
Israel, too, has had frequent elections and frequent changes of prime minister. Somewhere, there is a middle way between the 30-40 year dictatorships of many Arab countries and the musical chairs politics of Japan and Israel. In times of crisis, people want to know there is a steady hand on the tiller. Perhaps Japan’s crisis will at last produce a viable leader.
Human Suffering: Japan’s Gotemba Bell is the world’s largest functioning swinging bell, weighing 80,000 pounds. The bell weighs as much as an 18-wheel semi-trailer truck. Hung in a freestanding frame and rung by hand, it is located in a tourist resort only 205 kms (128 miles) south of Fukushima, where the crumbling nuclear reactors are.
I don’t know if the bell has rung in mourning since the disaster. But I hear it anyway. It tells Israel and the world – wake up! Learn from us. Help us give meaning to our enormous tragedy. Improve your disaster preparedness. Prepare stocks of food and water. Check your reactors. Organize fast-response teams to act on short notice. Japan was well prepared for an earthquake. Imagine the chaos in countries that are not.
Ultimately, Japan’s disaster is not about money or financial and economic loss. It is about people and human suffering. As J.K. Galbraith wrote crisply about the 1929 stock market crash, “While it is a time of great tragedy, nothing is lost but money.” In Japan, the loss of life was massive. Compared with that, economic losses pale.
Japan is a resilient society, like Israel. It will rebuild. I hope Israel and the world will help. Let us hear Japan’s bell tolling and recall that it tolls for us too.
The writer is senior research fellow at the S. Neaman Institute, Technion.