[William Pesek] ‘Goldman Sachs with guns’ joins sumo on ropes

Events in Egypt have journalists around the world asking: Hmmm, could that happen here?

In Tokyo, the answer is no. The student riots of 1968 remind us never to say never. The thought of today’s youths congregating at Shibuya Crossing, tossing Molotov cocktails and demanding the ouster of Prime Minister Naoto Kan, though, is a colossal reach. Mass protests in Japan are a rare, rare thing.

Yet there are fresh signs that the nation’s 126 million people are hankering for change. Even if Japanese aren’t about to join Tunisians and Egyptians on revolutionary road, a brewing backlash against these three long-tolerated elements of society offers a whiff of hope: The yakuza, politics and sumo.

Under the surface, Japan is undergoing an historic identity crisis as living standards slide and the privileged class acts as if it’s business as usual. It’s driving a desire for change and greater accountability that could alter Japan’s trajectory. It could mean more growth and less deflation and debt.

A strong sense of entitlement has long prevailed at the upper levels of Japanese society. Politicians thought they were above the law and answered to no one. Gangsters operated in plain view, handing out business cards and branching out into legitimate businesses like banking. The fabled national sport of sumo swatted away allegations of match-fixing.

That was all fine when Japan was rising, markets were lively and the future was bright. Tolerance is dwindling with monthly consumer-price-index readings. Japanese are becoming less accepting of the lavish lives of the powerful, the famous and the crooked now that times are tough.

One sign patience is evaporating is the crackdown on the yakuza, Japan’s organized crime families. As police clamped down on sex, drugs and gambling, they diversified into real estate, construction and stocks. It’s the latter focus that prompted Jake Adelstein, author of “Tokyo Vice,” to dub the yakuza “Goldman Sachs with guns.”

Japan’s estimated 80,000 gangsters were turned away from the big construction daddy of them all: the 2,080-foot (634-meters) Tokyo Sky Tree tower project. The escalating war on the mob reflects public discontent with the underbelly of Japan Inc.

“As to the timing of this push, some motivation is set within the continually declining economy,” says Brett Bull, who runs the Tokyo Reporter website covering Japanese subculture. “Dealing with gangsters adds costs.”

The second sign that the winds of change are blowing involves Ichiro Ozawa. No single politician is responsible for the widening gap between rich and poor and Japan’s declining global stature. Yet for many people, Ozawa will do.

The 68-year-old former head of the ruling Democratic Party of Japan is known as the “Shadow Shogun” for his wheeler-dealer back-room ways. His indictment last month for allegedly violating campaign finance laws cast a pall over Japan’s ability to pass a record budget and allay concerns over soaring debt. If ever there were a sign times are changing, Standard & Poor’s cutting Japan’s credit rating to the same level as China is it.

Ozawa, a powerbroker within his party, personifies the resistance to change that put the nation on a downward trajectory. He has hung on year after year, refusing to resign from parliament. The indictment reflects growing disillusionment with Japan’s sclerotic politics and its “silver democracy.”

Japan’s leadership is aging with the population. It controls the budget and coddles its key constituency: the elderly. No wonder twenty-something Japanese lack optimism. Far from working at the real Goldman Sachs Group Inc., many are low-wage “freeters” going from temporary job to temporary job.

Kan created a panel to propose ways to manage the world’s latest public debt. Its two most vocal members are economic bigwigs Hakuo Yanagisawa, 75, and Kaoru Yosano, 72, who want to double the consumption tax. In other words, two men well above Japan’s average retirement age want young consumers to pay more to support the over-65 set. Hardly a shock.

Also, it’s always struck me as odd that the two most outspoken critics of Japan Inc.’s geriatric ways, Takafumi Horie and Yoshiaki Murakami, ended up in jail while Ozawa roamed free. Internet entrepreneur Horie was in his early 30s when he was locked up for alleged insider trading; shareholder activist Murakami was in his mid-40s. It’s an amazing coincidence.

The third change indicator is sumo. Turns out, it is indeed fixed. Police found mobile-phone messages showing wrestlers were fixing matches, just as many people ― including Adelstein and the authors of 2005’s “Freakonomics” ― long suspected.

Sumo fascinates me because it’s a microcosm of the economy. It’s completely male dominated and has a broken model, an uneasy acceptance of foreigners, a rapidly aging fan base and limited interest in tweaking its franchise for overseas consumption.

What’s interesting, though, is that this story isn’t being swept under the tatami mat. It’s getting wide and breathless play, driven by edgier media outlets catering to segments of the population that are fed up with the status quo.

Predicting new dawns in Japan is a fool’s game. Yet the typically docile masses are getting antsy and speaking out. We’re not talking revolution here, yet for this change-resistant nation, these are heartening signs.

By William Pesek

William Pesek is a Bloomberg News columnist. The opinions expressed are his own. ― Ed.

(Bloomberg)