With every new hiccup in the Dow, Asia's economic troubles seem nearer and nearer to the US. Fearing just this sort of progression, leaders and experts around the world have been pressuring Japan to invigorate its economy and keep Asia's collapse from going global.
These outsiders have been calling for big, bold reform that will move markets and begin the Great Asian Recovery. To turn around Japan's financial industry, which is burdened by perhaps a trillion dollars' worth of bad loans, big changes are certainly necessary.
But to hear only the demands for reform is to miss what is really happening in Japan - not an economic revolution, perhaps, but an evolution. Today the Monitor begins a six-part look at how the world's second-largest economy is changing. Underneath the debate on the pace and sincerity of reform, the monolith once known as Japan Inc. is becoming a freer but grittier place.
Consider two practices that have defined working life for most breadwinners in the post-World War II era: lifetime employment and seniority-based pay increases. "I know Japan achieved affluence by working hard [and applying these practices]," says Tadashi Sekizawa, former president of computermaker Fujitsu Ltd. "But we cannot necessarily apply the same system in the future." Now his company relies on merit in determining promotions.
Japan has been an exceptional country in recent decades, with an economy that grew and grew and a system that shared the wealth. But as growth has faltered, so has egalitarianism. The result is an economic system more like the economies of other industrialized nations, which has brought anxieties and opportunities.
Companies are reevaluating the way they do business. Consumers are edgy. "We aren't as stupid as the government thinks," says Michiyo Taki, a housewife and part-time office worker.
Entrepreneurs are energized, eager to exploit a more flexible economy. "The current financial deregulation opens up opportunities for someone who has brains and a global network," beams venture capitalist Takashi Yoneda.
Others, like bankrupt businessman Masatoshi Nakajima, profiled today, have learned hard lessons. The new economy has altered his life; now Mr. Nakajima is among the many Japanese who say the old ways must go.
"Japan," he says, "is at a turning point."