It’s always fascinating to see how Westerners idealize Japan on platforms like HN. It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain? They’d probably find it strange and out of touch with reality.
This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing.
The author paints the lack of shareholder pressure as the secret behind their successful diversification. While true for a few, the flip side is that it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to.
Also, the idea of a 'horizontal culture' in Japan is a myth, especially in software. Even a glance at the Japanese web(5ch, onJ etc...) reveals a deeply entrenched vertical hierarchy. In my experience working with Japanese developers, their reliance on the legacy Waterfall model and an exhausting chain of approvals and reporting was far from horizontal. (Though I admit my sample size is small, it heavily contradicts the Western narrative).
I agree that this rigid system fosters the tacit knowledge needed for hardware and materials. Still, it proves that we all tend to project our fantasies onto cultures we don't fully understand. The divergence in perspectives on HN never fails to amuse me.
> It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain? They’d probably find it strange and out of touch with reality.
Quite the opposite - for me, anyway.
FWIW, as a Westerner, I find the Mondragon Corporation to be fascinating and something I've read a lot about because there's no way we've figured out the ideal sort of setup for a business (or government, or any sort of human organization, given appropriate context) in the year 2026.
We have a lot to learn, and while "different" doesn't always mean "better," I strongly believe being exposed to "different" is necessary for us to devise novel approaches to human organization.
I didn't feel like this article necessarily idolized it; the author seemed pretty even-handed about strengths and weaknesses.
The interesting question in all of these kinds of things is "are there ideas we can take to gain the strengths of other systems or patch the weaknesses in ours?". Looking at Japan specifically, I think I speak for most westerners in saying that if we could get a little more stability and less financial-quarter-driven behavior without taking the whole kit of lifetime employment and zombie companies, that would be a good thing. The author points out just how bundled that is, so it's a tough nut to crack.
One model that does give us that is the 'Untouchable visionary CEO' of Jobs and Musk, but I think the popularity of that approach is also limited, partially because of all the not so visionary CEOs trying to be Jobs, and partially because working for those guys is terrible. They inevitably seem to become tyrants.
Most Americans I know are familiar with the unending work culture of Japanese white collar workers (if only a parody version of it), and want no part of it.
> it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to
Zombie companies in the west are mentioned as a low/ZIRP phenomena. But the west shouldn't have as big an issue with those because companies, when less diversified, get killed off more often by interest rate hikes.
Zombie companies exist in Europe; at least part of the euro crisis was exacerbated by the continuing cascade of bankruptcies making other banks insolvent.
The EU’s crisis schemes like furloughing employees en masse dull the pain but also do prolong some companies’ lives. The US historically has had much more brutal impacts but quicker recoveries.
Japanese and American companies have different purposes.
In Japan the corporation primarily provides stable income and employment for society, and secondarily returns on capital invested. In America, corporations primarily provide returns on capital invested and secondarily provide stable income and employment.
This shows up in the data too. Japanese corporations are less likely to go out of business but provide worse investment returns. American corporations provide better investment returns, but the citizens have to deal with layoffs.
Most citizens would prefer stability to growth, but I think the tradeoff has a lot of downstream consequences.
Stability is preferred to growth in the moment, but in retrospect and in comparison to others most people don’t want to give up what they have and go back in time.
Westerners are taught by the media and education to idealize Japan and hate China almost everywhere. They present cherry-picked aspects of both countries that make China look bad and Japan look good. In reality every country has its good and bad aspects.
This is just part of the propaganda machine and what politicians want you to believe, in an effort to align their populations to be supportive of their foreign policy and military motives. That ultimately trickles down to things like this. When people come to HN, or any place, with rose-colored glasses of Japan, they will seek confirmations of that rose color everywhere.
> Westerners are taught by the media and education to idealize Japan and hate China almost everywhere.
As an American educated by the American public education system and indoctrinated by American media, our government is certainly stupid and vengeful enough to make me want to support this if it were true, but it's just not. The much more banal truth is that Japan is extremely talented at exercising soft power by projecting a favorable image of itself via the media it exports, whereas China is just comparatively terrible at exercising this sort of soft power.
Hate China? I don’t see that. There are plenty of factual reports about the CCP that are pretty damning, but the people/culture/place is generally perceived postively other than being a competitor…
Is it propaganda though? Japan is more aligned with ‘the west’ not only in geopolitics but in the system of governance that was imposed upon it by via USA occuptation. Whereas China has a very different political system that is generally poorly understood and distrusted. Regardless, I don’t know where you’re from, but I see plenty of idolizing of China and how it manages to solve big problems at speeds unseen outside of mobilization in other parts of the globe. China-studies are a big thing at the moment. The positive view of Japan probably flows from its postwar boom years and popculture exports. China is at the moment being viewed with suspicion over its military buildup near Taiwan and creeping authoritarianism under Xi. This could all change again in the future depending on the actions China will take.
I disagree. People still trade, travel, and visit both countries regularly. Even if some media outlets are biased against China, that doesn’t mean Japan need to be idealized, it proves nothing. Your comments come across as more like propaganda.
I really don't really think there's much political or propaganda interest in getting Westerners to idealize Japan, at this point.
Now back in the 80s? Back in the 80s, despite being aligned with the West, they were perceived a lot like China is today. Everyone was scared that they were going to start eating the West's lunch and various negative stereotypes and exaggerations started to bubble up: it was a futuristic land, but a futuristic land of suicides, with little drone-like salarymen crammed into little shoebox apartments the size of a Western bathroom, working 20 hour days.
Between the Plaza Accords and the bubble bursting and decade after decade of Lost Decades, the Japanese threat was successfully neutralized. I think Cool Japan is mostly something they've earned for themselves, frankly.
> Now back in the 80s? Back in the 80s, despite being aligned with the West, they were perceived a lot like China is today. Everyone was scared that they were going to start eating the West's lunch and various negative stereotypes and exaggerations started to bubble up: it was a futuristic land, but a futuristic land of suicides, with little drone-like salarymen crammed into little shoebox apartments the size of a Western bathroom, working 20 hour days.
Yep. A lot of cyberpunk fiction from that time that demonized corporate influence and power was inspired by the rise and perceptions of Japanese technology companies.
I can remember one of the American news magazine shows, maybe 20/20, showing a Japanese school with long hours and intense discipline and contrasting it with fat, illiterate American kids (the same stereotypes were made about the Soviet Union).
A lot of the perception of Japan, especially among Gen X and younger, is influenced from exports of Japanese culture. Nintendo, JRPGs, Manga, Anime, and even the quirky stuff reflects well on the Japanese though American eyes. No propaganda is needed.
> it was a futuristic land, but a futuristic land of suicides, with little drone-like salarymen crammed into little shoebox apartments the size of a Western bathroom, working 20 hour days.
Not really? If I were to describe the issues inflicting the west, none of too-small homes, high suicide rates, or an economy based on long hours of white collar work would immediately come to mind.
Rather, the west seems to be characterized mostly by insanely expensive housing caused by an extreme antipathy towards denser housing as populations grow, and a K-shaped economy where white collar coastal elites are actually doing relatively well but everyone else - namely blue collar and service workers - are doing worse and worse. Suicide rates aren't rising dramatically, and are nowhere near where they were in Japan at their peak in the 80s, which itself was always overstated (they were higher than they were in the US at the time, but were comparable to many other western countries).
> if they saw me romanticizing the Mondragon cooperatives in Spain?
Speaking for myself, I'd find that very interesting! I just stumbled over an article about it a few days ago, and don't think it's weird that different parts of the world would be interested in a regional business phenomenon.
Agree with the meta point. I worked in Korea and Japan and loved the culture but when I moved to the west I was surprised to see how people over here fantasize about their (imo inefficient) corporate cultures.
This particular article was decently nuanced though.
In my opinion, this comes from the 70s and 80s where there was very real concern that Japan was going to surpass the US economically. Many companies in the US attempted to adopt Japanese methods in manufacturing and other areas, media then inherited further Japanisms. There is also an historic backdrop of westerners viewing Japan as a mysterious civilization on the far side of the globe dating back to the 1500s.
I pretty much agree. While any semblance of a "horizontal" dynamic in Japanese software development was perhaps realized in embedded systems around 40 years ago (e.g., rice cookers with fuzzy logic, or, in a different sense of _lateral_, Gunpei Yokoi’s famous philosophy of "Lateral Thinking with Withered Technology"), software has traditionally been undervalued in Japan. This historical neglect has ultimately contributed to the decline of our consumer electronics industry. (Though personally, I still don’t see why a toaster or a fridge needs to be connected to the internet.)
IMO, the tight-knit division of labor between Toyota and its subcontractors is a slightly different story from the broad diversification within a single corporation. While the latter was historically bolstered by strong industry-academia ties (often driven by university cliques), we rarely see this kind of broad diversification happening in recent years. That said, Japan's traditional "membership-based" employment system, combined with a cultural reluctance to shut down unprofitable business units, is likely what has allowed this diversification to persist for so long.
In any case, Japanese companies are currently struggling with the friction between their traditional corporate culture and the superficial adoption of Western concepts like DX, Agile, meritocracy, job-based employment, and a startup-centric mindset. I suspect Korea might be facing similar structural clashes, though perhaps you are adapting at a much faster pace.
As someone who finds Japanese corporate culture interesting or even desirable in some ways, it definitely doesn't seem like the most efficient way to run a company. And I'm sure there are plenty of cultural aspects that would not be my cup of tea.
I've worked for an American megacorp and the branch office of a Japanese company. The Japanese company felt a lot more humane on balance, though it doesn't express as well when I write it.
The Japanese company had some rituals were a bit weird, but harmless/charmingly quaint like mandatory volunteer days, keeping a copy of the founder's precepts on my desk for executive walkthroughs. They also had some bad tendencies, like praising employees for being there at 6AM/8PM. If something didn't work, they'd give it a bit of runway to see if it could pull through before cutting back. When there were layoffs, it was the whole division failing (each division competed with the others). It's hard to imagine what kind of political statements would have been offensive to that employer, it was just a neutral job. Really, the worst part was subpar compensation (and I still felt spoiled compared to Japanese coworkers).
My next job was at an American megacorp. The executives would give a holiday speech about "social responsibility" and how well we were doing, then layoff a factory. The employer was constantly involving themselves with US national politics, but employees were expected to refrain from having political opinions of their own.
> The employer was constantly involving themselves with US national politics, but employees were expected to refrain from having political opinions of their own.
Reminds me of my first job in state government where the incredibly underpaid workers had to go through bureaucratic paperwork if they needed a second job to pay the rent (ostensibly because of the conflict of interest risk)
Yet the governor was a known slumlord. I’m sure there’s no potential conflict of interest there.
You’re right and that’s intentional. Japanese companies don’t optimize for efficiently but for longevity. Sometimes those things go hand in hand. Sometimes they don’t.
This is the first I've heard of the Mondragon cooperatives, and I quick peak makes me want to learn more about them -- I'm enamored with the idea for coops.
I'll preface this by saying there are lots of other factors at play, but here's an interesting one I can speak to personally:
Car culture. We're a very car-centric society, and the Japanese auto makers have been a part everyday life to 3 full generations of Americans now. Even most Baby Boomers are too young to remember a world without Honda or Toyota. Across all age groups, a lot more Americans grew up with a fondness for their family's Toyota than their family's Hyundai.
I grew up in middle America. Both my grandfathers were "GM Men" if you will. Partly by vocation, partly by culture. On both sides of my family, every car was either a Chevy or a Buick. When my folks bought a Honda in 2007, it was treated like a scandal. But yknow what? Now one of my cousins has a Hyundai, and nobody batted an eye. Things are changing, even for the "raise hell praise Dale" crowd.
Japan's car makers, and their other industrials have a 40-year head start on embedding themselves in the American zeitgeist. Sony, Panasonic, Canon, Yamaha, they've all been here a really long time. They're loved because they're familiar. That's a bias, and I think that bias colors the way we talk about east Asian businesses more broadly.
> We're a very car-centric society, and the Japanese auto makers have been a part everyday life to 3 full generations of Americans now.
I assume "we" are Americans.
I keep writing this over and over again on HN: There are NO highly developed non-micro states that are not car centric outside of major cities. Yes, literally, Japan, outside of a few large cities, is incredibly car centric. Sure, the cars are small and cute, but it is defintely car centric!
> Sony, Panasonic, Canon, Yamaha, they've all been here a really long time.
They came for a single reason: To avoid import tariffs. Please stop romanticising this for any other reason.
Yep. Growing up in the 90s, Japan was the undisputed king of cool, affordable entry level sports cars. RX-7, Integra, Impreza WRX, et al.
Yamaha, Korg an Roland were the defining instrument producers of the 80s and 90s. Few things have altered the course of popular music as much as the TR-909 and TR-808, M1, DX-7, Juno, Jupiter. All of electronic music grew out of those.
The Walkman and Discman were iconic.
Honda was building P3 and ASIMO. The PlayStation 1/2 and Nintendo 64/GameCube were a thing.
I didn't even get into anime, the language or music from there until decades later. But all of the cool things came from Japan back then. Honestly, they still kind of do.
Did you read the entire article? There is a whole section on where western model excels. The article is not about romanticizing Japanese culture, but to tell a story about how and why Japanese and American firms tend to differ. I am sure that it paints in overly broad strokes at times, but I really did not get the impression of idolization, idealism, or even oriental mysticism.
I did read it, but my impression remains the same. While the article does contain critiques of the Japanese system, as an East Asian, I feel it completely misses the actual underlying dynamics.
I know the author isn't trying to paint Japan as a utopia. The reason I call it 'romanticized' is because the author claims Japan's success in precision parts is driven by 'horizontal' and 'collaborative' practices. That just isn't true.
In reality, this system is largely sustained by the ruthless squeezing of subcontractors (for the record, I am Korean, but I actually like Japan), which is a massive social issue there. It’s very difficult for me to understand how anyone could view this structural dynamic as collaborative or horizontal.
If the author had concluded that their success in these niches stems from being an extremely vertical society where defying your superiors is simply not an option, I would have fully agreed. That aligns exactly with what I have experienced firsthand.
> is because the author claims Japan's success in precision parts is driven by 'horizontal' and 'collaborative' practices. That just isn't true.
> In reality, this system is largely sustained by the ruthless squeezing of subcontractors (for the record, I am Korean, but I actually like Japan), which is a massive social issue there.
Well that's just like your opinion...man. I think you're both singularly wrong. Trying to attribute a single factor to a highly complex system is a fool's errand.
If your conclusion is correct "ruthless squeezing of subcontractors" are there other cultures whether there is true and the country has been successful in precision parts? Otherwise, it's pretty impossible to conclude the causality.
In Japan, your corporate affiliation often dictates your social standing.
This is absolutely true in the US as well, by the way. People will treat you differently if you work for a FAANG company. People take a lot of pride in telling others they work for one. And we even have a word for someone who used to work for Google, for instance.
Yeah, a friend of mine from college works for Waymo (Google-adjacent) and I've overheard wives of local friends bugging their husbands to try and work him for an in.
Did you read it? I can see how you can come to this conclusion devoid of context. This is actually a topical article - mainly because it is a surprise to many that a toilet company could be one of the biggest winners in the AI pick-and-shovel trade. These names have just recently been hoisted into the spotlight. It's not really a romanization but an explanation of why.
It's not much different from how many Americans of a certain political bent idolize unions and yet have never been in a private sector union. They also loudly shout down and berate those who have who challenge their world view with stories of how non-rosy it actually is.
Frequently in my work life I encounter people who talk about unionization and if I were to bring up any of my three previous experiences as a member of one which were overwhelmingly negative, I would get get pilloried.
Unions are a poor solution to a worse problem. It's like if your roof was sagging, so you propped it up with a rotten log. You might be tempted to remove the rotten log, but that just means your roof caves in. Unions exist to antagonize company owners to keep them from indulging in their worst excesses when it comes to abusing their employees. Removing the union just means unleashing that unchecked power. A better solution isn't to disparage unions, it's to champion corporate structures that grant direct ownership to their employees, to move away from the outdated feudalist structure and towards a democratic structure. This makes unions obsolete.
I think more so the issue with the union rhetoric is that it’s all or nothing. Yes there are bad unions. But also, collective bargaining can form a safety net, and there isn’t much of an alternative when things go south in an industry.
But I'm drawing the parallel between situations where people like a certain work culture that they have never experienced because it conforms to their larger worldview.
It's mostly projection and doesn't meet with reality.
There's a lot that I like about aspects of Japanese work culture but I'm sure that I would find it stifling.
No, far more basic negligence and corruption. Negotiating deliberately bad contracts and collecting bribes. Diverting hours and cushy roles to union reps and their personal friends. Overwhelmingly siding with management against employees (which is what you think they're going to be there NOT to do). The kind of day to day petty shit that over time makes your job intolerable.
Oh and that one time in the retail baker's union (BCTGM) when they defended and successfully reinstated an employee who was terminated for _literally urinating in the cake batter every day for months and feeding it to people_ because it wasn't explicitly stated in the contract that they could use video evidence to terminate people.
If your union is protecting people who commit literal fucking crimes and dangers to public health, no, just fuck you and your union.
>This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing.
Related: In most of the world, carmakers separate out a luxury brand from their other products: Honda with Acura, Toyota with Lexus, etc. In Japan, they don't. The explanation I usually get is that the culture primarily associates luxury with "being attached to the big-name corporation". So you don't really improve on that by introducing another smaller brand, even one you build up as luxury.
See also the patio11 comment:
>>My salary was $30k, but there is some tangible value in having a pocket full of business cards which practically read "Attention, person who has just been handed this card: give the bearer whatever he wants. We're good for it. If you don't, we will remember." That status is very much not the same as the one you get if you combine two part-time jobs into the same level of income.
Acura has never been used in Japan. NSX and Integra are Honda models. Toyota introduced Lexus domestically in 2005. Their older Lexus models had Toyota equivalents, often as variants of the Toyota Crown which was their original luxury tier car.
That is accurate. Acura and Lexus were brands created for the US market. The original Integra was badged as Honda in Japan and Acura in the US, for example. A TLX or whatever is just a top trim Accord.
Lexus didn't enter the Japanese market as a brand until 2005, prior to that all Lexus models well sold under the Toyota moniker in the Japanese market. I'm not sure about Acura, but the GP's assertion is largely correct in its directionality.
I can confirm this is true for Acura. I owned an Acura Legend and the same car was sold in Japan (well, the right-hand drive version) as the Honda Legend. I had seen pictures of them online in the 90s, but happened to see a Honda Legend in person when I was in Tokyo some years later.
> It’s always fascinating to see how Westerners idealize Japan on platforms like HN
Most HNers tend to be in their mid-30s to 50s so a lot of Japan-philia does appear to stem from an older mental image from the 1990s to 2010s.
> This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing...
The Japanese Keiretsu and later Trust Bank model is the norm in South Korea, Taiwan, China, and other Asian countries as well due to a mix of colonial, financial, and policymaking ties.
This is still a form of orientalism which OP is pointing out. Japanese people don't work better or worse than anyone else, and most commenters think all yellow faces look the same and thus can't differentiate between a Japanese, Chinese, or Vietnamese working behind the counter at a konbini let alone other services jobs where Westerners are most likely to interface with.
You are correct.
Japans system was ahead of its time back then and was heavily imported into Korea. The flaws I pointed out are not strictly a Japanese problem it's really an issue shared across all of East Asia.
1. Japan has become much "chiller" from a work culture perspective, with hours worked being comparable to those of the UK and Ireland [0] thanks to regulatory changes in the 2010s.
2. While conglomerates remain prominent, a new generation of large Western-style employers like Rakuten, Mercari, LY, SoftBank, etc have arisen and operate with Anerican style management, and the stereotypical "salaryman" lifestyle is on it's last legs.
3. Japan has quietly become an immigration driven society. A major reason behind the rise of Takechi's faction in the LDP as well as Sanseito is because of the post-2019 immigration boom [1]. Going from less that 1% overseas born residents to around 4% in roughly 5 years was a massive shift socially and impacted both blue and white collar employment in Japan.
4. Japan has culturally shifted to be accepting of an offensive military posture. You see this shift in Japanese media (eg. SnK, Nippon Sangoku) as well as Japanese foreign policy [2]. A more muscular Japan with a chip on their back is arising.
5. Younger Japanese are more open to calling out tourists and Westerners when they do weird or weeb s#it or treat Japan as their own Disneyland. They now treat Westerners the same way they treat other non-Japanese people now. The mindset shift I've noticed is an "us" (which now includes Koreans and Taiwanese) versus "them" which now includes everyone else.
----
Ironically, I think contemporary South Korea is closer to the image that HNers have of Japan versus Japan today.
I'd largely question the accuracy of point 1 IN PRACTICE.
Japan is notorious for uncounted and unpaid overtime, vacation days no one takes, and paternal leave you'd better not think of if you don't want to instantly become your division's outcast.
I worked in a host of countries, including the UK and Japan (the latter about a decade ago - I'd be surprised if things had diametrally changed since that time). The actual work hours are not remotely comparable.
(In fact the UK is one of the locales where I worked the least in terms of actual hours. Much less than in France, where they're supposed to be slackers... So generally I call BS on these stats.)
See, this is the issue. Karoshi/unpaid overtime in white collar work largely ended as a practice in Japan by the 2010s due to legal changes and enforcement via the 2018 labor reforms.
Yet you see the same tropes peddled ad nauseum. I may as well use the same priors for Poland in 2026 as I would in the 2000s then when it was Europe's punching bag.
The reality is stuff changes but a lot of Westerners (and especially Europeans) just don't travel much outside of Europe to see these shifts.
Nothing of this is particular to Japan, it's only the way it manifests in Japan that is adapted to its rich culture. Zombie corporations, corporations with ties to the government, family owned companies, monopolies, cronyism, all of this has been a staple of Western capitalism for centuries.
I've thought a lot about (and I don't mean this in a derogatory way) the weebu phenomenon. I remember encountering it first in college when I met people who were in an anime club. It wasn't for me but my philosophy generally is "let people enjoy things".
I've wondered how much of this stems from being disaffected by the modern (particularly Western) world. I worked with an ethnically Chinese guy who was a massive weebu and that always struck me as odd given the Japan-China history.
Japan has always rubbed me the wrong way: misogyny, racism and denial about Japanese war crimes in WW2 mostly. Also the salaryman work culture. I see videos from Japanese workers and life honestly looks miserable. It's also a country that is dying. The samurais, ninjas, Ronin, shoguns, etc are cool though. Japanese history is fascinating.
My hot take here is that China is actually what people idealize Japan to be. China has the most competent government in the world and it's not even close. It's not problem-free. Nowhere is. But the transformation in the lives of ordinary Chinese people over the last few decades is unbelievable. China pulled ~800 million people out of extreme poverty.
It could be worse than Japan too. I think South Korea is that. As a non-Korean from the outside looking in, South Korea looks like a dystopian run by aristocratic (chaebol) families where the birth rate is the lowest in the world and it's in fact so low that if nothing changes, South Korea simply won't exist in 3 generations.
> you have a firm that has lots of lifetime employees who can’t be fired, and whose skills are tailored to what your firm needs rather than to a particular occupational category transferable to any employer
> the system only makes sense if the company is also insulated from outside pressure
> the J-firm [Japan-style company], run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
> And that basic impulse toward survival is why Japanese companies are so insistent on diversification. If you’ve made a commitment to keep people employed for life, then you need to create jobs for them if their current jobs stop making sense
> If you’re not very worried about profitability, and have lots of well-trained generalist employees, then it makes perfect sense to reinvest your company’s earnings by expanding into new industries
As it should be. The pay gap from CEO to bottom tier worker is now obscene (21 times in 1965 and ~285 today). It's the foxes looking after the henhouses.
Not sure why the left cares so much about CEO to work pay ratio these days, especially when Marx himself recognized that ownership was the true source inequality. A CEO is just a really well paid worker. Even CEOs who become billionaires do so from capital appreciation more than compensation.
Sure, but ownership being the root of inequality was the one thing that he was actually correct about. CEO to worker pay ratio is something that is completely irrelevant. Companies spend orders of magnitude more money on its shareholders (dividends, buybacks, and reinvestment) than executive compensation.
Global societies were still mostly agrarian in his time. His analysis doesn't work well for the modern era with <5% engaged in farming. Central planning won't work. You need distributed decision making to be flexible for changing circumstances. You need capital for industrialization and you need a cadre of people who can take risks to invest surplus capital into new ventures. The large disparity in wealth is a problem, but some is necessary.
Maybe others see it differently than I do, but the actual spending isn't so much the issue. It's the fact that these people with so much money exist at all. That much money translates to a tremendous amount of power which allows them to bend the law to their will.
I clicked on the article to learn, "why Japanese companies do so many different things," and then got hit with pages of low-bitrate context, such that my eyes started glazing over and it was difficult to find the answer to the question. So I appreciate their compression, or at least pointing to where the answer is found.
Yes, thank you for compressing it. They start their answer with:
> Here is the answer I want to suggest: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.
Which is then backed by some economists saying something similar (generally), but all of which completely ignores Japan’s specific history.
As a better example
Of examining Japan, here’s a look at Japan’s monopolies, how they were broken up, and partly how that effected the future of their industry:
While things like the expectation of lifetime employment (or at least very long tenure) may sound appealing, it also creates a job market with very low fluidity. In practice, if you miss that narrow “fresh out of school” hiring window, you can end up facing pretty unfavorable prospects later on.
People can still get hired mid-career, of course, but many companies traditionally hire based more on long-term potential than immediately usable skills, since they expect to train employees heavily through OJT. That also means the number of openings for experienced hires can be relatively limited. And because of the seniority-based structure, even experienced workers may end up starting near the bottom anyway.
There was an entire generation of people who missed that initial hiring window because of economic downturns and hiring freezes, and many of them still struggle to land stable permanent positions even today.
Things are gradually changing, but many structural assumptions are still there. For example, parts of the legal and employment system are historically built around the assumption of lifetime employment, which also makes it difficult for companies to dismiss permanent employees once they are hired.
> So why are Japanese companies like this? Why do they do so many different things? And how do they manage to do so all those different things so well?
Author says: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.
My response: No mention of culture? Sure maybe it is because of how they are structured somewhat, but it's also because of their culture. Japanese are masters of their craft. Look at the best pizza place in the world, the best burger maker in the world.. they are not in Italy or America, but in Tokyo.
Japanese take pride in their work and master their craft. A small pizza-shop owner in Tokyo doesn't make great pizza because of how it was structured. It's cultural. Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin).
Look at all the foreign-things Japan is now famous for:
Japanese Whiskey, Denim, bread making, Japanese curry, etc.
> Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin).
Thank you for explaining this. I was alawys amazed how the japanese would take the cuisine from other countries and make it better in all aspects than the country that originated it.
My experience in American organizations is that products and services need to not just make money, but make a lot of money. There is zero appetite for things that make a little bit of money relative to the cash cows of the company. You could say this is in part focus, but it is also based on internal accounting. Small product lines are saddled with total company overhead costs even if they do not apply to said product or service. Not good or bad, but it can lead to strange situations where you have a successful product that everyone complains doesn’t make any money.
> zero appetite for things that make a little bit of money
For obvious reasons, the expected rate of return needs to clear the hurdle of the risk-free interest rate. This puts a pretty high floor on activity that is "worth doing". This is a mechanism by which the phenomenon of ZIRP diversifies economic activity.
The risk-free interest rate is a pretty low floor for returns though? At least in my experience with expectations of what counts as a profitable project.
The risk-free floor is around 4% these days. Because the return on any other use of capital must be risk-adjusted, the breakeven might be 6-7%. That is roughly a 3x higher rate of return than you needed to breakeven when the risk-free rate was ~0%.
Small absolute changes in risk-free interest rates cause many things to become unprofitable when the relative change in interest rates is large. A risk-free rate of 1.0% and 1.5% are both small but the latter is 50% higher than the former.
Yeah, but my experience with what is considered a profitable project is firmly in the two-digits percentage range. Anything single-digit would count as a fairly low floor.
> My experience in American organizations is that products and services need to not just make money, but make a lot of money.There is zero appetite for things that make a little bit of money relative to the cash cows of the company.
Is your experience in the same America where Meta is losing another 4-6 billion $ this year in AR/VR business unit, after losing 19 billion $ last year. Similar with Google's and Apple's AR/VR unit which also consume a lot of money in R&D(funding a lot of high paying jobs) and not make any money, yet.
So sure, there's no risk appetite for things that make little money, except for all the evidence proving the contrary.
There is zero appetite for things that make a little bit of money, but in big tech there is limitless appetite for things that lose money but might make a lot of money one day.
If it ends up AI only makes a little profit annually in the longer term the whole thing collapses on itself.
>There is zero appetite for things that make a little bit of money
Because "making little money" is a commodity business activity, overrun with competition from Europe and Asia.
So why would you ever want to compete in the race to the bottom of "little money" when you have the highest labor cost in the world? It makes no business sense.
You go into "all or nothing" moonshots because Europe and Asia can't compete there. Especially when you have the world reserve currency as the infinite money glitch cheat code (while it lasts).
> American firms, for example, tend to prioritize focus above all else: it would be bizarre for an American paper mill to also operate a concert hall and an airport catering business
I don't think Kimberly-Clark ever opetated a concert hall, but they did run an airline (Midwest Express) and K-C Aviation was an airplane servicing firm.
It's not that American companies don't operate in diverse businesses. Maybe they're less likely to, but it happens when the need arises... if there's no reasonable supplier for an important input, then you start one, or you ask an existing supplier if they can start a new line of business that's somewhat related.
The headline example is that Toto, known as a maker of ceramic toliets, is making a lot of money making specialty ceramics used in semiconductor manufacturing. Which yeah, ceramic manufacturer makes ceramics.
The US business market does like to spin-off divisions when they are successful and can be independent.
Yeah, we actually had our own era of “conglomerates” - they were very big from the 1960s through 1980s. Companies like ITT, Cendant, Gulf+Western, GE — formed from tons of acquisitions, sprawling across completely unrelated industries.
At one point in the 1990s, you could buy a toaster from the same company that makes airplane engines, MRI machines, and produces “Saturday Night Live.” And you may have financed that toaster through their financial arm (GE Capital). Eventually the many lines of business were spun off from companies like this.
What came next was a very different type of consolidation - companies like Comcast, Chevron, and the current “AT&T” who went from being regional players to buying as many other companies just like themselves in order to maximize economies of scale - they’re huge but really just do one or two very closely-related things.
A great example is the bowling lane people AMF, who have over the years made things like pinsetters, jet-skis, motorcycles, scuba gear, shovels, and nuclear reactors. All spun in and out of the company over its life
Asian countries seem to have a different approach to diversification. In the East it is the companies that diversify while in the West it is the shareholders that diversify. So Bill Gates will not tell Microsoft to start farming, but he probably does have farms in his portfolio.
> the J-firm, run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
I don't know if all companies should be run like Japanese companies, but there's something very heartwarming about this. Some companies exist for the purpose of employment, and that's okay. In fact it's admirable and makes me want to cheer.
I do also think there's a charm to this model but there's a real cost also with Japan's economy stagnating compared to the United States in the last 30 years.
There’s also a real cost to the system in the United States as well. As companies pivot people get left behind. And we’re potentially going to see with LLMs a large collapse in employment that corporations don’t even being to consider their responsibility. I’m not suggesting one is superior but they do both have their downsides.
That is because of population aging. Despite the US importing effectively endless amounts of young people, per capita income growth for working age population since the 1990s has been identical between US and Japan. I am unable to say why exactly but it should be obvious.
It is important to note, however, that the starting point is very different. The idea of employees robbing those evil shareholders sounds good but has resulted in capital markets that effectively do not function. Tidying up that mess will not be simple and improving equity markets will go a long way.
Also, the structure of Japan is a function of US policy after WW2 to dismantle the zaibatsu. In every single other historical case that I am aware of the result of "employee-friendly" policies has resulted in the kind of permanent underclass that people fear, incorrectly, that AI will lead to (i.e. Germany). It is a known bad idea. Japan avoided this because all the wealthy people's assets were taken, this didn't happen in other countries (i.e. Germany) which led to significant financial instability/risk/inequality (Germany also has inequality within a completely stagnant economic system, which is different from inequality in a system where the composition of wealthy people is continually changing...Germany's billionaires are a combination of people who mysteriously got rich in the 1930s very quickly and people who have been rich since the 10th century).
Japan is interesting but it is a complete outlier. Even with their relatively good relative economic performance, they could be producing absolute-terms growth that is double or even quadruple where it is now. Comparing middling economies like Japan or Western Europe with countries growing the same rate and per-capita incomes that are double is a misunderstanding of potential. Average economic performance should be double the US consistently for multiple decades.
Japan is getting poorer. People online love to talk about American stagnant wages, but Americans are considerably richer than they were 20 years ago. The median American earns 20% more in real terms, and even the bottom quintile of earners in America has increased their inflation adjusted earnings by 15%. In the same time period, the median Japanese inflation adjusted earnings is down 2.8%.
Compared to 20 years ago, Japanese people travel much less (millions fewer can afford to go overseas). Residential energy is 35% more expensive per kwh, compared to only 5% in the US. Food as a portion of monthly Japanese spend is 48% more expensive than it was 20 years ago. Despite millions of vacant dwellings, the home ownership rate is slipping. They earn less and they spend less.
Tokyo may seem quaint to American visitors clanking down their metal Chase travel credit card for more sushi, but for the typical Japanese, although they take it with grace and in stride, they have mired in stagnation and degrowth for a generation.
Frankly I think any QoL measure between a western and a Japanese life are meaningless.
If you’ve ever worked for a Japanese corp under a Japanese boss, you would basically experience that your life is hell. As a westerner we are even subjected to far lesser rules and customs than a Japanese, and yet to me it still felt far more stifling and unbearable than any western company I worked for. Western companies have different failure modes, but intense unspoken micromanagement and stupid expectations was never one of them.
And I was a supposed “subject matter expert”, to be treated better than rank and file. That said, this clearly works for Japanese people, many of them are happy, I think they would be miserable under a western firms “do whatever the f you want as long as you get results” culture. To each their own.
Japan in some sense is stagnating if you compare it to a GOAT like US, but Japan of 1910s was also probably stagnating compared to US, in its own terms Japan is doing fine and their political situation is much more civil. So GG to them
They work crazy long hours (the last of which every day don't do much at all for productivity), which is really bad for QoL. Though I hear that the situation is improving.
Most of Japan stagnation was the result of brutal pressure from the US in the 1980s that led to a series of fiscal and monetary choices that removed a lot of Japan's competitivity.
The median age of Japan went from 37 in 1990 to 50 in 2026. That's an insurmountable headwind. Soon, half the country will be elderly. That's no way to run a vibrant dynamic economy.
A hypothesis I had on why some countries have more conglomerates than US is that access to capital and funds are much harder in those countries in comparison to US. When access to capital is comparatively more limited, more innovations falls to the party that has comparatively easier access to capital (conglomerates) and therefore reinforcing their position as conglomerate.
The Japanese economy is also famous for a macro economic stagnation for almost 40 years, a mild deflationary spiral, and companies hoarding cash on balance sheets rather than return it or invest it.
There are definitely world class companies in Japan, but also broad systemic problems with incentives
> In 2007, workers at a Toyota plant in Kentucky pulled the andon cord 2,000 times per week; workers at a Ford plant in Michigan pulled it just twice a week. You can’t get all the benefits of a single practice without installing the complete bundle.
This example seems to contradict the author's main point.
The Toyota factory in Kentucky got some of the benefits of the Japanese approach without importing every practice. They might have had a more Japanese organisation than Ford, but surely they didn't replace American practices in matters outside their control. They still had to deal with American approaches to labour practices, banking, local government, etc., all of which are called out in the article as necessary for the J-mode to flourish.
I'm not sure I'd say a company that makes ceramic toilets also making a tool for memory chips... which is also ceramic is really 'different things'. They're clearly a ceramic company. Different tolerances, but similar expertise.
Now the paper company got into the hotel business seems a far better example. No idea how that happens.
> Now the paper company got into the hotel business seems a far better example. No idea how that happens.
That's easy. They have corporate visitors to their corporate offices and the available hotels are insufficient. They decide to just make their own hotel.
There are many corporate campuses with an embedded hotel. Some run by the corporation itself, some with significant management contracting with the corporation, and some independently managed.
Large corporation has a small travel business is very common.
I almost feel like this topic deserves a further deep dive. This seems like a more profound difference of cultures: Japan, where failure is stigmatized and less of an option, optimizes for survival, and the United States, where failure is common, optimizes for growth(? wealth? fame?).
The pattern might also hold at a broader level. The United States is a relatively young nation that has seen plenty of internal strife (plenty of civil wars including The Civil War) whereas Japan has existed in some form for 2,600 years.
Probably too deep to consider, but the thought hit me that trees and plants (like these J-firms) grow multiple branches as quickly as they can because they are optimizing for survival.
I might be gatekeeping, but I consider a mark of actual healthy capitalism, to be creative destruction, the biggest companies of 1 generation are destroyed by the next generation and the churn keeps going on. Nothing ever lasts except the system.
By this criteria, in the entire world, only US and UK seem to do capitalism properly. Whether the current age of tech companies survive till 2050s is to be seen, (we are already seeing signs of OpenAI, Anthropic joining them but it is to be said if the existing monopolies of say Microsoft will be disrupted).
In other countries, big companies have been the same for hundreds of years, from Japan to Germany to Korea to India. This is no longer capitalism as much as it is some soft form of Feudalism, where the same set of families hold power for generations at a time till some major fortune swings occur.
The one key thing that is completely incorrect is there is no horizontal hierarchy. Everyone has a boss, a boss that you must not suggest is wrong. I'm very fond of visiting Japan but having worked there, found it impossibly challenging to get anything done.
When things work well it is great and the focused culture produces some great things, but when it fails it leads to catastrophe as no one is able to voice early in the process. Issues are only discovered once they are serious.
This paragraph on organizational model is super relevant to understanding how tech companies are responding to LLMs today.
> Aoki’s key insight was that the J-mode had a comparative advantage in environments of moderate volatility: situations where conditions changed frequently enough that rigid central plans would be outdated before they were executed, but not so radically that only top-down strategic intervention could cope. In an environment of stable, predictable demand, the H-firm did fine; in an environment of extreme disruption, where the whole product line had to be rethought, centralized authority was indispensable, and the H-firm also did fine. But in between—where the challenge was to make constant small adjustments in a changing but recognizable paradigm—the J-firm excelled.
They’re an absolute disaster but I do love that the companies are actually investing in expanding into new things. Shareholders don’t want that, they want cold hard cash. Hence all the buybacks and PE firms destroying companies.
It’s always fascinating to see how Westerners idealize Japan on platforms like HN. It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain? They’d probably find it strange and out of touch with reality.
This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing.
The author paints the lack of shareholder pressure as the secret behind their successful diversification. While true for a few, the flip side is that it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to.
Also, the idea of a 'horizontal culture' in Japan is a myth, especially in software. Even a glance at the Japanese web(5ch, onJ etc...) reveals a deeply entrenched vertical hierarchy. In my experience working with Japanese developers, their reliance on the legacy Waterfall model and an exhausting chain of approvals and reporting was far from horizontal. (Though I admit my sample size is small, it heavily contradicts the Western narrative).
I agree that this rigid system fosters the tacit knowledge needed for hardware and materials. Still, it proves that we all tend to project our fantasies onto cultures we don't fully understand. The divergence in perspectives on HN never fails to amuse me.
> It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain? They’d probably find it strange and out of touch with reality.
Quite the opposite - for me, anyway.
FWIW, as a Westerner, I find the Mondragon Corporation to be fascinating and something I've read a lot about because there's no way we've figured out the ideal sort of setup for a business (or government, or any sort of human organization, given appropriate context) in the year 2026.
We have a lot to learn, and while "different" doesn't always mean "better," I strongly believe being exposed to "different" is necessary for us to devise novel approaches to human organization.
Same thing, being Spanish the Basque Cooperatives movement is fascinating. Do you have any recommended read about it?
The most recent video I could find about this was from like 7 years ago, very weird
Let’s not confuse “romanticism” with “intrigue.” Things can be interesting and intriguing without being ideal targets.
I didn't feel like this article necessarily idolized it; the author seemed pretty even-handed about strengths and weaknesses.
The interesting question in all of these kinds of things is "are there ideas we can take to gain the strengths of other systems or patch the weaknesses in ours?". Looking at Japan specifically, I think I speak for most westerners in saying that if we could get a little more stability and less financial-quarter-driven behavior without taking the whole kit of lifetime employment and zombie companies, that would be a good thing. The author points out just how bundled that is, so it's a tough nut to crack.
One model that does give us that is the 'Untouchable visionary CEO' of Jobs and Musk, but I think the popularity of that approach is also limited, partially because of all the not so visionary CEOs trying to be Jobs, and partially because working for those guys is terrible. They inevitably seem to become tyrants.
Most Americans I know are familiar with the unending work culture of Japanese white collar workers (if only a parody version of it), and want no part of it.
> how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain?
HN has had posts romanticizing them, maybe check those
https://news.ycombinator.com/item?id=32622140
https://news.ycombinator.com/item?id=41438060
> it created a massive 'zombie company' problem—a heavily discussed issue in Korea and Japan that the West seems largely blind to
Zombie companies in the west are mentioned as a low/ZIRP phenomena. But the west shouldn't have as big an issue with those because companies, when less diversified, get killed off more often by interest rate hikes.
Zombie companies exist in Europe; at least part of the euro crisis was exacerbated by the continuing cascade of bankruptcies making other banks insolvent.
The EU’s crisis schemes like furloughing employees en masse dull the pain but also do prolong some companies’ lives. The US historically has had much more brutal impacts but quicker recoveries.
Japanese and American companies have different purposes.
In Japan the corporation primarily provides stable income and employment for society, and secondarily returns on capital invested. In America, corporations primarily provide returns on capital invested and secondarily provide stable income and employment.
This shows up in the data too. Japanese corporations are less likely to go out of business but provide worse investment returns. American corporations provide better investment returns, but the citizens have to deal with layoffs.
Most citizens would prefer stability to growth, but I think the tradeoff has a lot of downstream consequences.
Stability is preferred to growth in the moment, but in retrospect and in comparison to others most people don’t want to give up what they have and go back in time.
> how Westerners idealize Japan
Westerners are taught by the media and education to idealize Japan and hate China almost everywhere. They present cherry-picked aspects of both countries that make China look bad and Japan look good. In reality every country has its good and bad aspects.
This is just part of the propaganda machine and what politicians want you to believe, in an effort to align their populations to be supportive of their foreign policy and military motives. That ultimately trickles down to things like this. When people come to HN, or any place, with rose-colored glasses of Japan, they will seek confirmations of that rose color everywhere.
> Westerners are taught by the media and education to idealize Japan and hate China almost everywhere.
As an American educated by the American public education system and indoctrinated by American media, our government is certainly stupid and vengeful enough to make me want to support this if it were true, but it's just not. The much more banal truth is that Japan is extremely talented at exercising soft power by projecting a favorable image of itself via the media it exports, whereas China is just comparatively terrible at exercising this sort of soft power.
Hate China? I don’t see that. There are plenty of factual reports about the CCP that are pretty damning, but the people/culture/place is generally perceived postively other than being a competitor…
Is it propaganda though? Japan is more aligned with ‘the west’ not only in geopolitics but in the system of governance that was imposed upon it by via USA occuptation. Whereas China has a very different political system that is generally poorly understood and distrusted. Regardless, I don’t know where you’re from, but I see plenty of idolizing of China and how it manages to solve big problems at speeds unseen outside of mobilization in other parts of the globe. China-studies are a big thing at the moment. The positive view of Japan probably flows from its postwar boom years and popculture exports. China is at the moment being viewed with suspicion over its military buildup near Taiwan and creeping authoritarianism under Xi. This could all change again in the future depending on the actions China will take.
I disagree. People still trade, travel, and visit both countries regularly. Even if some media outlets are biased against China, that doesn’t mean Japan need to be idealized, it proves nothing. Your comments come across as more like propaganda.
I really don't really think there's much political or propaganda interest in getting Westerners to idealize Japan, at this point.
Now back in the 80s? Back in the 80s, despite being aligned with the West, they were perceived a lot like China is today. Everyone was scared that they were going to start eating the West's lunch and various negative stereotypes and exaggerations started to bubble up: it was a futuristic land, but a futuristic land of suicides, with little drone-like salarymen crammed into little shoebox apartments the size of a Western bathroom, working 20 hour days.
Between the Plaza Accords and the bubble bursting and decade after decade of Lost Decades, the Japanese threat was successfully neutralized. I think Cool Japan is mostly something they've earned for themselves, frankly.
> Now back in the 80s? Back in the 80s, despite being aligned with the West, they were perceived a lot like China is today. Everyone was scared that they were going to start eating the West's lunch and various negative stereotypes and exaggerations started to bubble up: it was a futuristic land, but a futuristic land of suicides, with little drone-like salarymen crammed into little shoebox apartments the size of a Western bathroom, working 20 hour days.
Yep. A lot of cyberpunk fiction from that time that demonized corporate influence and power was inspired by the rise and perceptions of Japanese technology companies.
I can remember one of the American news magazine shows, maybe 20/20, showing a Japanese school with long hours and intense discipline and contrasting it with fat, illiterate American kids (the same stereotypes were made about the Soviet Union).
A lot of the perception of Japan, especially among Gen X and younger, is influenced from exports of Japanese culture. Nintendo, JRPGs, Manga, Anime, and even the quirky stuff reflects well on the Japanese though American eyes. No propaganda is needed.
> it was a futuristic land, but a futuristic land of suicides, with little drone-like salarymen crammed into little shoebox apartments the size of a Western bathroom, working 20 hour days.
So basically just what the west is becoming?
Not really? If I were to describe the issues inflicting the west, none of too-small homes, high suicide rates, or an economy based on long hours of white collar work would immediately come to mind.
Rather, the west seems to be characterized mostly by insanely expensive housing caused by an extreme antipathy towards denser housing as populations grow, and a K-shaped economy where white collar coastal elites are actually doing relatively well but everyone else - namely blue collar and service workers - are doing worse and worse. Suicide rates aren't rising dramatically, and are nowhere near where they were in Japan at their peak in the 80s, which itself was always overstated (they were higher than they were in the US at the time, but were comparable to many other western countries).
The US under trillionare leadership, certainly.
> if they saw me romanticizing the Mondragon cooperatives in Spain?
Speaking for myself, I'd find that very interesting! I just stumbled over an article about it a few days ago, and don't think it's weird that different parts of the world would be interested in a regional business phenomenon.
> It makes me wonder(i'm korean): how would a Westerner react if they saw me romanticizing the Mondragon cooperatives in Spain?
I'd be pleasantly surprised, very impressed and it would make me reach out to have an offline chat. Not exaggerating.
Agree with the meta point. I worked in Korea and Japan and loved the culture but when I moved to the west I was surprised to see how people over here fantasize about their (imo inefficient) corporate cultures.
This particular article was decently nuanced though.
Mondragon gets glazed on HN frequently. Just search and you’ll find many examples.
In my opinion, this comes from the 70s and 80s where there was very real concern that Japan was going to surpass the US economically. Many companies in the US attempted to adopt Japanese methods in manufacturing and other areas, media then inherited further Japanisms. There is also an historic backdrop of westerners viewing Japan as a mysterious civilization on the far side of the globe dating back to the 1500s.
I pretty much agree. While any semblance of a "horizontal" dynamic in Japanese software development was perhaps realized in embedded systems around 40 years ago (e.g., rice cookers with fuzzy logic, or, in a different sense of _lateral_, Gunpei Yokoi’s famous philosophy of "Lateral Thinking with Withered Technology"), software has traditionally been undervalued in Japan. This historical neglect has ultimately contributed to the decline of our consumer electronics industry. (Though personally, I still don’t see why a toaster or a fridge needs to be connected to the internet.)
IMO, the tight-knit division of labor between Toyota and its subcontractors is a slightly different story from the broad diversification within a single corporation. While the latter was historically bolstered by strong industry-academia ties (often driven by university cliques), we rarely see this kind of broad diversification happening in recent years. That said, Japan's traditional "membership-based" employment system, combined with a cultural reluctance to shut down unprofitable business units, is likely what has allowed this diversification to persist for so long.
In any case, Japanese companies are currently struggling with the friction between their traditional corporate culture and the superficial adoption of Western concepts like DX, Agile, meritocracy, job-based employment, and a startup-centric mindset. I suspect Korea might be facing similar structural clashes, though perhaps you are adapting at a much faster pace.
As someone who finds Japanese corporate culture interesting or even desirable in some ways, it definitely doesn't seem like the most efficient way to run a company. And I'm sure there are plenty of cultural aspects that would not be my cup of tea.
I've worked for an American megacorp and the branch office of a Japanese company. The Japanese company felt a lot more humane on balance, though it doesn't express as well when I write it.
The Japanese company had some rituals were a bit weird, but harmless/charmingly quaint like mandatory volunteer days, keeping a copy of the founder's precepts on my desk for executive walkthroughs. They also had some bad tendencies, like praising employees for being there at 6AM/8PM. If something didn't work, they'd give it a bit of runway to see if it could pull through before cutting back. When there were layoffs, it was the whole division failing (each division competed with the others). It's hard to imagine what kind of political statements would have been offensive to that employer, it was just a neutral job. Really, the worst part was subpar compensation (and I still felt spoiled compared to Japanese coworkers).
My next job was at an American megacorp. The executives would give a holiday speech about "social responsibility" and how well we were doing, then layoff a factory. The employer was constantly involving themselves with US national politics, but employees were expected to refrain from having political opinions of their own.
> The employer was constantly involving themselves with US national politics, but employees were expected to refrain from having political opinions of their own.
Reminds me of my first job in state government where the incredibly underpaid workers had to go through bureaucratic paperwork if they needed a second job to pay the rent (ostensibly because of the conflict of interest risk)
Yet the governor was a known slumlord. I’m sure there’s no potential conflict of interest there.
Let me summarise your post: Pro-corporation, anti-employee.
You’re right and that’s intentional. Japanese companies don’t optimize for efficiently but for longevity. Sometimes those things go hand in hand. Sometimes they don’t.
This is the first I've heard of the Mondragon cooperatives, and I quick peak makes me want to learn more about them -- I'm enamored with the idea for coops.
I'll preface this by saying there are lots of other factors at play, but here's an interesting one I can speak to personally:
Car culture. We're a very car-centric society, and the Japanese auto makers have been a part everyday life to 3 full generations of Americans now. Even most Baby Boomers are too young to remember a world without Honda or Toyota. Across all age groups, a lot more Americans grew up with a fondness for their family's Toyota than their family's Hyundai.
I grew up in middle America. Both my grandfathers were "GM Men" if you will. Partly by vocation, partly by culture. On both sides of my family, every car was either a Chevy or a Buick. When my folks bought a Honda in 2007, it was treated like a scandal. But yknow what? Now one of my cousins has a Hyundai, and nobody batted an eye. Things are changing, even for the "raise hell praise Dale" crowd.
Japan's car makers, and their other industrials have a 40-year head start on embedding themselves in the American zeitgeist. Sony, Panasonic, Canon, Yamaha, they've all been here a really long time. They're loved because they're familiar. That's a bias, and I think that bias colors the way we talk about east Asian businesses more broadly.
I keep writing this over and over again on HN: There are NO highly developed non-micro states that are not car centric outside of major cities. Yes, literally, Japan, outside of a few large cities, is incredibly car centric. Sure, the cars are small and cute, but it is defintely car centric!
They came for a single reason: To avoid import tariffs. Please stop romanticising this for any other reason.Yep. Growing up in the 90s, Japan was the undisputed king of cool, affordable entry level sports cars. RX-7, Integra, Impreza WRX, et al.
Yamaha, Korg an Roland were the defining instrument producers of the 80s and 90s. Few things have altered the course of popular music as much as the TR-909 and TR-808, M1, DX-7, Juno, Jupiter. All of electronic music grew out of those.
The Walkman and Discman were iconic.
Honda was building P3 and ASIMO. The PlayStation 1/2 and Nintendo 64/GameCube were a thing.
I didn't even get into anime, the language or music from there until decades later. But all of the cool things came from Japan back then. Honestly, they still kind of do.
I think I've seen the odd HN post about Mondragon that does portray it positively. Though I'm not sure I've seen one in at least several years.
Did you read the entire article? There is a whole section on where western model excels. The article is not about romanticizing Japanese culture, but to tell a story about how and why Japanese and American firms tend to differ. I am sure that it paints in overly broad strokes at times, but I really did not get the impression of idolization, idealism, or even oriental mysticism.
I did read it, but my impression remains the same. While the article does contain critiques of the Japanese system, as an East Asian, I feel it completely misses the actual underlying dynamics.
I know the author isn't trying to paint Japan as a utopia. The reason I call it 'romanticized' is because the author claims Japan's success in precision parts is driven by 'horizontal' and 'collaborative' practices. That just isn't true.
In reality, this system is largely sustained by the ruthless squeezing of subcontractors (for the record, I am Korean, but I actually like Japan), which is a massive social issue there. It’s very difficult for me to understand how anyone could view this structural dynamic as collaborative or horizontal.
If the author had concluded that their success in these niches stems from being an extremely vertical society where defying your superiors is simply not an option, I would have fully agreed. That aligns exactly with what I have experienced firsthand.
> is because the author claims Japan's success in precision parts is driven by 'horizontal' and 'collaborative' practices. That just isn't true.
> In reality, this system is largely sustained by the ruthless squeezing of subcontractors (for the record, I am Korean, but I actually like Japan), which is a massive social issue there.
Well that's just like your opinion...man. I think you're both singularly wrong. Trying to attribute a single factor to a highly complex system is a fool's errand.
If your conclusion is correct "ruthless squeezing of subcontractors" are there other cultures whether there is true and the country has been successful in precision parts? Otherwise, it's pretty impossible to conclude the causality.
In Japan, your corporate affiliation often dictates your social standing.
This is absolutely true in the US as well, by the way. People will treat you differently if you work for a FAANG company. People take a lot of pride in telling others they work for one. And we even have a word for someone who used to work for Google, for instance.
Yeah, a friend of mine from college works for Waymo (Google-adjacent) and I've overheard wives of local friends bugging their husbands to try and work him for an in.
Did you read it? I can see how you can come to this conclusion devoid of context. This is actually a topical article - mainly because it is a surprise to many that a toilet company could be one of the biggest winners in the AI pick-and-shovel trade. These names have just recently been hoisted into the spotlight. It's not really a romanization but an explanation of why.
It's not much different from how many Americans of a certain political bent idolize unions and yet have never been in a private sector union. They also loudly shout down and berate those who have who challenge their world view with stories of how non-rosy it actually is.
Frequently in my work life I encounter people who talk about unionization and if I were to bring up any of my three previous experiences as a member of one which were overwhelmingly negative, I would get get pilloried.
Unions are a poor solution to a worse problem. It's like if your roof was sagging, so you propped it up with a rotten log. You might be tempted to remove the rotten log, but that just means your roof caves in. Unions exist to antagonize company owners to keep them from indulging in their worst excesses when it comes to abusing their employees. Removing the union just means unleashing that unchecked power. A better solution isn't to disparage unions, it's to champion corporate structures that grant direct ownership to their employees, to move away from the outdated feudalist structure and towards a democratic structure. This makes unions obsolete.
I think more so the issue with the union rhetoric is that it’s all or nothing. Yes there are bad unions. But also, collective bargaining can form a safety net, and there isn’t much of an alternative when things go south in an industry.
I agree.
But I'm drawing the parallel between situations where people like a certain work culture that they have never experienced because it conforms to their larger worldview.
It's mostly projection and doesn't meet with reality.
There's a lot that I like about aspects of Japanese work culture but I'm sure that I would find it stifling.
I'd be interested in hearing your experiences. Are we talking mob association? Arm-breaking thugs?
What is this, the 1970s?
No, far more basic negligence and corruption. Negotiating deliberately bad contracts and collecting bribes. Diverting hours and cushy roles to union reps and their personal friends. Overwhelmingly siding with management against employees (which is what you think they're going to be there NOT to do). The kind of day to day petty shit that over time makes your job intolerable.
Oh and that one time in the retail baker's union (BCTGM) when they defended and successfully reinstated an employee who was terminated for _literally urinating in the cake batter every day for months and feeding it to people_ because it wasn't explicitly stated in the contract that they could use video evidence to terminate people.
If your union is protecting people who commit literal fucking crimes and dangers to public health, no, just fuck you and your union.
>This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing.
Related: In most of the world, carmakers separate out a luxury brand from their other products: Honda with Acura, Toyota with Lexus, etc. In Japan, they don't. The explanation I usually get is that the culture primarily associates luxury with "being attached to the big-name corporation". So you don't really improve on that by introducing another smaller brand, even one you build up as luxury.
See also the patio11 comment:
>>My salary was $30k, but there is some tangible value in having a pocket full of business cards which practically read "Attention, person who has just been handed this card: give the bearer whatever he wants. We're good for it. If you don't, we will remember." That status is very much not the same as the one you get if you combine two part-time jobs into the same level of income.
https://news.ycombinator.com/item?id=8576008
Are you saying that in Japan they sell Acura as Honda, and Lexus as Toyota?
Acura has never been used in Japan. NSX and Integra are Honda models. Toyota introduced Lexus domestically in 2005. Their older Lexus models had Toyota equivalents, often as variants of the Toyota Crown which was their original luxury tier car.
That is accurate. Acura and Lexus were brands created for the US market. The original Integra was badged as Honda in Japan and Acura in the US, for example. A TLX or whatever is just a top trim Accord.
Lexus didn't enter the Japanese market as a brand until 2005, prior to that all Lexus models well sold under the Toyota moniker in the Japanese market. I'm not sure about Acura, but the GP's assertion is largely correct in its directionality.
I can confirm this is true for Acura. I owned an Acura Legend and the same car was sold in Japan (well, the right-hand drive version) as the Honda Legend. I had seen pictures of them online in the 90s, but happened to see a Honda Legend in person when I was in Tokyo some years later.
Acura is a brand made for North America. Just as in Japan, what you know as Acuras is sold in Europe as Hondas.
> It’s always fascinating to see how Westerners idealize Japan on platforms like HN
Most HNers tend to be in their mid-30s to 50s so a lot of Japan-philia does appear to stem from an older mental image from the 1990s to 2010s.
> This essay on Japan's corporate diversification and physical tacit knowledge is an interesting read. However, as an East Asian, my assessment is that this system is heavily driven by Japan's unique, subtle classism. It's a highly collectivist society with strict age-based milestones and immense pressure to secure traditional employment. In Japan, your corporate affiliation often dictates your social standing...
The Japanese Keiretsu and later Trust Bank model is the norm in South Korea, Taiwan, China, and other Asian countries as well due to a mix of colonial, financial, and policymaking ties.
I like Japan for its cuisine mostly.
And people take pride in what they do, and try their best.
This is still a form of orientalism which OP is pointing out. Japanese people don't work better or worse than anyone else, and most commenters think all yellow faces look the same and thus can't differentiate between a Japanese, Chinese, or Vietnamese working behind the counter at a konbini let alone other services jobs where Westerners are most likely to interface with.
You are correct. Japans system was ahead of its time back then and was heavily imported into Korea. The flaws I pointed out are not strictly a Japanese problem it's really an issue shared across all of East Asia.
Can you expand on what's new post 2010?
1. Japan has become much "chiller" from a work culture perspective, with hours worked being comparable to those of the UK and Ireland [0] thanks to regulatory changes in the 2010s.
2. While conglomerates remain prominent, a new generation of large Western-style employers like Rakuten, Mercari, LY, SoftBank, etc have arisen and operate with Anerican style management, and the stereotypical "salaryman" lifestyle is on it's last legs.
3. Japan has quietly become an immigration driven society. A major reason behind the rise of Takechi's faction in the LDP as well as Sanseito is because of the post-2019 immigration boom [1]. Going from less that 1% overseas born residents to around 4% in roughly 5 years was a massive shift socially and impacted both blue and white collar employment in Japan.
4. Japan has culturally shifted to be accepting of an offensive military posture. You see this shift in Japanese media (eg. SnK, Nippon Sangoku) as well as Japanese foreign policy [2]. A more muscular Japan with a chip on their back is arising.
5. Younger Japanese are more open to calling out tourists and Westerners when they do weird or weeb s#it or treat Japan as their own Disneyland. They now treat Westerners the same way they treat other non-Japanese people now. The mindset shift I've noticed is an "us" (which now includes Koreans and Taiwanese) versus "them" which now includes everyone else.
----
Ironically, I think contemporary South Korea is closer to the image that HNers have of Japan versus Japan today.
[0] - https://www.oecd.org/en/data/indicators/hours-worked.html
[1] - https://www.cw.com.tw/article/5136468
[2] - https://www.foreignaffairs.com/japan/return-japanese-hard-po...
I'd largely question the accuracy of point 1 IN PRACTICE. Japan is notorious for uncounted and unpaid overtime, vacation days no one takes, and paternal leave you'd better not think of if you don't want to instantly become your division's outcast. I worked in a host of countries, including the UK and Japan (the latter about a decade ago - I'd be surprised if things had diametrally changed since that time). The actual work hours are not remotely comparable. (In fact the UK is one of the locales where I worked the least in terms of actual hours. Much less than in France, where they're supposed to be slackers... So generally I call BS on these stats.)
See, this is the issue. Karoshi/unpaid overtime in white collar work largely ended as a practice in Japan by the 2010s due to legal changes and enforcement via the 2018 labor reforms.
Yet you see the same tropes peddled ad nauseum. I may as well use the same priors for Poland in 2026 as I would in the 2000s then when it was Europe's punching bag.
The reality is stuff changes but a lot of Westerners (and especially Europeans) just don't travel much outside of Europe to see these shifts.
Nothing of this is particular to Japan, it's only the way it manifests in Japan that is adapted to its rich culture. Zombie corporations, corporations with ties to the government, family owned companies, monopolies, cronyism, all of this has been a staple of Western capitalism for centuries.
I've thought a lot about (and I don't mean this in a derogatory way) the weebu phenomenon. I remember encountering it first in college when I met people who were in an anime club. It wasn't for me but my philosophy generally is "let people enjoy things".
I've wondered how much of this stems from being disaffected by the modern (particularly Western) world. I worked with an ethnically Chinese guy who was a massive weebu and that always struck me as odd given the Japan-China history.
Japan has always rubbed me the wrong way: misogyny, racism and denial about Japanese war crimes in WW2 mostly. Also the salaryman work culture. I see videos from Japanese workers and life honestly looks miserable. It's also a country that is dying. The samurais, ninjas, Ronin, shoguns, etc are cool though. Japanese history is fascinating.
My hot take here is that China is actually what people idealize Japan to be. China has the most competent government in the world and it's not even close. It's not problem-free. Nowhere is. But the transformation in the lives of ordinary Chinese people over the last few decades is unbelievable. China pulled ~800 million people out of extreme poverty.
It could be worse than Japan too. I think South Korea is that. As a non-Korean from the outside looking in, South Korea looks like a dystopian run by aristocratic (chaebol) families where the birth rate is the lowest in the world and it's in fact so low that if nothing changes, South Korea simply won't exist in 3 generations.
Are you angling for an 'Honorary Korean' title? You know too much about Korea
The core of the article is buried 60% down:
> you have a firm that has lots of lifetime employees who can’t be fired, and whose skills are tailored to what your firm needs rather than to a particular occupational category transferable to any employer
> the system only makes sense if the company is also insulated from outside pressure
> the J-firm [Japan-style company], run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
> And that basic impulse toward survival is why Japanese companies are so insistent on diversification. If you’ve made a commitment to keep people employed for life, then you need to create jobs for them if their current jobs stop making sense
> If you’re not very worried about profitability, and have lots of well-trained generalist employees, then it makes perfect sense to reinvest your company’s earnings by expanding into new industries
One other interesting fact about Japanese companies is that their CEOs get paid far far less than Western companies.
Checkout this article that talks about it: https://www.theatlantic.com/business/2010/07/5-lessons-of-ja...
edit: added article.
As it should be. The pay gap from CEO to bottom tier worker is now obscene (21 times in 1965 and ~285 today). It's the foxes looking after the henhouses.
Not sure why the left cares so much about CEO to work pay ratio these days, especially when Marx himself recognized that ownership was the true source inequality. A CEO is just a really well paid worker. Even CEOs who become billionaires do so from capital appreciation more than compensation.
Because Marx theories do not hold up to reality, and most people can plainly see it.
How is it working for the US to have every company mostly owned by the general public's retirement funds?
>How is it working for the US to have every company mostly owned by the general public's retirement funds?
It’s working quite well for retirees.
> Because Marx theories do not hold up to reality
Sure, but ownership being the root of inequality was the one thing that he was actually correct about. CEO to worker pay ratio is something that is completely irrelevant. Companies spend orders of magnitude more money on its shareholders (dividends, buybacks, and reinvestment) than executive compensation.
Global societies were still mostly agrarian in his time. His analysis doesn't work well for the modern era with <5% engaged in farming. Central planning won't work. You need distributed decision making to be flexible for changing circumstances. You need capital for industrialization and you need a cadre of people who can take risks to invest surplus capital into new ventures. The large disparity in wealth is a problem, but some is necessary.
Maybe others see it differently than I do, but the actual spending isn't so much the issue. It's the fact that these people with so much money exist at all. That much money translates to a tremendous amount of power which allows them to bend the law to their will.
The writing is a joy and the context is useful. Hardly buried.
I clicked on the article to learn, "why Japanese companies do so many different things," and then got hit with pages of low-bitrate context, such that my eyes started glazing over and it was difficult to find the answer to the question. So I appreciate their compression, or at least pointing to where the answer is found.
Yeah not everyone is a reader these days
The answer is much more deep than those bullet points provide. Hard disagree.
Yes, thank you for compressing it. They start their answer with:
> Here is the answer I want to suggest: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.
Which is then backed by some economists saying something similar (generally), but all of which completely ignores Japan’s specific history.
As a better example Of examining Japan, here’s a look at Japan’s monopolies, how they were broken up, and partly how that effected the future of their industry:
https://m.youtube.com/watch?v=5_-Ac68FKG4
While things like the expectation of lifetime employment (or at least very long tenure) may sound appealing, it also creates a job market with very low fluidity. In practice, if you miss that narrow “fresh out of school” hiring window, you can end up facing pretty unfavorable prospects later on.
People can still get hired mid-career, of course, but many companies traditionally hire based more on long-term potential than immediately usable skills, since they expect to train employees heavily through OJT. That also means the number of openings for experienced hires can be relatively limited. And because of the seniority-based structure, even experienced workers may end up starting near the bottom anyway.
There was an entire generation of people who missed that initial hiring window because of economic downturns and hiring freezes, and many of them still struggle to land stable permanent positions even today.
Things are gradually changing, but many structural assumptions are still there. For example, parts of the legal and employment system are historically built around the assumption of lifetime employment, which also makes it difficult for companies to dismiss permanent employees once they are hired.
> So why are Japanese companies like this? Why do they do so many different things? And how do they manage to do so all those different things so well?
Author says: Japanese companies excel in lots of very different domains because it’s inherent in how they’re structured.
My response: No mention of culture? Sure maybe it is because of how they are structured somewhat, but it's also because of their culture. Japanese are masters of their craft. Look at the best pizza place in the world, the best burger maker in the world.. they are not in Italy or America, but in Tokyo.
Japanese take pride in their work and master their craft. A small pizza-shop owner in Tokyo doesn't make great pizza because of how it was structured. It's cultural. Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin).
Look at all the foreign-things Japan is now famous for: Japanese Whiskey, Denim, bread making, Japanese curry, etc.
> Japan takes Western concepts, and applies an obsessive cultural devotion to mastery (Shokunin).
Thank you for explaining this. I was alawys amazed how the japanese would take the cuisine from other countries and make it better in all aspects than the country that originated it.
My experience in American organizations is that products and services need to not just make money, but make a lot of money. There is zero appetite for things that make a little bit of money relative to the cash cows of the company. You could say this is in part focus, but it is also based on internal accounting. Small product lines are saddled with total company overhead costs even if they do not apply to said product or service. Not good or bad, but it can lead to strange situations where you have a successful product that everyone complains doesn’t make any money.
> zero appetite for things that make a little bit of money
For obvious reasons, the expected rate of return needs to clear the hurdle of the risk-free interest rate. This puts a pretty high floor on activity that is "worth doing". This is a mechanism by which the phenomenon of ZIRP diversifies economic activity.
The risk-free interest rate is a pretty low floor for returns though? At least in my experience with expectations of what counts as a profitable project.
The risk-free floor is around 4% these days. Because the return on any other use of capital must be risk-adjusted, the breakeven might be 6-7%. That is roughly a 3x higher rate of return than you needed to breakeven when the risk-free rate was ~0%.
Small absolute changes in risk-free interest rates cause many things to become unprofitable when the relative change in interest rates is large. A risk-free rate of 1.0% and 1.5% are both small but the latter is 50% higher than the former.
Yeah, but my experience with what is considered a profitable project is firmly in the two-digits percentage range. Anything single-digit would count as a fairly low floor.
> My experience in American organizations is that products and services need to not just make money, but make a lot of money.There is zero appetite for things that make a little bit of money relative to the cash cows of the company.
Is your experience in the same America where Meta is losing another 4-6 billion $ this year in AR/VR business unit, after losing 19 billion $ last year. Similar with Google's and Apple's AR/VR unit which also consume a lot of money in R&D(funding a lot of high paying jobs) and not make any money, yet.
So sure, there's no risk appetite for things that make little money, except for all the evidence proving the contrary.
There is zero appetite for things that make a little bit of money, but in big tech there is limitless appetite for things that lose money but might make a lot of money one day.
If it ends up AI only makes a little profit annually in the longer term the whole thing collapses on itself.
>There is zero appetite for things that make a little bit of money
Because "making little money" is a commodity business activity, overrun with competition from Europe and Asia.
So why would you ever want to compete in the race to the bottom of "little money" when you have the highest labor cost in the world? It makes no business sense.
You go into "all or nothing" moonshots because Europe and Asia can't compete there. Especially when you have the world reserve currency as the infinite money glitch cheat code (while it lasts).
> American firms, for example, tend to prioritize focus above all else: it would be bizarre for an American paper mill to also operate a concert hall and an airport catering business
I don't think Kimberly-Clark ever opetated a concert hall, but they did run an airline (Midwest Express) and K-C Aviation was an airplane servicing firm.
It's not that American companies don't operate in diverse businesses. Maybe they're less likely to, but it happens when the need arises... if there's no reasonable supplier for an important input, then you start one, or you ask an existing supplier if they can start a new line of business that's somewhat related.
The headline example is that Toto, known as a maker of ceramic toliets, is making a lot of money making specialty ceramics used in semiconductor manufacturing. Which yeah, ceramic manufacturer makes ceramics.
The US business market does like to spin-off divisions when they are successful and can be independent.
Yeah, we actually had our own era of “conglomerates” - they were very big from the 1960s through 1980s. Companies like ITT, Cendant, Gulf+Western, GE — formed from tons of acquisitions, sprawling across completely unrelated industries.
At one point in the 1990s, you could buy a toaster from the same company that makes airplane engines, MRI machines, and produces “Saturday Night Live.” And you may have financed that toaster through their financial arm (GE Capital). Eventually the many lines of business were spun off from companies like this.
What came next was a very different type of consolidation - companies like Comcast, Chevron, and the current “AT&T” who went from being regional players to buying as many other companies just like themselves in order to maximize economies of scale - they’re huge but really just do one or two very closely-related things.
A great example is the bowling lane people AMF, who have over the years made things like pinsetters, jet-skis, motorcycles, scuba gear, shovels, and nuclear reactors. All spun in and out of the company over its life
There have been conglomerate fads from time to time in American business. Interestingly ITT
https://en.wikipedia.org/wiki/ITT_Inc.
used to have a big position in hotels and just about everything else and it trained quality movement advocate Phil Crosby
https://en.wikipedia.org/wiki/Philip_B._Crosby
Asian countries seem to have a different approach to diversification. In the East it is the companies that diversify while in the West it is the shareholders that diversify. So Bill Gates will not tell Microsoft to start farming, but he probably does have farms in his portfolio.
> the J-firm, run by its employees and largely indifferent to the interests of shareholders, exists simply to continue existing
I don't know if all companies should be run like Japanese companies, but there's something very heartwarming about this. Some companies exist for the purpose of employment, and that's okay. In fact it's admirable and makes me want to cheer.
I do also think there's a charm to this model but there's a real cost also with Japan's economy stagnating compared to the United States in the last 30 years.
There’s also a real cost to the system in the United States as well. As companies pivot people get left behind. And we’re potentially going to see with LLMs a large collapse in employment that corporations don’t even being to consider their responsibility. I’m not suggesting one is superior but they do both have their downsides.
That is because of population aging. Despite the US importing effectively endless amounts of young people, per capita income growth for working age population since the 1990s has been identical between US and Japan. I am unable to say why exactly but it should be obvious.
It is important to note, however, that the starting point is very different. The idea of employees robbing those evil shareholders sounds good but has resulted in capital markets that effectively do not function. Tidying up that mess will not be simple and improving equity markets will go a long way.
Also, the structure of Japan is a function of US policy after WW2 to dismantle the zaibatsu. In every single other historical case that I am aware of the result of "employee-friendly" policies has resulted in the kind of permanent underclass that people fear, incorrectly, that AI will lead to (i.e. Germany). It is a known bad idea. Japan avoided this because all the wealthy people's assets were taken, this didn't happen in other countries (i.e. Germany) which led to significant financial instability/risk/inequality (Germany also has inequality within a completely stagnant economic system, which is different from inequality in a system where the composition of wealthy people is continually changing...Germany's billionaires are a combination of people who mysteriously got rich in the 1930s very quickly and people who have been rich since the 10th century).
Japan is interesting but it is a complete outlier. Even with their relatively good relative economic performance, they could be producing absolute-terms growth that is double or even quadruple where it is now. Comparing middling economies like Japan or Western Europe with countries growing the same rate and per-capita incomes that are double is a misunderstanding of potential. Average economic performance should be double the US consistently for multiple decades.
Perhaps, but in terms of the average Japanese persons day to day experience it doesn't seem so bad. They outrank us in almost all QoL measures
* Japan is ranked 61st on the World Happiness Index. The US is 23rd.
* Japan is ranked 23rd on the Human Development Index. The US is 17th.
* However, Japan is ranked 8th on the US News Quality of Life Index. The US is 30th.
Grass is greener on the other side.
https://data.worldhappiness.report/
https://en.wikipedia.org/wiki/List_of_countries_by_Human_Dev...
https://www.usnews.com/news/best-countries/best-countries-fo...
Japan is getting poorer. People online love to talk about American stagnant wages, but Americans are considerably richer than they were 20 years ago. The median American earns 20% more in real terms, and even the bottom quintile of earners in America has increased their inflation adjusted earnings by 15%. In the same time period, the median Japanese inflation adjusted earnings is down 2.8%.
Compared to 20 years ago, Japanese people travel much less (millions fewer can afford to go overseas). Residential energy is 35% more expensive per kwh, compared to only 5% in the US. Food as a portion of monthly Japanese spend is 48% more expensive than it was 20 years ago. Despite millions of vacant dwellings, the home ownership rate is slipping. They earn less and they spend less.
Tokyo may seem quaint to American visitors clanking down their metal Chase travel credit card for more sushi, but for the typical Japanese, although they take it with grace and in stride, they have mired in stagnation and degrowth for a generation.
Frankly I think any QoL measure between a western and a Japanese life are meaningless.
If you’ve ever worked for a Japanese corp under a Japanese boss, you would basically experience that your life is hell. As a westerner we are even subjected to far lesser rules and customs than a Japanese, and yet to me it still felt far more stifling and unbearable than any western company I worked for. Western companies have different failure modes, but intense unspoken micromanagement and stupid expectations was never one of them.
And I was a supposed “subject matter expert”, to be treated better than rank and file. That said, this clearly works for Japanese people, many of them are happy, I think they would be miserable under a western firms “do whatever the f you want as long as you get results” culture. To each their own.
Japan in some sense is stagnating if you compare it to a GOAT like US, but Japan of 1910s was also probably stagnating compared to US, in its own terms Japan is doing fine and their political situation is much more civil. So GG to them
They work crazy long hours (the last of which every day don't do much at all for productivity), which is really bad for QoL. Though I hear that the situation is improving.
Most of Japan stagnation was the result of brutal pressure from the US in the 1980s that led to a series of fiscal and monetary choices that removed a lot of Japan's competitivity.
The median age of Japan went from 37 in 1990 to 50 in 2026. That's an insurmountable headwind. Soon, half the country will be elderly. That's no way to run a vibrant dynamic economy.
Apple is basically this already.
A hypothesis I had on why some countries have more conglomerates than US is that access to capital and funds are much harder in those countries in comparison to US. When access to capital is comparatively more limited, more innovations falls to the party that has comparatively easier access to capital (conglomerates) and therefore reinforcing their position as conglomerate.
I, from a country with few conglomerates, found the Commoncog explanation for why they exist to be interesting
https://commoncog.com/how-to-become-an-asian-tycoon/
https://commoncog.com/the-asian-conglomerate-series/
The Japanese economy is also famous for a macro economic stagnation for almost 40 years, a mild deflationary spiral, and companies hoarding cash on balance sheets rather than return it or invest it.
There are definitely world class companies in Japan, but also broad systemic problems with incentives
> In 2007, workers at a Toyota plant in Kentucky pulled the andon cord 2,000 times per week; workers at a Ford plant in Michigan pulled it just twice a week. You can’t get all the benefits of a single practice without installing the complete bundle.
This example seems to contradict the author's main point.
The Toyota factory in Kentucky got some of the benefits of the Japanese approach without importing every practice. They might have had a more Japanese organisation than Ford, but surely they didn't replace American practices in matters outside their control. They still had to deal with American approaches to labour practices, banking, local government, etc., all of which are called out in the article as necessary for the J-mode to flourish.
I'm not sure I'd say a company that makes ceramic toilets also making a tool for memory chips... which is also ceramic is really 'different things'. They're clearly a ceramic company. Different tolerances, but similar expertise.
Now the paper company got into the hotel business seems a far better example. No idea how that happens.
> Now the paper company got into the hotel business seems a far better example. No idea how that happens.
That's easy. They have corporate visitors to their corporate offices and the available hotels are insufficient. They decide to just make their own hotel.
There are many corporate campuses with an embedded hotel. Some run by the corporation itself, some with significant management contracting with the corporation, and some independently managed.
Large corporation has a small travel business is very common.
And don't the Japanese railways make all their money from the real estate around their lines, or some such?
I almost feel like this topic deserves a further deep dive. This seems like a more profound difference of cultures: Japan, where failure is stigmatized and less of an option, optimizes for survival, and the United States, where failure is common, optimizes for growth(? wealth? fame?).
The pattern might also hold at a broader level. The United States is a relatively young nation that has seen plenty of internal strife (plenty of civil wars including The Civil War) whereas Japan has existed in some form for 2,600 years.
Probably too deep to consider, but the thought hit me that trees and plants (like these J-firms) grow multiple branches as quickly as they can because they are optimizing for survival.
Right, the survival bit made me remember this: https://en.wikipedia.org/wiki/Ichimonjiya_Wasuke
I might be gatekeeping, but I consider a mark of actual healthy capitalism, to be creative destruction, the biggest companies of 1 generation are destroyed by the next generation and the churn keeps going on. Nothing ever lasts except the system.
By this criteria, in the entire world, only US and UK seem to do capitalism properly. Whether the current age of tech companies survive till 2050s is to be seen, (we are already seeing signs of OpenAI, Anthropic joining them but it is to be said if the existing monopolies of say Microsoft will be disrupted).
In other countries, big companies have been the same for hundreds of years, from Japan to Germany to Korea to India. This is no longer capitalism as much as it is some soft form of Feudalism, where the same set of families hold power for generations at a time till some major fortune swings occur.
And even US and UK are very questionable by now. The last time they had something resembling capitalism was sometime before Roosevelts New Deal.
I like watching Paolo fromTOKYO
He is part of a great new generation of entertainers. Youtube is great to see how the rest of the world lives.
The one key thing that is completely incorrect is there is no horizontal hierarchy. Everyone has a boss, a boss that you must not suggest is wrong. I'm very fond of visiting Japan but having worked there, found it impossibly challenging to get anything done. When things work well it is great and the focused culture produces some great things, but when it fails it leads to catastrophe as no one is able to voice early in the process. Issues are only discovered once they are serious.
This paragraph on organizational model is super relevant to understanding how tech companies are responding to LLMs today.
> Aoki’s key insight was that the J-mode had a comparative advantage in environments of moderate volatility: situations where conditions changed frequently enough that rigid central plans would be outdated before they were executed, but not so radically that only top-down strategic intervention could cope. In an environment of stable, predictable demand, the H-firm did fine; in an environment of extreme disruption, where the whole product line had to be rethought, centralized authority was indispensable, and the H-firm also did fine. But in between—where the challenge was to make constant small adjustments in a changing but recognizable paradigm—the J-firm excelled.
See for example https://aakashgupta.medium.com/microsofts-ceo-just-became-a-... or https://www.bloomberg.com/news/newsletters/2025-06-12/zucker...
You can pry my Mitsubishi pencil sharpener from my cold dead hands.
They’re an absolute disaster but I do love that the companies are actually investing in expanding into new things. Shareholders don’t want that, they want cold hard cash. Hence all the buybacks and PE firms destroying companies.