September 07, 2017

Trust but financially verify


Mooching is a given in Japan. I don't mean the welfare state, which is pretty parsimonious. Nobody goes to Japan to "game" the welfare system. Or the medical system. Japan has universal health coverage, and holds down costs with price controls and by being a late adopter, especially of drugs and pricey procedures like organ transplantation.

In 2015, there were 58 total organ transplants in Japan, versus over 30,000 in the U.S. Though Japan is a great place to get an inexpensive MRI or CT scan (technology, natch).

No, I'm talking about mooching off one's friends and relatives. The term du jour is "parasite single." Though it is constrained by certain cultural boundaries. The most common (dramatically speaking) is clearing debts and securing loans. The latter is a recurring dramatic trope: person X cosigns for person Y, who then defaults putting X in a tight spot.

Thereupon follows the trope of running out on one's debts, something that is more plausible in a country where so much of the financial system remains cash-based and bankruptcy is seen as the worse of the two alternatives. A national ID number system was only recently introduced.

A recent NHK morning melodrama began with the family decamping to the Noto Peninsula (the far side of the Moon) after the father defaults on a loan. It ends with him defaulting again (because his guarantor turned out to be crook), except this time he goes through a formal bankruptcy. This is depicted as the higher road but a tougher choice than in the U.S.

In any case, considering the kind of high-tech business he was in, in the U.S., he would have secured venture capital to start with, and at worse would have had to give up a controlling interest in the company. But the whole venture capital concept—giving money to complete strangers based on the strength of their ideas—hasn't really caught on in Japan.

Only recently has become possible to rent an apartment in Japan without a co-signer and the equivalent of a year's rent in advance. In the current NHK morning melodrama (which takes place during the 1960s), a girl renting a room in a boarding house (not an apartment) has her previous and future employer co-sign the lease.

The U.S., by contrast, because of its heterogeneous nature, evolved a "trust but verify" financial culture that makes it possible to invest in a person's resume rather that in who he's related to, and doesn't stigmatize risk-taking as long as the risk is understood. The venture capitalist accepts from the start that nine out of ten investments will fail.

This gets back to the intricacies of the mooching culture, which leads people to blindly trust "relations" even when the relations may turn out to be strangers. The result is an epidemic of what's called "Ore, ore" ("It's me") fraud. It's gotten so bad at times that police have been stationed at ATMs to ask the elderly why they are withdrawing money.

And yet, the deeply-seated cultural inclination, especially among the older generation, to trust "family" and to avoid public scandal, has made these crimes surprisingly difficult to curtail in a country that can rightfully boast of having one of the lowest crime rates in the world.

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