Given the widespread destruction, fires, and flooding, I doubt anyone expected any less than a death toll in five figures in the catastrophe that struck Japan this week. In fact, it might be a surprise if the figure stays this low, relatively speaking — but it won’t be an accident if it does:
People across a devastated swath of Japan suffered for a third day Sunday without water, electricity and proper food, as the country grappled with the enormity of a massive earthquake and tsunami that left more than 10,000 people dead in one area alone.
Japan’s prime minister called the crisis the most severe challenge the nation has faced since World War II, as the grim situation worsened. Friday’s disasters damaged two nuclear reactors, potentially sending one through a partial meltdown and adding radiation contamination to the fears of an unsettled public.
Personal stories of tragedy like this make the overall figures a misery that is really impossible to conceive:
In Rikusentakata, a port city of over 20,000 virtually wiped out by the tsunami, Etsuko Koyama escaped the water rushing through the third flood of her home but lost her grip on her daughter’s hand and has not found her.
“I haven’t given up hope yet,” Koyama told public broadcaster NHK, wiping tears from her eyes. “I saved myself, but I couldn’t save my daughter.”
So far, Japan has confirmed 1200 deaths, but that figure will rise rapidly as rescue and recovery teams begin their work. Only 739 are listed officially as missing, an absurd total under the circumstances, but that number will quickly escalate as well. Power, water, and communications have collapsed in the hardest-hit areas, which means that deaths and disappearances can’t even really be counted reliably at the moment.
Japan had already struggled economically before the quake, but remained one of the world’s wealthiest nations. That will have a big impact on their ability to recover, according to economic researchers. Wealthy nations have a better ability to adapt quickly to changing conditions, which allows them to recover fast from catastrophes, as Reuters reports, but the researchers and Reuters may have missed the forest for the trees in their analysis:
But researchers who have studied similar disasters in rich countries reach a reassuring conclusion: human resilience and resourcefulness, allied to an ability to draw down accumulated wealth, enable economies to rebound quickly from what seem at first to be unbearable inflictions – be it the September 11, 2001, attacks on New York or Friday’s 8.9-magnitude earthquake, the worst in Japan’s history.
Japan itself provides Exhibit No. 1 in foretelling the arc of recovery. A 6.8-magnitude temblor struck the western city of Kobe on January 17, 1995, killing 6,400 people and causing damage estimated at 10 trillion yen, or 2 percent of Japan’s gross domestic product.
The importance of Kobe’s container port, then the world’s sixth-largest, and the city’s location between Osaka and western Japan made it more significant for the economy than the more sparsely populated region where the latest quake and tsunami struck. Extensive disruption ensued, yet Japan’s industrial production, after falling 2.6 percent in January 1995, rose 2.2 percent that February and another 1.0 percent in March. GDP for the whole of the first quarter of 1995 rose at an annualized rate of 3.4 percent.
“Despite the scale of the disaster, it is hard to find much evidence in the macroeconomic data of the effects of the Kobe earthquake,” said Richard Jerram, chief Asian economist at Macquarie in Singapore and a veteran Japan-watcher.
Indeed, Takuji Okubo, chief Japan economist at Societe Generale in Tokyo, noted that Japan’s economy grew by 1.9 percent in 1995 and 2.6 percent in 1996, above the country’s trend growth rate at the time of 1.5 percent. Private consumption, government spending and, especially, public fixed investment all grew above average in 1995 and 1996, Okubo said in a report. By analogy, the medium-term impact on growth from the latest quake was also likely to be positive, he said.
The key to faster recovery is wealth and the ability to adapt, says one researcher who has studied the outcomes of disasters in 151 countries over a 43-year period:
But Mark Skidmore, an economics professor at Michigan State University, attaches greater importance to a rich society’s capacity to constantly adapt to the risks it faces. In the case of Japan, prone to regular earthquakes, this means improving its disaster response systems and adopting the latest techniques to help buildings withstand shocks.
Well, the question here is whether wealth allows for adaptation — or whether an economic system’s openness to adaptation leads to the wealth necessary to recover from disasters. The wealth of Western democracies based on capitalism owes its existence to economic and political environments where capital could flow freely to innovation and adaptation. Centrally-planned economies do not have that allowance for innovation and adaptation, even the so-called “enlightened” environment in China, where the reins have been loosened on central control but are far from removed. Furthermore, a system unused to adaptation in normal practice would hardly have the skills or the players necessary to implement that adaptation under crisis conditions. In fact, those systems tend to punish those with talent for innovation and management of capital outside of an unaccountable bureaucracy, which makes their presence rare in catastrophic conditions in centrally-controlled economies.
Massive application of capital will repair a lot of damage, but only if that capital gets applied wisely, efficiently, and by those used to making those decisions. It’s the economic freedom that creates the wealthy systems that can apply that capital, and it’s the economic freedom that produces the talent necessary to make massive applications of capital successful. Let’s not lose sight of the true prerequisite in this equation.
Let’s also not lose sight of Japan’s example of preparation and resiliency. In most other countries, after an earthquake registering 8.9 on the Richter scale and followed by a series of massive tsunamis, explosions, and nuclear emergencies, the death toll would already be in the high six figures, if not millions. The Japanese prepared for this eventuality for decades, and spent fortunes in building their nation to survive it. Those decades of preparation saved hundreds of thousands of lives this past week. The catastrophe will galvanize them into unity and purpose, and they will emerge a stronger nation for it.