Don't Forget about Global Warming

It is extremely hot this summer in Tokyo.

From early July, the temperature has been over 35 degrees Celsius (95 degrees ) almost everyday. In Japan we call the night when the lowest temprature is above 25 degrees Celsius “a tropical night (熱帯夜),” and almost every night in July and August has been “a tropical night.”

It isn't only that the temperature is high but also that the weather is tropical. Thunderstorms bring sudden heavy downpours and lightnining almost every two days. The weather this summer in Tokyo is similar to that of Bankok. Honestly, I used to be skeptical about global warming, but after I experiensed this summer in Tokyo, I couldn't deny it. 

Before March 11, 2011 Japanese mass media always discussed global warming, but they've rarely talked about global warming at all this summer. This phenomenon isn't limited to Japan either. President Obama also used to talk about green energy revolution, but he seems to have forgotten about it.

Now, just two nuclear plants in Japan are operating, and no one knows when the other plans will restart, so it's quite difficult to reduce green gas emissions in Japan. I'm guessing that this is the reason why Japanese mass media stopped talking about global warming.

Shale gas in the United States is rapidly increasing as a source of natural gas.  President Obama may think that the shale gas industry is more important that global warming in the United States.

However, it is clear that the overall global temperature is rising. We shouldn't escape from the reality.

Don't forget about global warming.

Milton and the Chocolate Town: Milton Hershey’s Amazing life

I’ve just finished reading the book “The Emperors of Chocolate.”

As I wrote in my previous entries, “"Gibu Mi Chokoreito": Ration D Bars and Japanese Children” and “The Ethics of Protestantism and The Spirits of Chocolate,” this book is about the U.S. chocolate industry, focusing especially on the competition between Hershey and Mars.

I was interested in Milton Hershey, who was a founder of the Hershey Company. His life was full of amazing stories.

He was born in 1857 in rural Pennsylvania. His parents were Mennonites, who were similar to the Amish. His mother expected that he would be a farmer like the people in his community were, and he went to school just until fourth grade.

But he didn’t become a farmer, instead he established a candy maker. In 1893, he found that chocolate machinery was exhibited at World’s Columbian Exposition and he bought all of the equipment after the exposition. He became the first major chocolate maker in the U.S.

At that time, Milton Hershey didn’t know how to make chocolate, so he learned it through trial and error. In the end, he created a chocolate with unique Hershey’s flavor. Because of its flavor, Hershey’s chocolate became quite popular in the U.S., but they couldn’t sell it well abroad.

Although his chocolate was almost dominat in the U.S. market, Milton Hershey himself was rarely interested in business. Using the huge profit by his chocolate, he began to build the city Hershey, near his birthplace.

In the early twentieth century, Milton Hershey built not only his huge chocolate factory but also infrastructure of the city Hershey, like streets, transportation, water supply, a park, a swimming pool, a theater, a hotel, and a church, and he supported his factory workers to build their own houses.

Since he didn’t have any children, he transferred a great part of his assets to the Milton Hershey School Trust fund to support the Hershey Industrial School, where many orphans, who got a scholarship from the fund, studied.

The fund had a majority stake in the Hershey Company, so the Hershey Company virtually earned profit in order to support the fund. It is the ultimate philanthropy.

After his death in 1945, the Hershey Company changed. In his days, although the Hershey Company  didn’t do marketing, their chocolate sold quite well and earned huge profit.

But the competition in the chocolate market got more severe, and it got more difficult for the Hershey Company to support the city Hershey. And now, the Hershey Company is an ordinary “Fortune Top 500 company.” 

Someday, I want to visit Hershey’s Chocolate World and stay Hotel Hershey in Hershey, Pennsylvania.

I Bought a Sony Product After Such a Long Time

Recently, the performances of Japanese consumer electronics companies, such as Sony, Panasonic, and Sharp, are quite weak. Sony invented “Walkman,” but now Apple dominates the portable audio device market. Samsung is the world’s leading TV manufacturer, though Japanese electronics companies used to dominate its market.

In fact, there is no product that made by Japanese electronics companies, which I want to buy. Most Japanese products are high functional, but I don’t need these functions. Japanese companies don’t understand what consumers want and miss the point.

I’m using iPhone now, and it’s enough for me. I haven’t bought Sony and Panasonic products in these years.

I always listen to music by iPhone on my way to the office. On the weekend, I go swimming. I wanted to listen to my favorite music, but of course I couldn’t use iPhone in water. So I wanted to buy a Waterproof Walkman, when I heard it could be used in water. This product just hit my point.

In the end, I bought a Waterproof Walkman last weekend. I can’t remember when I bought a Sony product last.

I read the comments on the Waterproof Walkman on Amazon.com. Some said that it was perfect for swimming, but others said that water got into ears and they couldn’t listen to music well.

Last Friday, I tried it in water, and it was perfect for me to listen to music during swimming. I'm very satisfied.

Before I bought it, I used iPhone and an earphone, but the cable bothered me. Now I use it on my way to office, because it doesn’t have a cable. 

Waterproof Walkman isn’t high functional. Its memory is only 4GB, and it doesn’t have a liquid crystal screen. It is just compact and waterproofed, but it perfectly meets my demand. The point isn’t how the product is high functional but how it meets the consumer’s demand.

The original Walkman is the same as it. It was just compact. It didn’t even have a mike or a speaker, although there was no audio player without a speaker at that time.

I am wondering if Sony is really back.

The Age of Discovery in Europe and the Age of Tokugawa in Japan

As I wrote in the previous entry “Chocolate, Coffee, and Tea: The History of Globalization,” I have become interested in the history of globalization.


When was the beginning of globalization?

A historian pointed out that the empire of Mongolia made the Eastern and Western world unified and established world history. Marco Polo could travel from Venice to China in the thirteenth century through the territory of the empire of Mongolia. In this sense, the origin of globalization was the empire of Mongolia.

Aside from Marco Polo, there was few people actually traveling between the Eastern and Western worlds at that time, and Europeans had not reached America or “Zipangu”, which Marco Polo called Japan. Of course no Japanese people had arrived in Europe.

And then, the Europeans, who had been trying to find a more direct route to Asia, accidentally discovered America in the late fifteenth century. In the middle of sixteenth century, Portuguese with guns drifted down to Tanegashima, the southern part of the Japanese archipelago, as I wrote the entry “Spread of Guns in the World History.” 

Japan, “Zipangu”, which is located in the farthest area from Europe, was the ultimate goal for European in the Age of Discovery. Their arrival on Tanegashima meant that the whole world finally had been united. This was the beginning of globalization, I think.

In fact, the arrival of Europeans had great impact on Japanese history.

In the sixteenth century, feudal lords called “daimyo” (大名) were scattered and fought each other throughout Japan. After the Portuguese brought guns to Japan, Japanese artisans began to produce guns. These then quickly spread among the feudal lords engaged in battle. Guns transformed the way of battle, and only forty years after the arrival of guns, Japan was reunified by force.

The feudal lords competed with each other to trade with the Europeans in order to get gunpowder. Some of them converted to Christianity and Catholicism spread rapidly into Japanese people. Some Christian feudal lords called “Kirishitan Daimyo” (キリシタン大名) dispatched embassies to Rome.

In the early of seventeenth century, the Tokugawa Shogunate (徳川幕府) was established and a big rebellion of Catholic people occurred. Iemitsu Tokugawa, the third Tokugawa Shogun, decided to expel Portuguese and only allowed trade with Chinese and Dutch traders, because Dutch were not Catholic but Protestant.

In the age of discovery, European culture and technology to the world both eastbound and westbound. Portuguese arrival at Japan was, of course, eastbound. In the early of the nineteenth century, American whalers passed through Cape Horn to off shore of Japan in the Pacific Ocean, which they called “Japan ground.” This meant that the Europeans finally arrived in Japan in the farthest “west.” 

In the middle of the nineteenth century, the Californian gold rush occurred and Europeans literally “rushed” to the west coast of North America. The United States dispatched a fleet to Edo to request the Tokugawa Shogunate to open country. This caused the breakup of the Tokugawa Shogunate and Japanese modernization.

In this sense, the age of Tokugawa was the period between eastbound and westbound of European arrival at Japan, and after the sixteenth century Japanese history was deeply influenced by globalization.

Chocolate, Coffee, and Tea: The History of Globalization

I have just finished the book “The True History of Chocolate.”

Recently, I have become interested in the history of globalization, especially its origin, so I have been reading books about the history of commodities - such as coffee, tea, sugar, chocolate, whale oil, fur etc. - that were produced, traded, and consumed all over the world.

The origin of chocolate is Mesoamerica. In the Olmec, the Maya, and the Aztec civilization, chocolate was quite a precious drink. Basically, only noble people drank it and ordinary people could drink it only during rituals.

After Columbus reached the New World, chocolate spread mainly among aristocratic society and Catholic churches in Europe through Spain.

The episode in this book that I was most interested in is about coffee houses in the seventeenth century in London. In the middle of that century, three of the most major beverage, coffee, tea, and, chocolate, were introduced to England almost at the same time, and people in London drank them in coffee houses.

The origins of three of them are different. As I wrote, the origin of chocolate was Mesoamerica. Coffee is from Ethiopia and tea is from East Asia. It is no coincidence that they arrived at England simultaneously. Coffee, tea, and chocolate were the most important commodities in early globalization, and their arrivals in the seventeenth century symbolized the dawn of globalization in England. 

In the eighteenth century, coffee was most popular in three of them in England. Chocolate was characterized as southern, Catholic, and aristocratic, and coffee as northern, Protestant, and middle-class. Tea was quite expensive before India was colonized and tea plantations were developed in India. The bourgeoisie with “the protestant ethic and the spirit of capitalism” drunk coffee.

Before the nineteenth century, chocolate was basically drunken. In this century, Van Houten, Henri Nestle, Rudolphe Lindt, John Cadbury, and Milton Hershey, who ironically were not Catholic aristocrats in the Southern Europe but Protestant bourgeoisie in the Northern Europe, invented and manufactured the mass product of solid chocolate.

Next, I will read a book about the history of sugar.

Why Do Firms Exist in Market Economy

I think that Fridrich Hayek was one of the greatest economic and political thinkers in the twentieth century, who insisted that the collective intelligence of general public was better than the wisdom of elites. He supported market economy and criticized planned economy.

Basically I also believe that market economy works far much better than governments and governments should play just accessory roles, because market economy reflects the collective intelligence of general public and governments are based on the "wisdom" of elites.

But if market mechanism is more effective than any organization, why do firms or governments exist in market economy? Why do firms work better than market economy?

Ronald Coase answered this question in his book "the Firm, the Market, and the Law." His answer is "transaction cost."

In order to explain why firms exist and what activities they undertake, I found it necessary to introduce a concept which I termed in that article "the cost of using the price mechanism," "the cost of carrying out a transaction by means of an exchange on the open market," or simply "marketing costs." To express the same idea in my article on "The Problem of Social Cost," I used the phrase "the costs of market transactions." These have come to be known in the economic literature as "transaction cost." I have described what I had in mind in the following terms: "In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal and on what terms, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection need to make sure that the terms of the contract are being observed, and so on." Dahlman crystallized the concept of transaction costs by describing them as "search and information costs, bargaining and decision costs, policing and enforcement costs."

The Internet gave a great impact on the structure of transaction costs and firms should adjust themselves to it. This change brought the rise and fall of Apple and Sony. Now that Apple successfully adjusted to the new structure of transaction costs, but Sony failed it.

Drucker pointed out that the role of enterprise as follows.

Because it is the purpose to create a customer, any business enterprise has two ― and only two ― basic function: marketing and innovation. These are the entrepreneurial function.

In a sense, it's true. Apple has succeeded, because they concentrated in marketing and innovation. But at the same time, Foxconn also has succeeded, because they got the order of fabrication from Apple.

The key factor of success is to clear up their own position in the new structure of transaction costs. Any organization should identify that what cost they can save in the market economy.