Hooked on Dr Hirofumi Uzawa.
Hello. I'm Mike, a lawyer living in Hong Kong.
The idea of using a real estate fund to renovate an old house and create a group of holiday homes is pretty cool. The concept is...
The primary attraction will be the original Japanese landscape that has remained unchanged for more than 100 years.
Vacant houses will be purchased one by one to create a group of villas comparable to residences in the world's most exclusive resorts.
As the scale of the project expands, it will be recognized as one of the world's leading recreational dest inations.
The asset value of the villas will increase.
The project will become even more attractive and easy to invest in.
Excellent!
The more I thought about it, the more I began to have doubts.
Can the city's development through property investment sustain it in the future?
The structural cause of the vacant houses that exist today in the first place is that no one lives in them anymore, as inheritance has continued for two or three generations, and grandchildren and great-grandchildren have come and gone. Even if a real estate fund buys a vacant house, the owner is only a third party, the fund investor. Since the investor's objective is investment income, if the income does not rise as expected, the fund will be dissolved at a loss, and the houses as investment properties will be resold to a third party or disposed of. If the house is profitable, it will be sold while it is still a good profitable property to earn capital gains, so the house will be sold to a third party in any case. Once sold to a third party, sooner or later the current structural vacancy problem will resurface.
Furthermore, fund investors pursue short-term profits, which is incompatible with long-term investment plans such as infrastructure development.
The development of resorts by capitalists and major developers took place all over Japan in the 1980s at the height of the bubble economy.
For example, N, a typical ski resort during the bubble era. staying at NP hotel and skiing at N ski resort. Even if the lifts were crowded and I could only ride a few times a day, I would drive there overnight while listening to Yumi. There were several resort condominiums built around the N ski resort.
At the time, ski resorts were in their heyday and I thought this glamorous world would last forever, but with the bursting of the bubble economy and the declining birthrate, the resorts quickly went out of business. The condominiums in the vicinity were also for weekend and seasonal use, so many of them are uninhabited after the ski boom has passed.
FOR EXAMPLE, I. PLATEAU I, WHICH IS FAMOUS AS A TOURIST DESTINATION, WAS ALSO A POPULAR AREA DEVELOPED AND SOLD AS A HOLIDAY HOME DURING THE BUBBLE PERIOD, BUT NOW THERE ARE AN OVERWHELMING NUMBER OF EMPTY HOUSES ON THE MARKET AT SURPRISINGLY LOW PRICES. THERE MUST HAVE BEEN MANY FACTORS, BUT ONE OF THE MAIN ONES WAS THAT THE BUYERS WERE MAINLY FAMILIES WITH SMALL CHILDREN LIVING IN TOKYO. WHEN THE CHILDREN WERE YOUNG THEY USED TO COME HERE EVERY WEEK TO ENJOY NATURE, BUT AS THEY GOT OLDER THEY STOPPED PLAYING WITH THEIR PARENTS, AND AS THEY GOT OLDER THEMSELVES THEY STOPPED COMING, AND THE HOUSE EVENTUALLY BECAME EMPTY.
On the other hand, a representative of a successful holiday home resort is Karuizawa. This place was developed during the Meiji era (1868-1912) and has gradually grown, so it has already established itself as a holiday resort. There is also life as a town, and with the recent arrival of the Shinkansen bullet train, the area has become a commuter zone to Tokyo, and people are settling down. Even if a house becomes vacant, it is traded at a resale price that makes economic sense. However, recently there have been large shopping malls and major capital developments in the area, so we do not know how this will develop in the future.
WHEN WE CONSIDER THIS SETO INLAND SEA TOWN AS A REAL ESTATE INVESTMENT PROJECT, WHAT MAKES IT DIFFERENT FROM N OR I? OF COURSE, IT IS NOT A SKI RESORT AND WE ARE NOT BUILDING HOTELS OR CONDOMINIUMS, BUT THE BASIC STRUCTURE REMAINS EXACTLY THE SAME: A CAPITALIST INVESTS CAPITAL TO DEVELOP A HOLIDAY HOME AND THEN EARNS A PROFIT FROM IT IN ORDER TO RECOVER THE CAPITAL INVESTED. IN THAT CASE, THERE IS A GOOD CHANCE THAT IT WILL BECOME A SECOND N OR I. THERE IS NO GUARANTEE THAT IT WILL BE KARUIZAWA.
We're in trouble.
I was vaguely thinking about this when I came across this book on economics and business.Dr Hirofumi Uzawa I was reading some books on economics and business when I came across
It is not my place to tell you how great he is, so I will leave that to google. One thing I would like to mention is that although he is said to be "the Japanese economist who came closest to winning the Nobel Prize", I think he was more like "the Japanese economist who should have won the Nobel Prize". In the 1960s he was working in the United States, where all of his teachers, colleagues and students won the Nobel Prize in economics. I believe that the only reason why he did not (and could not) win the Nobel Prize was that he left the University and returned to Japan, revolting against the Chicago School, which was then becoming the mainstream.
As an aside, the University of Chicago is famous for economics. It has produced several Nobel Prize-winning economists, known as the Chicago School. I went to law school at the University of Chicago in the 1990s, and the concept of "Law & Economics" was dominant there as well. Law classes always included a Chicago School economic perspective.
In a "Civil Law" class, there was a lecture on whether product liability should be borne by the consumer or by the manufacturer. The professor's explanation was not from the standpoint of legal responsibility or legal ethics, but from an economic standpoint: "Even if the manufacturer is held liable, the manufacturer will insure the product and pass the insurance premium on to the consumer, so this problem is not a product liability issue. The question is whether to put the burden on the individual consumer or on the consumer as a whole." I was freshly surprised to hear him say, "I am not sure if this is a problem for the consumer as a whole, or for the individual consumer.
Also, in discussing whether it is acceptable to intentionally break a contract, he said from an economic perspective rather than a legal-ethical perspective, "You should compare the economic benefit of fulfilling the contract with the economic benefit of breaking it. For example, if you make a contract to sell your land for $10,000 and a penalty of $2,000, and then someone comes along who wants to buy it for $15,000, you should pay the $2,000 penalty, break the contract, and sell it to a new buyer," I was honestly impressed by his explanation.
Now, I'd say, "That's not quite right.
I asked one of my friends in the economics department if he remembered Mr. Uzawa and he said that he had taken a class in a big classroom in his first year. The classroom was full because it was a famous teacher's class, but when he entered the classroom, he suddenly started drawing equations all over the blackboard, and after almost filling it with equations, he thought about something, muttered that it was different, and erased it all. He laughed and said it was a strange class and he didn't understand it.
For 50 years, Dr. Uzawa disagreed with, or rather disliked, the Chicago School's idea of placing economic prices on everything in the world and evaluating and judging things according to their value.
There are some things in this world that should not be traded as commodities. They are farmland and forests, water supplies and roads, education and healthcare. They are called ' social common capital '. This is the embodiment of "institutionalism", not of "capitalism", where everything is owned by individuals, nor of "socialism", where the state controls everything in a planned economy.
In the 20th century, the conflict and confrontation between two economic systems, capitalism and socialism, has threatened world peace and produced numerous disastrous results. (omitted) When we look beyond this confusion and chaos to open a new vision for the 21st century, the most central role is played by the idea of institutionalism.
Institutionalism, which goes beyond capitalism and socialism, seeks to realize an economic system in which the human dignity of all people is protected, the independence of the soul is preserved, and civil rights are enjoyed to the fullest extent. （Social common capital is a concrete expression of this institutionalist concept. (From " Social Common Capital " by Hirofumi Uzawa, Iwanami Shinsho.)
It was numbing. I sympathised intensely. Oh, yes, you're right. It's not a choice between the West and the East. Right now, the west is enjoying the victory, but it's too late. There is actually a third way, neither west nor east.
I was devoted to Dr. Uzawa and read his other books. I also read books by other scholars and watched videos of conversations with him. In this way, the questions that had been bothering me for a long time gradually began to clear up.
To be continued next time.
