For fifty years after World War II, a favorite theme of writing on Japan was «modernization» – how quickly Japan was changing, catching up with, or even advancing beyond other nations. Over time, Japan became Exhibit A in various theories of modernization, with writers fascinated by how traditional education and culture had contributed to making Japan a successful – some thought the world's most successful – modern state. However, it is a central thesis of this book that Japan's crisis of the 1990s springs from exactly the opposite problem: a failure to modernize.

Japan's ways of doing things-running a stock market, designing highways, making movies-essentially froze in about 1965. For thirty years, these systems worked very smoothly, at least on the surface. Throughout that time Japanese officialdom slept like Brunnhilde on a rock, protected by a magic ring of fire that excluded foreign influence and denied citizens a voice in government. But after decades of the long sleep, the advent of new communications and the Internet in the 1990s were a rude awakening. Reality came riding on his horse through the ring of fire, and he was not a welcome suitor. In the world of business, the stock market and banks crumbled; on the cultural front, citizens began to travel abroad by the tens of millions to escape drab cities and ravaged countryside.

The response by the bureaucrats who run Japan was to build monuments, and this they are doing on a scale that is bankrupting the nation. It was the only thing they knew to do. Hence the new title of this book: Dogs and Demons. The emperor of China asked his court painter, «What's easy to paint and what's hard to paint?» and the answer was «Dogs are difficult, demons are easy.» Quiet, low-key things like dogs in our immediate surroundings are hard to get right, but anybody can draw a demon. Basic solutions to modern problems are difficult, but pouring money into expensive showpieces is easy. Rather than bury electric wires, officials pay to have telephone poles clad in bronze; the city of Kyoto spent millions on building a Cultural Zone in its new railway station, the design of which denies Kyoto's culture in every way; rather than lower Internet connection fees, the government subsidizes «experimental Internet cities,» and so forth.

One of the recurring ideas in this book is the concept of «Japan at the extremes.» As Karel van Wolferen documented in The Enigma of Japanese Power, in Japan's political system the actual exercise of power is mostly hidden and widely denied, people dare not speak out, and the buck is passed indefinitely. The «Enigma» lies in how smoothly Japan Inc. seems to work despite a lack of strong leaders at the helm, and many an admiring book tells of how subtle bureaucrats gently guide the nation, magically avoiding all the discord and market chaos that afflict the West. But while the experts marveled at how efficiently the well-oiled engines were turning, the ship was headed toward the rocks. Japan's cleverly crafted machine of governance lacks one critically important part: brakes. Once it has been set on a particular path, Japan tends to continue on that path until it reaches excesses that would be unthinkable in most other nations.

Led by bureaucracies on automatic pilot, the nation has carried certain policies-notably construction-to extremes that would be comical were they not also at times terrifying. In recent years, manga (comics) and anime (animated films) have come to dominate major portions of Japan's publishing and cinematic industries. The popularity of manga and anime derive from their wildly imaginative drawings, depicting topsy-turvy visions of the future, with cities and countryside transformed into apocalyptic fantasies. One might say that the weight of manga and anime in modern Japanese culture – far out of proportion to comics or animation in any other nation – rests on the fact that they reflect reality: only manga could do justice to the more bizarre extremes of modern Japan. When every river and stream has been re-formed into a concrete chute, you are indeed entering the realm of sci-fi fable.

Extreme situations are interesting. Physicists learn the most from accelerated particles colliding at high energy levels not usually found in nature. What happens when bureaucrats control financial markets? One could do no better than study Japan, where one may view firsthand the crash at the end of the road for the most elaborate vehicle of financial control ever devised. What happens to cultural heritage when citizens have been taught in school not to take responsibility for their surroundings? Although temples and historical sites have been preserved, the destruction of traditional neighborhoods in all of Japan's old cities makes a good test case.

Destruction of all old cities? The words come easily, but the fact that such a thing is occurring strikes at the very heart of everything Japan once stood for. «Cultural crisis» is not, in fact, the best description of Japan's problems, for «crisis» implies a moment of truth, when issues come to a head and are resolved, whereas what is taking place in Japan is far more chronic and long-term. «Cultural malaise» is closer to the truth, a malaise that came about because of a severe mismatch between Japan's bureaucratic systems and the realities of modern life. This book is the story of that mismatch, and of how Japan wandered so far off on a lonely side road, removed not only from the world at large but from her own true self.