Keiretsu In Space

Suddenly a post about Classroom Crisis and Elon Musk? LOL. Maybe this is overdue really…

It’s hard to take seriously, in any anime setting, the existence of keiretsu systems. It’s a gross exaggeration, but Japanese society today is not a whole lot different than its feudal era self, at least when it comes to socieo-economic blocs that control the large majority of its economy. You have these vertically and horizontally integrated companies that controls everything from top to bottom–finance, retail, distribution, manufacturing, and more–and these keiretsu groups literally own the majority of wealth in the country, and is the beating heart of the Japanese economy.

What is a keiretsu? It’s basically a network (more precisely, a cartel) of companies, either horizontally or vertically integrated, or both, that have connected interests and interlocking ownership. Usually at the center of these businesses are a holding company and a bank to make financial transactions feasible. How they operate is similar to how Elon Musk’s associated major businesses operate: Solar City, Tesla, and SpaceX. Solar City sell bonds from energy investments and create demand for home batteries and get more people off the grid; Tesla sells battery to Solar City to scale its operations (justifies the “Gigafactory”) and home solar makes buying electric cars more appealing; and Space X takes its paid-up-front contracts and invests in Solar City bonds which perform much better than safer but low-yield bonds Aerospace contract money goes into typically. Meanwhile the chief himself buys stock and sells his stock options and provides personal loans from his net worth to finance the various businesses during times of need, providing liquidity and a safety net.

Anyway, I just summed up this article¹ in a couple sentences, which triggered this post. And it’s kind of interesting to look at Classroom Crisis (CC) this way, especially since the one keiretsu play a prominent role in the setting and plot. In fact this zaibatsu/keiretsu blood lineage drama nonsense in the anime is only possible because:

1. The progenitors are trend-bucking rocket engineers who pioneered some awesome, magical engines that enabled space travel to be however it is in CC.
2. The progenitors are literally the two families that runs the Kirishima keiretsu. This is really just a Japanese thing, but I suppose westerners can find it romantic too.
3. The keiretsu began as a rocket company who then used its pioneering position and superior technology to anchor an end-to-end chain, not unlike, say, Toyota. (Or may be a better example: General Electric.) Of course, it’s a vertical keiretsu that includes banking, distribution, mining, manufacturing, and eventually also whatever businesses needed to set up colonies on Mars and in space stations.²
4. Somehow the lineage comes into play because the generation of the protagonist is, well, an Elon-Musk-level talent bent on a specific goal, meanwhile trying to satisfy his supers and guardians without really upsetting them while doing things that ought to upset them? The romantic interests plus the background of the characters adds some human-relatable aspects to the story.

Of course, the anime does not come across that way like how Musk comes across like a modern-day Lex Luthor. The story is firmly couched in a high school setting, even if sometimes it feels like instead of a classroom organization and you put a marauding space ship in there instead, it would work the same way.

Conveniently, Classroom Crisis also exploits and play on some well-known problems of the zaibatsu/keiretsu system–from anti-competitive monopolies to connections to organized crime–but, it takes the beef with the worst one: it is an anti-meritocracy, and creates spaces within the organization where inept execs and employee can leech off of the system, on the basis of first-comer status and seniority.

I originally watched CC largely with that bias. It’s telling a generational story about Youth of Japan can find some inspiration and backbone to go against what is clearly not-a-good-thing coming down from their bosses and superiors. The whole lost generation thing, you know? But as a piece of science fiction, it may have inadvertently explored something much closer to home as well. It does beg the question: integrated cartels may have a role in space exploration, but there are all these problems with that notion, or at least a Japanese notion. We could nonetheless explore this aspect with a more American/non-Japanese sense, at least, and consider the benefits of keiretsu in risky businesses (from a shareholder perspective) such as pioneering space exploration.

Anyways, these observations are just that. I want to wrap this up with a point about Musk’s personal magnetism and his cultish followers. It’s not quite the same level of reverence coming from his fans, but some have compared Musk’s status in this regard to Steve Jobs. However, I think the difference is that Jobs is a great engineer and a pioneer in the spaces he devoted his life on, Musk is a SF Gary Stu, except he isn’t writing fan fiction, but actual history of the world by making it.

¹This blog post is partly owed to seeing that Slate piece, but Google Now news clips keep on putting Elon Musk pieces in there probably because I googled him once and I never said “not interested” to those cards ever since. But as a result I not only read that Slate piece but I read a lot of finance and investment news pieces (along with green tech sites…and I found there aren’t a lot of rocket/space sites out there unfortunately) about Musk. Because that’s the kind of sites that write about him. And it’s common that these articles draw him out as some crazy thing and don’t fit in traditional molds, as different pundit debate the nature of his companies. It’s really droll, but creepy/sad considering the readers of these sites are likely the 1%. Anyway, this footnote is just to diverge into a discussion that understanding how to valuate, say, Tesla, necessarily means understanding the financial interests Musk has with it, and it with Musk and his other companies…and how his other companies depend on each other besides Tesla, even.

²Space stations and colonizing Mars are one thing. On the record, Musk says humans need to be multi-planet as far as a guard against extinction risk. To me that’s sound, but lacks the immediacy. Couple this with one analysis of SpaceX’s near or mid-term risk, which is that while it’s great those Falcon 9 launches are cheap (and will get cheaper as the company figure out how to save money with its recovered stage 1s), there’s not a lot you can really do in space. Or rather, sure, there’s all this stuff you can do in space, but until going into space becomes something that can be done for giggles, there needs to be a demand for companies to pay millions of dollars to shoot things up there. In other words, the risk here is that there isn’t enough demand for businesses to take advantage of SpaceX’s cheap and frequent launches to justify that level of scaling. Things like space tourism are fine but it can’t make up all the use cases, and it’s a huge question as to at what price level it becomes viable as a business. The ISS is a huge money sink/paying customer of SpaceX today, but it’s not like we need to send a spacecraft up there every month. There are only so many comm sats and telescopes we can put in orbit. There are only so many space probes that can be babysat by the space agencies and institutions around the world. Which is to say, hello DSI? Planetary Resources? Yeah, space-based industry has to exist, but that is a very different use case than what Musk is trying to do at this stage. Which is driving at one conclusion I want to make with this post: going to Mars is one thing, pioneering new businesses and fields is, in its own way, exploring new and uncharted territory. And given how terrible space is, this is rather much more interesting. I mean why would anyone want to go into space for giggles! It’s like, the most hostile environment in nature!