IP: Japan's quiet power

[David Farber <farber () cis upenn edu>]

Japan's quiet power


By GLEN S. FUKUSHIMA


Special to Asahi Evening News


"In the 1980s, it was `Japan bashing.' In the early 90s, it was
`Japan passing.' Now, it's `Japan nothing.' "


This joke, now circulating widely in Japan, reveals the prevailing
Japanese zeitgeist. In Japanized English, it reflects the view
that in the 1980s, trade barriers and imbalances led to
accusations abroad of "unfair" Japanese trading practices,
acrimonious trade negotiations often including the threat of
sanctions and even the physical destruction of Japanese
products--as in the sledgehammer smashing of Toshiba radio
cassette recorders in the spring of 1987 by members of the U.S.
Congress outraged that a subsidiary of that company had, in
violation of export control laws, sold silent submarine propeller
technology to the Soviet Union.


Then, the joke contends, in the early 1990s the world's attention
shifted to other, more


rapidly expanding markets of Asia. This was reflected in U.S.
Congressman Sam Gibbons' admonition to American business to
"bypass" (Japan) and "haul ass" (to Asian markets more open to
trade and investment). And it was given policy imprimatur in the
"U.S. National Export Strategy" released in 1993 by the
newly-elected Clinton administration, designating 10 "big emerging
markets" as potentially the most lucrative for American exporters.
Japan was noticeably absent from the list, which included China,
India, Indonesia and South Korea among Asian countries.


Now, the joke notes, Japan has become "nothing," vanished from the
world's radar screen. Japanese language enrollments in American
universities are declining. Low student interest has caused
Western business schools to cancel study tours to Japan.
Attendance at Japan-related events at international conferences
such as the annual World Economic Forum in Davos has dropped. And,
to top it off, President Bill Clinton's State of the Union Address
on Feb. 4 referred to Europe, Russia, Bosnia, China, the
Democratic Peoples' Republic of Korea (North Korea), the Republic
of Korea (South Korea), Vietnam, Mexico and a host of other
countries and regions, but made not a single mention of the
country with which the United States supposedly has, according to
every U.S. ambassador to Japan since Mike Mansfield (1977-1989),
"the most important bilateral relationship in the world, bar
none."


What accounts for this state of affairs? Several factors come to
mind.


First, the post-bubble recession since the early 1990s has led
many in Japan to bemoan the state of the economy and to engage in
self-flagellation, which the Japanese have mastered to a fine art.
Evidence is eagerly sought for Japan's putative failings:
ineffective crisis management, as in the Great Hanshin Earthquake
of January 1995; erosion of social order, as in the Aum Shinrikyo
sarin gas attacks in March 1995; political disarray leading to a
succession of five prime ministers in four years; corruption and
scandal among elite government bureaucrats; problems in financial
institutions as in jusen and banks saddled with bad loans; a
depressed stock market; a postwar high unemployment rate of 3.4
percent; etc.


Second, just as many in the West overestimated Japan's strengths
in the 1980s, there is a tendency now to underestimate Japan. This
is sprinkled with a liberal dose of schadenfreude, especially
among Western economists and journalists who were confounded by
Japan's economic successes up through the late 1980s, as they
seemed to fly in the face of orthodox economic doctrine.


Third, this underestimation of Japan is fueled by a regained
American confidence based on two factors: the end of the Cold War
has left the United States as the world's only military
superpower, and the restructuring of American industry has led to
improved efficiency, productivity and competitiveness. It is hard
to believe that less than a decade ago, more than six out of 10
Americans polled answered that `the Japanese economic threat is
greater than the Soviet military threat."


Fourth, in recent years other countries in Asia, Latin America and
Eastern Europe have exhibited the political stability and economic
growth to attract trade and investment from abroad. Whereas until
the 1980s Japan stood out as the only major non-Atlantic economic
power, by the 1990s the booming economies of other Asian countries
and the end of the Cold War created opportunities for trade and
investment in new and hitherto untapped regions.


Amid all the handwringing in Japan and the gloating abroad about
Japan turning into "nothing," three points should be kept in mind.
First, Japan remains by far the second-largest economy in the
world. Its gross domestic product of $5.1 trillion makes it
roughly 70 percent the size of the United States, 70 percent the
economy of East Asia, nearly 10 times the size of China and almost
17 times the size of India. It is more than double the size of
Germany, actually larger than Germany, France and the United
Kingdom combined. U.S. exports to Japan ($64 billion) roughly
equal exports to these three countries combined ($65 billion).


Second, fundamental elements of Japanese economic prowess remain
intact, including growth-oriented macroeconomic management;
microeconomic policies to protect and promote industries;
long-term corporate growth and investment strategies; a systematic
approach to acquiring, refining, and commercializing technology
from around the world; an educated and disciplined work force and
a national priority accorded to achieving world competitiveness
and economic primacy.


In fact, the current handwringing among Japanese should be seen
less as admitting failure than as reflecting a sense of urgency
and crisis, a clarion call to action--to economize, rationalize,
restructure and engage in the century-long tradition of
oitsuke-oikose (catch up and overtake) the world's frontrunners.


Finally, the current inattention to Japan strikes an ambivalent
chord. For while Japanese national pride may be wounded and
Japanese individuals may feel slighted to be seen as "nothing" on
the world stage, there is a silver lining. While the world's
attention is focused elsewhere, Japan is spared the close scrutiny
of its government policies, corporate practices, trade behavior
and investment patterns whose asymmetries and imbalances attracted
the world's wrath only a few years ago.


Is the gloom and doom scenario about Japan that one finds so
prevalent in the West these days not only welcomed, but also
inspired and encouraged, by Japan's spin doctors? The author is
vice president of the American Chamber of Commerce in Japan. From
1985 to 1990, he directed Japanese affairs at the Office of the
United States Trade Representative (USTR). -end-