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| Ivan Hall on Japan's Phoney Slump |
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Friday, July 13th, 2001
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For years Japan has been promising to increase its purchases from abroad. But somehow circumstances always seem to get in the way. Thus although at recent market exchange rates it boasted half America�s total output, its total imports were less than 30 percent as much.
Why is Japan such a disappointing importer? The official explanation is that while Japan would love to oblige its friend the United States by importing more, it is suffering a terrible �slump� that has had a particularly depressive effect on its appetite for foreign goods. This story, repeated daily in the Western press, is no more than a media myth. Although there are some serious problems in Japan (notably in the banking sector), the truth is that in many respects the Japanese economy has been doing better than that of the United States in recent years. It suits the Japanese establishment, however, to encourage the Western press to portray the Japanese economy as a basket case. Why? Because the myth of an enfeebled Japan is so successful in warding off pressure from the United States for effective measures to end Japan's perennially mercantilist approach to trade.
So what is the truth of Japan's economic performance. Few observers are better placed to offer an assessment than Ivan P. Hall, author of Cartels of the Mind, an acclaimed book on the elaborate devices by which Western style intellectual inquiry is stifled in Japan. With a Harvard doctorate in Japanese history and a record of high level Japan-watching going back four decades, Hall offers a unique perspective -- a blend of Japan scholarship leavened by the practical on-the-spot experience of a diplomat and foreign correspondent. Recently he was asked by a well-known American news magazine for his insights into the true state of the Japanese economy. In reply, as an alternative to a lengthy international phone conversation, he provided a detailed, informal written assessment. In the event, not a word of his testimony was published. The magazine, so eager to print the Japan-is-doomed comments of any publicity-seeking representative of the scummy Japanese securities industry, simply did not have enough space to accommodate the comments of a man of Hall�s caliber.
So what did Hall have to say? Hall contradicted the official story of an enfeebled Japan and forthrightly stated what others in Tokyo are prepared only to repeat in whispers � that the Tokyo authorities have long been systematically exaggerating Japan's economic problems as a ploy to win a free ride on trade from Washington.
This is an abridged version of the testimony he provided to the aforementioned news magazine. EF.
All the talk of economic distress in Japan has been puffed up out of all proportion as a very convenient buffer against foreign pressure on trade.
I simply don't feel myself in a struggling economy when I am in Japan. The sense of well-being and even luxury in Tokyo is more palpable than in New York (let alone L.A.), taking these cities each as a whole. Last Christmas, for instance, young adults were lined up several abreast out onto the sidewalks at the Louis Vuitton in Shinjuku just to buy expensive baubles. People are crowding the airport concourses for overseas trips on the increasingly frequent extended weekends and other holidays. Look at the spiffy new hotel-shopping-recreation complexes that have sprouted in Tokyo. Compare the two hi-tech, luxurious, new subway lines that opened last fall with Manhattan�s 19th-century clunker of a subway system. Are these indicative of a faltering economy or a crumbling social order?
It is sad to see how much of the American sense of having bested Japan economically rests on the glitz increasingly unavailable to ordinary middle-class Americans, and how this has been puffed up as an ideology of freedom and individualism by an emerging new upper class. It's as though we have forgotten all the lessons we learned since the 1890s. Wages are higher in Japan than in America, and I find the average Japanese much better off than in the booming seventies. There have been a few tragic suicides by executives and others laid off by corporate restructuring, but these have not been typical. That has not stopped the Japanese and foreign press rushing to hype them. The basic system of employment and employment security is still in place.
Foreign observers ignore Japan's strengths
What I find puzzling is the way so many foreign observers (among whom I include not only American and European correspondents in Tokyo but the U.S. government and the American punditocracy) have chosen to ignore all Japan's strengths. What is truly bizarre is the way they have taken a relatively slack stretch in certain types of economic performance (e.g. the banking mess and the recent marginal dip in the employment rate) to mean that Japan's economy is terminally ill, "finished," "down the toilet," etc., etc.
Japan's economy is still four times that of China. Japan is still with Europe one of the two great rival centers of the world economy that America has to deal with, and one that is likely to get even further ahead of us in Asia as that continent continues to integrate economically.
Why have we got our head screwed on backwards, and why does official Tokyo try so hard to help keep it there? That's one of the great questions that needs to be addressed. For the Japanese the motivation is clear enough -- to deflect further pressures to open Japan's markets. For Americans I suspect it is largely ideological -- with some of our correspondents being driven by the enthusiasms of their editors back home. We are possessed by the fancied superiority of our guiding economic nostrums. Anything that questions the validity of those assumptions is embarrassing to those elements in our financial, government, media, and academic communities that have committed their investments, policies, guru-credibility, and scholarly reputations to these propositions. The alleged "failure" of Japan is one of the key pillars of this comprehensive globalist vision in the U.S.�just as the discrediting of that allegation would seriously undermine this vision. Japan is THE great counter-argument to that American world-view.
Still committed to traditional mercantilism
I believe Japan remains committed to its traditional mercantilism, and I will continue to believe so until we have ample proof to the contrary. When I say proof I don�t mean the official PR promises of the Japanese establishment � and certainly not the recent fatuous foreign predictions of a "third great opening of Japan" along the lines of the Meiji Restoration after 1869 or MacArthur after 1945. Those two earlier "openings" were induced by, and only by, massive foreign military pressure (either directly threatened in the first case, or directly applied in the second).
That Japan has not opened its markets is not the result of political stasis or ineptness but is because there has been absolutely no decision to make the enormous shift in fundamental national policy -- impinging deeply on all sectors of national life -- that this would require. I surmise from all the evidence that there has been a conscious (if understandably unpublicized) decision at the highest levels of Japan's political, economic, and social/intellectual leadership NOT to do so. Indeed, I think much of what looks to the outside world like a political-economic "muddle" is more of a stalling, a waiting around until external relations change so that the Japanese can go it again in their own way. By this I foresee preeminently a political and military distancing from America and its economic pressures, and closer ties with Asia.
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Contact Eamonn Fingleton |
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