Politics & Policy

Oh, How The Tables Have Turned

Japan needs to become more like…the United States.

Remember the days when Japan was going to eat our lunch? So-called “Asian values” were creating a superior form of capitalism. America’s fat and lazy workers had lost their spunk, while Japanese laborers did all those jumping jacks in the parking lot. Our managers were ineffectual klutzes who stole from the company. Japanese managers disemboweled themselves if they got caught taking a paper clip home by mistake. “America has become Japan’s granary, like Poland was for Flanders in the seventeenth century,” observed Jacques Attali, when he was the head of the European Bank for Reconstruction and Development in the 1980s.

Why am I bringing all this up? Well, tee-hee, a Japanese government commission of experts has just announced that Japan — giggle — needs to — snort, chortle — become more like…the United States baaaa ha ha ha ha ha!

That’s right Japan Inc., which became a giant by creating cheap knockoffs of American products, must now rip off our whole shtick. The commission was put together because Japan has fallen so far behind the United States economically we can barely make it out in our rearview mirror. The Japanese refer to the 1990s as the “lost decade” because there has been virtually no economic growth. The Nikkei, Japan’s stock market, closed the decade 50% lower than it started. Meanwhile, millions of Americans are just like me; they spend all day hitting “refresh” on their web stock portfolio the way chimps hit the cocaine pellet-bar in addiction tests.

The panel concluded that the Japanese need to become more individualistic, more creative, more fun-loving. The nation needs to scale back its reliance on tests and decision-making by consensus. Everyone’s got to learn English. The panel even concluded that the nation needs more lawyers, because it has “too many unwritten rules,” which is code for “people who take bribes.”

What a wonderful bit of irony. Only a few years ago American economists, lawyers and other freelance bureaucrats loved Japan. MITI, the Japanese Ministry of Trade and Finance, was worshipped as the One True God of economic planning. MITI supposedly picked which companies and industries would be successful. In a typically humble article titled, “How the World Works,” James Fallows — a journalist who specializes in making very dumb things sound very smart — said the industrial planning of Asian economies was the wave of the future. “The English-speaking world should … stop pretending that it doesn’t work.”

Candidate Clinton promised to “focus like a laser” on the economy, saying that we must “copy our competitors.” One of his advisors flatly said America would have a “Japan policy” of economic planning. He brought with him a slew of experts who were confident that they could predict the future success of whole industries — something Wall Street finds very difficult to do. “Now that the competition between centrally planned socialism and market capitalism is over,” argued Alan Blinder, then President Clinton’s chief economic adviser, “interest in Japan’s alternative way of organizing a market economy should be greater than ever before.” Laura Tyson, a subsequent head of the council of economic advisers, said it would be “criminal” not to follow Japan’s lead; their example would provide the prescription for America’s “economic revival.”

Once Clinton got elected, he quickly realized that he was a slave to the bond markets, angrily declaring at a cabinet meeting, “we’re all Eisenhower Republicans now.” He was forced to abandon the bulk of his pork, I mean “stimulus” package. Since then President Clinton has been earning a great deal of credit because he has done nothing to interfere drastically with the economy. Nobody needs another lecture as to why free trade, free markets, free beer, and free enterprise are better than their alternatives.

But the real cautionary tale is that so many people could have thought Japan was an economic role model in the first place. Its “successes” have been hysterical failures. In the 1960s, MITI tried to force Japanese carmakers to merge into one company; the bureaucrats thought competition would weaken the companies. The Japanese bullet train — which so many politicians envy — is in fact a monstrous money-loser, at five times the rate of normal trains. (For the best discussion of MITI and the Clintonites, look at “MITI Mouse” by Karl Zinsmeister in the Spring 1993 Policy Review. Karl is one of my many taskmasters, as he is now the editor of The American Enterprise and he would beat me like a red-headed step child if I mentioned Policy Review, but snubbed TAE. His MITI piece was so good that the entire world of industrial planning signed a letter denouncing it. Great stuff.)

The reality is that we didn’t need this commission to tell us that Japan Inc. was a failure. Intelligent people could see that even in the 1980s. The reason, I think, that so many experts fell in love with the idea of a planned economy is that they had no choice. It is in the nature of experts. Artists think the world’s problems can be solved with more art. Surgeons are famous for always wanting to cut. And bureaucrats think they can improve things by imposing a system on the messy world.

NOTE TO READERSMy apologies for not filing yesterday. But I am going to stick to my three a week policy whenever possible, so please stop threatening me. In the meantime check out all of our stuff on the Iowa caucuses. We are going to be giving these little spasms of Democracy our full attention in the days and weeks to come, so check in as much as possible to see all the goings-on.


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