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Strategies & Market Trends : Asia Forum
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To: Stitch who wrote (2358)2/24/1998 9:51:00 PM
From: j g cordes  Read Replies (1) of 9980
 
Stitch, was reading your posts with Zeev.. the same question has occured to me as to why the Japanese don't open the throttle. I believe there are two significant but related reasons.

One is a fiscal methodology which relies on the private sector funneling funds into large institutions which in turn are provided the capital base to expand their production and marketing capacity. This method of money routing differs from ours. We attempt to stimulate the general population through tax incentives and monetary policy to spend more or less to strike employment balance without inflation of goods or services. While we attempt to regulate the purchase of goods and services, they attempt to regulate the engine of export with much the same aim.

This brings me to point two.. which is that Japan is still an export driven economy and mindset which is easily understood as a survival then wealth building policy of superpower proportions. From the above you can see that the solution we see of encouraging the consumer in their minds goes counter to the habit of policy that encourages export. Indeed, by encouraging the consumer to spend more it may even be seen as counter productive, undermining the engine of export by encouraging imports.

Hope this helps.

Jim

When you are there, ask your hosts if by encouraging public spending they feel that Japan's financial security, which relies on positive export revenue, would be threatened. Also if imports were allowed freer entry, would it undermine the vertically integrated manufacturing structures... and are they politically motivated to lobby on behalf of little or no change to the status quo?

It may be a key worth turning.
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