Not entirely useful advice for Japan in the NYT:
June 28, 1998
Pieces of Advice for an Ailing Japan, Compliments of America
By DAVID E. SANGER
Back in the 1980s, Japan was full of advice for the United States: Clean up the federal deficit, a drag on the world economy. End your addiction to credit cards. Try a little lean production in Detroit. Adopt Japan's strict gun-control laws. Make sure every student can read. Make workers feel as though they are part of the company, not just hired help. Oh, and run a bullet train between Boston and Washington.
Most of these ideas were pretty good, even if Americans bristled at being given a lecture by the new titan of the world economy.
But now an economic reckoning has come to Japan, and it seems only fair to return the favor with a few modest suggestions from America that might help revive the ailing giant of Asia.
Give the Yankees A New Home: Osaka
It's not as crazy as it sounds. George Steinbrenner wants a new stadium, but New York taxpayers can think of better things to do with their money. Japan, on the other hand, has just appropriated trillions of yen for public works to bolster the economy -- and is having a hard time coming up with something interesting to spend it on.
But there is a more serious reason for moving the House That Ruth Built to the country that the Babe wowed during a 1934 tour. Japanese baseball has become a symbol of what's wrong with the Japanese economy: precisely controlled competition. Each team is limited to two foreign players, to keep the game from losing its distinctive Japanese flavor. Corporate Japan doesn't have the two-player rule, but it acts as though it does.
If the Yankees move to Japan's industrial heart, the closed market of Japanese baseball will be forever opened. Suddenly, teams around Japan will have to compete for the best global players they can find. Japanese fans will watch more home runs blasted out of the park. And the teams that can't stand the heat -- well, they may be busted to the minor leagues. That's capitalism.
Some other benefits: Steinbrenner becomes some other city's problem. Hideki Irabu, Japan's greatest export in recent years, might feel more at home -- the rest of the team will require simultaneous translation. And if you are a Red Sox fan, tired of looking up at the Yankees in the American League standings, it's a win-win situation -- all in the name of helping a great ally out of a tight spot.
Swap Cabbies With New York
For years, Japan and the United States have organized reciprocal visits by lawmakers. The Americans arrive in Tokyo, enjoy kaiseki feasts at the finest restaurants, hold news conferences to complain about trade barriers ("Good progress, but there's a lot of work to be done") and fly home without having changed anyone's mind in Japan.
A few months later, leaders of the Japanese Diet arrive in Washington, chain-smoke through endless meals at the Watergate Hotel and go home convinced that the Americans will never understand them.
To really alter attitudes, how about trading taxi drivers instead? Mayor Rudolph W. Giuliani of New York would love it: Tokyo's cabbies wear white gloves, keep their cars pristine and navigate seamlessly through one of the world's most complicated cities.
But the real benefit would go to Japan. After decades of "internationalization," the country is still far from what you might call a melting pot. Immigration is, um, frowned upon. And while this attitude creates a more cohesive society, it deprives Japan of the energy and entrepreneurship that populates labs in Silicon Valley -- and driver's seats in New York.
Without flying anywhere, Japanse citizens could get a crash course in multiculturalism. No doubt, there would be some culture clash when an inebriated Japanese salaryman gets into a cab in the downtown Ginza district at midnight and tries to give directions to his house in Yokohama to a new arrival with minimal Japanese language skills. But it would globalize Japan real fast.
Invite Gates-san To Endow a Chair
In the 80s, Japanese companies couldn't spend enough money on American campuses. They endowed chairs at Harvard and MIT, and paid for research projects at Stanford. The donations improved their image in the United States and gave the Japanese a window into the breeding grounds for some of America's most innovative technologies.
Japanese universities, meanwhile, were starving. They got little support from Japanese businesses, which would rather train researchers themselves.
In the early 90s, the president of one of Japan's leading research universities said, appeals for money for modern laboratories were regularly turned down by Japanese executives.
Now it is time for Japanese schools to solicit help from Silicon Valley. For example, they could establish the William H. Gates chair to infuse risk-averse Japanese students with a little Microsoft mythology.
In return for endowing the chairs, American companies would be offered the first crack at hiring Japan's best and brightest, before they disappeared into the bowels of Hitachi and Toshiba. And there's one more advantage for Gates: The Japanese are not known for breaking up monopolies.
How About Trying Credit Card Debt?
What do Americans have in abundance that we would be happy to share? All those letters from credit card companies declaring that we've just been pre-approved for a card we never requested. Why not take them off our hands?
Japan is suffering a credit crunch that is killing the economy. In the 80s and early 90s, banks lent money to anyone who walked in the door. They felt flush because real estate prices were sky high -- and real estate on a crowded island never goes down, right? -- and because banks in Japan were (and still are) allowed to count stock holdings as part of their capital. Every jump in stock prices meant that the banks could lend even more.
Then the triple whammy hit. Land prices crashed. So did the stock market. And then many of the banks' borrowers -- small businesses, gangsters, property developers -- announced that they couldn't pay. So now, saddled with $600 billion in bad debts, the banks simply won't lend. Sure, interest rates are ridiculously low, but try getting a loan.
Of course, no new credit means little new business activity, which sends the stock market lower, which pushes the banks even closer to the brink.
The Japanese government promised last week to get serious about cleaning up the banking mess, but it has said that before. In the meantime, Japan needs credit. Lots of it. Take that junk mail -- please.
Scrap the Yen. Spend Tamagotchi.
The big problem in Japan these days is that no one is spending any money. Ordinary folks don't trust the banks, so they are stuffing cash under the futon. Whenever they are tempted to buy something, the government warns that the population is aging quickly, so people have to save, save, save for retirement.
The solution lies in Japanese technology: the tamagotchi, that annoying little electronic chicken that needs to be fed, stroked and cared for every few hours or it dies. For a few years now, it has driven parents in Japan -- and then in America -- to distraction, as their children weep over the loss of the E-chick.
How about harnessing the invention to a greater purpose? Tuck a tamagotchi chip into every 10,000-yen bill. If it sits in a dark pocket without changing hands for more than a day, it turns to dust. But pass it around -- buy a computer, spend an evening in a karaoke bar -- and it chirps with contentment.
Sell an Island To the Taiwanese
When Japan was booming, it spread its wealth. The rich and the not-quite-rich bought condominiums in Honolulu and Maui. They flocked to Guam and to Port Douglas, the Australian resort village near the Great Barrier Reef. Local shops responded, posting signs in Japanese and hiring Japanese speakers to serve their new patrons.
Some locals complained at the time about the influx, but these days Hawaiians and Australians alike talk wistfully about the days when 747s landed every hour, full of Japanese travelers eager to snap up souvenirs and real estate.
Now, with the yen melting down, the dollar reigning supreme and Japanese property prices collapsing, Japan can reverse the tide. This is the best moment in 30 years for Japan to lure investors from abroad.
Hokkaido would be a good place to start. Japan's northernmost island is beautiful, thinly populated and home to Japan's best ski slopes. Why not build spectacular ski chalets to suit the tastes of wealthy Taiwanese, who have no place to ski on their hot, flat island? It would create jobs in one of Japan's most depressed corners.
Politically savvy developers could also market the chalets as a hedge against a Chinese invasion of Taiwan, especially if America's military commitments to the island prove a bit iffy.
There is no reason to stop at Hokkaido. Why not get cities across Japan into a bidding war to attract the Big Three to buy or build car factories, the way Tennessee, Ohio and Kentucky vied for Nissan, Honda and Toyota? Time to roll out those tax breaks.
After all, according to Nicholas R. Lardy, a scholar at the Brookings Institution, there has been more foreign direct investment in China in the last few years than there has been in Japan since the end of World War II.
Borrow a Chapter From Al and T. Boone
So maybe Albert J. Dunlap, lately downsized before he could get around to dismissing still more employees at the Sunbeam Corp., isn't exactly a poster child for American-style capitalism.
But if ever there was a country that needs to learn the meaning of the term "shareholder value," it is Japan. So a touch of Chain Saw Al's approach -- getting companies into fighting trim -- might do wonders at bloated concerns like Japan Airlines.
The Japanese are not likely to warm up to some of Chain Saw Al's ideas any more readily than Americans have, but they just might develop a new appreciation of the need to produce profits and returns for shareholders. After all, the old Japanese commitment to lifetime employment is breaking down anyway, and Japan's jobless rate, now more than 4 percent, rivals America's.
And what about bringing back T. Boone Pickens? The self-promoting Texas oilman made a splash in Japan in the early 1990s when he took a big stake in a Japanese car-parts manufacturer, and then had the nerve to show up at shareholder meetings and ask embarrassing questions about how the company was run.
It was quite a show. First he was booed. Then he was accused of acting as a front for a Japanese shakedown artist. Finally he was bought out.
Pickens was probably ahead of his time. Now some Japanese realize that the ingrown system he was challenging -- the Japanese keiretsu system, in which companies hold stakes in one another but also hide one another's weaknesses -- allows managers to run amok.
There is a nascent movement to let investors actually learn something about how their companies are run, as long as they don't get too nosy. So how about sending a delegation from the Keidanren, Japan's biggest business organization, to tell Pickens that all is forgiven?
Take Homespun Hints From Beardstown
Japanese women have always been among the country's most active investors. With husbands working all day, the securities houses used to hunt for customers by setting up shop in department stores. But the days of watching the cash pour in are long, long gone.
How about calling in the Beardstown Ladies, the grandmotherly stock sharks of rural Illinois? Nothing sells better in Japan than products that sniff of down-home American culture: blue jeans, Elvis, New England quilts.
So the ladies can push their no-nonsense, look-for-long-term-value brand of stock-picking. It shouldn't be hard to beat Nomura Securities, the Japanese brokerage giant, given its track record for the last seven years.
Of course, the ladies' reputation was tainted a touch recently, when it was determined that they had inflated their returns by counting their monthly dues as profits. They say it was an innocent mistake. But even this can be spun to advantage. The ladies can argue that they were simply getting accustomed to Japanese accounting standards.
Call In Your Pals From the CIA
Forty years ago, when the greatest threat facing Japan and America was communism, the Central Intelligence Agency secretly funneled millions of dollars to support the conservative party that has dominated Japan for four decades -- the ill-named Liberal Democratic Party.
This was one of the agency's few covert operations that worked (italics)too(end italics) well. The party's politicians who were begging the agency for money in the 50s told American trade negotiators to take a hike in the 80s. And Japan's opposition parties, fragmented and disorganized, have not been able to spur any real political debate in Japan over how to manage the economy.
So how about re-invigorating the huge CIA station inside the American Embassy in Tokyo? Call it Operation Rising Yen. The spooks could bombard Japanese voters with propaganda promoting Treasury Secretary Robert E. Rubin's vision of a Japan that throws itself open to competition, spurs the economy without inflating the trade deficit and solves its banking crisis. They could plant guests on the Sunday morning talk shows, advocating radical ideas like actually closing institutions that are bankrupt.
Sure, it's meddling in another country's politics, but that has rarely stopped the agency before. And if Congress won't pay for it, maybe the Chinese will. After all, they suddenly seem interested in contributing to political causes abroad -- and they have as much to lose as America does if Japan buckles.
Create the Sequel 'Godzilla vs. MOF'
Ever since Japan turned out its 1954 classic "Godzilla, King of the Monsters," the world's favorite destroyer of cities has symbolized the various threats facing the country. The first Godzilla movie was a protest against American nuclear tests in the Pacific.
In the 1960s, Godzilla's struggles with King Kong were a stand-in for the cold-war battles between the United States and the Soviet Union, with Japan caught in the crossfire. The latest movie, written by Americans for the Japanese-owned Sony studios, sends the monster rampaging through Times Square.
Many Japanese people now believe the country's biggest threat comes from within -- specifically, from the Ministry of Finance. After all, its powerful bureaucracy forced a misconceived tax increase last year -- raising the country's consumption tax from 3 percent to 5 percent -- which many now blame for plunging the country into recession.
Its top leaders enjoyed long, expensive nights at "hostess bars" with the financial executives it was supposed to be regulating, one reason the country now finds itself in dire straits. And it is MOF, as the ministry is known, that has dragged its feet in closing down failed banks and deregulating the financial markets.
Many in Japan have called for the breakup of the ministry. But taking on the most powerful bureaucrats in Tokyo is no job for mere mortals.
So in the spirit of those anti-nuclear protests of the 50s, Godzilla's powerful tail and fiery breath could be turned on the ministry's impregnable headquarters in downtown Tokyo. It's unclear whether he could persuade the bureaucrats to take some painful steps to get the economy moving again. But it might be fun to watch him try |
