Thread,
I just read this article trying to understand the Japanese point of view. These are just excerpts I thought were pertinent to understand the Japanese thinking as they face their crisis. It was written by an American trying to get into the head of the Japanese. I don't have an opinion on this subject, but thought this article was pertinent because we do seem to neglect the Japanese viewpoint concerning their economic crisis.
Full article can be found at:
pathfinder.com
Thanks,
MikeM(From Florida)
______________________________
GIVE US CREDIT
To understand why Japan resents calls to stimulate its economy, imagine you're a loyal bureaucrat-as our man in Tokyo does here
By FRANK GIBNEY JR. Tokyo --- Dear Treasury Secretary Rubin: During the last several months, you and other United States officials have urged that we Japanese act quickly to stimulate our moribund economy. Your Deputy, Lawrence Summers, derided our government's efforts as "virtual policy," and Western commentators have referred to Prime Minister Ryutaro Hashimoto as "President Herbert Hoover Hashimoto" for insisting on tight fiscal controls that could choke Japan's economy just as Hoover's policies throttled America's on the eve of the Great Depression.
Specifically, you and others have called for an $80 billion fiscal stimulus that would include sweeping tax cuts to boost consumer demand. Last week-even as some Japanese politicians were complaining about Western interference in our economy-the Liberal Democratic Party proposed a historic $123 billion fiscal package. Is that big enough?
I am writing because, although I'm just a small cog in what you Americans refer to as "Japan Inc.," I want you to know that we Japanese are even more nervous about our economic fate than you are.
Obviously, it is bad enough that our economy has slipped into recession for the first time in 23 years. Bankruptcies and unemployment are on the rise. Our banking system is in crisis, burdened by $585 billion in bad loans. Capital is not flowing through our markets because domestic consumption is plunging and ailing financial institutions are trying to avoid making new loans. In the meantime, our decision-making infrastructure is being shaken the way the 1995 earthquake shook Kobe.
My colleagues at the Ministry of Finance are demoralized, even paralyzed, by a corruption investigation, not to mention a publicly sanctioned effort by top politicians to deprive them of much of their power. (How would officials at your Treasury Department get their work done if prosecutors arrived every other week to remove truckloads of important files?)
As our bureaucrats head for cover, our politicians are more responsible than they have ever been for running the country. Which brings me back to last week's stimulus package. Even you, Mr. Secretary, have to acknowledge that it is impressive to commit 3% of Japan's GDP to pull our economy out of the hole. (Added to the $231 billion pledged to bail out our banks, this amount starts to approach the GDP of most of Southeast Asia.) On the other hand, you might not approve of spending so much of this money on public works projects-even though it is not just for roads and bridges (there is little left of Japan to pave over).
No matter how financially expansive this plan claims to be, I concede it is embarrassing that after four previous rescue packages since November, the economy has only worsened. You would argue there is little evidence of real structural reform in any of these plans. Guess what? Many in Japan agree. As the Nihon Keizai Shimbun notes, 65% of Japanese recently polled asked for a tax cut.
We deserve some credit. On April 1, for example, Japan is launching its "Big Bang" financial reforms, which by 2001 will liberalize foreign exchange transactions and leave the banking, securities and insurance industries essentially free of government manipulation.
You'll be heartened to know that many American financial institutions are leading the effort to change the old attitudes in Japan. Every week, it seems, companies like Fidelity, Merrill Lynch and Goldman Sachs announce a new program for Japanese investors. Citibank, which has become a major force in consumer banking in Tokyo, has plans to provide its services through the post office, the unreformed main repository of Japan's savings. As you Americans might say, "If you can't beat 'em, join 'em."
No matter what anyone says, we will continue trying to export our way out of this mess. That means our trade surplus, which you calculated for 1997 at $55.7 billion, is already the highest ever in real terms and will keep rising steadily. Today, as the U.S. enjoys near full employment and a healthy 3.2% growth rate, Japan may seem awfully far away. But this is an election year for you, too, and a big current account deficit could turn into a nasty political issue. Our own politicians might shrug that off as America's problem. But the realists among us do not want to face another battle with the U.S. over trade. Though our market is more open than ever, our backs are against the wall, and our instinct will be to protect our companies and farmers from competition.
So, Mr. Secretary, we need your understanding and patience now more than ever. Many of us bureaucrats acknowledge that these problems are of our own making. We should have begun cleaning house when the bubble burst in 1991.
My sincere hope is that you and others in the Clinton Administration will stand by. We need your advice and support. But please offer it quietly so that on top of all our other problems we do not have to deal with political backlash as well.
Sincerely, a concerned bureaucrat.
|
