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To: lorne who wrote (30329)	3/19/1999 12:40:00 PM
From: Alex	Respond to of 117029

Japan's recovery years away: economist By MALCOLM FOSTER NEW YORK, FRIDAY <Picture>Japan was still several years away from recovery because there was no urgency to make changes in the economy and corporate culture, the president of the Milken Institute, Mr Donald Straszheim, said yesterday. ''Are Japan's best days past?'' Mr Straszheim asked. ''Yes, for the next 10 to 15 years. The speed with which they'll change will disappoint us.'' Those comments come as Japan's benchmark Nikkei 225 Index has rallied 22 per cent this year, lifted by speculation among some investors that the nation's economy is emerging from an eight-year slump. Don't get your hopes up, warns Mr Straszheim, who was chief economist at Merrill Lynch & Co from 1985 to 1997, before joining the Santa Monica, California-based economic think-tank, chaired by one-time junk-bond financier Mr Michael Milken. Japan was slow to take action because ordinary citizens were not feeling much pain from recession, Mr Straszheim said. The average after-tax income per person in Japan had fallen about 5 per cent from its peak a couple of years ago, based on the institute's calculations, he said. That was not enough to spur the public to push for change. Much of Japan's trouble stemmed from its resistance to reward merit, which stymied competition, Mr Straszheim said. Company employees were generally paid according to seniority, not performance. In politics, there was little competition because the Liberal Democratic Party had almost totally controlled the Government since the end of World War II, he said, adding that the same was true of the financial markets. ''Capital doesn't get allocated to the areas that provide the best returns,'' he said. Until this changed, even interest rates near zero would do little to stimulate growth. The neglect of stockholders also bode poorly for creating competitive companies, Mr Straszheim said. Japanese companies tend to work for the benefit of managers, employees, suppliers and customers as opposed to shareholders, he said. The dearth of new venture businesses in Japan also dragged on growth, he said. ''Shanghai is a more entrepreneurial place than Tokyo,'' Mr Straszheim said. BLOOMBERG theage.com.au