Japan Seen ‘Overtaking’ U.S. in ’85

When Harvard Prof. Ezra F. Vogel wrote a book called “Japan as No. 1: Lessons for America,” it attracted little attention in the United States but was a best seller in Japan.

That was in 1979, when the U.S. trade deficit with Japan was $8.7 billion. Now, with the trade deficit heading toward more than $40 billion this year, Americans are showing some interest.

As evidence of that, Vogel points to the 92-0 vote in the Senate on March 28 calling for retaliatory trade measures against Japan. But he recently told a group of foreign correspondents here that “our response to Japan is still woefully inadequate.” Vogel said he is trying again to “help wake up America to the progress in East Asia,” and to this end he has written another book, to be published soon by Simon & Schuster. The Japanese-language edition appeared here last December, and 100,000 copies have already been sold.

The new book, “Comeback: Charting the Future for America” suggests that Vogel is more optimistic about America’s future than he was in his earlier book. But he made it clear to the reporters that he is more alarmed now than he was then by American complacency in dealing with the Japanese challenge.

Few Americans appear to be aware of it, he said, but 1985 may mark the “critical turning point when Japan surpasses the United States as the dominant economic power in the world, and America begins a precipitous decline.” He ticked off the following possibilities, all of which he said are likely to occur this year:

- The United States turns from a creditor to a debtor nation, with Japan already in place as the world’s leading creditor nation.

- Japan exports more manufactured goods than does the United States.

- The portion of Japan’s gross national product devoted to research and development surpasses that of the United States.

- America’s trade deficit goes out of control.

Vogel recalled that, in 1956, Japan--which had not exported ships regularly until 1947--surpassed Great Britain as the world’s leading shipbuilding nation, and nobody in Britain paid much attention.

“The English,” he said, “did not properly diagnose, let alone treat, what the Japanese now so condescendingly call the English disease. If we Americans don’t turn things around, future historians may well cite 1985 as the critical turning point.”

To Vogel, neither Japanese trade barriers nor the strong dollar account for the growing bilateral trade deficit between the United States and Japan. The issue, as he sees it, is competitiveness. And Japan, he said, will become even more competitive in the future.

He said Japan will gain ground not only in its factories, where it is already widely recognized to be in the lead, but also in its offices, where it has lagged behind the United States in productivity.

Japan already leads the world in the production and use of robots, he said, “but, more important, it dominates the world in the speed of application of flexible manufacturing systems.” And he added: “It is moving rapidly toward all-night manufacturing without workers.” Vogel noted that new, automated manufacturing systems require a plentiful supply of electrical engineers in the factories, and that Japan has them while the United States does not. Japan, he said, is educating 1.5 times the number of electrical engineers as is the United States.

In addition, he said, a much smaller turnover of workers at Japanese factories--plus employers’ efforts to retrain rather than fire workers idled by automated assembly lines--ensures that Japan’s “lead in productivity increases will not only continue but grow.”

Office automation promises to bring a far greater “leap in technology” to Japan than it did to the United States, he said. While office automation takes Americans from the typewriter to the computer, it is sending Japanese workers on a quantum leap from handwriting to the computer, he said.

In the Japanese language, there are 2,000 Chinese characters and two 52-letter phonetic alphabets, and, as a result, the typewriter has proved to be more cumbersome than handwriting; few office workers here use it. But the new word-processing technology enables a worker to type in one of the 52-letter phonetic alphabets and produce written material in the standard Japanese mixture of Chinese characters and phonetic alphabets.

The bottom line, Vogel said, is that “greater net gains are likely in productivity in the service sector.”

American spending on research and development is likely to remain virtually unchanged at about 2.6% to 2.7% of GNP in coming years, he said, while such spending in Japan already equals the American level and is expected to rise to at least 3% of GNP by 1990.

With Japan concentrating its research largely on commercial applications, “Japan may be spending about as much on commercially relevant R&D; in absolute amounts as the United States by 1990,” even with a population only about half that of the United States, he said.

Americans do not recognize the change, he said, but Japan has altered the concept of world power.

“We still tend to think of the basis of world power in old-fashioned geopolitical terms, in which power belongs to the countries with natural resources and strategic physical locations,” he said. But Japan has proved that “the basis of international power is now human resources and organization, the ability of a nation and its institutions to respond quickly and effectively” to changing conditions.

Japan’s preference for a “low posture” in politics and its “narrow pursuit of national self-interest,” Vogel said, are likely to ensure that it will not challenge the United States’ international political leadership, even as the U.S. economy becomes less able to support such a role. The key issue for the United States, he said, is “whether we can be a forward-looking country,” not whether America is No. 1 or No. 2.

Vogel said the United States needs to make a “genuine comeback, as opposed to the present artificial and deceptive comeback.” He called for better labor-management relations, more rapid introduction of automation, better education, “a balance between humanitarian concern and maintenance of incentives” and “a citizenry willing to work for the common good.”