Japan Sees Chaos, Not Domination

Japan’s economic challenge to the United States has sparked a flurry of American charges that Japan seeks to “dominate” the world. Even potboiler novels have taken up the theme.

Many Japanese, however, find such charges incredible. Rather than some kind of “Japan Inc.” concocting national conspiracies, what they see here is disorder and chaos in the management of their country.

Japan still retains the potential to grow by as much as 7% to 8% a year, said Hiroshi Takeuchi, 54, research director of the Long-Term Credit Bank, but it has lost the political “governability” needed to achieve such growth.

Traditional “100% agreement--not 51% agreement--(but) consensus democracy” has stalled major economic development, Takeuchi said.

Now new “bullet line” railways, airports, dams, nuclear power plants, even factories--which Japanese used to welcome when they felt poor--cannot be built or take two to three times as long to build as in the past, he said. Opposition from local residents and inflated land prices are the major obstacles.

A feeling of wealth, gained largely from the inflated value of the land that they possess, has lulled Japanese into “disliking change,” which they accepted wholeheartedly in the past, Takeuchi said.

Places Heavy Burdens on Corporations

The average value of potential factory land in Japan, he noted, is $8.10 a square foot, compared to 12 cents a square foot in the United States.

Huge budget deficits have curtailed the government’s public works. Tax increases on individuals cannot be implemented--even though Japan has the lowest tax burden of any advanced nation--for fear of incurring the wrath of voters. So the government winds up placing heavy burdens on corporations, the banker said.

Corporate taxes here now average 52%, compared to 33% in the United States, “because governability has been lost,” he said.

To retired Gen. Hiroomi Kurisu, 65, a former chairman of the joint chiefs of the Self-Defense Forces, Japan’s famed mid-19th Century goal of “catching up with the West” was not a target that Japan set for itself. It was “forced upon us,” he said.

“The West was ahead. It is only natural human instinct to want to catch up,” he said.

But domination?

“We are certainly not that ambitious a people,” said Takashi Hosomi, 65, a retired Finance Ministry civil servant who now heads the government’s Overseas Economic Cooperation Fund.

U.S. Mistakes Disorder for Domination

Japanese, he said, function very well when established rules exist. But defeat in war destroyed the old moral order, and Japanese have not been able to create a “new community” ethic to replace it, Hosomi said.

“Only profit and loss provide a link among people now,” he added.

“Japanese probably obey stoplights better than any other people in the world. But chaos occurs if the stoplights stop working. In the areas of our society and economy where we have no stoplights, it’s complete disorder,” he complained.

It is this disorder that Americans see when they feel that Japan is trying to “dominate,” Hosomi said.

“Toshiba worries about competition with Hitachi. Hitachi worries about competing with Matsushita. That’s all they think about. They haven’t the faintest idea of the impact they have on the United States. Engaging in only micro-competition, Japanese have no concept of the total impact of their actions,” Hosomi said. The nature of Japanese society itself dictates against Japan seeking some kind of “domination,” Hosomi added.

Japan may approach the United States in the level of its per-capita income, he said, but it will not surpass the United States “because breakthroughs in inventions won’t occur in Japan. America is a society that puts its brilliant people to work. Japan is a society that suppresses its brilliant people . . . a society that pulls people down, not one that pushes them up.”

The best people--the ones who might have the ability to devise “domination” plots--never become leaders, he said. Japan has developed a warped form of egalitarianism, a kind of “equal-o-cracy” that “hates leaders.”

Former Prime Minister Takeo Fukuda, 80, said the Japanese plunged into their new postwar freedoms without accepting any of the responsibilities that should accompany freedom. The result is that everyone thinks only of himself, he said.

In trying to catch up with the West, “we thought only of improving Japan,” said Takashi Ishihara, 73, chairman of Nissan Motor Co. From now on, Japan must start working to help enlarge the economy of the world, he said.

With huge surpluses accumulating in current accounts--the total of trade, shipping, tourism and other non-trade international transactions--Japanese leaders agree that they need to do something to promote additional growth at home to pull in more imports and ease pressures to export.

Excess Savings Flow Overseas

But how to do it is a question that has not been answered.

“No matter how much we may try, we cannot eat twice as much as we eat now, nor can we wear twice the amount of clothing we now wear,” Hosomi said. “Even for building homes, we don’t have that much land.”

The snowballing current accounts surpluses wind up as excess savings, which cannot be used at home. So the funds flow overseas, driving down the value of the yen, strengthening the dollar, making Japan’s exports even better bargains and American products still more expensive in Japan. Ever-greater trade surpluses are the result, Takeuchi said.

Government leaders are now talking about trying to use more of the nation’s savings at home by mobilizing private enterprise, which is not saddled with the debts that the government has, to carry out large-scale public works projects. A new airport in Osaka Bay to be built with private funds is one example.

Fukuda, however, thinks that the prime emphasis should be on housing.

He recalled that, when a visiting prime minister of Thailand was a guest at his home, the Thai asked: “Is this the home of the prime minister of Japan?”

“And my home is one of the better ones,” Fukuda said.