The Second Pearl Harbor

As we approach Dec. 7--Pearl Harbor Day--many observers believe the country which once had us on the ropes militarily may one day wrest world economic leadership from us. Is this a second Pearl Harbor in the making?

We of course helped in this process. Gen. Douglas MacArthur returned to a devastated Japan after World War II and exercised leadership towards its recovery. We provided for the defense of Japan, and thus the country was spared the economic burden of providing it. But the Japanese are terribly hard-working, innovative and aggressive in going after world markets.

Everyone of my era can remember where he or she was when we heard about the bombing of Pearl Harbor (I was delivering the Seattle Times). But no one is able to pinpoint when the second Pearl Harbor--the economic one--will occur.

It has become increasingly likely ever since the United States leadership got saddled with the notion that communism is incapable of change. It never occurred to us that the real threat to our hegemony might be another capitalist country that out-hustled us. So we went ahead being driven by the obsession that the Soviet Union was our only significant threat. Huge defense expenditures took priority over every other need.

Yet the evidence was mounting--even before Mikhail Gorbachev--that communism was proving to be a failure as an economic system, at least as it was being practiced. Incentives and other elements of a free market were being introduced into some of the nations of the Eastern Bloc and China.

We faced eastward and snarled like a Doberman pinscher at the Soviets. We have spent trillions on defense which has caused immense disruptions in our economic relationships with other countries.

At the other end of that snarling Doberman, going relatively unnoticed, was Japan and the other rapidly growing economies of the Orient. They went blithely along capturing markets, making equity investments in American real estate and companies, and buying our bonds which we had to issue to finance the defense buildup.

Who knows when the second Pearl Harbor will come. No shots will be fired and no ships will be sunk. It will happen when the yen becomes the universally recognized standard of economic exchange, replacing the dollar. The old saying “As sound as the dollar” will become archaic. The new aphorism will be “as sound as the yen.”

FLOYD A. OLIVER

Los Angeles