The Japanese Miracle

By Hunter Wallace

From the Prestowitz book:

“Beginning with Japan, however, Asia became a completely different story. Japanese leaders completely rejected fhe free-market, free-trade Anglo-American doctrine and set out on their own version of the Hamilton road. …

As Naohiro Amaya, the former vice minister of Japan’s Ministry of International Trade and Industry (MITI), once explained to me: “We did the opposite of what American economists said. We violated all the normal concepts. The American view of economics may help business to increase current production or to lower current costs. But research and development is necessary for the future, and it is a gamble. Businessmen are risk-averse. They hesitate to take the gamble on new developments. Therefore, if the invisible hand cannot drive the enterprise to new developments, the visible hand must.” In this regard, MITI official K. Otabe also once noted that “if the theory of international trade were pursued to its ultimate conclusion, the United States would specialize in the production of autos and Japan in the production of tuna.” But he emphasized that this would not be the case, because the Japanese government believed that the creation of certain industries is “necessary to diversify and promote the development of the Japanese economy.”

US trade negotiators once told the Japanese after the Second World War that they were foolish to develop automobile and consumer electronics industries. Japan had a comparative advantage in seafood.

12 Comments

  1. The Americans studied how Britain became a great power until it adopted the free-market, free-trade doctrine in the 1840s.

    Germany copied the American model in the late 19th century to become the dominant great power in Europe.

    After the Second World War, Japan rejected the free-market, free-trade model in favor of the neo-mercantilist model that had made the US and Germany great powers.

    In East Asia, China, South Korea, Taiwan, Malaysia and Singapore copied the successful Japanese model. Vietnam, too, has recently embraced it.

  2. What about the Soviet Union, Mao’s China, Ho Chi Minh’s Vietnam, East Germany, Cuba or North Korea?

    Authoritarian state socialism is not the same thing as private sector-government coordination of the economy. It lies in the difference between killing the kulaks and hunting down the bourgeoisie and taking the opposite approach where the government works closely with them to nurture its own industries. Also, the difference between no private property and state ownership of industries where the government is the only employer and a mindset where everyone in the nation is kind of on the same team.

  3. “Authoritarian state socialism is not the same thing as private sector-government coordination of the economy. It lies in the difference between killing the kulaks and hunting down the bourgeoisie and taking the opposite approach where the government works closely with them to nurture its own industries. Also, the difference between no private property and state ownership of industries where the government is the only employer and a mindset where everyone in the nation is kind of on the same team.”

    It’s called fascism, and I don’t mean that derisively.

  4. It would be very difficult for the US to transition to their style system. The corporation heads have much less power. They would resist it. There is one way to do so though. The US has spent an extraordinary amount on research and Dev. The US corp. just take this and do what they will with it. If we changed this where they could only use this tech in the US or with permission it would immediately change the ratio of power. An example is the wing on the new Boeing 787. Largely carbon fiber paid for with vast amounts of American R&D dollars. Yet to the Boeing managers just gave it away to Japan. They have no long term interest in Boeing. They just want high stock prices NOW. Even if the competitiveness of the company is destroyed in the process. Changing one law on sharing the R7D we paid for would help bring some of this back in line.

    The same thing happened in electronics. We’re behind and new technologies cost ever more to start up. Facebook is not an industrial policy.

  5. What works for one country may not work for another ; or work when circumstances change for that country. For example, the “Scandinavian model” might have worked in Scandinavia in the post second world war enviroment and with a homogeneous population that shared the “work ethic”. But things have changed…

  6. When Japan was asked to take in “Syrians” they said, we are too demographically vulnerable, and until we solve the demographic problem, we cannot concern ourselves with this.

    An anti-genocide policy.

    I have a great deal of respect for the samuri; they know the score.

  7. Pretty much.

    There is no one size fits all of economic development. Something that may have worked at one time and in one set of circumstances might be a folly tried elsewhere. A good example of this would be constitutional government in the Democratic Republic of Congo.

  8. Yup Mugabe worked in the post colonial bliss of the 80s. After the Cold War he reduced Zimabwe to beggary.

  9. “I thought Japan has been in a sustained recession the last couple of decades?”

    When Wall St moved US factories to China it created a tsunami of cheap manufactured goods that hammered all the industrial countries (including the US of course). Japan is holding on pretty well under the circumstances.

    A lot of the negative stuff you read in the western media is just sulky BS cos they’re annoyed Japan won’t open its borders.

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