1980s Bubble and Bust

The Lost Decades Begin

Nixon Shock(s)

High Growth to Low Growth

Floating Exchange Rate

US Trade Deficit

Plaza Accord

• France, West Germany, Japan, the United States, and the United Kingdom, to depreciate the U.S. dollar in relation to the Japanese yen and German Deutsche Mark by intervening in currency markets. September 22, 1985 at the Plaza Hotel in New York City.

Plaza Accord

• Little impact on US exports to Japan– US claims “structural impediments” – Trade friction continues

• Trophy real estate purchases– Devalued dollar makes US real estate

attractive to Japanese• Rockefeller Center • Pebble Beach Golf Course• Waikiki Hotels

Frightening Japan

• Japan [nation as a whole] is buying up ….

• the Japanese [nation as a whole] are buying up ….

• Companies less likely to be named than in European case– Study by SF correspondent Charles Burress– European investment much larger

Frightening Japan

• UK reaction much different– Japanese investment welcomed especially

compared to German– US paranoia satirized in Bill Emmott,

Japanophobia– Contrast with Fallows, Containing Japan and

Crichton Rising Sun

Maekawa Report

Maekawa Report

• Privatization of government owned companies– JNR 日本国有鉄道 Japan National Railways

• Rural lines built for political reasons• Pension burden from use as employer of demobilized military• Union busting

– Work to rule struggles 順法闘争– NTT Nippon Telephone and Telegraph

• Monopoly impeding progress• High charges

– Buy lines to get phone

– Call back services because of high charges

Hollowing Out 空洞化

Offshoring

• Production by Japanese companies of Japanese products outside of Japan– Automobile factories in Thailand, US, UK, etc.– Large political motivation especially in US case– Tariff barriers, local content regulations– Exchange rate fluctuations

• Decline in manufacturing employment in Japan• Local plant closings

Regional Regeneration

• Amusement and theme parks built in towns and cities that had lost their industries

• Yubari 夕張 in Hokkaido – Amusement park to replace coal mines

• City goes bankrupt in 2007

Yubari

Recognition of Stagnation

• Slow in coming– Rising Sun 1992, three

years after stock market crash ending bubble

– Blindside: Why Japan is Still on Track to Overtake the US by the Year 2000 (1995)

Environmental Change

• Rise of China and Korea– Largely ignored by domestic and foreign

commentators until early 2000s– Japanese firms dismissed as “cheap labor”

production of imitative products– Expected “Japanese quality” to preserve

markets

• Aging population

That’s All Folks

• Slides for lectures, readings– www2.gol.com/users/ehk/keio/postwar– ehk.servebeer.com/keio/postwar

• Office hour– None at Keio

• Email– ehk@gol.com ehkuso@gmail.com– Always put “Keio Postwar”, your name, and student n

umber in the subject line of your email– Email can be in Japanese 日本語も使用可能

That’s All Folks

• Slides for lectures, readings– www2.gol.com/users/ehk/saitama/postwar– ehk.servebeer.com/saitama/postwar

• Office hour– None at Saitama

• Email– ehk@gol.com ehkuso@gmail.com– Always put “Saitama Postwar”, your name, and stude

nt number in the subject line of your email– Email can be in Japanese 日本語も使用可能