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Preparing For the Twenty-First Century by Paul Kennedy
Chapter 8: The Japanese "Plan" for a Post-2000 World
Preparing For the Twenty-First Century by Paul Kennedy
Chapter 8: The Japanese "Plan" for a Post-2000 World
• "Can Japan continue to be an island of prosperity in a sea of discontent"
Japan’s Isolation Policy
• Japan's economy and standard of living have skyrocketed over the past 4 decades.
• Japan is a tiny island in the large Asian block of countries.
• Japan has isolated itself from the rest of the Asian countries.
• Keeping all of the prosperity at home while many of the Asian countries starve.
Island of Prosperity
• Since 1945, Japan’s rate of creation wealth has been the fastest in the world.
• GNP has exploded: • 1951 - The Japanese GNP was 1/3 of Great
Britain’s and 1/20 of United States’• 1993 - 3 times Great Britain and 2/3 of United
States
Island of Prosperity
• Social Harmony• Cultural Uniqueness• Strong National Identity• Social and Racial Coherence• Individual Sacrifice for the Good of the
Collective
Sea of Discontent
• Can Japan remain isolationists when an increasingly large number of their Asian neighbors starve?
• In 25 years Asia's population is expected to be as high as 5 billion.
• A widening separation between the "haves" and the "have-nots."
• A more assertive and aggressive China.
• Severe North Korean hunger crisis which could lead to a war against South Korea
• Can Japan overcome a potential negative global reaction against their national protectionism policies, and dominating self proclaimed superiority?
Japanese Educational System (Positives)
• Teachers are highly valued.
• Learning is reinforced at home and with "crammers".
• Japanese study 220 days/year including Saturday half days.
• This compares with only 180 days in United States.
• By the time Japanese are 14 years old, they have as much education as a 17 or 18 year old American.
• Japanese students continue to outscore US and European students on standardized tests.
Japanese Educational System (Negatives)
• Subjects focus on factual acquisition rather than the free flow of debate and ideas.
• The rigid education is based on facts and group think. --not creativity
• This education style tends to lower creativity and self expression.
• This weakness later appears in Japanese factories and organizations.
• Higher education has also underperformed in creative research.
• As of 1987 Japanese had won only four Nobel Prizes in science compared with 142 for the United States.
Japan's Financial Strength
• Tax system encourages personal savings.
• Aging population and high cost of housing further promotes savings.
• Banks and insurance companies are flush with capital.
• Lending money at low interest rates to manufacturers.
• This gives Japanese companies a significant cost advantages over foreign rivals.
• The "Keiretsu" is a form of corporate shared ownership of many firms and banks.
• This shared ownership allows managers plan for the long term without regard for quarterly profits.
The Globalization of Japan• Japan dominates many international market products and
services.
• Highly integrated with western Pacific and east Asia.
• In 1991, 36 out of the world's top 100 companies were Japanese.
• 29 of the world's largest banks are Japanese. Germany has 12, France 10 and US and Italy have 9.
• 4 of the world's top 5 insurance companies are Japanese.
• The top 4 Security firms are Japanese.
• High Soft Power with IMF and World Bank.
• Global economic vulnerability has always been the price Japan has had to pay in achieving global commercial preeminence: and that vulnerability is, if anything, increasing.
Japan’s International Trade Strategy
• “Japan Inc.” avoids the rules of international free trade.
• Imposes Discriminative Tariffs.
• Manipulates the distribution system. Fixing contracts in secret.
• Buy technology -- and then dominate the production markets with exports.
• Establish global points of presence, in order to remove own barriers.
• Japan exports and Sub-contracts on a global scale.
• Perceived victim: US 40-50 billion dollar trade deficit
Japan's Long Term Growth Strategy
• Plan for decades in advance. Ignore quarterly profit reports.
• Increase capital spending. Japan's capital spending has exceeded that of the US in absolute terms.
• Invest heavily in education and Research & Development.
• Highest rate of qualified scientists and engineers.
• Over 800,000 Japanese are engaged in R&D, more than Britain, France and Germany combined.
• Switch to high value added products, and away from labor intense products.
Negative Aspects of Culture and Society
• Rigid Hierarchical Social Structure.
• Rigid social conformity to the point of repression of civil liberties.
• High Suicide Rate
• High cost of living and reduced purchasing power.
• Emphasis on national superiority transcends to a deep streak of racism.
• Reflected on views against Koreans, Chinese, American blacks, and other non-Japanese ethnic groups.
Negative Aspects of Culture and Society
• Enormous privileges to a select group of males who run the large corporations and bureaucracies, and control the ruling Liberal Party.
• Majority of population has cramped accommodations, excessive work hours, group calisthenics, and with the only consolation of national pride.
• Women are meant to take care of the home, manage the savings, and ensure the children's after-school education.
The Costly Life of Japanese Consumers
• Japan's Average per capita income is the highest in the world.
• But real purchasing power is diminished with higher living expenses,
• such as high prices on cost of food, consumer goods, land, and housing.
• Society is also behind in public facilities, sewage disposal and places of recreation.
Japan's Food Crisis
• Uncompetitive Farms translate into higher food prices.
• Restrictions on food imports worsens the dilemma.
• Japan is purchasing agriculture/biotech technologies to improve situation.
• Purchasing and managing beef farms in the US and at home.
• Japan’s food source is dependent on the rest of the world.
• In times of global crisis, food supply and prices could negatively impact their society.
Japan's Aging Population/What to do?
• Life expectancy in Japan has increased dramatically. • From a life expectancy of 45 years to 76 years male, 82
years female.• Total fertility rate has decreased to 1.5 births per
woman. • This is below the average 2.1 births per woman needed to
maintain the population.• In 25 years Japan will have the highest ratio of people
over 65.
Japan's Aging Population/What to do?
• The use of robotics and automation of many processes.
• Allow Immigration only for scientists and engineers.
• Continued Outsourcing as a solution.
• Have women enter the workforce.
Do we want to a militarized Japan?
• No military spending. (Less than 1 percent of GNP)
• Accused of free loading on America's military supremacy.
• Extremely Efficient with a dominating mentality.
• Memories and feelings of the past still present.
• Japan has a proven record of imperialistic expansionist policies.
Japan: A Crisis in the making
• Extraordinary high property prices and almost equally inflated stock prices.
• Volatile paper assets used as collateral on real estate and overseas operations/acquisitions.
• Real Estate industry trouble could require major sell-offs to increase bank liquidity at home.
• Japanese pride and honor could result in an under- reporting of economic problems.
The Big Japanese Question:
• What should Japan do to maintain its global dominance?
• Switch to more value added products.
• Spend more and save less.
• Focus more on consumption, enjoy more luxuries, and be more cosmopolitan.
• Strive for less structured and hierarchical society.
• Reduce trade barriers for better public relations and lower consumer prices.
• Shift from an industrial base to a service based economy.
• Outsource low value added manufacturing.
• Some of these points would deviate from current Japanese philosophy.
Japan's Current Problem
• $600 Billion In Bad Loans
• Billions Of Additional Bad Loans Go Unreported
• Real Debt May Equal 250% Of Japan's Output (11 Trillion Dollars)
• Government Gridlock