3/1/2023 0 Comments Japanese economy 80s freeter![]() ![]() The esteemed writer James Fallows “wrote a series of articles on Japan…in which he hinted at the darker side of the Japanese character by citing the sadomasochistic violence in Japanese sex comics.” A string of books appeared with titles like The Japanese Challenge and Japan as Number One. Bentsen fretted, “We are in a trade war, and we are losing it.” In 1988, commentator Paul Harvey warned of “an economic Pearl Harbor” in an article titled “ Japan buys US with our money.” Then, as now, military metaphors entered circulation. As a wise man once said, “A government bureau is the nearest thing to eternal life we’ll ever see.” That wise man was Ronald Reagan in 1964. Initially set to run until 1983, they were renewed annually until 1994. The Japanese government acquiesced, agreeing to a system of voluntary export restraints. In 1981, Senators John Danforth (R-MS) and Lloyd Bentsen (D-TX) proposed a bill to establish import quotas for automobiles. That is, to convince the Japanese in one way or another that, in their own interests, that deluge of cars must be slowed while our industry gets back on its feet. This is where government can be legitimately involved. During his 1980 presidential campaign, Ronald Reagan said The American auto industry found eager defenders in both parties. Then, as now, American producers began demanding, and getting, protection from Congress and the president. These dollar inflows showed up as a surplus on the US capital account, offsetting the ballyhooed deficit on the trade account. What could Japan do with these dollars? They sent them home, using them to buy assets like the Mobil Building in New York in 1987, Firestone Tire and Rubber Company in 1988, and the Rockefeller Center in Midtown Manhattan in 1989. Surely, the Americans were doing better out of this. ![]() Where America piled up consumer goods, Japan piled up dollars. These dollar inflows showed up as a surplus on the US capital account, offsetting the ballyhooed deficit on the trade account.īut the flipside of this was that the Japanese, like the Chinese now, were selling more stuff to than they were buying from a particular trade partner, giving them a trade surplus. This totaled $49 billion with Japan in 1989, which so alarmed businessman Trump. Then as now, the US found itself buying more stuff from than it was selling to a particular trade partner, resulting in a trade deficit. Then the rise in gasoline prices arising from the two oil shocks (the 1973 Arab oil embargo and the 1979 Iranian revolution) switched demand away from the large American cars and toward the Japanese imports.īetween 19, Japanese manufacturers’ share of total US new car sales rose from 9.4 percent to 22.6 percent. Process innovations that had been developed at Toyota in the 1950s and 1960s, and then diffused to other Japanese companies, had lowered the production costs of the Japanese auto manufacturers and boosted their exports. With automobiles, as economist David Flath explains: Superior productivity gave Japanese producers an edge in these newly competitive markets. ![]() Together, these reduced tariff rates in all the developed nations (averaged over dutiable items) by about one-third. Then as now, since China’s accession to the World Trade Organization in 2001, American producers have been faced with increased competition from more productive foreign firms.īetween 19, the Kennedy Round of talks took place under the General Agreement on Trade and Tariffs (GATT), followed by the Tokyo Round (1973-1979) and the Uruguay Round (1986-1993). Japanese cars, Chinese steel, the song remains the same. They aren’t the words of President Trump talking about his misguided trade war with China in 2019 but of businessman Trump talking about the trade deficit with Japan in 1989. These are familiar words from Donald Trump. When a country is losing billions and billions and billions of dollars a year and when other countries are making hundreds of billions of dollars, something is going to burst. I know from a common sense financial standpoint that something has to burst. ![]()
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