Those Who Blame Japan See Only Part Of The Story

January 06, 1992|By Greg Steinmetz | Greg Steinmetz,Newsday

In 1853, Commodore Matthew C. Perry guided four warships into the waters outside Tokyo.

His mission: to force Japan to open trade relations with the United States. After Perry showed up a second time with even more ships, Japan gave in and let the United States trade at two Japanese ports.

President Bush will be visiting Japan this week with a similar objective. Instead of warships, he will bring along 21 corporate chief executives and the unstated threat of sealing off U.S. markets to Japanese products.

Mr. Bush wants to help U.S. companies penetrate Japan's markets and, in the process, help the ailing domestic economy and his slipping popularity. He says that for every $1 billion of U.S. goods bought in Japan, 20,000 jobs are created in the United States.

The visit also fosters a growing belief among Americans that Japan deserves some of the blame for the U.S. economic problems, a belief that is as true as it is false. The Japanese have soared ahead in the manufacture of products ranging from steel to television sets, causing nightmares for U.S. companies and prompting widespread layoffs.

But to blame Japan for the recession is an exercise in scapegoating, observers say. Japan didn't tell General Motors and U.S. Steel to modernize so slowly. Japan didn't tell the United States to let schools deteriorate. Japan didn't tell U.S. consumers to go on a borrowing binge.

"When you've got a government that says none of this is our fault, then the Japanese have a right to be angry," said Bruce Scott, an economics professor at Harvard University's business jTC school.

And the idea that trade with Japan is a one-way street is mythology. The Japanese buy more U.S. goods per capita than Americans buy from them. Chrysler owns 11 percent of Mitsubishi, one of Japan's largest companies. Coca-Cola is the biggest maker of soft drinks in Japan. Only Canada buys more U.S. goods than Japan, and U.S. companies do well selling tobacco, drugs, grains, soft drinks and computers to the Japanese.

By going to Japan, Mr. Bush is applying more pressure than ever. Yoshi Tsurumi, a professor of international business at Bernard M. Baruch College in New York, says the president erred by bringing along the business leaders, many of whom, including Chrysler's Lee A. Iacocca and Motorola's Robert Galvin, are perceived as Japan-bashers.

"Bush's silly grandstanding has hurt his image as a leader," Mr. Tsurumi said. "He looks like a showman."

Mr. Tsurumi worries that Mr. Bush's visit will only whip up emotions on both sides of the Pacific. Recent Japanese best sellers have included an American book called "The Coming War With Japan." A Japanese book is called "The Japan That Can Say No," a title suggesting a Japan no longer dependent on U.S. military might.

Americans have their own worries about the Japanese. Polls show most Americans overwhelmingly perceive Japan as a bigger threat than Russia.

Mr. Bush's yardstick for success is the merchandise trade deficit, which stands at about $41 billion a year with Japan, accounting for almost half of the total U.S. trade deficit. Although the deficit with Japan has fallen since 1987, many expect it to rise in coming years. More than 60 percent of the deficit relates to automobiles and auto parts.

But the deficit is misleading because it does not take into account services, such as engineering consulting, where the United States has a $9 billion surplus with Japan. Also, the gap could be narrowed immediately if the United States chose to export more logs and other raw materials in short supply in Japan, a mountainous country the size of California.

The United States has been losing ground to Japan economically for decades. In the 1960s, Japan took over the lead in radio production. In the 1970s, it was televisions. In the 1980s, it was automobiles. In the 1990s, it could be computers.

The Japanese have even begun to beat the United States on U.S. territory. Last year, Honda, which builds more cars at its U.S. factories than it does in Japan, passed Chrysler as the third-biggest automaker in the United States.

But, while Japanese car production was increasing at an average annual rate of 26 percent from 1966 to 1972, the Japanese people were doing without. By saving twice as much as Americans -- in part because they pay more of their own money for retirement and health care -- they provided money for industry to invest.

Japanese living standards have begun to approach those in the United States, but the Japanese still make do with less. Apartments are tiny, cars are expensive, and vacation time is scarce.

Japan's decision to put industrial power ahead of living standards is the reverse of the U.S. approach, which assumes the government has no place meddling with business.

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