Japan mired in losing streak World nervously waits for nation to bounce back

August 23, 1998|By Hal Piper

TOKYO - The Orioles' Hall of Fame manager Earl Weaver used to say that a team is never as good as it looks when it is winning, and never as bad as it looks when losing. Japan's new prime minister, Keizo Obuchi, might take comfort in that.

Japan's losing streak is about as old as the decade, but it seems to be accelerating. Business-page headlines this month have been uniformly dreary - bankruptcies up; stock market down; corporate capital investment down; banks cutting off credit to shaky companies; corporate bond ratings downgraded.

Naturally, everybody knows what Japan should do. American, Chinese, Malaysian and other governments are pestering Japan to do the right thing. Japan's editorial writers agree that the Obuchi government is not doing the right thing. Sample headlines - "New leader, old ideas"; "Obuchi's first failure"; "A quick thumbs-down for Obuchi"; "Obuchi off to fizzling start."

Imagine! Keizo Obuchi has been prime minister for three entire weeks without solving the crisis. The nincompoop!

But Japan's recovery is the world's business, not only Japan's. Japan is by far Asia's largest economy, and if it could boom, the increased business activity would stimulate the flagging economies of its trading partners in South Korea, Thailand, Indonesia, the Philippines and Malaysia.

Conversely, a weak Japan weakens the rest of Asia. A falling yen - its value against the dollar is only 60 percent of what it was three years ago - squeezes the export competitiveness of the other Asian currencies. If the yen drops much further, analysts say, a round of currency devaluations might spread throughout the region, beginning perhaps in China. Just how seriously Wall Street takes Asia's economic weakness was seen the other day when the stock market took a 300-point, one-day drop.

In Western eyes, Japan oscillates marvelously between titan and pygmy. In the 1950s, "Made in occupied Japan" signaled the cheap trinkets - pretty shells wrapped in paper streamers and the like - produced by a defeated former enemy.

I lived in Japan for a year and a half beginning in 1964. Japanese saw that as the year they reclaimed their place on the world stage. It was a matter of great national pride, given the dryness of the subject, when Japan was accepted into the Organization of Economic Cooperation and Development - the club of advanced industrial countries. And that year the world came to Tokyo for the Olympic Games. Japanese felt that their country had recovered from the pariah status of World War II loser.

Still, Japan was eager to please. In hopes of being found worthy by the Western world, members of the public and private sectors tried to bury everything that was thought to be too Japanese.

Sometimes the results were almost farcical. There are too many barking dogs here, a letter writer complained to a Tokyo newspaper - what will the foreigners who come to the Olympics think of us? Can't somebody collect all the dogs and humanely cut their larynxes to silence them?

And: What shall we do about the old men - retirees - who sit in the air-conditioned airport lounge every summer day in their underwear? Is this the picture Japan wants to present to the world? Can't these old men be rounded up, at least during the Olympics, and settled somewhere where the foreigners won't see them?

By 1980, when I returned to Japan, the country had recovered not only its economic prowess but also its self-confidence. While the United States was experiencing "stagflation" - no growth, but rising prices - Japan captured world markets in automobiles, cameras, television sets, steel and other industries. Within a few years, books would be published: "Japan as No. 1" and "The Japan That Can Say 'No.' "

An official of the Ministry of Trade and Industry silkily told a group of visiting American journalists: "Japan has learned much from the West. Now, perhaps Japan has much to teach the West."

This month I returned to Japan for two weeks, and the wheel has turned again. The United States revels in its Goldilocks economy - not too hot and not too cold, but just right - and Japan is a stumblebum. Its economy this year will produce less than it did last year, while unemployment has climbed to a modern record. Its stock market is off 60 percent from its highs of a decade ago, meaning that the paper millionaires created by the stock and property boom of the 1980s are 60 percent poorer than they thought. And banks list as assets on their books an estimated $1 trillion - yes, trillion - in loans that will never be repaid.

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