Japanese Economic Prosperity And Recession

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Ten years ago this month, Japanese farmer Kanzunari Takahashi sat in his house near the town of Ichidoriyacho and talked passionately about why his country could never open up its borders to imported rice. "It is very difficult for Japanese farmers like me to reduce production costs, and I am worried about prices going down," he told this correspondent. Kanzunari had 12 acres of rice, and was a big farmer by his country's standards. His rice fields were smaller than the lawns of some Americans. But his argument was big and powerful, and won out in Japan.

So despite a worldwide move toward open markets — one the United States eventually joined and pushed with major trade agreements in the 1990s — major parts of Japan's ...
... economy and its consumer market hunkered down behind centuries-old economies and traditions.

A few days after the interview with the farmer Kanzunari, the press secretary for Japan's foreign ministry recounted that rice was more than a commodity in Japan; instead, it was a "sacred" part of Japanese culture. "So it is very difficult to approach this program from a purely economic angle, "said the press secretary, Tailor Watanabe. Ten years ago, Watanabe and Kanzunari could make these cultural and economic protectionist arguments from a position of strength.

Today, Japan's failure to modernize major parts of its economy and more fully embrace a global market are why some economists believe Japan is in worse shape than anyone would have dreamed 10 years ago. In 1991, Japan's economy was seen as a threat to America's, which was just coming out of recession. There were dire predictions in the United States that the Japanese were buying up America, piece by piece, and driving core US industries into the ground. Authors like Pat Choate were warning about Japan's growing influence in American political affairs.

Today, Japan's major banks are in trouble. The country's real estate market has collapsed, threatening the solvency of many ordinary people. And rather than being a threat to the United States, Japan threatens to become a burden to the rest of the world, its financial woes threatening to stretch beyond Asia. It's happening at a precipitous time, with the slowing of the American economy and other economic disruptions — foot-and-mouth disease in Europe among them — all converging.

Japan's experience could be a cautionary note in an argument now going on in the American body politic. Beware, of the predictors. When it comes to economics, trends are one thing, human events another.