Q: If we loosely define racism as an inherent desire in a person to promote and advance the interests of his or her race, I would contend, for the sake of discussion, that most people are racist. And that racism, as defined, can be a good and healthy thing. Would you agree?
A: No. No, I think we live in an increasingly small world, and to make divisions based on race is not to anyone's benefit.
Q: How about nationality?
A: I think nationality is inevitable and necessary. The reason is that, although we may be moving toward a world economy, many aspects of economic behavior are still determined by nationality--they just are. In other words, I can buy a car that comes from many parts of the world now. But I will drive it on an American road; if I get in an accident, I will be in the American legal system; if I get injured, I'll be in the American health- care system.
So, it's not unreasonable to imagine that, at least as we're in a transition to a world economy, it's still necessary now to pay attention to how our country is doing economically in comparison with other countries. To become poor, to move in the direction of decline, to have the good- paying jobs disappear, to abandon our manufacturing sector, to not have a national economic policy as do our competitors--these are all bad ideas.
Q: Has the continued decline in the Japanese stock market, their falling real-estate value and shrinking foreign investment caused you to rethink your views of Japanese-American business dealings?
A: No, not at all. I've not seen figures on what the growth of the Japanese GNP will be this year. You hear stories about economic distress in Japan, but you see that the growth rate is going down to 4% from 5%. If this country had a 4% growth rate, we'd all feel like we were pumped full of testosterone.
Q: How did you feel when Matsushita bought Universal Studios?
A: Fine. It didn't bother me a bit, because that sale doesn't have large economic consequences for the nation. Did it bother you?
Q: Yes. My reaction was best put by Akio Morita, whom you quoted at the end of "Rising Sun," saying, "If you don't want Japan to buy it, don't sell it." I was more aggravated by the owners of Universal than I was by Matsushita. In the book, you seem as ready to blame the U.S. for its own decline as you are to blame Japan. True?
A: I think there's no question it's an American problem.
Q: What allowed us to contribute so willingly to our own weakening? Greed? Altruism? Shortsightedness? Arrogance?
A: (following a large sigh) You have to look back at broad time periods. It's possible now to argue that Americans have had no increase in real earnings power since 1962. Some economists would dispute that, and set the date at 1973.
Either way, the country is in a steady, consistent and ongoing decline. Why? That's an extended conversation. I'll just mention three things I think are of equal importance.
First, American business emerged from the postwar period in a position of tremendous superiority. Principal competitors of pre-World War II--Germany and Japan--are devastated. So American business is pumped up from wartime production, and everyone is feeling really good. We are on top of the world. That inevitably breeds complacency, and Americans had a long period of complacency.
Secondly, in the postwar period, Americans turned away from quality as the principal goal of manufacturing and made cost the principal goal. Japanese, restructuring their companies, made exactly the opposite decision. American quality-control experts who worked in America during the Second World War, became very nearly living treasures in Japan. So Japan and Germany have had decades of structuring business in the direction of quality, whereas Americans have had decades structuring business according to . . . other principles.
Thirdly, the cost of capital. The decline of the individual investor and rise of the institutional investor as the primary player in the stock market, and the change in tax laws so there's no advantage in long-term as opposed to short-term investment, have meant that the American stock market is now entirely speculative.
No one invests in a company anymore, in the way it was done in the '50s, say, because they believe the company is good. They buy because they think the price of the stock will rise or fall. What this means is that American managers are obliged to manage in the short term. There's no incentive for an investor to hang on with a company for the long term. In Japan, savings--up to a certain point--are tax free. Why is that not also true in America? You want savings? Then don't tax it as ordinary income.