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U.S. Caught Flat-footed Once Again?

June 15, 1997|David Friedman | David Friedman is an international consultant and fellow in the MIT Japan Program

At the end of the 1980s, Japan was hailed as the world's next superpower. Magazine covers portrayed the nation as an invincible dragon, the symbol of the coming "Asian century." Best-selling novels and films offered frightening visions of America wilting in the glare of Japan's "rising sun."

Less than a decade later, after Japan endured an unprecedented period of stagnant growth, political gridlock, bureaucratic scandals and domestic terrorist attacks, the idea of Japan as superpower seems laughable. The same magazine covers that giddily proclaimed "Japan as No. 1" now depict the country's sun setting into dark seas. Far from a confident dragon, Japan is just a puppy, albeit with a talent for making auto parts.

But cover illustrators may need a new metaphor. The puppy is starting to morph.

All but ignored, Japan's economy is among the hottest in the world, growing 600% faster than in 1994. Its resurgence is paced by falling yen rates, still-unmatched technical and manufacturing prowess, and at least some resolution of the financial crisis caused by its wildly speculative '80s investment binge. If Japan's expected triumph was vastly overstated, reports of its death were equally premature.

Indeed, America's spectacularly inaccurate assessment of Japan, the world's second-largest economy, raises troubling questions of whether the United States can comprehend, let alone cope with Asia in general. Unlike the nuanced treatment afforded Europe, Americans treat Asian issues as a stark choice between good and evil, a passion play among dragons and puppies, with almost nothing in between.

This startling myopia developed because, to a greater extent than most other regions, Asia historically shared few of the cultural experiences Americans often assume are common everywhere. In Japan, for instance, abortion has been an accepted birth-control method for centuries; most Asian countries harbor decidedly unfashionable gender, racial and nationalistic prejudices; many reject basic individual rights taken for granted in the United States.

All this posed problems after World War II, when mostly U.S. elites advocated extensive international economic and political ties to promote lasting peace. How could such links be forged with regions like Asia, which diverged so dramatically from mainstream Western values?

Some conservative economists constructed a theory that ingeniously evaded such difficult questions. As global commerce expanded, they reasoned, each country would inevitably adopt the same political and social values necessary for economic success. Those that didn't would be punished by the market. In the long run, values, ideologies and prejudices simply wouldn't matter.

As long as Asia remained weak, few questioned this "developmental" approach. But as Japan and other Asian "tigers" mounted spectacular economic successes, a growing number of observers began to worry about the consequences of still pervasive, if not expanding differences between U.S. and Asian societies.

Such concerns were ridiculed. Developmental economists steadfastly asserted that economic "science" guaranteed political and social convergence. Their dismissive attitudes incensed their critics who, in turn, redoubled their attacks. The result has been a never-ending passion play in place of more reasoned policy debate.

Fortunately, the consequences, so far, are limited to serious but not imminently critical matters like misunderstanding America's chief economic competitor. The challenges posed by China--a potentially hostile nuclear power with a dismal human-rights record and an economic policy that bluntly extorts technology, supply contracts and domestic investment as the price for access to its market--considerably raises the stakes. The United States cannot afford to approach modern Asia with the same infantile perspectives that so grossly botched its views of Japan.

Yet, as this month's congressional debate over renewing China's most-favored-nation (MFN) trade status painfully demonstrates, not much has changed. Echoing years of Washington orthodoxy, economists and free-traders dismiss the thought of linking commerce with moral suasion, insisting that, over time, China is just a rambunctious puppy that will be tamed by the necessities of economic development. MFN opponents warn that China is a rapacious, unprincipled dragon, a Japan with slave labor. Blithely pursuing technology and trade relationships with a country that so openly flaunts basic norms will legitimate injustice and permanently harm fundamental U.S. interests.

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