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Where Japan Stands

Where does the Japanese economy stand at the dawn of the new millennium?

July 19, 2000

Where does the Japanese economy stand at the dawn of the new millennium?

Usually when a country hosts a G8 summit, it tries to be in top shape economically. Not so in the case of this year’s G8 summit, which occurs this weekend at Okinawa, Japan. It was only a decade ago that most economists were marveling over Japan’s economic successes. Then the economy suddenly ran out of steam. Our new Read My Lips feature examines what people really have to say about Japan — its successes, its failures, its future.

Recent years have brought on an uncharacteristic dose of Japanese self-criticism …

“I want to diversify my portfolio to mitigate risks … Earthquakes may hit Japan.”

(Retired construction executive, on why he turned to online stock trading, May 2000)

Why do more and more Japanes women opt for a career?

“Japanese women have been disillusioned by their mothers. They devoted themselves to their children and husbands — and what did they get for it?”

(Japanese career woman, January 2000)

Are Japanese taxes a heavy burden?

“We work hard to own a house and then a grave.”

(Japanese woman, May 1999)

Do Japan’s bankers have confidence in themselves?

“We are at wits’ end — at the moment of final reckoning.”

(Japanese central bank official, on the prospects of a strong yen contributing to slow economic growth, January 1998)

What do Western economists think?

“Japan, uniquely among the world’s major nations, has managed to recreate 1930’s economics at the dawn of the 21st century.”

(MIT economist Paul Krugman, May 2000)

Does Japan bet on the wrong economic models?

“Having the public sector hire more people, loaning more public money to private business development — all this smacks of a quasi-socialist attempt at engineering economic growth.”

(Andrew Shipley, an economist at Schroders Japan, June 1999)

Occasionally, top U.S. officials have taken up a similar line of reasoning …

“[The] traditional communist economy puts an emphasis on coordinating economic activity relative to motivating economic activity. I think it is fair to say that the Japanese approach to management … has probably put somewhat more emphasis on coordination than motivation of economic activity.”

(Larry Summers, U.S. Treasury Secretary, November 1995)

But U.S. officials still respect the size and importance of the Japanese economy …

“Yes, we are currently studying the prospects for future U.S. relations with the four other major economic powers in the world — Japan, Germany, uh, Japan, Germany — uh, uh, Ch-China, and, and Russia.”

(Senior Clinton Administration official, July 1999)

How important is Japan to the United States?

“I believe that the U.S.-Japanese relationship is our most important bilateral relationship.”

(Richard Holbrooke, the new U.S. Ambassador to the United Nations, September 1999)

Does Japan value advice from the United States?

“Mr. Summers has been very kind in advising us. I am moved to tears — but we would like to do our own thinking.”

(Taichi Sakaya, director general of Japan’s Economic Planning Agency, October 1999)

What is Washington’s key role in the region?

“The Americans can play the Japanese card with the Chinese, and the Chinese card against the Japanese. But Japan and China have no card to play against the Americans — not unless they can act together, which is unlikely”.

(Lee Kuan Yew, former prime minister of Singapore, November 1998)