In one corner of the bustling media centre at the Toronto economic summit, the scene was sofas, sushi and snoozing Japanese journalists. During the three days of the summit, Japan’s media contingent of 231 editors, reporters and photographers was both jetlagged and overworked. Japan’s six major TV networks devoted an extraordinary amount of time to summit coverage-one network provided 18 hours of coverage over the three-day affairwhile others, German or French or American, squeezed in two-minute vignettes throughout the day to be sandwiched between news of local fires or murders or scandals. The Japanese are the world’s foremost information junkies. Knowledge is power, and that has been their strength. But the West had better catch on. If only more was understood about the land of the rising sun, Japan would get away with less.
Japan, in a word, has played a very cunning post-Second World War game, but may not for much longer. Margaret Thatcher and Ronald Reagan have both taken aim at Japan’s protectionism, which has made the country rich at a frightening pace. And while success has also been earned through innovation and hard work, the fact is that the Japanese have shared in the profits of Western prosperity but not in its costs, such as defence and foreign aid. And it is about time things changed.
Japan’s lust for information is not surprising. That is how it learned to create products that met Western needs— and then set about to make those things more cheaply than anyone else. Its population is one of the world’s most literate and educated. But Japan’s remoteness—both culturally and geographically—from its Western markets and foreign investments enhances the appetite for information. One Japanese broadcaster complained that his Tokyo bosses were not satisfied unless his staff skipped sleep during the summit and filed stories constantly.
It was extremely telling to observe a nation so devoted to information and yet so inaccessible to journalists. Aides to the delegation members were polite and prompt in returning phone calls and distributing glossy brochures that sang the praises of Japan in great factual detail. But the Japanese delegation itself seemed devoted to maintaining a low profile. Prime Minister Noboru Takeshita and other top politicians remained
unavailable for speeches or interviews with the foreign press. And when senior officials were served up at news conferences, they were well-versed in the art of bureaucratic bafflegab. “I am sorry but that is the way I will answer the question,” said one official as he dodged a media question.
Japan cannot duck attention any longer. It relentlessly buys American and Canadian assets. By 1990, about $1 billion a month, roughly twice as much as now, will likely stream into Japan in the form of income from foreign investments. Even more dramatically, at current growth rates, Japan could surpass the United States within 10 years as the world’s biggest economy. That is in great part due to the success of the Japanese as traders. But it also has a great deal to do with the way Japan conducts its internal affairs.
For instance, the Tokyo Stock Exchange represents 42 per cent of the val-
Western nations had better catch on — if only more was understood about Japan, it would get away with less
ue of all the world’s stock exchanges. Underlying that is the fact that the total value of real estate in Japan is higher than the $2 trillion worth of real estate that exists in the United States, even though Japan’s land mass is only equal to about three per cent of the United States. But land prices are catastrophically high because of a hothouse effect created by onerous capital-gains taxes. Those taxes are so high that the Japanese are hesitant to sell land or buildings after they have increased in value, which has created a shortage.
At the same time, Japanese banks have become swollen with deposits because of the tax benefits to individuals who sock money away— until April, interest earned on bank deposits was taxexempt. Those banks then lend the landowners mortgages based on the greatly inflated value of their property. That money, in turn, is used to buy more assets in Japan or abroad, is reinvested in ongoing enterprises, or is used to subsidize exports. Such expenditures, in turn, drive up the value of stocks. In essence, then, Japan is an economic anomaly created in part by overinflated property
values, which lead to the overinflation of Japanese stocks, which in turn reap windfalls to corporations who can use those windfalls to beat the competition, subsidize exports—or to buy up the rest of the world.
Little wonder that Japan’s summit partners have been asking Japan to stimulate consumption, instead of savings, among its population. In Toronto, one of Japan’s brochures proudly boasted that Japan’s efforts to increase spending at home have been working, and included a prominent chart showing how domestic demand had been increasing for the past few years. But the Japanese efforts have not been enough for such leaders as Thatcher, who has hammered away at the Japanese about their barriers to scotch whisky and foreign stockbrokers, while Reagan’s officials upstaged the summit somewhat by striking a special deal that scrapped Japanese tariffs against U.S. beef and citrus fruits.
As well, the Japanese do not pay their fair share of the defence and foreign aid tab that makes the world safe for democracies—and multinationals. For instance, the United States spends as much as 10 per cent of its gross national product on defence. But the Japanese constitution, written under the watchful eye of the victorious Americans after the Second World War, stipulated that Japan must remain nonmilitary. Since then, defence expenditures have generally been restricted to less than one per cent of the country’s gross national product—and, given that 43 years have passed since the war, it is time for a change. “Japanese people are very sensitive against militarization because they suffered too much,” one Japanese journalist told me. But others suffered too, and that selective pacifism is nothing more than fiscal freeloading. For one thing, the Americans patrol the Persian Gulf at their own expense—despite the fact that Japan is the greater beneficiary of that. More than two-thirds of Japan’s oil comes from the Gulf, while less than 20 per cent of U.S. oil imports now come from there.
Little wonder that Japan is lukewarm toward the U.S.-Canada free trade deal, as well as the planned total integration by 1992 of the European Economic Community. Both trading blocs are capable of playing a little hardball themselves. “We hope that these do not have adverse effects on international trade,” said Japanese vice-finance minister Toyoo Gyoten. Don’t count on it.
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