Japan, Inc. East Asian Enron?
From the Washington Post: “One week after assuring President Bush of his determination to press ahead with painful economic reforms, Japanese Prime Minister Junichiro Koizumi unveiled an ‘anti-deflation’ package that promised stricter bank inspections and signaled government willingness to use taxpayer money to shore up troubled lenders. But the plan, released late Wednesday after a meeting of a Koizumi’s council of economic advisors, drew mostly scorn from analysts and investors, many of whom dismissed it as a vague restatement of current policies.”
There you have it. Koizumi, the supposed Elvis of Japanese politics, turns out to be the fat, lazy Elvis of the Vegas years. That’s all he could come up with?
Everyone in Japan knows what must be done: Write off bad debt, allow bad banks to fail, provide an RTC-type corporation to deal with any assets, and deregulate farms and the consumer economy. Tall order? You bet. But not one person of any political influence in Japan, not even their hip, new Prime Minister, is willing to lay even one of those cards on the table. To make matters worse, he’s promising even more money (which the government doesn’t have) to continue to prop up rickety banks.
As a result, Japan is being industrially “hollowed out.” Sure, we lose jobs to China and Mexico and everywhere else — but we lose the low profit margin, low labor skill, can-build-it-most-anywhere jobs. Sorry, textile workers and get screwed, Pat Buchanan — we don’t need domestic sweaters that badly for the Gap. the jobs we keep here are in computers and aviation and ideas. These are the steel mills and coal plants of the 21ist Century. Japan, however, is losing its entire industrial base — to China, South Korea, and elsewhere — because they are unwilling to take the necessary steps to save their economy.
So how do we fix Japan? We can’t. And the whole world is going to pay a big price.