26.TheJapaneseChallenge
Rightnow,AmericaisinanotherwarwithJapan.It'snotashootingwar,ofcourse,butatradewar.Itisastrugglethatiscriticaltothefutureofbothcountries.Allthingsbeingequal,itwillbeaformidableshowdown——butthekeyissueisthatallthingsarenotequalbetweenthetwocountries.
Tobeginwith,Japaneseindustryisnotplayingbyitself.ItisbackedtothehiltbytheJapaneseGovernmentintheformofMITI,theMinistryofInternationalTradeandIndustry.MITI'sjobistodeterminetheindustriesthatarecriticaltoJapan'sfutureandtohelptheirresearchanddevelopmentefforts.Despitesomemistakes,theoveralleffectofMITIonJapaneseindustryhasbeenincredible.
TheJapanesegovernmenttaggedautos,steel,chemicals,ship-buildingandmachinerymanufacturingascriticalindustries.Theyintroducedasystemofgoalsandprioritiesencouragingindustryandthegovernmenttoworkcloselytogethertoachievetheirnationalobjectives.Theyalsogetgovernmentloans,accelerateddepreciation,R＆Dassistance,protectionfromimportsandaprohibitionagainstforeigninvestment.Management,shareholders,thegovernment,bankers,suppliersandworkersallpulltogether.Theresult？Intheautoindustryalone,theyhavegonefrom100，000vehiclesinthemid-1950sto11milliontoday.
AnotherJapaneseadvantageisthefactthattheydon'tspendanythingonnationaldefense.Theyannuallyspendabout$80acitizenondefense,asopposedtotheUnitedStatesaveragespendingofmorethan$800foreverycitizen.
AnotheradvantagefortheJapaneseistheartificialweaknessoftheyen.Theircurrencymanipulationisdesignedtokeeptheyenweaksothatthepriceoftheirexportedgoodswillremainattractiveinothercountries.
Finallythereisthemythoffreetrade.Freetradeisfine——aslongaseveryoneisplayingbythesamerules.Japanhasitsownruleswhichitworkstoitsownadvantage.CountriesaroundtheworldhaveintroducedlimitsonthenumberofJapaneseimportstheywillallowintothecountry,buttheUnitedStatesstillfeelsitwouldbemorallywrong.Fortyyearshavepassedsincethe＆nbsp；SecondWorldWar,anditstimetoacknowledgethesituationhaschanged.