some American and European policymakers have begun to advocate a form of government-led capitalism that would provide support to corporations. The reaction in America to industrial policy, however, has been consistently negative. Although Washington has, in fact, stepped in to protect producers on numerous occasions, the American people have a deep-seated, almost physical, aversion to providing systematic protection for particular companies.
In Japan, however, although some of the glitter is gradually wearing off the hypercorporatist system, the Japanese people still have absolute trust in those in positions of authority. The reason everything in Japanese life converges on Tokyo is that that is where the okami— the higher powers—congregate and govern their subjects from a position that is above the law. Tokyo’s ability to attract those who have an exclusive hold on power and information is prodigious. The city is Washington and New York combined.
In America there is a clear distinction between the functions of those two cities: power is in the hands of the government in Washington; the private sector, based to a large extent but not exclusively in New York, controls information. Power itself is regarded as something that is entrusted by the people to political leaders and can be taken away from them at the first sign of any slip. Deep down Americans have little confidence in government. Mistrust of Washington is particularly deep-rooted among state governments.
This hostility to government is ingrained in the American people. Government service has little appeal for young people. Many of the most gifted undergraduates at American universities go on to pursue advanced degrees in graduate or professional schools; the second-best go to work for major corporations; few of the elite seem interested in a career in government. In contrast, the top graduates of Japan’s top university, the University of Tokyo, set their sights on passing the civil service examination and enter the government in droves. The American image of government is one of agencies squabbling with each other over money (a bigger share of the budget), and for that reason the government commands little respect. Recently, I must admit, similar feelings have been gaining ground among the Japanese as well.
In 1989 I had a conversation with a former vice-minister of MITI who asked me an extremely interesting question: “With all this talk about the American economy being on the decline and the United States falling behind in technology, why does the American government stand idly by? Why doesn’t it do something? In Japan MITI would have taken action long ago.” Although one can understand the vice-minister’s perplexity, the United States makes a sharp distinction between the sphere of government and that of the private sector. No matter how frustrated the American government may feel, no matter how much authority it may have, the American people would not tolerate its interfering in private enterprise.
The only areas in which Washington can openly intervene and make policy decisions are those related to military matters and national security. Conversely speaking, if these areas can be used as justification, the government can get involved in anything it wishes. All it has to say is that national security is at stake and those who ordinarily would object will remain silent. National security is the “open sesame” that unlocks all doors. Setting aside what might be done behind the scenes, any top U.S. government official who openly attempts to give public support to a private company will immediately lose his job. What makes James Fallow’s proposal for containing Japan so difficult to adopt as a policy measure is that the U.S. government would have to support one corporation or industry over another in order to win the trade war with Japan. Washington, however, cannot openly propose special rules for private corporations.
What then is it to do? When the government chooses to give support to the private sector, it dreams up an excuse for doing so, namely, that such action is necessary for military reasons or in the interest of national security. Once an action can be justified on these grounds, anything is possible. Thus we have seen Fujitsu prevented from buying Fairchild Camera and Instrument Corporation, the smashing of a Toshiba radio cassette player on the steps of the Capitol, and Washington’s blithe reversal of its own decisions about the FSX fighter support plane.
Excuses for Japan-Bashing. Each of these incidents was justified on grounds that came close to pure fabrication. The reason given by the Commerce Department, the Defense Department, and the Congress for stopping Fujitsu from buying an 80-percent share of Fair-child in 1987 was that semiconductors are a strategic, high-tech product and that the takeover of a leading American semiconductor company by a foreign firm would pose a serious national security problem. Fair-child was a subsidiary of a French firm, however, and not an American company at all, to say nothing of the fact that Schlumberger, its French parent company, wanted to sell it because of management difficulties. Yet as soon as national security was invoked, the American government felt it could step in and call the deal off.
The Toshiba affair was also highly suspect. In 1985 the United States informed the Japanese government that Toshiba Machine Company, a subsidiary of Toshiba Corporation, had sold precision milling equipment to the Soviet Union in violation of COCOM, the coordinating committee for controlling East-West trade. This equipment, it was claimed, had made it possible for the USSR to reduce the noise of its submarines, thereby making them harder to detect. As a result, the United States had been forced to assume an additional defense burden of $30 billion. No cause-and effect relationship between Toshiba’s milling equipment and the noise reduction was ever established, nor was any reliable source ever given for the $30-billion figure. Nevertheless, when the incident was made public in 1987, hawks in the Congress, under the banner of “national security,” smashed a Toshiba radio cassette player with sledgehammers on the steps of the Capitol. A Norwegian company, Kongsberg Vaapenfabrikk, had also sold this kind of equipment to the Soviet Union, however, and Russian submarines had become quieter well before the sales by Toshiba Machine began. To put it bluntly, Japan was “had” by then Secretary of Defense Caspar Weinberger.
As for the FSX, Japan was forced to make humiliating concessions in its plans to develop the next generation of support fighters for the Japanese Air Self-Defense Force. By making the FSX into a political issue, America was able to indulge in as much Japan-bashing as it pleased.
Under pressure from Weinberger, in January 1988 Japan abandoned plans to develop its own fighter support plane and agreed to a joint U.S.–Japan development project. That November the two countries exchanged a memorandum of understanding to the effect that Japan would assume the entire cost of the project in exchange for American aviation technology. On January 29, 1989, however, the Washington Post carried an article by Clyde Prestowitz entitled “Giving Japan a Handout,” which charged that America was giving away its airplane technology to Japan. Although an agreement had been reached the previous year with the Reagan administration and a memo of understanding had already been exchanged, the United States unreasonably demanded that the issue be reopened. The upshot was that America withdrew its promise to furnish “critical” jet engine technology, and the baffling decision was made that Japan was to unconditionally turn over to the United States the technology it had independently developed. At the heart of the issue was America’s fear that if it provided Japan with technology, Japan would “beat the United States at its own game” and overtake America in aerospace and defense-related industries as it had in other areas. In the words of Newsweek (August 7, 1989), “For the first time, policymakers treated America’s economic strength as a national-security issue.”
Public hearings on the FSX project were held during the spring of 1989. American congressmen know nothing about Article 9 of the Japanese constitution that forever renounces “war as a sovereign right of the nation and the threat or use of force as a means of settling international disputes.” They are equally ignorant of Japan’s three principles on weapon exports, first promulgated by Prime Minister Eisaku Sato in 1967, that forbid the export of weapons to communist countries, to countries to which the United Nations prohibits the export of weapons, or to countries that currently are, or might become, involved in international conflict. The purpose of the hearings was to provide an opportunity for U.S. government officials to explain these and other issues and answer any questions.
As I watched the coverage of the hearings on CSPAN, it was abundantly clear that trade matters and national security issues had become closely linked. The members of Congress bombarded the witnesses with questions. Secretary of Defense Richard Cheney was asked