What are we all doing here if
the Japanese economy is as hopelessly behind the curve as Western economists insist? Well,
not all. Eamonn Fingleton, author of "Blindside: Why Japan is Still on Track to
Overtake the US by the Year 2000" (1995) and most recently "In Praise of Hard
Industries" (1999), makes the contrary case that the Japanese economy is emerging
stronger than ever from the financial problems of the 1990s. Hilary Hinds Kitasei
asked him to explain.
Eamonn Fingleton:
"the economy never collapsed."
Photo by Mitchell Coster
You predicted
Japan' banking and real estate crisis as far back as 1987. Yet you have never budged from
your belief in the Japanese economy as a powerhouse.
The Japanese economy never collapsed in the 1990s. Rather, in the ways that matter to
Japanese policy makers, it has continued to strengthen. Since I began work on
"Blindside," the yen has gained more than thirty percent against the dollar. The
trade numbers have risen hugely as I predicted, and that is why I say Japan is still on
track to overtake the United States. Indeed in many respects Japan has already overtaken
the US, notably in its savings flows, its net exports and the net output of its
manufacturing sector. The trend for the yen to gain against the dollar is still intact and
that defines the ultimate outcome.
Why are Japan's economic strengths so invisible to foreigners, even many who live
and work here?
They have made far too much of Japan's financial problems. These problems are large but
well contained. If foreigners would only open their eyes they would see that the rest of
the economy has emerged unscathed from it all. There is virtually no visible economic
distress anywhere in Japan. Unemployment is lower than just about anywhere else and every
foreign employer here knows it because they just can't get good people. Ownership of
everything from personal computers to satellite dishes has soared. Ownership of mobile
phones is fifty percent higher than in the United States. The number of Japanese going
abroad on vacation increased seventy-three percent in the first eight years of the 1990s.
The per-capita GDP actually grew faster in Japan than in the supposedly booming United
States in the first eight years of the 1990s. What is really amazing is that this growth
has been achieved while at the same time working hours have been shortened.
What are we missing?
Manufacturing. All conventional wisdom to the contrary, manufacturing is a nation's
economic locomotive. Despite everything you have heard about Japan's financial
difficulties in recent years, Japanese wages are twenty to forty percent higher than
American levels. Yet Japan is the principal source of the components and materials and
entire finished products that make up such a big part of America's supposed manufacturing
output these days. That is amazing evidence of Japan's superiority.
How can foreigners exploit the opportunities in all this?
Wages are high here but there is a glass ceiling for foreigners and it is set very low.
But a few years here is certainly a highly educational experience and it will probably be
useful in one's later career back in the West. The area where we can learn most is in
manufacturing, where Japan is way ahead - like liquid crystal displays, where it already
achieves productivity ratios as much as ten times higher than a Western company might
achieve should it decide to enter the business. Of course, whether the Japanese are
prepared to divulge all their production secrets to visiting Western workers is another
matter, but exposure to Japan is certainly highly educational for any young Western
engineer or technician planning a career in manufacturing.
