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SHOULD AMERICA BUY JAPANESE?
Remarks on: "Does America Say Yes To Japan?" (2nd edition) by Louis Leclerc
(Please circulate widely)

What follows are some extended comments on "Does America Say Yes to
Japan,"(2nd edition) by Louis Leclerc, a piece that has been widely
distributed electronically. The comments follow his article section by
section.  I will also make passing remarks on _The Japan that Can Say
No_ by Akio Morita and Shintaro Ishihara (originally published in Japan
in 1989), a translation of which has apparently been circulated as a
sort of companion piece to illustrate Japanese attitudes towards the
U.S.

Before embarking on what will be some rather extensive critical
comments, I should establish my background.  I have no Japanese or
Asian ancestry, and have never worked for a Japanese firm or lobbying
organization, nor has any member of my family to my knowledge.  I would
not have to mention these things but for the fact that the
argumentative technique of poisoning the well is all too common in
these discussions.  I have worked at MCC, a private-sector computer
consortium founded in part as a response to the Japanese "Fifth
Generation" project (which has turned out to be rather a flop).  I hold
an M.A. in philosophy from the University of Texas and am currently
working on my Ph.D. there.  I should stress that the opinions that
follow are entirely my own, and do not necessarily reflect positions of
MCC or UT.

		--Paul Blair
		PLAC665@UTXVMS.CC.UTEXAS.EDU

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Regarding the author's introductory comments:

The author remarks that upon going to Japan he expected to see a highly
efficient country from which the U.S. could learn, but that the reality
is instead quite different and disturbing.  He continues by noting that
"Japanese companies are the among the largest in the world" (which is
ambiguously tendentious; it is certainly not the case *all* Japanese
companies are among the largest in the world, rather, *some* of them
are), and that some large U.S. firms are owned by Japanese companies,
as if these facts were somehow connected to what the author finds
"disturbing."  The implication is that the Japanese are in fact not very
efficient or productive, but that Japan is prosperous anyway not so
much due to efficiency but to "disturbing" factors such as the fact that
they somehow happen to own a lot of huge companies at home and abroad,
while foreigners own very little Japanese industry.

How, then, did Japanese companies get so large without being efficient
and productive?  The rest of the article claims, effectively, that the
size of these companies is due not principally to their efficiency and
productivity, but to "unfair" trade practices.  I will show, on the
contrary, that such "unfair" trade practices are actually to the benefit
of its trading partners, including the United States, often even to the
detriment of the Japanese themselves.  I will show that the economic
strength of Japanese companies also benefits the United States, as does
foreign investment in general (which is made no worse by being
Japanese).  Furthermore, I intend to reveal the many (and often mutually
contradictory) economic fallacies lying behind the claims made in the
article.  The worst of these appears to be the idea that someone (a
person or a country) can be rendered poor by the mere fact that someone
else happens to be much more productive than he is.  To the contrary, I
will show that the wealth produced by those who are more productive is
not made at anyone else's expense, and in fact redounds to the general
well- being of everyone.

Finally, I will point out where appropriate one of the recurrent and
major weaknesses of the article--its use of the invalid argumentative
technique of establishing wild or exaggerated claims through context-
dropping.

THE "JAPAN PROBLEM":

The principal thesis of the "Japan Yes" article is contained in this
section.  It is stated in these words:  "Japan is in a kind of economic
war against us. Their objective is for them to win and for us to lose.
Through the use of cartels, price fixing, government-corporate 'anti-
foreigner' tactics as well as adversarial trade and predation
strategies, Japan is destroying much of America's strategic industries,
standard of living and military strength. These actions are also
destroying the jobs of ordinary American people. As a result, the
greatest transfer of wealth in the history of the world from one
country to another is happening right now, from the United States, to
Japan."

In fact, little if any of the preceding is true.  In particular, the
entire concept of an "economic war" being waged through voluntary
exchange is an invalid one.  Indeed, the United States, when it wishes
to wage something like an "economic war" on other countries, usually
does so by imposing a trade *embargo* on them (for instance, in the
case of Iraq and Cuba).  As a result, the isolated countries are no
longer able to take advantage of goods produced elsewhere and must
either do without them or divert resources from other more productive
sectors in order to produce the needed items themselves.  How ironic,
then, that this article claims that the Japanese are becoming wealthy
at our expense by imposing upon themselves the same strictures that are
generally used to inflict economic damage!  By this logic, we could
make all the countries of the Third World extremely rich indeed, simply
by cutting off all exports to them.

It is alleged that the Japanese objective is "for them to win and for us
to lose."  How strange, then, that they use as a weapon the practice of
voluntary exchange for mutual benefit.  In any trade both parties
normally intend to win; even if each party considers only its own
advantage, the result is a situation in which both parties are better
off than they were when they started.  It is a fallacy to assume that
because one party to a transaction is better off, the other is worse
off (else just think of how many people--who'd otherwise have no job at
all--must therefore be ripping off their employers merely by drawing a
salary!).  So there is little doubt that the Japanese intend to "win."
In fact, some of them probably intend to try to make their country
richer than the United States.  None of this implies that as a result
we will have lost anything; in fact, we will merely have gained a
richer trading partner.  (It is even odder, however, to assume that
the Japanese intend to win through the practice of deliberately making
exchanges where they are on the losing end.)

It is true that the Japanese have engaged in "the use of cartels, price
fixing, government-corporate 'anti-foreigner' tactics," though many of
these practices have declined significantly since the mid 1980's and the
officially orchestrated policy of thwarting foreigners is mostly gone
(see, e.g., "Does Japan Play Fair?" _Fortune_ 9/7/92).  The Japanese
economic crash of the past two years has also made entering the
Japanese market much easier in many respects, though entry remains
difficult.

In what follows, however, I will show that "the use of cartels, price
fixing, government-corporate 'anti-foreigner' tactics as well as
adversarial trade and predation strategies," to the extent that they
exist, are not only not the primary cause of Japan's wealth, but indeed
often benefit the U.S. at the expense of the Japanese themselves.  In
any case, they are not responsible for impoverishing the U.S.; American
economic problems, particularly mass unemployment and a declining
standard of living, originate in our domestic economic policy.  One is
not witnessing a "transfer of wealth" from the United States to Japan;
at most what one is witnessing is a Japan that had been generally
committed to increasing production alongside an America whose
government is in general committed to restricting it.  Since those who
have dug us into our present situation do not want to admit that their
policies are responsible for our economic problems nor to abandon them,
they find it more convenient to point the finger at the Japanese.

"Japan is organized to fight, uses a tactical strategy and has a
fundamental plan.  America's economic strategy is in disarray and there
is no plan," states the article.  Such a sentence is highly ambiguous.
In fact, both Japanese and American companies are and have long been
developing strategies for competing (and cooperating) with each other.
But the article is actually making a veiled reference to industrial
policy, implying that what is needed is more *government* planning.
Yet in reality, governmental economic planning and industrial policy
have been a colossal failure the world over; nations from the Soviet
Union to Argentina have been abandoning it in droves.

In reality, what goes by the name "government planning" is actually the
exercise of governmental power to disrupt the plans of individuals and
companies acting to further their own economic self-interest.  In some
miraculous way, the wealth of a country is supposed to be increased by
prohibiting some of its citizens from augmenting their wealth--so that
the government (endowed with some mysterious wisdom that for some
reason no one else shares) can encourage enterprises that will
ultimately be more successful than those in which profit-seeking
individuals would have invested in the first place.  In fact, however,
governments have no special mystical knowledge that gives them an
advantage over investors when it comes to picking the most profitable,
wealth-producing fields to enter; the only place government has any
"advantage" is that through taxation it can force people to invest in
businesses they otherwise would have avoided.  Ultimately, government
planning is simply a way of picking some citizens' pockets for the
benefit of industries with political clout in that country.  This is
hardly a way to increase the overall wealth of society.  Despite all
this, however, it is true that the United States needs an industrial
policy: a consistent policy by the U.S. and state governments not to
interfere in the economy.

It is often said that an industrial policy is needed not to benefit some
industries at others' expense, but to "coordinate" their production so
that they will not weaken each other by competition.  Of course, such a
policy normally just protects entrenched industries by prohibiting
newcomers from entering the field.  On such a view, "too much"
competition is bad, so that government should step in to do exactly what
it prohibits companies from doing in their own interest via the
antitrust laws: cooperate in order to strengthen themselves against
their competitors.  Again, the only "government planning" that is
needed in this regard is repeal of antitrust legislation.  In an age
where IBM is falling apart because of the growth of a little company
started in someone's garage, when giants like Sears are in trouble, it
borders on the ridiculous to claim that bigness in itself somehow
stifles competition.  If the bigness is not maintained through superior
productive efficiency, it falls apart.  I will further substantiate this
point later in my comments.

These comments are not based upon some speculative economic pipe- dream;
they are derived from and borne out by experience.   Consider, for
example, the case of Japan's MITI, which is often cited as an example
of successful industrial policy.  People who praise MITI tend
conveniently to ignore the failures it has produced.  These include its
promotion of such industries as aluminum smelting, jet engines, nuclear
powered blast furnaces, petroleum, chemicals, paper, etc.  Government
targeting of aircraft in 1971 and software in 1978 failed to result in
any meaningful share of the international market.  Michael E. Porter
writes in _The Competitive Advantage of Nations_ concerning MITI-
sanctioned cartels that "Only a handful of the more than sixty
industries involved have subsequently achieved significant economic
success."  In fact, many of Japan's great industrial successes have
occurred not only without MITI help, but actually in defiance of MITI
planning.  One may remember that it was MITI that advised Honda to stay
out of the automotive business and tried to limit the number of
competitors in the Japanese auto industry.  It was the refusal of
Japanese auto companies to acquiesce that led to the vigorous
competition which has been the basis for that industry's success.  The
government also mistakenly attempted to limit the number of competitors
in industries such as steel, machine tools, and computers.

In fact, it is more than a little amusing that Akio Morita (head of
Sony) expresses bewilderment at the fact that the U.S. has no
department of industry and that Americans tend to see government as an
enemy rather than a partner (in _The Japan that Can Say No_).  In the
same book he recalls with pride Sony's licensing of the transistor in
the early 1950's.  No doubt he has forgotten what he wrote in his book
_Made In Japan_ in 1986:

"In Japan exchange control was very strong at the time, and we needed
approval from the Ministry of International Trade and Industry (MITI) to
remit the initial transistor license fee of twenty-five thousand dollars
out of the country.  The transistor was so new, and foreign currency was
so scarce in Japan, which was just then beginning to accelerate its
recovery from the war, that the bureaucrats at MITI could not see the
use for such a device and were not eager to grant permission.  Besides,
MITI thought that such a small company as Totsuko (as we were known)
could not possibly undertake the enormous task of dealing with brand-new
technologies.  In fact, they were adamant against it at first.  Ibuka
was eloquent on the possible uses of this little-known device, but it
took him six months to convince the bureaucrats.  MITI has not been the
great benefactor of the Japanese electronics industry that some critics
seem to think it has."

The fact that most of MITI's formal powers have lately been allowed to
lapse has not exempted it from silliness.  One of MITI's latest projects
is the establishment of a research institute to study new age phenomena
such as psychic powers for possible applications in industry (_Wall
Street Journal_ 2/22/93 p. A6, 2/24/93 p. A18).  So much for the alleged
superior long-range thinking and clear-sightedness of an agency set
"above" the profit motive.

There are several other interesting facts to note in this connection.
The Japanese government's share of R&D spending, for example, is the
lowest among the industrialized countries (Robert Ozaki, "How Japanese
Industrial Policy Works," in Chalmers Johnson, ed. _The Industrial
Policy Debate_).  And Italy has enjoyed a rise in world export share
second only to Japan's, as well as a rising standard of living, but its
government policy has been largely ineffectual (Porter, p.4).

What, then, is the source of Japanese success?  The figures clearly show
that Japanese saved at a rate about twice ours in the 1970s and three
times ours in the 80s.  Their ratio of fixed capital formation to GNP
was twice ours in 1989.  Partly because of its low defense budget, the
Japanese government spends less money than ours:  In 1970, the Japanese
government at all levels spent 19.4% of their GDP as opposed to the
U.S.' 31.7%--over twelve per cent less.  While in the early 1980's both
governments spent about the same proportion of GDP, the Japanese figure
declined relative to ours over the 1980's: by 1989 the percentage of the
Japanese economy eaten up by government spending was 4.6% less than in
the U.S. (31.5% as opposed to our 36.1% in 1989).  The Japanese
educational system is widely acknowledged as far superior in many
respects to that of the U.S., and Japanese children tend to be supported
by cohesive, strong families.  Japanese companies tend to have loyal
workers who identify their interests with those of the company and are
willing to work hard (though this situation also has its disadvantages).
Furthermore, the Japanese government, for all its protectionism,
maintains a strong pro-business atmosphere that in Ozaki's words, is
"more developmental than regulatory."  This pro- development attitude
also manifests itself in a number of Japanese tax policies.  The above
factors are widely cited as the principal causes of Japan's rapid
development.  One should also note that from 1985-1990 Japan's economic
progress was exaggerated by a credit bubble that has now burst, creating
a crisis of immense proportions.  (More on this below.)

IN THE BEGINNING, THE TV CARTEL:

The thesis of this section of the article is that Japan, having
prohibited the importation of American televisions in the 1960's, was
able to inflate television prices in Japan while lowering them in the
U.S., thus driving American television manufacturers out of business.

Now, given the scenario as presented, what was the net result of this
cartelization?  The Japanese continued to manufacture TVs, while the
Americans didn't (though they presumably continued to receive licensing
fees from the Japanese for their technology).  Furthermore, Japanese
consumers had to pay high prices for televisions, while American
consumers got theirs more cheaply than they otherwise would have.
Here, clearly, is a transfer of wealth: from the Japanese to the
Americans.

So, if one is interested in cheap televisions, the Americans clearly got
the better end of the deal.  But somehow the article seems to think that
America is poorer because it is no longer manufacturing television sets.
By this same logic, of course, America is poorer because most of its
horse-and-buggy manufacturers have gone out of business, because of the
jobs lost in the adding machine and slide-rule industries, and because
an ever-decreasing proportion of its population is involved in farming.
All of these examples illustrate the same error--the error of thinking
that people consume in order to keep producers in business.  In
reality, the whole reason production exists in the first place, the
reason why people bother to work at all, is that they need to use and
consume things.  If one isn't producing something people want to buy,
one isn't being *productive*.  If someone finds a better or cheaper way
to produce something, consumers benefit and competitors either follow
suit or go out of business.

If someone else can provide us with televisions more cheaply than our
own manufacturers can, this is a good thing.  What this means is that
we now have more valuable things to do with our time and resources than
produce televisions.  (In other words, the cost of the labor and
resources that would go into producing a television in the U.S. exceeds
the value of the television that would be produced.  This normally
means that the labor and resources are in higher demand in other
industries.)  Military considerations aside (which I will deal with
below), nowhere is it written in stone that AMERICA MUST HAVE A
TELEVISION INDUSTRY--nor a machine tool industry, a motorcycle
industry, or a flat-panel LCD screen industry.  If the Japanese want to
sacrifice their consumers so that we don't have to go to the trouble of
producing these things for ourselves anymore, let them. We can find
more productive things to do with our time.

I should note, however, that one shouldn't just accept the article's
claims of the significance or effectiveness of government-industry
cartelization in Japan on face value.  For example, the Japanese are now
facing competition in DRAMs from other Pacific Rim countries, while
American chipmakers have overtaken the Japanese in overall market share
by shifting to the production of specialty chips.  In fact, the
Japanese were never "five years ahead" of the U.S. in chips (see e.g.
Philip Abelson's editorial in _Science_ 6/8/90 as well as _Aviation
Week_ 3/2/87.)  The U.S. has always been ahead in microprocessors and
application-specific ICs, and had the lead in 1 Megabit chips in the
"captive market" (AT&T and IBM, who produce chips for their own use)
even in 1987.  The scary scenario cited by Ishihara in _The Japan that
Can Say No_ came from a report by the U.S. Defense Science Board, which
was working closely with the semiconductor industry trade group that
led the charge for government funding of Sematech--in fact two of the
members of the board were from the Semiconductor Research Corporation
(the Semiconductor Industry Association trade group is the parent of
the SRC).  In fact, an article in _Technology Review_, Nov/Dec '87
makes it clear that American security interests were never threatened
by the Japanese lead in semiconductors, as the chipmakers' lobbyists
would have had us believe.  More on this below.

Our author seems to think that the "DRAM shortages" of a few years ago
were the result of the fact that U.S. companies couldn't take advantage
of government trade retaliation against the Japanese by organizing with
each other.  In fact, the problem was a direct result of U.S.
retaliation.  Under the U.S.-Japan trade agreement, the Commerce
Department was required to set prices for Japanese chips sold in the
U.S. and raised them 300%.  The result was a decrease in demand for
chips in the U.S. and an oversupply of chips in Japan.  The result was
to hurt U.S. manufacturers trying to penetrate the Japanese market, to
accelerate the purchase by the Japanese of weakened U.S. chipmakers,
and to sacrifice the U.S. computer industry to save the semiconductor
industry: 11,000 jobs were lost in companies using chips.  (See "Falling
Chips," _Wall Street Journal_ 2/12/87 p. 1 and James Bovard, _The Fair
Trade Fraud_ p. 244.)

DISPELLING SOME STATISTICS:

Here we find the interesting claim that Japan exports more than it
imports.  Prima facie, this would indicate that Japan is making the rest
of the world wealthier at its own expense (the situation is more
complex, as will be seen later).    If Japan were to perpetually run a
trade surplus with the U.S., this means that for some strange reason it
has decided to transfer part of its wealth to the U.S. for nothing in
return!  In the ideal case, we could simply print dollars and send them
to Japan, and in return have them do all our production for us.  We
could all sit around relaxing all day long, unemployed, enjoying the
luxurious lifestyle that our Japanese slaves had volunteered to provide
us in exchange for nothing other than pieces of paper.

Next, we have a hilarious example concerning the alleged evils of a
Japanese trade surplus: "...imagine a world with 2 countries, one with
100 citizens, and another with 1 citizen, you. Each person has $200 to
their name.  Every year you buy $100 of goods from the other country,
and each of their citizens buys $100 of goods from your country. If you
work out this example, you will see that in a little over 2 years, you
will have accumulated all of the money in the world and the other
country will be penniless. This is the current state of affairs between
Japan and its trading partners."

Now, let's examine this example a bit more soberly.  In the first year,
you buy $100 of goods from the other country, and each of the 100
others buys $100 of goods from you.  The first question to ask is,
where did you get all these goods?  You must have to work 100 times as
hard as any citizen in the other country, just to satisfy their demand
for your goods.  And if indeed you are 100 times more productive than
they are, then who's being taken to the cleaners here?  In that year
you are sending the other country $10,000 worth of goods while you are
receiving only $100 worth in return!

The following year, you decide to sit on $9,900 of cash, for some
bizarre reason only you can fathom, and only buy $100 worth of goods
from the other country.  Again, they buy 100 times as much as you.
Again, you've given away $10,000 worth of goods and $100 in paper and
only received $100 worth of goods and $10,000 in paper.  Now you have
$19,900 in paper and the other poor, penniless nation only has $100
left.  Of course, if they decide to stop playing the trading game at
this point, then you are just stuck with a pile of worthless paper and
one one-hundredth of the value of the goods you'd originally produced.

The example, in other words, illustrates the basic economic fallacy of
equating wealth with money.  In fact, however, money only represents a
medium of exchange; what is really being exchanged is the goods
produced by one party for the goods produced by another party (or
deferred claims on those goods in the case of lending).

Now, if we think in terms of goods instead of money, let's suppose that
Japan and the U.S. are the only two countries in the world and that
Japan produces as much as the U.S. does.  Say the total world
production is 2 units, of which Japan and the U.S. both produce 50%.
Now suppose Japan triples its production, while the U.S. doubles its
own.  Total world production is now 5 units, but suddenly the U.S. is
behind!  It only has 40% of the world's wealth, while Japan now has
60%!  Yet in absolute terms both countries are richer than they were
previously.

Now suppose there are only two products manufactured in the world, rice
and TVs.  Let's suppose that 1 unit of effort will produce 2 units of
rice or 1 of TVs in the US.  In Japan, one unit of effort will produce 4
units of rice or 3 of TVs.  So, given the same effort, if the U.S.
produces 1 unit of TVs and 1 of rice, Japan produces 3 units of TVs and
2 of rice.  Then there will be a total world production of 4 units of
TVs and 3 units of rice.  In other words, we're supposing Japan
produces TVs three times as well as the U.S., and rice twice better, so
it outcompetes the U.S. in every industry.  Given the apocalyptic
visions of the article, one might expect that Japan would soon wind up
producing everything and the U.S., outcompeted, would produce nothing
at all and languish in poverty.

However, suppose instead the U.S. were to produce only rice and Japan
only TVs.  With the same effort it took to produce 1 unit of TVs and 1
of rice, the U.S. can produce 3 units of rice.  At the same time, with
the effort it took Japan to produce 3 units of TVs and 2 of rice, it
can produce 4 1/2 units of TVs.  Total world production is now four
*and a half* units of TVs and three of rice.  Since Japan needs rice,
the U.S. could trade 2 units of rice against, say, 1 1/4 units of TVs
and both countries would be 1/4 unit of TVs ahead, *even though Japan
can outcompete the U.S. both in TVs and in rice.*

Granted, the example abstracts away from the fact that workers can't so
simply and easily be diverted from one industry to another.  But this
isn't the point (since the principle applies equally to trade among
individuals).  The point is that, even if Japan were to be a more
efficient producer in every single industry, it would never destroy all
of American industry by competition and trade; to the contrary, both
countries would be richer.  The situation would never arise in which one
country was producing everything and consuming everything and the other
was producing and consuming nothing.  As Michael Porter writes, "no
nation can be competitive in and a net exporter of everything."

This principle is what economists call the law of comparative advantage.
It's the reason why a janitor, for instance, can still earn a living
even though everyone else might be able to do his job better than he
can.  It's also part of the reason why barbers can purchase far more
today with their earnings than they could a hundred years ago even
though the work they do isn't appreciably different--the fact that
everyone else is more productive has made them richer too, by
increasing the abundance of goods.

It is utter nonsense, then, to claim that America is losing industrial
jobs in order to become a nation of "burger-flippers."  First, it is
untrue that America is de-industrializing (look it up); this claim
focuses on the decline of existing industries while dropping the
context of new industries arising in the rest of the economy.  Second,
even if the service sector were to become significantly more important
than the manufacturing sector in the U.S., this would mean only that
the service sector was relatively *more productive* -- i.e., one
shouldn't be thinking in terms of burger flippers, but rather of
something like software support.

In _The Japan that Can Say No_, Morita and Ishihara also both display
the concrete-bound mentality that value only comes from producing
tangible things (how interesting that Japan is now suffering from
overcapacity and unsold inventories in many manufacturing industries!).
To the contrary, value is also produced every time someone helps someone
else to produce something more efficiently.  Even if one drops context
entirely and considers the utterly absurd scenario of the U.S.  losing
its entire manufacturing sector to foreign competition, (say, with the
exception of a few key military contractors), this would simply mean an
increase in the value and quantity of our exports of natural resources
(oil, lumber, food, textiles...) and information-based services and
products (financial services, insurance, entertainment, software,
pharmaceuticals, etc.).  We would buy all our manufactured products
overseas, and be the richer for it.

Let's return to the Japanese trade surplus.  Is it really true that the
Japanese are continually running a trade surplus with the United States,
such that for some bizarre reason they have decided to sacrifice
themselves by giving us some goods in exchange for nothing but paper
dollars, which they stash in a mattress someplace?  No.  Well, what else
can they do with their dollars besides purchase American goods or hold
on to them?  The only alternative is to invest them in the U.S., e.g.,
by buying government or corporate bonds or by purchasing stock, real
estate and other assets.  And this is what they are in fact doing, as
the article clearly attests.  Whether this practice should be
demonized, however, I will comment on later.

POLITENESS AND CODED LANGUAGES, A BACKGROUND:

The article tends to give the impression that the Japanese (and
particularly their politicians) have some kind of monopoly on
doublespeak in diplomacy and business relations.  Of course, it may be
quite true that Japanese often have trouble saying "no" when they mean
"no," and thus could use a measure of the self-assertiveness recommended
by Morita and Ishihara.  But this hardly need be elevated into a problem
of epic proportions.  As Jonathan Rauch writes in his book _The
Outnation: A Search for the Soul of Japan_, "every society has honne and
tatemae, the Japanese are merely the only ones unhypocritical enough to
have words for them." (p. 161)

Concerning the Bush trip to Japan, what galled *me* was the sheer
effrontery of U.S. automakers who contended they would only start
manufacturing the kinds of cars the Japanese want, if the Japanese
would first start buying their cars!

The article's real complaint, in fact, seems to be that the Japanese
government doesn't knuckle under when the U.S. government puts pressure
on it to enforce restrictions on Japanese companies.  I'm all for the
Japanese government not knuckling under in such situations.  (Equally,
though, I'm all for the Japanese government knuckling under when it is a
matter of removing restrictions on trade--e.g., barriers to the
importation of rice.)

DISCRIMINATION:

This section is not primarily of direct economic significance to the
U.S.  Even if the Japanese disdain us they are ultimately going to
have to spend their dollars on *something*; a dollar isn't worth
anything unless it is used to purchase something in the United States.
The significance of this section is more in its unstated implication
that if Japan becomes a significant economic power we will both face
discrimination and be forced to adopt Japanese discriminatory
attitudes.

The racist attitudes that are allegedly extensive in Japanese culture
are of course morally repugnant.  (One could say the same or worse
about quite a few other nations with whom we trade.)  It is interesting
that the article's position seems to be that racist attitudes can be
eliminated or reduced by legislating them away--by passing laws forcing
people to deal with those they despise.  So far, experience indicates
that such policies generally only intensify racial conflict (see, for
example, Thomas Sowell's _Preferential Policies: An International
Perspective_).  On the other hand, trade (*voluntary* trade, not
slavery etc.) has historically been a primary vehicle for curbing the
effects of racism, by widening contacts between members of different
cultures and leading them to regard each other's activity as mutually
beneficial.  In such situations, the racially closed-minded lose out on
the economic benefits that trade confers, while the greediest
capitalists profit from the attitude that anyone's money is as good as
anyone else's.  It is the Japanese, as Morita points out, that are
going to have to become more cosmopolitan if they are to succeed in the
world market.

On the other hand, if the article is in fact correct in its claim that
the Japanese government violates the individual rights of its
population on a racial basis, this certainly calls for the Japanese
government to change its policy and make reparations to the victims
where appropriate.

SHAME AND HONOR IN BUSINESS:

It is quite sad to reflect on the self-sacrificial attitudes many
Japanese apparently take towards their professional lives, and their
lack of individualism in this regard.  The article indicates the ways
in which these attitudes would be extremely detrimental to them, even
leading to suicide in some cases.

THE DISTRIBUTION SYSTEM; WHY FOREIGNERS ARE SET UP 
TO FAIL IN JAPAN:

This entire section again shows how the Japanese have set up their
system to harm principally themselves: they must buy more expensive
goods unless some clever Japanese finally gets around to undercutting
the market by navigating all the bureaucracy and/or smuggling the stuff
in.  (Apparently discounters are beginning to crop up all over the place
in Japan and are now earning huge profits by doing just this sort of
thing.)  Consumer prices are thus much higher in Japan than in the
U.S., so that figures showing Japanese per capita income as reflecting
their standard of living should be taken with many grains of salt.
Barriers to trade do nothing to help either the U.S. or Japan; we should
naturally seek to have them eliminated (as well as all similar barriers
to trade that we erect against foreign goods).  This probably will only
happen when the Japanese finally realize that all they are doing by such
practices is impoverishing themselves.

	Suppose no U.S. goods are sold in Japan.  What are the Japanese
going to do with all their dollars?  Eat them?  Invest them?  For what
reward?  With profits paid out in dollars they still can't do anything
except spend them in the U.S., either on American goods or on
increasing the productivity of American labor by investing here.  If the
dollars are exchanged for yen, that means that somebody someplace has
yen that he received in exchange for American goods.  If the Japanese
don't use their dollars at all, they are hurting only themselves; they
essentially will have given us something for nothing in return.

THE BUSINESS CARTEL, KEIRETSU:

It may be the case in some industries that conglomerations of
enterprises are in fact more efficient producers of goods--in which
case it is our antitrust laws that are preventing us from being
competitive rather than the Japanese system of cartels.  Often,
however, it is government policy that actually encourages such
conglomeration when it has passed the point of economic benefit, by
barring competitors from entering the field (as the previous section
has showed).  To this extent the keiretsu would be a manifestation of
the self-punishing nature of Japan's industrial policy.  Now that we
have seen the enormous plunge (on the order of 50%) in the Japanese
stock market over the past several years it is by no means evident
which of these two scenarios is actually the case.  Indeed, if the
keiretsu banks "don't call in loans for silly reasons like U.S. banks
do" then it is quite natural to expect that their stock market would
plunge when the banks finally were no longer able to postpone the day
of judgment by accomodating and covering over unproductive practices.

The idea that buying Japanese goods could cost you your job is at best
short-sighted.  If a Japanese company outcompetes an American company,
then the American workers are, indeed, out of a job.  In any normal
economy, that would not be much of a problem, as they could find jobs
elsewhere.  Human workers are productive and valuable; one doesn't just
leave pots of gold lying around unused.  Of course, a worker may have
to accept a job at a lower salary--but at the same time his cost of
living is declining proportionately due to the importation of cheaper
foreign goods.  To say that someone can't find a job is to say that
there is nothing valuable he could be doing for anybody, at any
price--or that one is not permitted or is unwilling to accept that
price.

Yet we do have massive unemployment in the United States.  The problem
is, of course, that the U.S. government's policies actively and often
intentionally prevent people from creating new jobs by starting new
enterprises.  Think seriously about what would be involved if you were
to try to start a business tomorrow.  It used to be all one needed was
a good idea, some basic knowledge of accounting, and some startup
capital (not that that wasn't a big headache already).  Today, how many
different laws, licenses, fees, taxes and regulations would you have to
comply with before you could even get started?  Chances are you don't
even know most of them, or even where to go to find out to make sure
you aren't in violation of some chance obscure regulation that just
happens to apply in your case.

It is only natural that if one impedes and interferes with people's
ability to purchase the services of others, one will have an
unemployment problem.  The answer to this problem is not to freeze
people into unproductive positions by "protecting" industry--doing so
will simply increase and make more abrupt the eventual unemployment
that will occur when the unproductive industry finally collapses.
(Look at what happened to our steel industry, and what is happening in
Japan today.)  The point is to create an economy where, if a person
loses a job, it will be quite easy for him to find a job elsewhere.
This is not a fantasy; such conditions have existed, right here in this
very country, even in this century.

COMMAND AND CONTROL:

The article is correct that our antitrust policies disadvantage our
industry.  It is not correct in implying that government planning and
"coordination" is of equal value to the removal of antitrust
restrictions.  As I have mentioned above, one should be quite
skeptical about inflated claims as to the overall significance and
success of MITI-sponsored efforts.

THE PROTECTED HOME MARKET...JAPAN'S LAUNCH PAD TO THE WORLD:

Somewhere later in this article the author claims he is not a
protectionist; this section refutes that claim.  He actually thinks
that protectionism is of benefit to Japan. What is actually happening,
however, is that Japan is lowering its own standard of living in order
to export more goods to the U.S.  (Japan's protectionism is detrimental
to America, however, but not in the way the author thinks.  We lose
opportunities for benefit inasmuch as "protection" allows otherwise
inefficient Japanese industries to survive--a point the article
corroborates.  Hence, we do not get the benefit of the Japanese being
as productive as they otherwise would have been.  Of course, the author
would surely think such a situation to be even more harmful than the
existing one, since Japanese products would be even cheaper and more
plentiful.)

It is alleged that the "protected" home market in Japan allows Japanese
companies to perfect their products before introducing them on the
world market, hence giving them a competitive advantage.  But this
argument proves too much.  Suppose a Japanese and an American company
were both to come up with the same not-quite-perfect product at the
same time.  The Japanese company waits until it can perfect the product
in its home market.  The American company has a choice: On the one
hand, it could spend the time before the Japanese company introduces
its product in perfecting its product and test marketing it in certain
localities, so that by the time the Japanese introduce their product on
the market, the American company will have a product of equal quality.
On the other hand, the American company can introduce its not-quite
so-good product on the market right away and take the initial market
away from the Japanese.  In other words, the article itself proves that
if the Japanese were of equal productivity to the Americans, the
Americans could always beat them to market.

 Note that American manufacturers, too, could if they wished use the
same strategy as the Japanese; i.e., they could decide to sell their
products only in the U.S. (or even only in some other country, say, in
Latin America) until they were perfected, and only then allow their
products to be exported to the world market.  Protectionism offers no
advantage in this regard.

The author claims it is unfortunate that the U.S. government doesn't
bestow "protection" on "promising small companies."  If the companies
show such promise, the capital markets will give them all the support
they need.  There are trillions of dollars out there on stock markets
just waiting for some company to come along that's sure to build a
better mousetrap and beat everyone else to market.  The only thing
government "protection" adds is that a company will still receive
capital even when people who are interested in making money don't think
the business is promising.  Government "protection" is *in its very
nature and purpose* protection for losers--for the destruction, not the
production, of wealth.

The article tries to get away with claiming that the 7 Japanese auto
producers do not compete against each other in Japan because their
market share is relatively stable.  This fact says very little about
whether or not there is competition in a given market.  (In fact,
Porter's study, which is far from simple-minded, reveals that domestic
rivalry is intense in virtually every industry in which Japan is
successful internationally-- see p. 413.)  The article suffers from the
fallacy of assuming that a bigger company is always more efficient and
thus will always "swallow up" a smaller competitor if competition is
free.  Economies of scale, however, have a limit.  Beyond that point
size actually becomes a disadvantage, in that a large company is
intrinsically more difficult to manage.

WHAT IS DUMPING AND WHY IT IS BAD:

To the contrary of the article's position, dumping is not a problem and
it is the author who is mistaken in thinking otherwise.  The author is
correct that if a Japanese product sells for less than it costs to make,
the cost must be paid by someone.  He has already told us who's paying
it:  the Japanese company that is suffering losses, or the Japanese
consumer, who is forced by protectionism to cover those losses by
paying higher prices in Japan.  Even if a Japanese company makes up for
the cost of "dumping" by charging higher prices in Japan, it too has to
face the added cost of the fact that *everything* costs more in Japan,
and thus its cost of doing business is higher.  It has to pay more for
supplies and raw materials; its workers' cost of living is higher, etc.
The people who are paying the costs of dumping are the Japanese.

The cost to America is said to be in closed factories and lost jobs.
This is no doubt true in the narrow sense that some American companies
may well go out of business and their workers have to look for work
elsewhere.  This is a disaster only on the implicit assumption that
there is a shortage of work to be done: that there is a fixed amount of
knowledge to be gained, of fields to excel in, of jobs to be had.  It
assumes that we have enough housing, that our highways are in good
enough repair, that our children are well enough educated, that health
care, food, clothing, furniture, consumer products and energy couldn't
get any cheaper, that we have no more life-saving drugs to discover,
that there are enough doctors, nurses, engineers, taxi drivers, city
buses, restaurants, etc., that there is no new technology to be
developed.  To the contrary, it isn't as if there is a shortage of work
to do that people would be only too willing to pay to have done for
them more cheaply than it is done now.  What there is, of course, is a
shortage of job openings at currently existing companies.

Why, then, aren't more companies coming into existence to do the work
that needs to be done?  Hint: Who by law prohibits or restricts
competition with public transportation, mail delivery, electrical
utilities, cable-TV operators, and local phone companies?  Hint: Who
controls the housing market and the banks by playing with interest
rates?  Who "plans urban growth?"  Who "protects" us from "greedy
developers?"  Hint: Who's in charge of building the highways?  Hint:
Who educates our children?  Who makes it impossible to make profits in
the education industry?  Hint: Who has gradually assumed control of the
health care system for the past twenty years and is now ready to take
it over completely?  Hint: Whose policies are explicitly intended to
restrict the production of food?  Hint: Whose regulations prohibit
life-saving drugs from reaching the market?  Hint: Who licenses
doctors, nurses, taxi drivers, beauticians, massage therapists, etc.
for the explicitly stated purpose of limiting competition?  Hint: Who
eats up over a third of everyone's income in taxation spent on
immediate consumption, rather than allowing individuals to invest that
money in production?  Hint:  Whose labor policies are aimed explicitly
at preventing people from making too much money from the labor of
others--and why would anyone hire anyone else if he wasn't going to
make money from the employee's work?  If we have unemployment in this
country, it is not the Japanese who are to blame.

Consider the following example of dumping: Robinson Crusoe lives alone
on his desert island, barely getting by on the work he can do alone:
hunting, fishing, collecting fruits and nuts, chopping wood, building
shelter, making tools, etc.  Along comes Friday who, for the purposes
of this example, we will assume is Japanese.  Friday tells Crusoe that
since he, Friday, is really good at chopping wood, he will do all of
Crusoe's chopping for nothing in return.  Crusoe is delighted.  He has
also just been run out of the wood-chopping business.  Does this make
him "unemployed" during the time when he would have been chopping wood?
Doesn't he have better things to do with his time?

Things are no different in the real world.  Suppose tomorrow the
Japanese said they were going to give away cars for nothing.  Our car
companies and many of their suppliers would go out of business, leaving
many people out of a job.  At the same time, every worker in the U.S.
could within several years forget entirely about car payments.  This
means that on average, every worker in the U.S. could take a pay cut of
say, $100 per month and still have a higher standard of living (and a
better car) than before.  How many extra people could employers put to
work with these savings?  That, of course, depends on the wage.  For
every 30 workers, they would have enough money to put another one to
work at an average of $3000 per month--and if so we would decrease our
unemployment rate by just over 3 per cent.  The idea that by buying
Japanese one takes a job away from an American and gives it to a
Japanese (and what makes a Japanese person less worthy of a job than an
American, just because he's Japanese?) conveniently forgets the added
employment generated in the U.S. out of the savings to the consumer.

Aha!  But supposedly I forget the article's claim that "later on Japan
makes much more profit than it originally cost to do the dumping once
the non Japanese competition has been wiped out by the practice."
Suppose the Japanese destroy our auto industry by selling cars
extremely cheaply.  Later on, the argument claims, when the competition
is out of business the Japanese will be able to demand extremely high
prices for their cars, thus making up their losses and hurting us in
the long run.  (Notice that this claim explicitly contradicts the
following statement later in the article: "It should be noted that
Japan's goal is not to make excessive profits by charging monopoly
prices once the takeover is complete. The goal is simply to ensure that
the major players in the industry are Japanese...")  This is known as
"predatory pricing," and is the principal bit of economic pseudoscience
behind our antitrust laws, even though it is thoroughly discredited and
can be easily shown false.

First, one should note that international competition abounds in any
industry.  Even if the U.S. were to lose its auto industry, Japanese
influence on prices would be limited by the existence of competing car
companies in Korea, Germany, France, England, Italy, Sweden, Argentina,
Mexico, etc.

Now let's follow the article by removing ourselves several steps from
reality and assume a scenario in which all these competitors have been
driven out of business.  Even then, the Japanese would still be facing
competition from the used car market.  As long as the Japanese flood the
American market with cheap new cars, they will be increasing the supply
of cars for the used car market.  If the Japanese later charge
extraordinary prices, people will simply buy fewer new cars, switch to
used cars or keep their old cars longer, and wait until new suppliers
entered the field.

At the same time, there would remain a number of empty automobile
factories that could be brought into production as soon as higher
Japanese prices made it economical to do so.  Suppose unrealistically
that despite the foreknowledge that the Japanese eventually were going
to increase their prices, these factories had for some reason been
dismantled. Nevertheless, manufacturing facilities in other industries
(e.g., tractors) could be converted rapidly to automobile production.
In a slightly longer time-frame, new factories could be built.  As a
result, the Japanese would continue to face a potential competition
that would keep their prices in line.

The standard response to this argument is that the Japanese would never
let such factories come on line; they would immediately drop their
prices and drive the newcomers out of business.  Yet if one considers
the full context, several factors operate to make such a practice
wildly unrealistic.

First, if the upstart American producers knew that the Japanese would
try to drive them out by selling cars at a loss, they could go to
investors and car dealers and say: "Look.  We know they can't go on
forever taking losses on every car they export.  They're trying to sell
at 80 per cent below cost now so that they can charge 500 per cent
later.  On the other hand, you can contract with us to purchase a
steady stream of cars at our present market prices for the next three
years.  Right now they may not sell, but if Japanese prices don't come
back into line soon they'll suffer nothing but losses and eventually go
out of business.  Meanwhile you can stockpile our cars to sell after
the Japanese are out of the market.  On the other hand, if Japanese
prices do come back into line, which is more likely, then our cars will
be competitive.  In neither case will you have to worry about the
Japanese charging high prices."

At the same time, if American car dealers and investors know that the
Japanese are taking a loss on every car they export, and that these
losses will have to be made up by charging higher prices later, this
means they can increase Japanese losses and even run the Japanese
companies out of business just by buying plenty of their cars and
stockpiling them.  The Japanese would never get the chance to recoup
their losses by raising their prices; they would be out of business
first.

In other words, a policy of "predatory pricing" does not make good
business sense; buyers can always protect themselves in many different
ways, e.g., by making contractual agreements with alternate suppliers.
The general idea behind the "predatory pricing" sophistry is that big
companies can always outcompete smaller ones, because they can last
longer in any price war.  In fact, however, the bigger the company the
faster it loses money in a price war, in proportion to its market share.
Only if the larger company is more efficient (which is by no means
necessarily the case) can it gain a relative advantage.

It is said that certain people made a lot of money off John D.
Rockefeller's Standard Oil in the early part of this century simply by
building oil refineries and threatening to bring them on line.  Instead
of facing the potential competition, Rockefeller would purchase the
refinery, yielding the seller a hefty profit.  But since Rockefeller
would be taking a loss on the refinery if he didn't bring it into
production, it was more advantageous to him to bring it on line--thus
increasing the supply of oil and reducing prices.

It is important to remember that later in the article the author
retracts his claim of predatory pricing.  This is probably because
there is no evidence for it; for example, after 20 years of alleged
dumping by the Japanese television cartel, the price of color TVs has
declined 25.6%.  (On this see James Bovard, _The Fair Trade Fraud_.)
The Japanese, the author says, are not seeking market share in order to
be able to charge monopolistic prices; rather, they are seeking market
share simply for the sake of market share, even at the expense of
profitability.  This supposedly "long run" strategy would actually
weaken Japanese companies in the long run: while they are suffering
losses to gain market share, other producers can wait until the
Japanese are at their weakest and only then enter the market.
Meanwhile, the American consumer would enjoy the lower prices paid for
by Japanese losses.  A case in point is the manufacture of computer
memory chips so touted by Ishihara: after the Japanese chipmakers had
faced large losses in order to outcompete the Americans, they soon
found themselves competing against Korean and Taiwanese firms that
didn't have any losses to recoup.  Meanwhile, American chipmakers were
moving into more profitable areas and eventually surpassed the Japanese
in total market share.

ECONOMIC STRATEGY, WHAT IT ALL MEANS:

Previously, the article has repeatedly claimed that the way the Japanese
are able to afford to undercut prices in the U.S. is by raising prices
in Japan.  In this section it contradicts that position by maintaining
that the Japanese are undermining our PC makers by lowering prices of
LCD screens in Japan and raising them in the U.S.  Either way,
apparently, the Japanese win.  Yet, if the Japanese had originally
outcompeted U.S.  producers of LCD screens by raising the prices of
their screens in Japan and taking losses abroad, then U.S.
manufacturers using LCD screens in their products would have had a
tremendous competitive edge over Japanese producers of the same items,
and once again those Japanese companies would have arrived at the
market too late.  One can't benefit oneself by stealing from oneself.

But the article does not demonstrate that the Japanese took over LCD
screen production by charging higher prices in Japan.  It simply says
that the Japanese outcompeted U.S. producers of screens.  In such
competition *both* sides take losses, and so both sides sell below cost;
the one who can hold out longer wins.  That's the way competition
works.

If American producers of PCs could gain a competitive edge over the
Japanese by using American-made LCD screens, screens would be produced
here.  It wouldn't take much time to start up production in the U.S.
The point is that even if Japanese producers were getting Japanese LCD
screens at lower prices than American producers are, American producers
still prefer to get their screens from Japan than to buy ones produced
in the U.S.  If one were to force American manufacturers to buy LCD
screens from American companies, one would be *reducing* the
competitiveness of American products.  This is in fact what has
happened: The government slapped a 63% tariff on portable computer
screens, with the result that IBM, Compaq and Apple all moved
production of their portable computers outside the U.S. (_Forbes_
5/10/93 p. 25)

The basic complaint of the article is that the Japanese can outcompete
the Americans in certain industries.  If American companies don't want
to license their technology to the Japanese, they don't have to do so.
They know the consequences.  They could take their production to Hong
Kong or Singapore or Taiwan or Mexico or Ireland or even stay in the
U.S.  The reason they don't is either that they're stupid or, far more
likely, that the present arrangement is the most efficient for them.  In
fact, the failure of American companies to license technology has
occasionally stimulated the Japanese to develop a competing technology
on their own--e.g., in the case of 32-bit microprocessors (see the
_Technology Review_ article cited above).

The article is probably correct in its statement that Americans tend to
do better where basic innovation is involved.  This means that it is to
America's benefit to create conditions under which innovation is free
and unfettered.  As long as the Japanese maintain a culture that
disvalues individualism, Americans will have a competitive edge in this
regard--if we don't undermine it with calls for collective unity and
sacrifice.

If the Japanese actually believe that "business is war," in a literal
sense, then they will be quite disappointed to find that each of their
conquests benefits their enemy.  It's very easy to point to factories
that are shut down: this doesn't take any reflective capacity or
thought, just a perceptual-level mentality.  It takes a bit more
critical reflection to understand the true causes of business failures,
and to point to the new businesses that have taken the place of the
old.  In a free market, businesses are being outcompeted and closing
down all the time, Japanese or no Japanese.  That doesn't make a going
out of business sale the moral (or actual) equivalent of a bombing run.

THE ECONOMIC WAR, A SUMMARY OF THE GLOBAL PLAN:

The author shrugs off the Japanese stock market crash as if the loss of
50% of the value of one's company meant nothing to ones "manufacturing,
marketshare and technology."  Wealth *does* come from making and
selling things--but it is also the *source* of the power to produce and
sell even more things.  The loss of half one's wealth will make a large
difference to one's productive capacity.  The idea that these are all
"paper losses" is again the result of a perspective that is unable to
look beyond the immediately evident.

Suppose one owns a car and is making regular car payments when suddenly
the car's resale value goes down fifty per cent.  Sure, one still has
the car.  In fact, one is stuck with the car--if one needs to sell it,
one will no longer be even close to being able to cover the debt.  Now
suppose instead it is a factory on which one is making payments.  If the
value of one's factory goes down by fifty percent, this means that one
is still stuck making payments on the original value of one's factory
even though its value, which is based on the value of what it produces,
is substantially lower than it had been.

Even if one is not paying off debt, to lose fifty per cent of one's
wealth is to lose half one's capital; i.e., one's power to produce.
The article notes that if manufacturing and marketshare is robust the
companies' values will rebound, but conveniently neglects the effects
that a loss of wealth will have on Japanese production and marketshare.
Capital *means* tools.  The value of one's capital is a measure of the
value of one's tools--i.e., of their usefulness.  The NIKKEI collapse
means that the market currently thinks that the usefulness of Japanese
plant, equipment, etc. is not as great as was once assumed.  (This is
not to imply, however, that we should be happy about the Japanese
losses.  The more productive the Japanese are, as I have argued, the
better off we are.)

In fact, the Japanese economy is in a real mess right now.  Major
industries such as auto manufacturing and electronics are faced with
tremendous overcapacity, unsold inventory and declining sales.  Nissan
was to close a plant in Japan and lay off 5,000 employees (_Wall Street
Journal_, 2/24/93).    Nippon Telegraph and Telephone has a business
plan that would shrink its payroll by 30,000 workers in the next 3
years.  Big Japanese corporations, which have been trying to weather
the storm to avoid layoffs, are now no longer able to do so.  The system
of "lifetime employment" is crumbling: right now there are nearly a
million redundant workers drawing paychecks in Japan, a situation that
only worsens companies' economic difficulties and prolongs the crisis.
The credit bubble has collapsed; banks are sinking under the weight of
bad loans and outright fraud as the inflated real estate and stock
prices that were the basis for these loans have plunged.  The money
supply, GNP, consumer confidence, capital spending, and profits are all
down in Japan.

Indeed, the Japanese are now seriously considering restructuring their
management more after the American manner.  Hiroyuki Mizuno, a
Matsushita executive director, was quoted in the Wall Street Journal
article cited above as saying "We are coming to the U.S. way.  Our
management has to be changed."  Akio Morita has recently echoed similar
sentiments (_Wall Street Journal_, 8/8/92 p. A5).

Our author, and Morita as well, makes typical disparaging remarks about
"junk" bonds and mergers (funny, how the article takes mergers and
conglomerates to be good and powerful when the Japanese do it),
apparently ignoring entirely the improvements in efficiency and
competitivity brought about by means of these tactics.  Yes, a number of
companies inadvisably overextended themselves using these methods
(which is one way of looking at what we're now seeing in Japan as
well).  In general, however, companies took on additional debt precisely
because the increases in efficiency brought about by mergers or changes
in management or streamlining outweighed, by the best calculations of
the investors, the additional debt load.  Whether U.S. government
monetary policy will invalidate these calculations remains to be seen.

Instruments such as "junk" bonds have made it possible for upstart
companies to find the capital they need to go rapidly into full
production and compete.  This kind of financing means, in concrete
terms, more factories and more manufacturing.  These are not simply
"money games."  Given the state of the American economy, U.S. companies
have been under great pressure to do more with less and to figure out
new ways of getting the capital needed to expand, grow and remain
competitive.  It is rather disingenuous of Morita and Ishihara to point
to such practices as if they constituted gambling and irresponsible
speculation, when at the same time the Japanese were rolling in easy
money and engaging in all sorts of speculative excesses in stocks and
real estate, which have finally collapsed on top of them.  So who's
playing "money games?"

The article claims that free world trade is a good thing for all
countries, which it is.  It also claims that Japan is more
protectionist toward American goods than America is toward Japanese
goods, which is possible (the article never discusses the extent to
which American industries are "protected" by U.S. tariffs and other
impediments to trade).  From the claim that "Japan closes its market
towards us, but we don't towards them" one is supposed to infer that
free trade is good only when practiced equally by both parties.  In
fact, for reasons already noted, removal of trade barriers is to the
interest of every country whether or not its trading partners follow
suit; a country that closes its market to foreign competition is mainly
hurting itself.

If one thinks that the source of Japan's wealth is its protectionism,
then one should first consider all the "protected" Japanese industries
that have languished in inefficiency and have never become
internationally competitive.  One should also look at other countries
that have tried to favor domestic industry through protectionism.  Go
to Argentina, for instance, and find out how much a car costs: usually
at least double the dollar price of what it costs in the U.S.  In
Argentina, companies such as Renault (I seem to remember) license their
technology to Argentine companies that actually manufacture the
Renaults in what I believe is still a "protected" market.  This has not
made Argentina an appreciable world power as far as auto manufacturing
is concerned.

The article claims that Japanese trade surpluses are harmful because as
a result "Japan takes money out of America's economy and uses it for
their own purposes (such as buying our real estate, or companies)."  In
other words, we want the Japanese to buy things from us, as long as it
isn't real estate or companies, and heaven help us if they actually use
the dollars they receive in trade for their own purposes!  Apparently
Americans don't purchase things on the world market for their own
purposes, but only to give foreigners jobs.  (It is worth noting that
Japanese buying actually helped a lot of Americans' unload their real
estate when the market was at its top in the mid 80s, and have
subsequently lost a great deal of money on their investment.  In fact,
as Robert Reich writes in his _New York Times Book Review_ article of
2/2/92, most Japanese investments in the U.S. have been losers,
particularly in T-bills, real estate, and unsuccessful Rust Belt
companies.)

It is true that Japan's trade surplus is no accident.  If because of
protectionism the Japanese are not allowed to purchase consumer goods
from foreign companies, the only thing they can do with the dollars they
receive is to invest them in the United States, either by buying real
estate, starting factories, financing our government's budget deficit,
or purchasing companies.  (The article also mentions in the same breath
the fact that the Japanese are purchasing *art*.  How evil can they
get?).  However, Japan's trade surplus is not the same thing as the
source of Japan's wealth.  With a "protected" market the Japanese pay
in higher prices more than they gain in production.  The article points
to the Japanese trade surplus as the source of its wealth out of an
unwillingness or inability to fathom the true source of Japan's economic
progress, primarily faster capital accumulation through higher savings
and lower government spending, better education, and hard work.
Japan's economic progress cannot be ascribed to the fact that their
economy is less capitalistic than ours.

The article mentions in passing that Japanese companies are more
"averse to business risk" than their competition.  This is a synonym for
"stagnant."  Indeed, the article here claims that Japanese companies are
more inefficient than their competition.  This claim is no doubt
partially true given whatever trade barriers exist.  But it is not by
means of their inefficiency that they are conquering world markets.
The fact that Argentine car makers have been inefficient due to tariff
"protection" certainly has not allowed them to flood the world with
high-quality, low-priced automobiles.  If the Japanese are inefficient,
they can only outcompete us when we are more inefficient.  It's not as
if the Japanese are winning world markets by supplying high-cost, low
quality goods.  The idea that their success is the result of
inefficiency is a patent absurdity when one considers the quality and
prices of their merchandise.  As Rauch writes (p. 112), "We used to
complain about planned obsolescence, about products built to fall
apart; that's dead now, and we have Toyota and Sony to thank."  Not at
all, say the Japan-bashers; we Americans could have produced
merchandise of even better quality for even lower prices if we didn't
have this unfair Japanese competition to contend with!  To which the
proper answer is:  if you were able to produce higher quality
merchandise for lower prices, why didn't you?  You would have beat the
Japanese, regardless of their trade practices.  If all Japanese
competition suddenly disappeared, this would add nothing to the
productive efficiency of Americans; it's merely that the American
products that had been losing on the market would no longer suffer the
comparison.

DEFENSE:

Japanese laws against foreign ownership of companies--to the extent
that they still exist--are obviously unjust and surely deprive Americans
of many profitable opportunities.  Likewise, they hurt the Japanese
economy by restricting foreign investment and production.  With the
recent collapse of the Japanese stock market, one can be sure the
Japanese will be looking for all the foreign investment they can get.
As Christopher Wood of the _Economist_ writes in _The Bubble Economy_,
the system of cross-shareholding is unraveling, making the present a
time of great opportunity for foreign companies to set up, expand, or
buy companies in Japan.

The fact of large "cross-holdings" of shares by Japanese companies in
other Japanese companies has allegedly prevented foreign takeovers by
making it impossible to accumulate enough shares to do so.  This
contention appears to be true at least for many of the larger companies.
Many companies in the U.S. are likewise either wholly or majority- owned
by one person or group, making takeovers impossible unless those
individuals are willing to sell.  Big deal.

Now comes the assertion that since Japanese companies are not
responsible to their stockholders, they can afford to think long-range,
instead of having to deliver short-term profits.  One should remember
that before leveraged buyouts became common in the U.S. during the
1980's, the contention was often made that U.S. corporate management
had little responsibility to shareholders as long as it could assure a
certain minimum profit, with the result that management tended to be
more interested in feathering its own nest and protecting its position
than in making profits.  Indeed, it was one of John Kenneth Galbraith's
critiques of modern capitalism that corporations were no longer driven
by the profit motive, but by an entrenched bureaucracy no longer
responsive to shareholders.  To the extent that this was the case, it
was blown away in the leveraged buyouts that our author so disparages.
People like Michael Milken made it possible for people who saw such
inefficiencies to borrow money, take over companies, replace
management, and maximize efficiency and profits.

Maximizing profits is bad, our author counters, since it leads to short-
term thinking.  This claim ignores the fact that short-term thinking
leads to falling stock prices: the long-term prospects of a company are
reflected in the price of its shares.  If a company is sacrificing its
long term prospects for short term gain, its dividends may rise, but
the fall in its stock will more than make up the difference.  It may
well be, of course, that American companies are pursuing short-sighted
policies not yet reflected in stock prices because of government
manipulation of interest rates and other factors.  Moreover, it is only
natural that a company will sacrifice long-term projects if it has
reached the point where it is fighting just to stay alive.  This is
what happens when capital becomes scarce; it is the natural result of
our low savings, restrictions on lending, and high government spending.
If Japanese companies were able to invest more in their future, it is
because they had more to invest in their future.  The situation in
Japan has also been exaggerated by the credit bubble: "Thinking ahead
was a snap in an era of rocketing share prices and rock-bottom interest
rates." ("Japan's Reversal of Fortune," _U.S. News and World Report_
1/11/93).

It is very difficult to plan for the future in the midst of continual
uncertainty about the economy and government economic policy.  (Who in
America today would think of making a 99-year contract?)  While in
America policy shifts back and forth depending on the party in power,
Japan was governed by the LDP for decades.  Only recently have the
Japanese faced the kind of crisis that makes a shambles of long-term
plans.

It is true that American culture tends to be focused on immediate
gratification while in Japan a person may instead tend to forego present
consumption even to the extent of doing so when it will yield no future
benefit to him.  Neither of these cultural attitudes is conducive to a
healthy economy.  Consider the example of a suicide note left behind by
a Japanese executive who, knowing his company's secrets, killed himself
to protect it from scandal: "The company is eternal.  It is our duty to
devote our lives to that eternity.  Our employment may last for only
twenty or thirty years, but the life of the company is eternal.  I must
be brave and act as a man to protect that eternal life." (Rauch, _The
Outnation_, p.69) If the company becomes an end in itself, its
continuation tends to become the overriding concern, even when its
existence is no longer needed.

OFFENSE:

This section makes several contentions.

First, the Japanese government and corporations are said to coordinate
with each other to select a strategic industry they want to enter.  The
implication is that if they do so, they cannot fail.  This, however, is
false.  All it means is that if they fail, they all fail together.

Second, the Japanese are said to copy and improve on foreign
technology, and then test and perfect their products in their
"protected" domestic market before offering them for export.
Meanwhile, however, their competitors would either be doing the same
thing (in the absence of competition from the Japanese products that
are being perfected) or would be beating the Japanese to market.  The
latter is a significant advantage; by this means, a competitor can
sometimes establish an entrenched industry standard before the
competition even arrives with an incompatible system.

Finally, the Japanese are said to gain market share through dumping.  In
this way they can allegedly take over any industry they wish.  The
fallacies of this view have already been presented.  However, I pause to
note the additional fallacy that it by no means follows, even if the
Japanese were able to take over any single industry they wished, that
they could eventually take over every industry at once.

Notice how the argument now suddenly shifts: the Japanese no longer
have to raise prices in Japan in order to support the costs of dumping;
they can do so out of their cash reserves.  (In fact, if the new
discount retailers are successful, Japanese companies will no longer be
able to cover losses abroad by overinflating domestic prices.)  Yet if
the Japanese are no longer taking advantage of their "protected"
market, they lose what the article claims is their major competitive
advantage.  If American businesses were to start with large enough cash
reserves, in other words, the argument implies that they could outlast
the Japanese.  Now, I wonder what it could be that would cause
American industry to be so undercapitalized?

SUCCESS DOESN'T ALWAYS COME THE FIRST TIME:

This section is necessary to rationalize away the mysterious fact that
even with all the alleged advantages they enjoy, Japanese companies
don't always win.  Nevertheless, the article alleges, if they are
defeated in an industry they consider strategic, they will go home, do
their homework, improve their products, and come back and win later.
In other words, the Japanese allegedly will continue to pursue areas in
which they are comparatively unproductive, just because those fields
have been designated as "strategic."  Instead of directing their effort
to improving their strengths, they focus instead on their weaknesses.
Of course, they may eventually become quite productive in these
fields--but this must be weighed against the degree to which they would
otherwise have improved in areas that showed more promise.

INNOVATION:

Since Japan has a problem with innovation, it must acquire new
technology abroad, sometimes even stealing it, according to the article.
More often, the Japanese buy foreign companies that have developed new
innovations.

Theft of ideas is nothing unique to Japanese big business: consider the
lawsuits that are flying back and forth across the microchip business
even within the U.S.  Protecting people against such theft is the
business of the law.

On the other hand, the Japanese purchase of small American technology
developers is regarded as a bad thing, because these are our "strategic
industries."  In other words, a person with a good idea who can't raise
money on the American market is to be prohibited from raising capital
and starting, continuing or expanding his business by selling his firm
to the Japanese.  Better apparently that no one make use of an idea at
all than to let the Japanese get hold of it.  Meanwhile American
investors are assumed to be just too stupid ever to know a promising
investment opportunity when they see one.

The Japanese also are said to free-ride off publicly available research
done at foreign universities.  Japanese research, on the other hand, is
done by corporations who, by keeping it secret, can use it to defeat
their competition.  Of course, the whole point of making research
publicly available is that anyone can make use of it--that everyone
benefits from advances in human knowledge.  If a Japanese company can
take a good idea and make better use of it than an American company
can, so much the better.  By supporting university research, American
companies still derive the localizable benefit of a university-educated
labor force that's not going to move to Japan.  If American companies
discover that their financial support of university research is putting
them at a competitive disadvantage, they may have to do more of their
R&D in-house.  This is basically up to the companies themselves to
determine, and is entirely within their control.

It is interesting that Japanese companies are seen as gaining an
advantage by saving themselves the expense of charitable giving.  The
implication is that American firms are willing to sacrifice jobs and
production to charitable giving--a very odd form of philanthropy.

JAPANESE PEOPLE AND THE MARKET:

This section starts out by maintaining that the Japanese people are too
naive to be aware of the existence of cartels in their country.  Perhaps
this is the case.  However, if cartels are the source of Japan's
economic power, as the article has suggested, why then should the
Japanese people oppose the existence of cartels?  It is precisely
because the article's primary contentions are false that the Japanese
could be considered naive about the existence of cartels.

The examples in this section merely reveal the other side of Japan's
protectionist policies: a high cost of living for the Japanese.  These
are the people who are paying the price of erecting barriers against
trade.  They are the ones who need to be informed about the
consequences of Japan's trade policies, and about prices of goods in
the U.S.  Ultimately, they are the ones who will make discounters or
even smugglers financially successful to the disadvantage of
"protected" domestic industries.

ESCALATOR DOLLS AND OFFICE LADIES:

Here the Japanese are seen to deprive themselves of the productivity of
more or less fifty per cent of their work force in order to perpetuate
outdated and unfair prejudices and attitudes about women.  There's not
much to say about that except that if I were a woman, I'd much rather be
living in the U.S.

"BUSINESS IS WAR":

I find it fascinating that many Japanese apparently cannot bring
themselves to engage in trade unless they see it as something that it is
not: war.  Here again one sees the incompatibility of collectivism and
of medieval attitudes with modern capitalism.  Basically, in a culture
imbued with the idea that the sacrifice of one's personal interests to
the group is good, how on earth is the profit motive to be
rationalized?  One has to look upon one's career as a self-sacrificial
act in the service of one's country, rather than as a way of making a
living.  Since the paradigm of a self-sacrificial act in the service of
one's country is fighting in a war, the image is not surprising.
Unfortunately for the Japanese, the main beneficiaries of this
sacrifice are the foreigners who receive inexpensive goods of high
quality.

MILITARISM:

This section points to certain aspects of the Japanese culture that
would lead one to believe that militarism is on the rise in Japan.
These claims should be evaluated in the context of the fact that Japan
has a constitutional limit on military spending and restricts its
military activity severely.  During the Persian Gulf war, it became
clear that changing the constitution on this point (so as to allow
Japan's military to participate in the Gulf war) would be hugely
unpopular in Japan.

The existence of anti-American nationalist movements should be taken in
the context of the fact that these exist all over Europe as well.
Citing Morita and Ishihara's book _The Japan that Can Say No_ as
evidence that Japanese interests are contrary to American ones is like
the Japanese citing a book, say, by Sen. Richard Gephardt and Lee
Iacocca as evidence that the U.S. is hostile to Japan (in fact, such a
conclusion would probably be closer to the truth).  There are almost
certainly militaristic and nationalistic elements in Japanese culture.
One should ask, however, how significant they are in the full context
of Japanese culture, and whether they are increasing or decreasing as
Japan's involvement in the world economy increases.

Certainly, America has an interest in making certain that Japan
continues to pose no military threat.  Nevertheless, to claim that it
does is a fairly outlandish contention. The article insinuates
throughout that Japanese trading practices are destroying our military
and our security.  The suggestion is unfounded.   Ishihara's claim that
the Japanese could alter the world balance of power by selling chips to
the Soviets, and that the U.S. could do nothing about it, was never
true.  First, the Americans were never behind in the chip technology he
mentions.   There always existed alternate U.S. suppliers (e.g. IBM and
AT&T), U.S.  manufacturers that could convert rapidly to the
manufacture of such chips, and foreign suppliers outside Japan.
Indeed, by November 1987, nine months after the Department of Defense
study Ishihara cites to demonstrate America's dependence on foreign
memory chips, Motorola announced it would again start producing DRAMs
owing to improving market dynamics (_Wall Street Journal_ 11/17/87, p.
A12).

Second, the kinds of semiconductor upon which most military
applications depend are low-volume, custom-designed, high performance
products in which the U.S. lead was never in question.  Indeed, the
Department of Defense itself supported since 1977 a very- high-speed
integrated circuits (VHSIC) program to develop radiation resistant
microelectronics and production capability.  Furthermore, the DOD
accounts for less than 10% of all semiconductor sales and less than 3%
in chips.  (These facts are from the _Technology Review_ article cited
above.)

Third, it has turned out to be false (and was even known to be false at
the time) that the technology driver of the semiconductor industry is
the mass production of commodity chips, rather than the production of
higher-tech specialty chips.  Even in commodity chips, most U.S.
manufacturers have found that making other high volume chips is just as
useful for advancing their technology as making DRAMs ("Falling Chips,"
_Wall Street Journal_ 2/17/87, p.1).  An intraagency survey on the chip
industry led by the NSF found that America's technology lag was wildly
overstated by semiconductor industry lobbyists (_Wall Street Journal_
1/8/88 p. A6).  Patriotism, in other words, is the last refuge of the
scoundrel.

Fourth, the scary U.S. Defense Department study cited by Ishihara was
heavily influenced by lobbyists for U.S. chipmakers who, losing money,
wanted good arguments for why the government should help fund a joint
research consortium--which turned out to be Sematech.  In fact, when
Sematech came into existence it did not go into the high- volume
manufacture of chips, as was originally planned, since the market was
already full of competitors.  Instead, it focused on developing
techniques for the high-volume manufacture of chips.  While this
research has been of some benefit to Sematech member companies, overall
only half the group's members are breaking even or seeing a return on
their Sematech investment (_Wall Street Journal_ 8/17/92 p.  B1) even
though Uncle Sam has been footing over 40% of the bill.  In any case,
such commercial research has had little if any effect on America's
national security, the ostensible rationale for the consortium in the
first place.  As Malcolm Forbes, Jr. wrote last year (_Forbes_ 5/10/93
p. 25) "Apologists for the consortium claim that American chipmakers'
prosperity in recent years demonstrates the success of Sematech.
That's like the rooster believing that his cock-a-doodle- dooing makes
the sun rise."  While defenders of Sematech claim that it is still
"building an infrastructure," American technology has actually advanced
through the knowledge of how to make multiple products on flexible
equipment, manufacturing custom chips in small batches and shifting
rapidly among diverse specialized requirements (_Science_ 3/20/92 p1501
and _Wall Street Journal_ 1/8/88 p. A6.).  This should be another
lesson to advocates of American industrial policy.  As Forbes writes,
"Though there is evidence of successful government-sponsored research,
there is next to none that government investment is more farsighted,
more efficient than that done by the private sector."

Fifth, Ishihara is correct in noting that if Japan were to have tried to
alter the balance of power by contributing to Soviet technology, the
U.S.  would have put a stop to it, ultimately by military means if
necessary.  One should also remember, if one is entertaining absurd
scenarios, that technology is not the only game in town.  The Soviet
Union and China, despite their massively inferior technological base,
were (and are, in the case of China) nevertheless able to pose a threat
to the United States for many years.  Countries like France and
Britain, whose economic dominance has declined, continue to be world
military powers nevertheless.  Even if one drops context entirely and
assumes that all military contractors capable of manufacturing a
particular critical device or weapon were to go out of business in the
U.S., it would in many cases be more efficient to buy what was needed
on the world market and stockpile it rather than continue to sustain
money-losing industries in the U.S.  Finally, the United States is in
no danger of losing its edge in technological innovation, which means
that in fact, in the case of a military threat, existing factories
could be reconverted to military use and new ones built relatively
rapidly.  In short, the argument from military security is a scare
tactic.

There is in addition no threat of Japan attacking the United States.
First, Japan depends far more heavily on international trade than does
the U.S.--the U.S. economy could survive without trade; Japan must
import all its raw materials.  War is thus simply not in Japan's
interest.  Second, it is to Japan's interest to let the U.S. pay the
cost of defending it against neighbors such as China, which do pose a
certain threat.  Third, if Japan had plans to rearm itself, the U.S.
would have plenty of time to respond.

The joint development of the FSX fighter by the U.S. and Japan (cited
by Ishihara) would not have taught the Japanese anything they didn't
already know--the U.S. has co-produced F-15s for years with the
Japanese.  On the other hand, according to William Ross, head of
McDonnell Douglas' McDonnell Aircraft Co., though the Japanese might be
able eventually to produce an FSX on their own, they would not be able
to match more advanced attack planes such as the ATF or the A-12 (_Wall
Street Journal_ 11/14/89 p. A23).

Even if one goes so far as to credit rumors that Japan is developing a
nuclear capability, just how different would the situation would be from
the fact that France possesses nuclear capability?  Japan will only be
perceived as a military threat to the extent that one has preconceived
notions about the hostility of Japanese to Americans.

EFFICIENCY:

Basically, this section makes the claim that Japan is quite inefficient
in areas outside manufacturing, and that this inefficiency is due to
protectionist policies.  The evidence seems to indicate that this is
true.  In other words, Japan would be no different from a country like
Argentina were it not for the fact that in Argentina inflation,
dictatorship, state-run monopolies, etc. had impeded the accumulation
of capital, while the Japanese have limited their government spending,
saved for the future, promoted a culture that favored business growth
and hard work.  This strategy has made up for the inefficiency
naturally produced by protectionism.

It is interesting that though the article cites a statistic showing the
Japanese to be less productive in general than the Americans, it also
claims that Japan is per capita the richest industrialized country in
the world.  The intended implication is that the disparity between
America's greater production and its lesser wealth is being stolen by
the Japanese.  How Japan can accomplish this theft by exporting more
wealth than it imports should be utterly mystifying to the author of
the article--unless he takes into account the fact that prices are
higher in Japan, with the result that a greater dollar figure for
Japanese wealth can still result in a lower standard of living.  No
theft is involved.

Japan, being an island nation, must inherently rely on the outside world
for natural resources, food and oil.  It is thus hardly surprising that
Japanese firms have focused on exploiting their relative strengths in
manufacturing for export.  This also means, however, that the Japan
will always be significantly dependent on foreign imports of food and
energy regardless of how many strategic industries it "takes over."  It
is important to keep this fact in mind before one engages in hysterical
fantasies of the Japanese "taking over" everything.

TRUE, BUT ONLY ON THE SURFACE:

Now the article goes after Japanese investment in the U.S.  It is
alleged that Japanese plants opened in the U.S. are only assembly
plants, while the research and development of machine tools, plastics,
parts, technology, etc. goes on in Japan.  Thus, since parts are made
in Japan and shipped to the U.S., "for every 1 job created another 4
are lost" in other sectors of the economy.  I wonder how this statistic
was reached.  The person who arrived at it might simply have figured
out how many more jobs there would be in the U.S. if such plants used
American- made parts instead of Japanese-made parts.  More likely,
however, it reflects the fact that these American-assembled Japanese
cars displace U.S. manufactured cars (assembled, say, in Mexico!), and
therefore even though the same number of cars results, there is less
demand for American-made parts.  Either way, the point the article is
trying to make, but doesn't make clearly, is that the Japanese use
American assembly plants to get around American tariff barriers while
still keeping a great deal of the manufacturing in Japan.  In this way
they are undercutting U.S. automakers and their suppliers.  Since the
United States should have no tariff barriers against Japanese goods in
the first place, this situation is not really a problem.

The implication of the article, however, is that Japanese investment is
disadvantageous to the United States and results in a net loss of jobs.
This argument again is patently absurd on its face, and results from the
false premise that only if the Japanese spend their money on American-
produced consumer goods will they *really* be putting people to work in
America.  Au contraire.  The Japanese can only do so many things with
their dollars.  If they don't buy U.S. consumer goods, any investment
they make in the U.S. increases the supply of capital, lowers interest
rates, and adds to our productive capacity.  Even if they sit on the
cash and do nothing with it, they will have lowered the cost of living
for everyone in the U.S.  Unemployment is hardly the result of foreign
investment.

The article also claims that Japanese-owned franchises of American
companies do not constitute American successes in Japan.  This claim is
puzzling, at least.  Does McDonald's somehow lose by virtue of the fact
that it has franchises in Japan?  By the same argument it would lose
money on its independent franchises in the U.S.  In fact, through
franchising McDonald's can now make a profit with minimal investment in
the franchise itself.  The overall point of the article, that the
Japanese interfere with trade, is probably true.  But there is no need
to make every success into a failure--or every failure of theirs into a
success.

EXAMPLE, HOW THIS ALL WORKS TOGETHER:

This section alleges that by purchasing Japanese goods we are
furnishing the capital for Japanese industries to outcompete us in other
fields.  One must bear in mind, however, that the article itself claims
that the opportunity for American investment in Japanese companies is
quite limited.  On the other hand, the Japanese are investing quite a
lot of money in the U.S.  While we are furnishing them with capital by
purchasing their goods, they are equally furnishing us with capital by
investing in our industries.  Yet the article tendentiously wishes to
construe both sides as damaging to Americans and as beneficial for the
Japanese, when in fact these transactions are mutually beneficial.

There follows a detailed description of how the Japanese are likely to
take over the world telecommunications industry.  Maybe--if one focuses
only on the factors that would be propitious to Japanese success.  The
article's foregone conclusion that the Japanese will succeed stems from
a skewed perspective under which nothing the Japanese can do will
ultimately fail.

AMERICA IS ALSO TO BLAME:

The claims made in the article concerning American businessmen's
unpreparedness for doing business in Japan don't surprise me at all, nor
do claims about Japanese attitudes toward women.  However, this section
reveals another key argument that lies behind the article: fear of
Japanese cultural dominance.  The author writes, "Japan is fast
becoming the world's economic power which means they get to make the
rules, not us. This is part of the price Americans pay for buying all
those Toyotas and Sonys for so many years. As Japanese industrial
influence spreads throughout the world, more of this type of treatment
of women by Japanese companies will take place (as many women working
in Japanese transplant companies in the US can attest)."  The subtext
is that we Americans have been forcing blue jeans, rock and roll, and
Coca Cola down the throats of the rest of the world for forty years,
and now Japanese success will permit them to force on us their
attitudes toward women, foreigners, and work.

This argument drops the entire context of the meaning of American
success.  Blue jeans, rock and roll and Coca Cola became popular in the
rest of the world because they were regarded as *liberating* and as
representing America and individual freedom--not because America forced
them on an unwilling populace (not counting cultural snobs, who while
not forced to wear blue jeans, were unwilling to allow anyone else in
their countries to wear them either).  On the other hand, Americans are
also known for Puritanical attitudes on matters such as sex and drink;
these have had much less influence on the rest of the world.

In any case, the idea that the Japanese will dominate us culturally to
the extent of changing our attitudes about women is based on three
false premises: 1) that in any economic relationship one party is
always "stronger" and can force his will on the other (in which case,
since America has had the upper hand not only economically but
militarily for forty years, why haven't the Japanese already adopted
our attitudes towards women?), 2) that Americans, especially women, can
so easily be bought off, and 3) that the Japanese won't be more
affected by our culture in this regard than we are from theirs.  Women
in the U.S. have nothing to gain from adopting Japanese attitudes
towards women; Japanese women have everything to gain from abandoning
them.  Given this fact, one should expect the "corrosive influence" of
American culture to be the more effective.

On a different note, it is quite interesting to note how in this section
the article equates tax exemptions with subsidies.  What is the
difference between a plant that exists and pays no taxes and no plant
at all?  Allegedly it's the loss of tax dollars from the plant that
wouldn't exist if it had to pay taxes.  There is no *loss* of taxes
whatsoever; the government has simply agreed to keep its paws off money
that it has not produced and to which it has no right.  It is true that
this means American businesses may have to operate at a
disadvantage--which means simply that it is scandalous to continue the
plunder of American businesses.  The purpose of business is not to
increase tax revenue; the American people do not exist to be taxed.

Of course, the government can't tell the difference between tax
exemptions and subsidies either, which is why governments sometimes
engage in the equally destructive practice of subsidizing industry in
their state, whether foreign or domestic.  As discussed above, the only
thing government needs to do to allow jobs to exist is to get out of
the way.

"FOREIGN AGENTS"

The alleged reason we are engaged in what the article deems to be
irrational trade practices is that the Japanese have Washington
lobbyists who used to work for the U.S. government.  (It's not as if
the American businesses don't have lobbyists or anything...)

The idea that such people are betraying their country depends on the
idea that it is a bad thing for foreign countries to circumvent our
trade laws.  In fact, it is in most cases a good thing, since the
existence of American barriers to trade is clearly irrational.

The idea that America's trade policies are the result of Japanese
"agents of influence" is merely a confession that the article does not
understand why unilateral free trade is to America's benefit.
Fortunately, the federal government is slightly (probably only barely
slightly) more rational in this regard.  The real reason why America's
trade policy towards other countries is still so open is that the vast
majority of economists, both academics and policymakers, understands
that the policy is beneficial to the United States.  The opinion of
economists, needless to say, is usually given a fair amount of weight
when it comes to matters of economic policy.

THE "MEDIA WAR"

Here again we have another pseudo-explanation of current American trade
policies.  The article makes as if governments the world over didn't
try to sell themselves in each other's countries--and as if somehow the
media had suppressed the existence of the "Buy American" movement.

We find again in the appendix to the article the view that the Japanese
control a large portion of the media in the U.S., to the extent that we
are in danger of Japanese mind control.  Free speech, apparently,
extends only to Americans; Japanese are not to be allowed the means to
say anything on their own behalf for fear that they might say something
persuasive.  (This argument could easily be extended to deprive any
unpopular minority group of its freedom of speech.)  In fact, "mind
control" is a non-issue.  One can be assured that the rest of the media
will not hesitate to make hay out of any deceptions on the part of their
Japanese-owned competitors if and when the opportunity arose.

It is true that Morita, in _The Japan that Can Say No_, recommends that
Japan target its investment so as to get Americans on Japan's side.
There is nothing in itself sinister about this--only if one has the
preconceived image of Japan as a monolithic scheming entity out to
destroy America will such a recommendation appear anything less than an
attempt to improve relations between the two countries.

ACCEPTING REALITY; AMERICA'S PROBLEMS AT HOME:

To quote the article, "One only has to look at the social and economic
troubles today in countries like Britain (which years ago in its time,
was also the richest and most powerful in the world) to see our destiny
if we continue in our erroneous and divisive ways."  Indeed, this is
quite true.  Britain after the war explicitly adopted a form of
socialism which eventually ran its industries into the ground.  It is
now still trying to pick up the pieces.

It is true that in some industries the issues of management compensation
and labor relations diminish American competitiveness.  Certainly laws
creating labor monopolies stifle productiveness and should be repealed.
Exorbitant executive compensation has been one target of the leveraged
buyouts and mergers that sought to add to the efficiency of American
companies.  Making management more responsible to shareholders is one
way to ensure that it will not be paid more than it's worth.

By the same token, however, a Japanese-style "teamwork" model also has
its disadvantages.  For many years IBM followed the policy of not
firing employees, but rather finding them new positions within the
company.  This turned out to be a tremendous drain on its productivity
and culminated in massive and abrupt firings when the company could no
longer postpone the inevitable.  The same thing is currently happening
in Japan.  In fact, since different industries require different
approaches, Japanese-style management enjoyed little success even in
Japan in such industries as chemicals and packaged consumer goods
(Porter, p. 4ff).  While Morita claims it is a violation of American
workers' rights that employers do not guarantee them lifetime
employment, most Americans would surely not relish the prospect of
being chained to the same employer for the rest of their lives.  What
the U.S. most needs is not so much the retention of employees who are
no longer needed at or interested in their jobs, but a labor market
where jobs are plentiful and finding employment is easy.  If one knows
one can always find a job somewhere else, one will most likely stay on
a job because one likes it, not because one has to like it.

The article claims about the auto industry that "as much as many
Americans want these companies to go bankrupt, it is a unrealistic and
dangerous hope. These are still US companies. We need them in this
country as they are a key part of our industrial base and our wealth."
Every one of these sentences is wrong.  Americans don't want auto
companies to go bankrupt.  They want them *either* to be competitive
*or* to go bankrupt--but they are not willing to pay more money for
lower quality just to save somebody's job.  Fortunately the American
auto industry seems to be getting the message.  The fact that these are
U.S. companies is entirely irrelevant as to whether or not they should
be allowed to go bankrupt if they can't compete; indeed, one might say
more--that the fact that America upholds the system of free enterprise
demands that *because* they are U.S. companies they be allowed to go
out of business if they can't compete.  Finally, if the auto industry is
indeed a key part of our industrial base and our wealth, it will
survive.  If it isn't, it won't.  There is simply no commandment
handed down from God that the U.S. must produce automobiles.  Countries
become wealthy by producing what is needed, not by preserving
inefficient production because of a vague and woozy attachment to "our
industrial base."

CONCLUSION:

The article states that it is not about the Japanese people, but about
their companies and their government policies.  Unfortunately this is
only half true (Tatemae?).  The Japanese people, not their government
or their companies, are the source of many of the cultural attitudes
(e.g., towards women and foreigners) criticized by the article.

The article concludes by stating that Japan practices "adversarial
trade," which in reality is a contradiction in terms, regardless of how
hard a bargain the Japanese drive.  Forty years ago, Japan was indeed a
third world country with almost no industry.  The article of course
ascribes Japanese success to a "war strategy" which has made them much
richer than they would have been under U.S.-style free market
capitalism.  Since free market capitalism doesn't exist in the U.S.,
one wonders what he is talking about.  Certainly, if the Japanese had
had to carry on their backs the weight of our welfare state, combined
with our rate of military expenditure, they would never have attained
the state of wealth they have reached today.  However, this is not due
so much to "war strategy" as to the capital accumulation that has been
achieved by a combination of high savings and low government
spending--not to mention good education and the freedom from many
economic regulations that burden us in this country.

If Americans are "defeated in economic conflict" they will have no one
to blame but themselves.  Even in our present state we are more
efficient producers overall than the Japanese.  There is no reason to
suppose that Japan will do so well in manufacturing and technology that
America no longer will have any need to rely on domestic manufacturing
or high- tech industries.  America, furthermore, will remain the world
center of innovation as long as the Japanese continue their
anti-individualistic attitudes.

The danger of a situation of high unemployment as it exists today is
that it leads people with little understanding of economics to ascribe
to joblessness every cause except the right one.  Unethical politicians
are generally not in the business of telling ignorant people that
"dumping" is not a problem, as the article maintains; rather, they tell
ignorant people to "Buy American" while they themselves are being
bought off by lobbyists for American industry to enact protectionist
measures.  What is more difficult to explain to the public in a 30
second sound bite: why the Japanese are taking jobs away from us, or
why they aren't?

We are urged to adopt Japan's economic strategy in an explicit call for
protectionism.  We are told that the laws of the jungle apply where
there is mutual trade for mutual benefit; instead we are to adopt an
allegedly harmonious policy whereby industry is to be allowed to profit
by sacrificing the interests of consumers.  We are told that the world
"is not a place for the weak and the righteous," as if being righteous
made one weak.  We are told that we cannot put pressure on the Japanese
to become more like us; we must become more like the Japanese--and in
precisely the wrong respect.

The article contains as an appendix a list of Japanese and Japanese-
owned companies, which is apparently supposed to impress us by its
length--again a form of argumentation suited primarily to the
perceptual- level mentality.  If one wants to see a long list of
companies, one need only open the financial pages of the _New York
Times_ and look at the NYSE and NASDAQ listings.  What we don't see is
statistics telling us what proportion of investment in the U.S. is
foreign (about 20%), and what proportion of that is Japanese, nor what
proportion of large U.S.  based industries are owned by the Japanese.
Nor, ultimately, is there any good reason to care very much.

In an Afterword to the article, by Andre Robotewsky, we find this
telling quotation: "Think of America when you do business and remember
that exclusive self-centered thinking will only make problems in
America worse than they are. That is the true lesson of the 1980's.
Self centeredness doesn't work in the long run. If we were as loyal to
each other as the Japanese are to each other, we wouldn't be in the
economic and social mess we are now."  When one reads this quote one
should remember that it considers the enemy, literally, to be yourself
and your interests, which should be sacrificed for the "public good."

This quotation reveals the entire philosophy behind the article: success
comes from self-sacrifice, so the reason behind Japanese prosperity
must be that they sacrifice so much.  Of course, if sacrifice really
were good there would be no good reason why America shouldn't sacrifice
its interests to Japan anyway--why should national "self-interest" be
good when individual self-interest is not?  If Japan has become
prosperous by having its citizens sacrifice for the good of Japan, think
how much more prosperous we could become if we had all our citizens
sacrifice for the good of the world in general!

It used to be that the advocates of sacrificing the individual to the
"common good" would find a country claiming allegiance to that
principle, such as Russia or China, and try to persuade us of how
prosperous it was.  Now, with the collapse of socialism in Britain,
Eastern Europe, Russia, Cambodia, etc. etc., this tactic doesn't work
very well anymore.  So now the game is to find a prosperous country and
try to persuade us that its wealth really comes from self-sacrifice in
the public interest.  Of course, since it is the more capitalistic
sectors of the Japanese economy that are the main source of Japan's
wealth, and since the Japanese sacrifice an eighth less of their wealth
to their government than we do to ours, the absurdity is the same.

Basically, the article pulls in two mutually contradictory directions.
Underneath the economic fallacies lies a deeper argumentative strategy
of pointing to repugnant elements in Japanese culture, such as attitudes
towards women and foreigners, and scaring people into thinking that
Japanese success will force America to adopt those practices.  At the
same time the article calls for Americans to restrain their
individualism and to adopt certain nationalistic and collectivistic
attitudes ascribed to the Japanese.  Fundamentally, however, it is this
corrupt philosophy that guides the entire article: the
anti-individualistic attitude that the consumer should consider not
what is valuable to himself, but should buy things because he owes
someone a job, and in addition the nationalistic attitude that a
Japanese person is somehow less worthy of a job than an American, just
by virtue of being Japanese--after all, if I really destroy an American
job by buying Japanese, then I just as well destroy a Japanese job by
buying American.

The "Buy American" philosophy is fundamentally anti-American, as Harry
Binswanger has pointed out ("Buy American is Un-American," _The
Objectivist Forum_, April and August 1987).  This country was founded
on the principle that each person's life is his own to live, that he
has the right to pursue his own happiness, that he owes no one else a
living, and that these rights belong to each human being as an
individual, regardless of nationality, race or sex.  If we want America
to succeed, it is because we want these principles and this way of life
to survive.  We will not preserve them by abandoning them in favor of
collective unity for collective sacrifice.

******************************************************

Some interesting reading material:

"Buy American is Un-American," _The Objectivist Forum_, April and
August 1987, by Harry Binswanger, is a hard-hitting moral, political
and economic defense of free trade.  I highly recommend it, with the
single caveat that two figures he cites regarding Japanese government
spending and social security do not correspond to the OECD figures I
found.

_The Fair Trade Fraud_, by James Bovard, refutes the many fallacious
arguments commonly offered for protectionism, "fair trade," and
"leveling the playing field."

_The Outnation: A Search for the Soul of Japan_, by Jonathan Rauch,
though philosophically uneven, is quite a fair-minded assessment of the
Japanese, their culture, and the resulting issues in Japanese-American
relations.  Rauch is a keen observer and conveys well what it's like to
be in Japan.

_The Bubble Economy_,  by Christopher Wood of the Economist, is a 
fascinating and detailed study of the sources of the recent economic 
collapse in Japan.

"National Security and the Semiconductor Industry," _Technology
Review_, November-December 1987, by D.G. Dallmeyer, is a good critique
of the view that government support of the commercial semiconductor
industry was necessary for national security purposes.

Some good presentations of basic economic principles for the layman:

_Economics in One Lesson_, by Henry Hazlitt
_The Government Against the Economy_, by George Reisman
_Economic Sophisms_, by Frederic Bastiat

Some sources on Japan's industrial policy:

"Japan's Industrial Policy," _Journal of Competitive Economics_ Dec. 
1984, by Thomas A. Pogel.
"How Japan's Industrial Policy Works," by Robert J. Ozaki, in _The 
Industrial Policy Debate_, Chalmers Johnson, ed.
_The Competitive Advantage of Nations_, by Michael E. Porter.

An interesting perspective on recent Japan-bashing is given by Robert
Reich, our current labor secretary and no friend of free markets, in:
"Is Japan Really Out to Get Us?" _New York Times Book Review_ 2/9/92
p.1. Reich mentions that many recent works "tend to mix factual
analyses of Japan's economic strengths with hyperbolic visions of
Japan's plot to run the United States."

Meanwhile, the opposite side of the political spectrum has been
launching scathing critiques of industrial policy (the material I have
used for my comments above, however, was drawn from less partisan
sources, which are cited in the text):

Brink Lindsey's "DRAM Scam," _Reason_ , 2/92,  goes after 
Sematech, while
Karl Zinsmeister's"MITI Mouse," _Policy Review_, Spring 1993, 
makes one wonder how Japan ever could have survived with such an 
inept industrial policy.

*******************************************************
Transcript of a telephone conversation between two individuals we 
vaguely remember having met somewhere before:

Sam:  I hear you've been getting serious with that Arab guy Mohammad.

Betsy:  We've been going out.

Sam:  You can't go out with him!

Betsy:  Why not?

Sam:  He's from Iraq!

Betsy:  So?

Sam:  So it's unpatriotic and unfair to honest upright Americans like
me!

Betsy:  Since when is the pursuit of happiness unpatriotic?  Give me a
break--it's not as if your grandparents weren't immigrants.  And what
does patriotism have to do with anything anyway?

Sam:  He doesn't have your best interests at heart.

Betsy:  You mean he doesn't have *your* interests at heart.

Sam:  What is it you like about him so much, anyway?

Betsy:  Oh, he's *really* good to me.  And you should see some of the
places he takes me...

Sam:  Don't you know he can only afford it because his parents are
putting him through school?  How am I supposed to compete with that?

Betsy:  What does this have to do with my love life?

Sam:  What do you think his parents would do if they found out where
their money was going?

Betsy:  Oh, I think they know.  I think they do it because they think it
will bring them prestige to have me as a daughter-in-law!

Sam: You mean that they intend to use you to spread propaganda about
their Iraqi way of life.

Betsy: That's a pretty cynical way of looking at things; it's not as if
they're after anything.  They just want to be more accepted in the
community.  Which has nothing to do with my dating him anyway.

Sam:  So that's why they let him do it.  I thought I'd let them know
what was going on and they just wouldn't listen.  This isn't fair.  *My*
parents don't subsidize my dates!

Betsy:  They know better.

Sam:  Don't you feel guilty taking his gifts when there are guys like me
around who will work hard to please you?

Betsy:  Mohammad works really hard to please me.  And he knows very
well that he can't buy my love with his parents' money.  There are
plenty of other guys around who've tried *that*.

Sam:  What do you think is going to happen when they get the bill and
finally realize how much this is costing them?

Betsy:  I imagine they'll restrain his spending habits.

Sam:  And then you'll dump him.

Betsy:  Silly!  *That* depends on whether or not he keeps "working hard
to please" me.

Sam:  And I suppose that's why you dumped me?

Betsy:  *You* used to be lots of fun to go out with, before you started
hanging around with that student government crowd.  Now the only thing
you can talk about is politics and planning other people's lives for
them.  Maybe if you would stop trying to plan mine for me we could start
getting along better again.

Sam:  But how can I compete with him when he has such an unfair
headstart?

Betsy:  What does his having a headstart have to do with anything?  I'm
not concerned about "headstarts," I just like the way he treats me.

Sam:  You know, I really like his sister.  I've been trying to get her
to go out with me, but every time I call or go over to their place her
parents answer and tell me she's not home.  Mohammad tells me that they
insist she's free to go out with whoever she wants, but I think they
don't like me.

Betsy:  I'm sorry to hear that.

Sam:  Look, if I can't go out with her, and I can't go out with you
either, I won't have anyone to go out with at all!

Betsy:  Maybe you should think about changing your style, then.

Sam:  You don't understand.  Don't you see--if you keep seeing him I'll
be heartbroken!

Betsy:  If I go out with you, I'll be unhappy and *he'll* be
heartbroken.

Sam:  But he's a foreigner and I'm an American!

Betsy:  So what?

Sam:  He just wants to become the center of your life.

Betsy:  And you don't?

Sam:  If I'm heartbroken, I'll get so depressed...

Betsy:  ...if you let yourself get depressed over it.  Look: I'm sorry.
You'll get over it.  I still like you, I really do.  But that's *your*
problem.

Sam:  No, it's your problem too--how can we continue even being friends
after you've broken up with me like this?

Betsy:  Of course we can still be friends; it'll just be different from
before.

Sam:  No, we can't.  He won't let me.  He'll take up all your time and I
won't ever get to see you and talk to you.

Betsy:  Don't be silly.  We're just going out.

Sam:  Don't you see what he wants?  He wants you to spend all your time
with him and none with anybody else.  He wants to muscle us all out of
your life.  He wants to be the total center of your life!

Betsy:  I'm sure he appears to you to be a little neurotic that way
sometimes.

Sam:  Neurotic?  It's pathological jealousy!  First it'll be me, then
it'll be the rest of your friends, all your friends, one by one, until
there won't be anyone left but him!

Betsy:  Aren't you getting a little hysterical?  I know Mohammad.  It's
not as if I can't love him and still have plenty of friends.  And if he
thinks otherwise, he'll find that I'm a pretty independent-minded
woman.

Sam:  Can't you see through all his smooth moves and fancy gifts?
He's trying to get you totally dependent on him so he can influence you
and boss you around!

Betsy:  There's a difference between influencing somebody and bossing
her around.  Or don't you think your mate's opinion should count for
anything?

Sam:  But he wants to make you so totally dependent on him that you
won't remember how to do anything anymore.  He wants total control!

Betsy:  The only evidence I have of his supposedly bad intentions is
that he intends to displace *you* in my affections and he's being
pretty aggressive about it.  So who's pathologically jealous?  Don't
you think he realizes that I'll stay with him only so long as he's good
to me?  I'm a pretty selfish person, as you well know.

Sam: Your selfishness is what's going to get you into trouble.  Why
can't you be unselfish for once?

Betsy:  And sacrifice my love life for your sake?  And let you take it
over--when you're the one who's warning me about becoming dependent on
him?  What sense would that make?  Why go out with someone who makes
you unhappy?  My happiness is my whole motive in the first place; my
self-interest is my sight and my safeguard.  If I gave that up, I have
no doubt I'd wind up at his mercy, or at yours, or at somebody else's.

Sam:  But what if he doesn't let you go?  What if you're trapped?

Betsy:  Look.  I'm going out with Mohammad because I enjoy going out
with him.  If he becomes a pain, I'll stop.  Suppose he were trying to
gain all my love so he could use it against me later.  What good would
it do him?  If he betrayed my love, I'd leave him and both of us would
be hurt.  I could only become dependent on him if I destroyed my
capacity for making friendships and gave up responsibility for my life,
and that's something only I can do to myself--he can't do it to me.
It's not as if he's any physical threat to me: he doesn't have it in
him, and besides, he's a reasonable person.  And I'll thank you to
remember that I made black belt last year!

Sam: Yeah, and now you've got him interested in learning martial arts
too.  What if he learns a thing or two you don't know?  Then he'll be
able to stand up too you; he won't let you push him around.

Betsy: I don't know why you suddenly have this fixation about
relationships all being based on manipulation or coercion.  There is not
going to be any violence in this relationship whatsoever.  And if we
were to break up he's simply not going to come after me.  It's
ridiculous!
 
Sam:  By the time you break up with him, you won't have any friends
left.

Betsy:  Oh, come on!

Sam:  Well, you sure won't have anyone who's as crazy about you as I am.
All your key friendships will have been destroyed!

Betsy:  Must you make a nuisance of yourself?  Say I get so totally
infatuated with Mohammad that for some reason I don't see any of my
friends for quite awhile because I want to drown in his eyes and get all
the love that I need from him.  Don't you think they have other friends
besides me?  Don't you think they'd understand?  Do you really think
they wouldn't be there for me if I needed them?

Sam:  Friendships can die out if you let them slide long enough.

Betsy:  And if it really came to that, don't you think I could make new
friends?

Sam:  But you'd be alone and unhappy!  And you would have forgotten so
many things...

Betsy:  So I'm supposed to sacrifice my romantic interests for my
friends?

Sam:  But don't you see--you can't let him take over your life
completely!

Betsy:  I never said I intended to let him take over my life completely.
You're the one who's spinning fantasies.  I just said that even if I get
totally involved with this guy, it wouldn't be the end of the world.
But I've got room for plenty of friends in my life, if they can deal
with the fact that I've got a new boyfriend.

Sam:  Don't you know about the Arabs?  Do you know how they treat their
own people?  Do you know what kinds of attitudes they have about women?
Or about us Americans?

Betsy:  You can rest assured I am enlightening him on that subject.

Sam:  But don't you see what'll happen if you were to marry him?

Betsy:  Do you really think I'd marry him if I wasn't sure I could deal
with it?  He already knows what kind of a woman I am--if you're worried
about me being "influenced" by him on that topic, you can put your mind
at ease.  And he knows that I am *not* going to go with him if he
travels back to Iraq.

Sam:  But there'll still be his relatives--they'll treat you like dirt!

Betsy:  If I get married, I'll be marrying him, not his relatives.  If
they come to visit, then I'll have to put up with their attitude
problem and they'll have to put up with my "unfeminine" behavior.

Sam:  I can't believe Ron Brown fixed him up with you.  He sure as hell
isn't much of a friend.

Betsy:  He only did it because he knew I wanted to meet some new people
and thought I might get along well with Mohammad.  You said it was OK
with you if we both dated around; it's kind of late now to be
complaining about it.

Sam:  You're really set on this, aren't you?

Betsy:  Not necessarily; it depends on how things turn out.

Sam:  You just want me to be unhappy!

Betsy:  Not at all.  I think what *you* need to do is rethink some of
the character traits you've picked up over the past few months, and go
find yourself a new girlfriend, instead of coming whining to me like
this.  It's undignified and it just makes you more unhappy.

Sam:  That's not a very nice thing to say.

Betsy:  I'm sorry if you're hurt.  I have to go.  Good bye, Sam.