Tuition for Americanby William R. HawkinsnSelling Out: How We Are LettingnJapan Buy Our Land, OurnIndustries, Our FinancialnInstitutions and Our Futurenby Douglas Frantz andnCatherine CollinsnChicago: Contemporary Books;n400 pp., $9.95nCniinommerce is a perpetual andnpeaceable war of wit and energynamong the nations” wrote the 17thcenturynFrench statesman Jean BaptistenColbert. He likened his Grandes Compagnies,nstate chartered trading companies,nto “armies” attacking the economicnfoundations of rival nations.nColbert’s primary target was thenDutch, whose economic leadershipnwas also being undermined by thenBritish who went on to become thennext global economic superpower.nThere was great concern in Londonnthat the country avoid the “Dutchndisease” that had led to Holland’sndecline. The malady was described bynLord Sheffield in 1784 as a maladynthat would leave the BriHsh “rich perhaps,nas individuals; but weak, as anstate.”nThe noted expert on Dutch history,nC.R. Boxer, has written that “Thendecentralized structure of the governmentnand the inter-provincial jealousiesnof the self-styled United Provincesn. . . became greater obstacles in thenchanged circumstances of the eighteenthncentury when foreign compehtionnwas more effective.” It was thenfailure of the Dutch to counteract thentrade and industrial policies of rivalsnthat led to their defeat in internationalneconomic competihon. Indeed, it isndifficult now to think of Holland asnonce a Creat Power with worldwidenimperial holdings.nEngland eventually fell prey to itsnown strain of the Dutch disease undernthe impact of classical liberalism, anpro-capitalist creed under which Britishncapitalism stagnated. The liberals rejectednthe mercantilist duality of wealthnand power, preaching a pure economÂÂn36/CHRONICLESnREVIEWSnics isolated from politics, a world ofnindividuals and benign competitionnrather than a wodd of nations wherenthe balance of power was a zero-sumngame. That same liberal view todaynclouds Washington, preventing itsnleaders from understanding the perpetualnwar for control of the world’snwealth. Which brings us to DouglasnFrantz and Catherine Collins, whonchronicle the march of Japan’snGrandes Compagnies through thenAmerican landscape.nThe semiconductor industry followednthe Colbert model:n… a few diversified, integratednelectronics companies, such asnNippon Electric Corporationn(NEC) and Hitachi, werenallowed to produce chips undernprotection from the government.nU.S. technology and productionnequipment were imported andncopied, but direct investmentnwas prohibited and importationnof actual chips was severelynrestricted.nWhen the wodd demand for chipsnsoared, the giant Japanese firms werenbetter able to expand with it than werenthe gaggle of small, underfinancednAmerican firms that supplied two-thirdsnof the U.S. market. However, Japanesenacquisitions like Rockefeller Centern(NYC), the AT&T Building (LA), andnthe Xerox Center (Chicago) symbolizenthe larger shift in economic power.nWhat has made such purchases possiblenis the combination of large Americanntrade deficits and a declining dollar.nDevaluation is the natural result ofndeficits, but the Reagan administrationncalled this result a policy. According tonEcon 101 “free market” thinking, devaluationnwill eventually eliminate thendeficit as foreign goods become relativelynmore expensive. Yet despite a 70npercent drop in the dollar’s value sincen1984, the deficit remains well aboven$ 100 billion, and American automakersnactually lost another 5 percent of thenmarket during this period. Thus it hasnbeen the other side of the equation thatnhas proved crucial. American propertynhas become relatively less expensive:nthough the dollar-flows by definitionnnnbalance, their composition creates anshift in wealth. Foreigners sell consumerngoods, then plow back the money tonbuy productive assets. And the tradendeficit actually understates the penetrationnof the market, since foreign-ownednplants built in the United States expandntheir market share without its showingnup in the trade statistics.nFinancial power supports the process.nEurope, led by London, was long thenworld’s banker. However, the strain ofnWodd War I shifted the center ofnfinance to the United States, where itnremained until the 1980’s. In 1980 thenworld’s largest bank was Bank of America.nBy 1987, Bank of America rankednforty-fifth and had to seek Japanesencapital to stay afloat. Of the wodd’s 25nlargest banks today, 17 are Japanesen(including all of the top ten). None isnAmerican.nThe Japanese have become the dominantnplayer in the U.S. bond market.nWhen the trade figures for Augustn1987 showed continuing large deficits,nthe fear was that the dollar would dropnagain. Japanese investors started sellingnbonds, driving interest rates up in Septembernand triggering the stock marketncrash of October. Richard Koo, a seniorneconomist with Nomura Securities, toldnForbes that the September rate hikenwas “tuition for America. Now younhave learned how dependent you arenon foreign capital.”nThe Japanese also invest in politicalnpower, and the four chapters Frantznand Collins devote to Tokyo’s machinationsnin Washington are the mostndisturbing pages of their book. RobertnAngel, former head of the Japan EconomicnInstitute, a D.C. “research center”nfinanced by the Japanese government,nis quoted as saying that Japann”can buy its way out of any trouble.”nIn 1988 Japanese interests spent annestimated $100 million to influencenforeign policies. Over one hundrednJapanese subsidiaries have PACs. It isnunknown how many lobbyists Japannhas, since those working for foreignownedncompanies operating in thenUnited States do not have to register asnforeign agents.nWhat is known is their aim to inducenCongress and the White Housen
January 1975July 26, 2022By The Archive
Leave a Reply