The lessons of aping US business

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The target of the suspicious police investigation was Takafumi Horie, the young, maverick founder of Livedoor, an Internet-services company that has riled Japan's traditional business elite with American-style aggressiveness. The spike-haired, brash Mr. Horie has inspired young Japanese to start new firms while putting a spark in the Tokyo stock exchange and in an economy that, while the world's second largest, has struggled to regain its feet for more than a decade.

Horie also used legally borderline and "un-Japanese" tactics to boost his company's stock and to buy into other companies, challenging Japan's semisocialist business/government collusion, or what's called "communitarian capitalism."

His potential downfall may merely represent the establishment's way of hitting "a nail that sticks up" rather than actual illegality. Japan's economic model is, after all, in a state of crisis, with the old guard trying to defend their old ways. Japan is carrying a whopping national debt and pension commitments that its current economic ways cannot fulfill.

As Marie Anchordoguy, a Japan scholar at the University of Washington, writes in a new book, "Reprogramming Japan," the country "needs to allow its citizens and firms more independence so they can become more innovative and entrepreneurial" - like Livedoor's Horie. But its business leaders are resisting pressure to become clones of their US counterparts, since their system of relative egalitarianism worked well until the slump of the 1990s in both creating wealth and distributing it. They don't want a US-style, exclusive focus on shareholder interests at the expense of employees and the broader community, says Ms. Anchordoguy.

Japan is not alone as it faces long-term, subpar growth.

The European Union tried in the late 1990s to adopt US-style business ways in hopes of matching America's high productivity rate. It failed, reflected in Germany's weak attempts at reforms. In a March summit, the EU plans to look north to the Scandinavian model of flexible labor markets and a strong social-welfare safety net in hopes of making less-radical adjustments to its economies.

It may be disappointed since Sweden has the highest absentee rate for workers in any developed nation - putting its effective unemployment and underemployment rate at about 20 percent.

Overdependence on government generosity, as in Europe, or on government guidance, as in Japan, are traditions that are difficult to throw off but must change to the new instabilities of global competition.

Both these economic giants need to let in more immigrant labor, open their borders to more competitive goods and services, let more companies fail, and set up new rewards for those which innovate and succeed.

Merely aping US business ways isn't the answer. But adjusting creatively to new realities is.