How Japan Gets Its Dollars

MONTH after month, the drum roll continues of new stories about major American corporations or large banks or massive real estate holdings or lavish country clubs being sold to the Japanese. And harsh things are said about the Americans who are willing to put personal benefit ahead of their obligations to their country. But castigating Americans who sell to the Japanese is not where most of the blame belongs.

First, we have to scrutinize how Japan accumulated the dollars to acquire important American holdings. We have to look at the gross errors and miscalculations in US policy that blinded us to the inner weaknesses of our own economic structure in competition with the Japanese. We have to ask ourselves whether we have taken steps to stop the hemorrhaging of American dollars into military waste, misspending, over-charging, and fraud. No one has yet been tried for crimes which in the aggregate may be even more damaging to the American future than the sale of our businesses or real estate.

Begin with the primary reason behind the steady and prodigious increase in Japan's acquisition capacity. Japan, in terms of physical size and natural resources, is far down on the list of the world's major nations. But Japan has been able to understand, perhaps more than any nation, that the basic and primary source of wealth is the human brain. At a time when the United States has been cutting back on higher education, Japan has been staking its future on educational opportunities for young people and on advanced research. The most significant product of such policies is a design for the Japanese economy able to overcome inadequate natural resources. Japan's brainpower enables the country to become a processing economy - the most advanced the world has ever known. The creativity and ingenuity connected to that policy produced high quality automobiles, television sets, silicon chips, pianos, organs, cameras, computers, copying machines, typewriters, toys, ballpoint pens, among others. The American people found Japan's products more attractive and better priced than their own domestic counterparts.

Meanwhile, US policymakers acted as though they were unaware that the main challenge to American capitalism was coming not from a communist nation but from another capitalistic nation, Japan. Japan was investing the capital from sales of its goods to enlarge its markets and increase its competitive edge. We allowed the obsessive fear of communism to obscure a far greater danger to our economic system. We overestimated ideology and underestimated nationalism and economics as forces of change in the world.

The most serious error of all, perhaps, was a failure to see the connection between economic health and national security. Instead of upgrading our competitive capabilities, we subsidized habits of inefficiency and incompetence with massive military spending. We developed habits of sluggishness in military programs, with inevitable spillover effects on a large part of the domestic economy.

The central, overriding, and crushing fact is that Japan is buying up the United States with money acquired in the United States. It is an error to say that this accumulation was made possible only because Japan did not spend money on defense. Japan was smart enough to recognize that General MacArthur was correct in urging adoption of a constitution that renounced war and the means of war. In the modern world, General MacArthur contended, the only real defense is an organized peace. To cry ``foul'' because Japan put its money into creating a powerful economy instead of a war machine is to bypass the fact that we were not prevented from doing the same. The significant failure is the inability to understand that in a nuclear age national security requires institutions of effective world law.

In any event, it is a costly waste of energy to complain that Americans should not now sell their companies or their real estate to the Japanese. There is no point in lamenting past errors or miscalculations. The essential need is to start making sense. We have prodigious natural resources. We can connect these resources to creative energies. We can make a massive investment in the human brain and its products. We need to restore and enlarge our educational plant.

The Japanese have no monopoly on the concept that national growth and well-being are products of the developed mind. The pursuit of human potentiality is the only path to true wealth.

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