The Japanese Economy Essay, Research Paper

The Japanese Economy

The prewar economy of Japan was a Socialist economy and the country was

ruled by an emperor up to WW2 and after WW2 it started to lean towards a mixed

market economy until what it is today although its government is Socialist it is

leaning towards a mixed market economy.

The Japanese economy is a mixed economy that leans towards market, it is

like this because almost all business are run by private corporations or people

and that is the market in the economy. And the reason that they are thriving and

are so competitive is because of the trade tariffs and quotas that the

government has in place. These regulations include heavy taxes on some products

and denial on some others for example: the way Japan will only let certain

foreign cars in to Japan and even then they are so heavily taxed that the

average Japanese person can?t pay that much and will have to buy a Japanese made

car and at the same time in other countries they are selling their cars for less

than anyone else in that country and that is what they do with most of their

products and is how they get a trade surplus year after year.

Manufacturing is the most important economic activity in Japan it

accounts for about 28% of it?s GDP. The Japanese people import more than half

of the products that they manufacture from other countries in their crudest form

and manufacture them into transportation equipment, iron, steel, chemicals,

petroleum and coal products and textiles. Most of these products are produced by

large corporations with many employees and the happier the employees are the

more it will be done.

An aspect of a market economy that Japan has is the way the companies

treat their workers. The way the Japanese treat their workers is so different

form the way we treat our workers here. The Japanese are so much more respectful

towards their employer( the exact opposite from other countries especially those

with a centralized economy) and often work for one employer until retirement.

Some of the special treatment that the workers receive is housing; some of the

companies namely Honda have a special housing unite for their workers and their

families and a company cemetery for all the workers and their families. Because

of this the employees work habits are much more productive and a larger profit

can be turned and they can get a jump on the competition.

In centralized economies very few luxuries are returned to the people

and in market economies most of them are, in Japan there are to kinds of people

farmers and city dwellers, the farmers get no luxuries and live in poor

conditions while the city dwellers on the other hand get just about all the

luxuries like mass transit, hospitals and if you have a job financial security.

The government keeps whatever is necessary and whatever the people will buy and

will export the rest. In the farmlands there is a strong sense of a command

system and in the city there is capitalistic economy. Farming is one of the

larger employers in Japan it employs 9% of the work force but it only accounts

for 3% of the GDP. There are few government owned companies the only ones they

own are some power plants, railways and some airlines as well as the commuting

services and civil services. The government employs about 1 in 10 people in

Japan mostly civil services. There are some strict regulations set forth by the

government to insure that the countries stores are filled with Japanese goods

rather than foreign goods and they include trade restrictions such as tariffs,

bands and quotas.

After reviewing all this evidence the Japanese economy is leaning

heavily towards a market economy but does have some socialist government views

and laws but the market out weighs the command.

Another major part of the Japanese economy is international trade .For years after the end of the second world war, the Japanese suffered from an inferiority complex. This was the result of the American aid to Japan which helped to rebuild their country. Soon the Japanese started producing goods, small stuff at first, like junky toys in the earlier years – but then came better items, much better items. Now it is the Americans

that suffer from the inferiority complex, not familiar with being

economically vulnerable and not entirely in control of their destinies. Who

to blame – the Japanese of course. If Americans can not learn to compete

with the Japanese, then there is going to be some serious trouble because

the economic problem will not just “go” away.

When Japan lost World War II, six million Japanese had to return home

from the colonies Japan lost. These people had to be fed, clothed and

housed. The outlook for Japan’s recovery did not look very hopeful. The

Americans had no intention of helping the Japanese, but the communist

victory in China changed this, because the Americans wanted to stop the

further advance of communism. Americans started to help Japan out by not

making them pay reparations for war damages and opened Japanese trade to

other countries. The Americans dissolved the powerful family businesses

which opened business to more competition and in the countryside, they took

land from the landlords and gave it to the tenant farmers. By the time

American occupation ended in 1952, Japan had returned to prewar levels of

production. With their recovery now ensured, Japan embarked on a period of

great economic growth which is growing at a faster rate every day.

Yoshio Sakurachi, the speaker for the Lower House of the Diet (the

Japanese Parliament), called American workers lazy and illiterate. These

remarks came just after George Bush and the leaders of American Auto

Corporations had visited Japan, a trip that left everyone with an

impression of American weakness and whining.

Americans are now trying to figure out ways to get the economy back on

Line. Dr. William Lippy, for example, offered the 75 employees of his clinic $400

cash if they bought a new American car. He started inviting all other

companies to join in his “Jump-Start America” campaign. He claims to have

enlisted a total of 175 firms with 60,000 workers to offer similar

incentives. This is nothing new to the Japanese though, where this has been

going on for a long time. For example, Mitsubishi and other corporate

groups, called keiretsu have the power to order employees to wage personal

warfare on the commercial brands of a rival. A common story was of a group

of Japanese men that walk into a bar and shout “Biru” (Beer). The bartender

offers them Asahi Beer, a common brand but they shout, “Were Kirin men!”.

The Kirin men are literally that – employees of any one of the 148

companies associated with the Mitsubishi group, which controls Kirin.

Americans are running scared now, and you probably did not need this

essay to tell you that – and Japan is aware of this. So now opinion is

growing in Japan in favour of an almost revolutionary idea – to back off.

Corporations should raise prices, pay workers more for fewer hours and

distribute fatter dividends. This came after the President of Sony made a

speech saying that Americans will not take much more of the way the

Japanese are competing with them. They should in short then, become more

like their western rivals. Already change is afoot in Japan’s most

competitive industries. Since January, the two biggest auto companies,

Toyota and Nissan, have said that they would raise vehicle prices and

lengthen new product cycles from four to five years. Similar moves were

made by consumer electronics giants such as Sony and Matsu*censored*a. All these

changes would benefit foreign competitors worn down by the back-breaking

pace of the Japanese.

There have been some problems inside Japan as well that are hurting

American companies. For the last while, The Nikkei stock average has been

falling (See Graph #1) and Japan is in the beginning of a recession which

is getting deeper and deeper although nowhere near as severe as the

American recession. When domestic economic weakness is combined with a weak

currency, it is a recipe for fewer Japanese imports and more Japanese

exports. This pattern is already showing up. In the past year, Japan’s

total imports have fallen by one quarter, and it’s non-oil imports by 10

percent. In the case of Canada and the United States, both of which are

mounting recoveries in their own economies – Japan is each ones second

largest trading partner. Needless to say, the last thing either of these

two economies needs is a Japan that buys less and sells more, and becomes a

roadblock in their road to recovery.

Americans are looking for a way to come out of their recession and

become a growing world economy once again. Japan is right in their way.

America, so used to being on top, has never been so vulnerable. I believe

that if Americans don’t do anything, like provide incentives to “buy

American” and change the way they work and compete, then it is going to

stay this way. Japan may help them, now and then, like they are starting to

now, but that may not last. I believe that they can either become more like

the Japanese, giving up the lifestyles so grown accustomed to, by working

harder for less money, or learn to live with not always being on top of the

world economy. It is always hard to change, but sometimes you have to.

“Cocksure Japan Loses Confidence”, Cook,Peter. From the Globe and Mail

Newspaper, May 2, 1992

Compton’s learning company 1988. In Compton’s encyclopedia (vol. 12 pp. 34-39.). Chicago: division of encyclopedia Britannica, inc.

“Japan to Rethink Bullish Marketing Abroad”, From the Toronto Star,

April 27,1992

“Japan Hits Hard Times”, Hillenbrand, Barry. From Time Magazine, March

23,1992

“Japan in the Mind of America”, Morrow,Lance. From Time Magazine,

February 10, 1992

John J. Curran(May 18, 1992). Why Japan will emerge stronger. Fortune,

pp.46-60.