Why Japanese Investment in the United States Is No Laughing Matter

Don't Laugh Off Threat

To the Editors of The Crimson:

I would like to thank Betty Hung for focusing attention on the economy, specifically the role of Japanese capital in America. I strongly feel her editorial piece, "Will Japan Buy Harvard Too?" demands attention because of the likely life-long impact Japanese business will cast on all of our lives, through the creation of jobs in America; ergo, growing political influence in state capitals and on Capitol Hill.

Specifically, I do not feel that undergraduate or graduate students have given sufficient thought to such paramount questions as what the national policy towards foreign investment should be and how far open should the door of the American market be held. If our markets are open to others, but theirs are not equally open to us, what should our government or citizens acting collectively do?

I agree that due to an insatiable hunger for consumer goods and unending demand for public services, there is chronic private and public overspending that has resulted in staggering trade and budget deficits. Yet, on the other hand, I am deeply troubled by many government policies towards Japan that have allowed our trade deficit with that nation to run so wildly out of control.

As I view decision-making in Washington, defense decisions are given unquestioned priority over commercial and other concerns. This has been especially true when it comes to Japan given that the Pentagon looks at Japan as an "an unsinkable aircraft carrier" in the Far East where we have placed premium value on base rights at Camp Zama, Yokosuka, Yokota, Misawa, Iwakuni and throughout Okinawa Prefecture. While not every Japanese is fond of U.S. bases on Japanese soil, the deal has been sweetened by virtually throwing open the U.S. market to Japanese goods.

The same parallel can be seen in the drug crisis. Alfred McCoy wrote in the The Politics of Heroin in Southeast Asia in the early 1970s that the U.S. Government was not actively stemming the import of illegal stimulants from Southeast Asia into the U.S. because it wished to cultivate the political support of local anti-Communist leaders, many of whom had financial interests in drug exports to the U.S.

Philosophically, free trade is a Western--especially an American--ideal based on notions of competitive advantage, equality and reciprocity. I do not believe the philosophical underpinnings of Japanese thought or historical records supports acceptance of such. In a broad sense, the U.S. has been having a trade war with Japan since the mid-19th century. The most recent string of bouts was rekindled in the early 1970s concerning textile, followed by steel, consumer electronics, automobiles, semiconductors, et cetera.

Unfortunately, being stamped "made in America" does not always connote the quality or garner the respect that it once did. However, I am loathe to think that we should continue to allow systematic targeting resulting in the demise of U.S. industries to persist, while the door to the Japanese market is welded shut to non-Japanese competition. For example, the construction industry in Japan is a feudalistic fiefdom, closely working with the Japanese government to exclude foreign competition. For the protection it receives, it liberally lines the coffers of Japanese politicians.

American companies were told that the construction of the New Kansai International Airport was "too difficult for foreigners" even though American companies have turned the deserts of Saudi Arabia into gleaming futuristic cities. While Japanese banks widely expand in the U.S., foreign banks control less than 2 percent of the banking business in Japan, and Citicorp was reportedly blocked in its quest to acquire the bankrupt Heiwa Sogo Bank owing to inside influence. Sumitomo Bank, one of Japan's largest banks, acquired it.

Our practice of free trade with Japan is akin to acceptance of a grievous handicap in that Japan does not abide by the same set of rules, that is resulting in a historic transfer of wealth from the U.S. to Japan. I have little faith in the trade agreements that have been signed between the U.S. and Japan because they only are conceived after great pressure has been applied and frequently before global summit-conferences in order to reduce world-wide media attention on Japan. For those nations whose trade policies are based on free trade and allow equal access to their markets, we must maintain trade relations based on reciprocity. For those such as Japan, we must move to a policy of "managed trade" guided by an industrial policy that would set quotas on Japanese imports. William E. Sharp, Jr.   Graduate School of Education '90