The Japanese Miracle

Editor’s Note: There is a ton of good stuff in our vast archives.

Here’s an excerpt from page 89 o Clyde Prestowitz’s The Betrayal of American Prosperity:

“Beginning with Japan, however, Asia became a completely different story. Japanese leaders completely rejected fhe free-market, free-trade Anglo-American doctrine and set out on their own version of the Hamilton road. …

As Naohiro Amaya, the former vice minister of Japan’s Ministry of International Trade and Industry (MITI), once explained to me: “We did the opposite of what American economists said. We violated all the normal concepts. The American view of economics may help business to increase current production or to lower current costs. But research and development is necessary for the future, and it is a gamble. Businessmen are risk-averse. They hesitate to take the gamble on new developments. Therefore, if the invisible hand cannot drive the enterprise to new developments, the visible hand must.” In this regard, MITI official K. Otabe also once noted that “if the theory of international trade were pursued to its ultimate conclusion, the United States would specialize in the production of autos and Japan in the production of tuna.” But he emphasized that this would not be the case, because the Japanese government believed that the creation of certain industries is “necessary to diversify and promote the development of the Japanese economy.”

In the aftermath of the Second World War, US trade negotiators advised the Japanesethat they were foolish to develop automobile and consumer electronics industries to compete with Americans because their actual comparative advantage in seafood.

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