Can Japan Compete?

Book Description

In Can Japan Compete?, world-renowned competition strategist Michael Porter and his colleagues explain why American assumptions about Japan have proved so inaccurate, what Japan must do to regain its strength, and what its journey can tell us about how to succeed in the new global economy.The research behind this book began in the early 1990s, at a time when Japan's economic success was overwhelmingly credited to the Japanese government and its unique management policies. Porter and his colleagues started by asking a crucial but previously overlooked question: If Japanese government policies and practices accounted for the nation's extraordinary competitiveness, then why wasn't Japan competitive in many of the industries where those policies had been prominently implemented? The authors and a team of colleagues surveyed a vast array of Japanese industries. This surprising book is the result of their work. The continuing influence of Japanese government and management strategies worldwide makes Can Japan Compete? a must read for anyone competing in the global economy.

Customer Reviews:

Dead On.......2003-07-26

I work for a Japanese company that is mentioned in this book and the book is a dead on diagnosis of how Japanese companies are managed. For anyone familiar with the current Japanese economy (which is in a huge depression) there are some major problems with how the Japanese economy operates. There is nothing inherently genius about the solution that Porter offers, which is simply a call for a true free market system in Japan; free of tariffs, trade barriers, cartels, and collusion. However, if you work for a Japanese company I strongly suggest buying this book to understand why your company is managed the way it is.

Japan¡¯s success and failure in light of business strategy.......2002-08-16

...

Michael Porter become the celebrity in the field of business strategy with his two books, ¡®Competitive Advantage¡¯, ¡®Competitive Strategy¡¯. Takeuchi and Sakakibara secured their name in organizational learning school with their book, ¡®The Knowledge-Creating Company.¡¯ With this book, ¡®the word, ¡®knowledge creation¡¯ has been widely circulated within business schools.
This book poses the question, ¡®Why does Japan stumble?¡¯ it¡¯s the single most popular subject in Japanese studies. Numerous books come to mind on that issue. The approach this book takes is, nonetheless, unique. While others have tackled it in the view of macroeconomics or political economy, authors of this book take the view of microeconomics, or more precisely business strategy. They argue that more-than-decade-long deflation and liquidity trap are not the fundamental problem, but just symptoms. The underlying problem must be hunted for elsewhere: the eroded competitive advantage of Japanese companies. There has been warning signs since 1980s well before bubble bursting:
1. Since 1980s, no new internationally competitive industry has emerged.
2. The profitability, or capital productivity has long been low. Export share has been achieved and maintained partly by sacrificing returns to capital.
3. Japan¡¯s share of world exports peaked in 1986 (10%). But it has fallen since then to below 8%.
Bubble and subsequent financial meltdown certainly is serious trouble. But above reveals much deeper crisis: the loss of competitiveness.
Michael Porter maintains that firms initially gain competitive advantage by altering the basis of competition. They won not just by recognizing new market, or technologies but by moving aggressively to exploit the,. A firm¡¯s local rivalry in home nation plays a critical role in shaping manager¡¯s perceptions about the opportunities that can be exploited. Firms that survive vigorous local competition are often more efficient and innovative. In the 1970s and 80s, Japan set the world standard for operational effectiveness, that is, for improving quality and lowering cost: TQM, JIT system, lean production, cycle time reduction. Japanese companies pushed the productivity frontier well beyond the capabilities of many Western companies. Japanese companies¡¯ competitive advantage was obtained through cut-throat local competition. But starting in the mid- and late 1980s, the gap between Japanese and Western companies began to narrow through so-called restructuring or reengineering. Now Japan¡¯s source of competitiveness has been eroded away. As a result, international competition has ever more vigorously intensified not in the behalf of Japan. Worse, what drove Japan to be competitive now serve as drag on it. Fierce local rivalry degrade into competitive convergence. It means that all the competitors in an industry compete on the same dimension. As rivals imitate one another¡¯s improvements in quality, cycle time, or supplier partnerships, competition becomes a series of unwinnable races down identical paths. This occurs because Japanese firms believe that by mimicking competitors¡¯ technologies and products, they can avoid being in a weak positioning in the market. Because, as a result of mutual benchmarking, Japanese companies cannot but think of competition only in terms of operational effectiveness for their product lineup converges, the have made it almost impossible to be enduringly successful. The more benchmarking, the more they look alike. To avoid such a stalemate, they try to diversify product lineup. But it inflames only to another round of convergence. This kind of local rivalry has finally led to excess costs to over-differentiation for products as well as their components. Such costs have become too high, thus leading to a considerable waste of resources. When they set the best practices, such a cost could be dissipated at the expense of Western competitor¡¯s market share. But now such an advantage rarely exists, if any. Competitive convergence leads to the lack of focus. The lack of focus results in no obvious competitive advantage for they are over-diversified. Authors recommend to compete on strategy: Operational effectiveness is just one of two ways a company pursues superior performance. The other is through strategy, or competing on the basis of a unique positioning involving a distinctive product of service offering. The essence of strategy is to perform differently from rivals. It¡¯s choosing not to do something. They succumb to the temptation to chase easy growth by adding popular features and taking on product lines or services that do not fit their strategy. Or they target new customers to whom the company offers noting unique. But attempting to compete in several ways at once creates confusion and undermines organizational motivation and focus. Profits fall, so more revenue is seen as the answer. In sum, authors argues that the problem of Japan is more in mind-set than in unchangeable circumstances in Japan.

Reviving the competitive advantage of Japan.......2001-12-12

Michael Porter is Professor of Business Administration at Harvard Business School and a leading authority on competition and strategic management; Hirotaka Takeuchi is Professor and Dean of the new Graduate School of International Corporate Strategy at Hitotsubashi University in Japan; and Mariko Sakakibara is Assistant Professor at the Graduate School of Management at the University of California, Los Angeles.

"This book aims first and foremost to offer a theory that can explain and interpret Japan's postware economic trajectory." This 'theory' follows a mostly academical and economical research method. In Chapter 1 the authors first discuss Japan's economical history, whereby the authors use extensive graphs, figures and tables to prove their point: "Japan's actual competitive performance, then, has been mixed for decades." Expanding on their discussion on the economical history, the authors challenge the Japanese government model. "At the core of the Japanese government model is a particular conception of the process of economic development and the bases of competitiveness. It embodies an implicit aversion to certain forms of competition and an effort to channel competition in various ways." This model goes back to the early post-World War II period, when "the nation was in shambles". There is an 12 developmental policies list which form the building blocks of the Japanese governmental model. The authors discuss the impact of these policies on Japan's successes and failures.

In Chapter 3, the authors discuss Japan's unique management model. "The model stresses attributes such as teamwork, a long time horizon, and dedication to continuous quality improvement, all of which remain important Japanese strengths. But it has also encouraged conformity and a conception of competition that is dangerously incomplete." Again, the authors introduce a list of policies which are typical for the Japanese corporate model. The authors' biggest complaint is that most Japanese companies do not have a strategy, they tend to compete on operational effectiveness. (For more see Porter's 1996-article 'What is Strategy?')

In Chapter 4 the authors try to explain Japanese competitiveness. This model for competitiveness follows the universal model: "vigorous competition in a supportive business environment, free of government direction, is the only path to economic vitality." Most of this chapter is directly taken from Porter's 1990-book 'The Competitive Advantage of Nations', discussing various industries (both successful and unsuccessful).

In Chapter 5, 6, and 7 the authors aim to come up with an answer to move Japan forward. The authors discuss the requirements for both government and companies. "What is needed is nothing short of a new economic strategy, one that builds on the true bases of Japan's past success, recognizes the differences between the country's rebuilding challenges and its present circumstances, and addresses the realities of modern global competition." So can Japan compete? The authors believe it can. "Japan has a history of competing successfully at the highest level and rapidly advancing national productivity, when competition was allowed to proceed unfettered. ... Japan can compete. To do so, however, it will require the systematic changes in both business and government we have described. ... As it has shown in earlier periods of transition, if mind-sets change, Japan has the capacty to move rapidly."

Yes, I do understand the disappointment of some of the other readers. In line with Michael Porter's 'The Competitive Advantage of Nations' (1990) this book is more about governmental issues than the activities within companies as in Porter's bestsellers 'Competitive Strategy' (1980) and 'Competitive Advantage' (1985). In their search for their answer to the title-question (Can Japan Compete?) the authors use an mostly academical and economical approach, which can be daunting to some readers. The book is mostly aimed at Japanese multinationals, economists, and governmental officials, and includes some strong critical comments toward their policies.

Worthless.......2001-08-25

This book is another attempt to capitalize on a name brand (Porter; Harvard) as opposed to providing a substantive, insightful take on what is happening in Japan and what needs to be done in order to correct certain problems in the Japanese economy. It also gives the false impression that Japan is somehow a pre-mature version of the US. Porter is not a Japan expert and I would be very careful, as an American/foreigner, to not to take books on Japan by foreigners who have never lived their or speak the language too seriously. The book is not about Japan, it is a generalized theoretical black box solution to a much more complex problem in which one needs to understand a lot more than just management theory. Japanese management is much more complex and, unlike in the US where a monkey can be trained to fire people, Japanese managers have many more issues to deal with. People tend to forget the fact that Japanese managers have done a much better job (though moving more slowly) at reducing the negative impact of restructuring. Its more difficult to keep a company going and competitive when its against the law to fire people than if you could fire people on the spot-- US management "expertise" is incredibly over-rated the recent market correction shows the incredible amount of resources that are wasted by corporate America on such things as management consulting. Those foreigners who have written on Japan's economy and financial markets who have the language down (speaking; reading) and have been in-country for an extended period of time as expats can provide a very interesting and highly useful perspective for those looking from the outside in a way most Japanese cannot (and will not). Being a "senior advisor" to a few large Japanese companies does not qualify someone to write on this topic.

A Gimmick..Not worth a penny.......2001-07-20

The title 'Can Japan Compete' raised my hopes of finding some thought provoking insightful debates in pages to come. However, most of the solution that Porter suggests are basic rules of a capitalist economy.

Porter, again, suggests solutions without keeping in mind the 'contexts'. 50 years after the defeat in war, today, Japan has companies that compete globally, its people living a high standard of living. Compare the rate of this 50 years of development with any other country's development and you find Japan a clear winner. And Porter just writes them off!

Book Description

The ancient civilization of Japan, with its Shinto shrines and Buddhist temples, is also closely associated with all that is new and modern. Looking outward, Japan sees what it has become since Hiroshima: the world's second-largest economy, a source of fury and wonder, a power without arms. Looking inward, Japan sees old ways shaken and new ones developing at a hectic pace.

Japan in the Twenty-first Century offers compelling insights into the current realities of the country and investigates the crucial political, economic, demographic, and environmental challenges that face the nation. A combination of text, maps, and photographs provides an essential understanding of Japan's geography, cultural heritage, demography, economic and political development, and of many other important issues.

Pradyumna P. Karan explores the obstacles and opportunities that will shape Japan and affect the world community in the coming years. He highlights strategies and policies that will facilitate economic and political change and stimulate the development of effective institutions for long-term, sustainable prosperity and economic vitality. Unique field reports drawn from direct observations of events and places in Japan illuminate Japanese traditions and sensibilities.

The first full-length English-language textbook on Japan's geography, culture, politics, and economy to appear in nearly four decades, Japan in the Twenty-first Century will be a vital resource for researchers, academics, general readers, and students of Japan.

Customer Reviews:

At last - Glenn Trewartha work is continued.......2005-01-26

This is a regional study looking at many aspects of Japan, including its physical setting, history, population, agriculture, politics, urban areas, economics, environment, and future challenges, all liberally laced with illustrative photos (B&W), maps, and diagrams. Before the publication of this book, the only comprehensive work on Japan was done by Glenn Trewartha, last published in 1965, a 1945 update. With the relevance of Japan in today's world, it's surprising that something hasn't been done sooner.

Each chapter has a valuable list of references at the end, with dates from Ellen Churchill Semple's time to modern journal articles published in 2002, which make an interesting work in itself.

99% of the photos were taken by the author, so this is more of a first hand account of what's there than a library study.

This is a good book to find out what's actually occurring in Japan and why.

The MIT Encyclopedia of the Japanese Economy - 2nd Edition

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Invaluable reference source

The MIT Encyclopedia of the Japanese Economy - 2nd Edition
Robert C. Hsu
Manufacturer: The MIT Press
ProductGroup: Book
Binding: Hardcover

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ASIN: 0262082802

Book Description

The MIT Encyclopedia of the Japanese Economy was the first English-language encyclopedia to cover all major aspects of Japan's postwar economy. The second edition has been fully revised and expanded, and includes previously unpublished data as well as coverage of recent developments in the economy. The definitional entries concisely explain major economic concepts and include translations of Japanese economic terms and cross references to the longer topical essays. The 180 topical essays cover banks, financial systems, major industries, corporate groups, management practices, labor unions, international trade and investments, government economic policies, and more. They also include comprehensive statistics, American and Japanese views on economic relations between the two countries, and suggestions for further reading. A new index contains names of major companies.

Customer Reviews:

Invaluable reference source.......1999-01-06

As an international equity portfolio manager specializing in Japanese equities, this book is a very valuable reference source. The book describes many of the key institutions and their interlocking nature. Full of cross references, addresses & phone numbers (for institutions) and mini bibliographies for most major concepts, this book is a great hub for studying the Japanese economy. I look forward to the next edition.

Cages of Reason: The Rise of the Rational State in France, Japan, the United States, and Great Britain

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Cages of Reason: The Rise of the Rational State in France, Japan, the United States, and Great Britain
Bernard S. Silberman
Manufacturer: University Of Chicago Press
ProductGroup: Book
Binding: Paperback

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ASIN: 0226757374

Book Description

Blending political, historical, and sociological analysis, Bernard S. Silberman offers a provocative explanation for the bureaucratic development of the modern state. The study of modern state bureaucracy has its origins in Max Weber's analysis of the modes of social domination, which Silberman takes as his starting point.

Whereas Weber contends that the administration of all modern nation-states would eventually converge in one form characterized by rationality and legal authority, Silberman argues that the process of bureaucratic rationalization took, in fact, two courses. One path is characterized by permeable organizational boundaries and the allocation of information by "professionals." The other features well-defined boundaries and the allocation of information by organizational rules. Through case studies of France, Japan, the United States, and Great Britain, Silberman demonstrates that this divergence stems from differences in leadership structure and in levels of uncertainty about leadership succession in the nineteenth century.

Silberman concludes that the rise of bureacratic rationality was primarily a response to political problems rather than social and economic concerns. Cages of Reason demonstrates how rationalization can have occurred over a wide range of cultures at various levels of economic development. It will be of considerable interest to readers in a number of disciplines: political science, sociology, history, and public administration.

"Silberman has produced an invaluable, densely packed work that those with deep knowledge of public administrative development will find extremely rewarding." —David H. Rosenbloom, American Political Science Review

"An erudite, incisive, and vibrant book, the product of intensive study and careful reflection. Given its innovative theoretical framework and the wealth of historical materials contained in it, this study will generate debate and stimulate research in sociology, political science, and organizational theory. It is undoubtedly the best book on the comparative evolution of the modern state published in the last decade."—Mauro F. Guillen, Contemporary Sociology

Empire: A Tale of Obsession, Betrayal, and the Battle for an American Icon

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great read - fast paced and interesting
Dated Loose Threads
Better than the pulpiest fiction
Fascinating tale of greed, passion, and hatred
Excellent business history

Empire: A Tale of Obsession, Betrayal, and the Battle for an American Icon
Mitchell Pacelle
Manufacturer: Wiley
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Binding: Hardcover

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ASIN: 0471403946

Amazon.com

Each day over 4,000 people take the elevator up to the observatory of the Empire State Building to catch a minute of glory. What almost none of them have known--until now--is just how many people have fought to own outright the crown jewel beneath them, and the chaos that these trophy hunters have caused. "Over the years," writes Wall Street Journal reporter Mitchell Pacelle, "the Empire State Building had exerted an almost magnetic pull over a certain kind of man, the kind who once had nothing and now had everything." The construction of the Empire State Building was a $50 million roll of the dice by a failed political candidate, who took on the impossible task of filling 80 floors with paying tenants in the midst of the Depression just to win the race for skyline supremacy. Thirty years later, the Prudential Company gutted the building's profit potential by leasing it to real estate magnates Larry Wien and Harry Helmsley for 114 years. Their heirs, Peter Milkin and Leona Helmsley, would end up locked in a bitter embrace. Then, in 1991, Prudential decided to sell the tower, and the building entered its most bizarre period as a group of eccentric billionaires fought to control it.

Pacelle masterfully tells the story of Hideki Yokoi, a Japanese businessman with a shady past who became obsessed with the American icon during an $80 million shopping spree. Rebuffed in his pursuit by Prudential, he finally landed the building with the help of his illegitimate daughter, a front man, shell companies, and a fair number of lies--but not for long. Convinced that his daughter had stolen the building from him, he initiated a bizarre family feud that landed two people in jail. Add Donald Trump to the mix (and a plan to upscale the building with luxury condos, classy restaurants, and a hotel) and an epic legal war began between Trump and his nemesis Leona Helmsley, holder of the precious lease. Full of mind-boggling twists and betrayals, Pacelle's book is a priceless cautionary tale about ego, greed, and vengeance, and the inevitable bust that follows every bubble. --Lesley Reed

Book Description

The world's most famous skyscraper, the Empire State Building is an icon as immediately recognizable as the Eiffel Tower, the Great Pyramids, or the Taj Mahal; and for some of the world's most powerful men, it is the ultimate prize. From the day it was erected, it has been the object of obsession for the heads of empires, conjuring their most hidden vices. In a riveting chronicle of betrayal, revenge, family rivalry, and raw greed, award-winning journalist Mitchell Pacelle tells the compelling tale of the history of the Empire State Building and the battle for ownership which reveals the inner workings of a world of powerful, self-made men. Pacelle brings to life the colorful cast of characters involved-a dramatis personae including the most powerful players in the international real estate markets both old and new, including John Raskob and Pierre du Pont alongside Donald Trump, the Helmsleys, Peter Malkin, and the eccentric Japanese billionaire Hideki Yokoi. Before the tale is over, Yokoi will accuse his beloved illegitimate daughter of stealing the building from him, several participants will land in jail, one will die suddenly, and a tense legal standoff will leave the landmark in limbo. One of the most fascinating characters to emerge from this richly layered story is the building itself, with its legendary romances and suicides, its odd tenants, and the countless human triumphs and tragedies that have been played out within its towering walls.

Customer Reviews:

great read - fast paced and interesting.......2005-06-01

very interesting account of how ego, greed and poor research affect real estate investments.

good historical account of how property values were overinflated and seasoned investors were only too happy to offload them to unsuspecting foreigners. [even though the media claimed america was loosing its landmarks.]

Dated Loose Threads.......2005-04-29

The publication date should give it away but with the climax of this book referring to the gleaming twin towers of the World Trade Centre and Donald Trump dreaming of a potential buyer for the subject, readers today will be left feeling empty having traced what could have been, an interesting saga over 300 pages.

Other than a useful insight into the construction of the Empire, its first decades of presence and the personalities of Yokoi, Helmsley, Malkin, Wein and Trump (mostly within the space of a couple of chapters), what remains is a messy and tedious multifaceted, intercontinental legal dispute, with many arms all leading whether separately or in toto, to little in the way of meaningful conclusion.

An early suggestion as to this American icon being stolen by a wily foreign foe builds to a crescendo of outrage that grabs the reader immediately, only to be forgotten thereafter.

It is this attempt to lead the reader (albeit with a comfortable writing style) so many times to no place at all, together with a conspicuous tendency towards repetition in the final chapters, that leaves the sensation; why did I bother? This story cannot merely be left with Trump holding a torn bag side by side with the heirs of a tattered Japanese business powerhouse. Trump in all respects is the story. Readers deserve to hear the end game.

An unfinished chronicle. Its legacy at least rests with the fact, that in detailing its story to mid 2001, scholars now possess a basis of personal interview upon which to complete this epoch of urban American history.

Better than the pulpiest fiction.......2004-07-07

In typical New York fashion, the story of the Empire State Building, from inception to today is stranger than fiction. In his brilliant book, "Empire: A Tale of Obsession, Betrayal, and the Battle for an American Icon", Mitchell Pacelle reveals the intrigues, wheeling-dealing, and financial brawling that surrounds the greatest symbol of America's financial power. Sometimes the depths to which the players sank were as deep as the Empire State Building is high. There are many of the names that you would expect to be involved in this tale: Raskob, Smith, Helmsley, Trump, but there are plenty of surprises (which I won't give away).

Mr. Pacelle deserves a load of credit, not just for the research (which is impressive enough) but for the glitzy, brash, and engaging style with which he tells this fascinating story. Only in New York would a story like this happen, and only Mr. Pacelle has told it the way it should.

Rocco Dormarunno, author of THE FIVE POINTS

Fascinating tale of greed, passion, and hatred.......2004-03-12

This book is a complex but riveting tale of how the Empire State Building inspires not just affection for a classic American icon, but incredible greed, hatred, and pretty much all of the seven deadly sins. This is also a peek behind the curtain of big time real estate, and a seriously unflattering portrait of most of its practitioners. Absolutely recommended for anyone who wants dirt on Leona Helmsley, or has a vague dislike for Donald Trump. None of these characters, especially the Japanese (both the Yokoi family and the Japanese bankers), comes off as particularly admirable. Very good.

Excellent business history.......2003-11-16

Don't think this book is a PBS-like history of the Empire State Building. It's real purpose is a sexy, Donald Trumpesque review of the transactions that have gone on over this coveted building. The foolishness, the cunning characters, and the overall race to own the building have created a great story for Pacelle to write about. While the book is a bit difficult in that it jumps back and forth in places, the level of knowledge presented is both informative and entertaining.

The End of Diversity?: Prospects for German and Japanese Capitalism (Cornell Studies in Political Economy)

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Important book

The End of Diversity?: Prospects for German and Japanese Capitalism (Cornell Studies in Political Economy)

Manufacturer: Cornell University Press
ProductGroup: Book
Binding: Paperback

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ASIN: 0801488206

Book Description

After the devastation of World War II, Germany and Japan built national capitalist institutions that were remarkably successful in terms of national reconstruction and international competitiveness. Yet both "miracles" have since faltered, allowing U.S. capital and its institutional forms to establish global dominance. National varieties of capitalism are now under intense pressure to converge to the U.S. model. Kozo Yamamura and Wolfgang Streeck have gathered an international group of authors to examine the likelihood of convergence—to determine whether the global forces of Anglo-American capitalism will give rise to a single, homogeneous capitalist system. The chapters in this volume approach this question from five directions: international integration, technological innovation, labor relations and production systems, financial regimes and corporate governance, and domestic politics.

In their introduction, Yamamura and Streeck summarize the crises of performance and confidence that have beset German and Japanese capitalism and revived the question of competitive convergence. The editors ask whether the two countries, confronted with the political and economic exigencies of technological revolution and economic internationalization, must abandon their distinctive institutions and the competitive advantages these have yielded in the past, or whether they can adapt and retain such institutions, thereby preserving the social cohesion and economic competitiveness of their societies.

Customer Reviews:

Important book.......2005-08-16

Very interesting collection of essays, highly recommended if one wants to understand more on what is currently happening in Germany and Japan (i.e. important changes that will inject new dynamism in these two "fallen angels").

Japan's Policy Trap: Dollars, Deflation, and the Crisis of Japanese Finance

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The most important book on Economics since General Theory
America's Policy Trap
Not scholarly enuf; too alarmist; conspiracy minded?
Manufactured Problems

Japan's Policy Trap: Dollars, Deflation, and the Crisis of Japanese Finance
Akio Mikuni , and R. Taggart Murphy
Manufacturer: Brookings Institution Press
ProductGroup: Book
Binding: Hardcover

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ASIN: 0815702221

Book Description

Until quite recently, the Japanese inspired a kind of puzzled awe. They had pulled themselves together from the ruin of war, built at breakneck speed a formidable array of export champions, and emerged as the world's number-two economy and largest net creditor nation. And they did it by flouting every rule of economic orthodoxy.

But today only the puzzlement remains—at Japan's inability to arrest its economic decline, at its festering banking crisis, and at the dithering of its policymakers. Why can't the Japanese government find the political will to fix the country's problems? Japan's Policy Trap offers a provocative new analysis of the country's protracted economic stagnation.

Japanese insider Akio Mikuni and long-term Japan resident R. Taggart Murphy contend that the country has landed in a policy trap that defies easy solution. The authors, who have together spent decades at the heart of Japanese finance, expose the deep-rooted political arrangements that have distorted Japan's monetary policy in a deflationary direction.

They link Japan's economic difficulties to the Achilles' heel of the U.S. economy: the U.S. trade and current accounts deficits. For the last twenty years, Japan's dollar-denominated trade surplus has outstripped official reserves and currency in circulation. These huge accumulated surpluses have long exercised a growing and perverse influence on monetary policy, forcing Japan's authorities to support a build-up of deflationary dollars.

Mikuni and Murphy trace the origins of Japan's policy trap far back into history, in the measures taken by Japan's officials to preserve their economic independence in what they saw as a hostile world. Mobilizing every resource to accumulate precious dollars, the authorities eventually found themselves coping with a hoard they could neither use nor exchange. To counteract the deflationary impact, Japanese authorities resorted to the creation of yen liabilities unrelated to production via the largest financial bubble in history. The bursting of that bubble was followed by massive public works spending that has resulted in an explosion in public sector debt.

Japan's Policy Trap points to the likelihood that Japan will run out of ways to support its vast pile of dollar claims. Should the day come when those claims can no longer be supported, the world could see a horrific deflationary spiral in Japan, a crash in the global value of the dollar, or both. The effects would reach far beyond Japan's borders. Mikuni and Murphy suggest that a reduction in Japan's surplus must be accompanied by a reduction in deficits somewhere else—most obviously through far-reaching shifts in the American economy.

Customer Reviews:

The most important book on Economics since General Theory.......2004-05-10

This is a brilliant book on economics. Its contribution to economics is no less significant than Keynsian General Theory.
Keynes demonstrated how investment and savings could balance at suboptimal level of economic activity.
Keynes paid little attention to balance of payments constraint(although he did analyze it thouroughly in Consequences of Peace). Balance of payments situation was not explored in his Generel Theory, since it would have brough the whole theory off track.
Contemporary economic theory is best expressed by IMF officials in that current account surplus is not a grave concern for any given country. Structural account surplus is usually thought of as an additional powerful stimulus for a country to grow quicker than its defecit prone neighbours.
Modern economic thinking takes as given that authorities have fiscal and monetary tools to bring the country to full employment. The only problem is to coincide full employment with balance of payment constraints ie long term current account balance coincing with full employment income.
Akio Mikuni and Taggart Murphy demonstrate how a current account surplus can coincide with suboptimal economic growth. They also demonstrate how a country under certain conditions, may lack fiscal and monetary means to bring about full employement under conditions where current account is positive at full employment.
Before reading this book, I never thought such situation might be possible. I recomend this book to anyone seriously interested in economics.
PS I would be very interested in learning more about economic situaiton of European Union. Suboptimal economic performance of EU is just as contradictory to all that modern economic thinking has to offer.

America's Policy Trap.......2003-06-27

Japan has $400 billion in a New York bank. Whose problem is that? People like me wrote checks for Toyotas etc which never got to Japan. If your checkbook shows $400 oustanding is that good or bad? Brookings - a Washington think-tank hired two banker types to solve the puzzle; their book is a bomb. "The Yen is both too strong and too weak."

Banking is not history. The $400 billion is a diplomatic problem - Japan and America have a joint history that explains the $400 billion, where it came from and what inevitably must be done. America is the one in the trap.

To keep Japan from Indonesian oil we sank their fleet. We incinerated innocent city people to get unconditional surrender. We imposed juvenile law, government and banking systems. We put their businessmen in prison and their politicians on the CIA payroll.

As people, we get along very well. We we all eat raw fish now.

Japan's immediate big problem is China. China and Japan have tons of history; the bottom line is that they are emerging with comfortable global joint hegemony. That leaves America trapped out in the cold. If I were Mr. Bookings that's what I would hire brains to write about. (A chart shows Japanese land is wrorth 2,455 TRILLION Yen! How do you pronounce that? Within memory the US dollar has bought between 14.5 Yen and 360 Yen.)

So what's a few New York bucks?

Not scholarly enuf; too alarmist; conspiracy minded?.......2003-01-08

This book is not up to Brookings Institute standards, perhaps that explains the forward written by the Brookings chief, where he says the books 'conspiracy' theme is interesting, to deflect criticism that the book relies too much on secondary sources.

Basically the premise is old news: Japan runs a current account surplus because it refuses to import and only exports, which creates a weaker than normal yen. The dollar surplus then has to be either invested overseas (hence the Japanese overpay for US investments), or plowed into assets by JP banks to avoid the yen from being strengthened. But that this is part of a 'conspiracy' is not really fleshed out. The book relies too much on secondary sources. And it is not clear to me that the currency imbalance is the root of Japan's ills (this is the central premise of the book). Note that Japan import/exports are only 10% of the GNP, (not unlike the 15% in the US), and thus the lack of demand in JP from the remaining 90% of the GNP is perhaps the real cause of the 10 year recession there. Also other Asian countries do the same thing as JP (namely, keep their currency weaker than it should; ration credit; restrict labor mobility and labor wage rates); how do their economies escape the JP trap of recession? Can it be that other reasons are at fault for JP's demise, such as JP is getting older? These issues are not discussed.

Basically the book is a 20 page white paper made into a several hundred page book, and the tone is too 'alarmist'. The most interesting points are made when discussing politics, and how the Ministry of Trade decides who is going to live or die vis-a-vis the 'walking zombie' companies. Of course the same things happened in the US (credit rationing until the 1970s; bank failures in the late 1980s, where the government decided which banks were to be taken over; and a merchantilist philosophy of keeping the dollar strong, which keeps inflation low in the US but results in the mirror opposite but also dangerous problem as in Japan--current account deficits, or living beyond your means).

Manufactured Problems.......2002-12-05

Akio Mikuni & R. Taggart Murphy have produced an excellent critical piece on the multiple troubles that Japan now finds itself, as well as realistically outlining how the elites are still very much unaware of the full consequences of their actions, and indeed inaction. This book also raises a number of interesting indepth parallels in Japanese history, illustrating that Japan has been in similar waters before and like the past, cannot adapt and change policy before disaster causes havoc. It is furthermore explained that, like all previous merchantile and/or socialist regimes, Japan's production capacity approach to trade is of little use unless profits and risk management are approached seriously. There is some hope for Japan, but the authors wisely find that Japan's war production approach (which is indeed ancient), coupled with its ministerial fiefdoms (whom act like warlords of old.....and control things like banks and until recently the Japanese equity markets), weak liberal democratic structures, non-guilded unions, and lambish populous, coupled with a mountain sized foreign (US$) currency reserve, {which as they argue convincingly, cannot ever really be swapped for Yen....it would destroy Japan (and cause much angst elsewhere)}, all need fundamental revision. Fundamentally, this book highlights the enigma of Japanese power. It should be read along with books like Cartels of the Mind (Ivan Hall); Japan's Big Bang (Declan Hayes); Dogs and Demons (Alex Kerr);The Enigma of Japanese Power (Karel van Wolferan); and Hirohito and the Making of Modern Japan (Herbert P. Bix). Having lived in Japan for four years, I would highly recommend this book.

The Japan That Never Was: Explaining the Rise and Decline of a Misunderstood Country

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Must read for IPE and comparative politics

The Japan That Never Was: Explaining the Rise and Decline of a Misunderstood Country
Dick Beason , and Dennis Patrick Patterson
Manufacturer: State University of New York Press
ProductGroup: Book
Binding: Paperback

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ASIN: 0791460401

Book Description

Contests conventional wisdom on Japan's postwar economic success and its economic and political problems in the 1990s, providing a new account of these conditions.

Customer Reviews:

Must read for IPE and comparative politics.......2004-08-05

By far the best book on Japan. I'm not surprised. Would never expect anything less from Patterson.

Japan under Construction: Corruption, Politics, and Public Works

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Good for anyone who wants to understand politics of Asia through its construction industry

Japan under Construction: Corruption, Politics, and Public Works
Brian Woodall
Manufacturer: University of California Press
ProductGroup: Book
Binding: Hardcover

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ASIN: 0520088158

Book Description

In 1987, Japan excluded American firms from bidding on the multibillion-dollar New Kansai International Airport, sparking yet another trade dispute between the United States and Japan. The State Department, Congress, and the President himself were caught up in the dispute, which still smolders even after Congress passed a threatening resolution to retaliate. Scandal after scandal--both domestic and international--splashes across headlines in Japan, generating wave after wave of attempts at reform. Why is this industry so rife with bid-rigging, collusion, and pork-barrel politics? What are the political forces behind the industry? Brian Woodall answers these questions in this book, based on extensive research and over one hundred candid and revealing interviews with contractors, industry association officials, public works bureaucrats, elected politicians and aides, political party officials, journalists, and scholars.
This inside view begins with a profile of the institutionalized system of bid-rigging in the public construction market. It explores the powerful positions of unelected bureaucrats, who are often hired by private-sector firms after retirement. Career politicians within the Liberal Democratic Party are revealed to use the construction industry to exploit party factions toward their own electoral ends. Recent events--the Sagawa affair and the massive "general contractors" (zenekon) scandal as well as the political reform movements that followed them--are examined in detail. Throughout, Brian Woodall illuminates the construction rift between Japan and the United States and demonstrates how international pressures were subverted within the shadowy domestic system.
Japan Under Construction is must reading for anyone interested in Japanese politics, United States-Japan trade relations, and political corruption and reform anywhere in the world.

Customer Reviews:

Good for anyone who wants to understand politics of Asia through its construction industry.......2006-12-07

I am a Thai Citizen and an architect. Since I was a child, I see Japanese construction firms dominating the market of Thailand and the rest of South East Asia. I can not help but wonder why. I was asking myself `How come Japanese have such capability and we, as a local citizens of the land can not compete.' Japanese construction firms seem to be able to deliver much better quality work compare to Thai construction firms. I used to believe that they are better because their (1) discipline, (2) workaholic mentality, (3) team player mentality and (4) "honesty". This book confirms that the first three assumptions are corrected but give me a very different point of view towards the fourth one. The book laid out the history of construction industry and explained why such a corrupted and cartel-like system can survive so long in the world of free-market capitalism. The simple answer is that, it is not exactly a free-market practice when it comes to construction industry for Japanese. For this type of Industry, Japan has its own unique protocol regarding Protectionism.

It proves that may be they do not uphold their morale as high but, at the end of the day, they still uphold the quality of work and protect the benefit of Japanese who pay for these projects. I would say it is a very workable "gray" style of practice which probably only work for Japan.

The book is well written. It is elaborated and highly detailed which is very helpful for the reader to help them understand the thesis of the author. However, even with that much help, it is still pretty hard to understand if you do not have a background regarding Japanese culture or Construction Industry in general. It is more like Master-Degree Thesis with a lot of reference from Japanese columnist and articles. The writing style is very academic. Some of the part is lengthy and boring. However, when the author mentioned about examples of some incidents or scandals, it will wake you up.

With overall effort of research and information gathering, I have to salute the hard work of the author and give this book, 5 stars. It is probably the best book to read if you want to under stand the construction industry of Japan.

Japan's Financial Crisis: Institutional Rigidity and Reluctant Change (Princeton Paperbacks)

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A sorely needed update on Japanese financial politics

Japan's Financial Crisis: Institutional Rigidity and Reluctant Change (Princeton Paperbacks)
Jennifer Amyx
Manufacturer: Princeton University Press
ProductGroup: Book
Binding: Paperback

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ASIN: 0691128685

Book Description

At the beginning of the 1990s, a massive speculative asset bubble burst in Japan, leaving the nation's banks with an enormous burden of nonperforming loans. Banking crises have become increasingly common across the globe, but what was distinctive about the Japanese case was the unusually long delay before the government intervened to aggressively address the bad debt problem. The postponed response by Japanese authorities to the nation's banking crisis has had enormous political and economic consequences for Japan as well as for the rest of the world. This book helps us understand the nature of the Japanese government's response while also providing important insights into why Japan seems unable to get its financial system back on track 13 years later.

The book focuses on the role of policy networks in Japanese finance, showing with nuance and detail how Japan's Finance Ministry was embedded within the political and financial worlds, how that structure was similar to and different from that of its counterparts in other countries, and how the distinctive nature of Japan's institutional arrangements affected the capacity of the government to manage change.

The book focuses in particular on two intervening variables that bring about a functional shift in the Finance Ministry's policy networks: domestic political change under coalition government and a dramatic rise in information requirements for effective regulation. As a result of change in these variables, networks that once enhanced policymaking capacity in Japanese finance became "paralyzing networks"--with disastrous results.

Customer Reviews:

A sorely needed update on Japanese financial politics.......2004-09-23

Amyx is one of very few scholars doing the kind of yeoman's work in political science today that is necessary for successfully integrating original source field research with rigorous theoretical analysis. The payoff is the kind of detailed and informed study that made Johnson's MITI and the Japanese Miracle a classic. Amyx's analysis of networks inclusive of the Ministry of Finance provides a rich explanatory framework for policy paralysis over the course of a dozen + years. A particularly interesting insight is that networks (i.e., people) make institutions durable even as institutions structure incentives for individuals. This reinforcing relationship, in Japan's case, led to intransigence and suboptimal outcomes for nearly all parties. I highly recommend this to readers interested in an update on bureaucratic politics in Japan, and those interested in the backstory to the grim headlines on Japan in the financial papers over the last decade. Even as Japan starts its long-delayed turnaround, this book will help readers understand where change is most likely to occur, and where the bottlenecks still exist.

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