The relationship between the world’s two greatest economic powers is in serious trouble. With a frightening momentum economic disputes between Japan and the United States are growing into a political conflict. Still, attempts by both sides to create a situation they can live with are unpromising. The Reagan Administration gives the impression of preferring to avoid thinking about it. Although the "Japan problem," as the fundamental conflict has become known, is already many years old, what must pass for a Japan policy in Washington is so unrealistic that it may make the situation considerably worse.
There is much more at stake than America’s growing trade deficit with Japan. If present trends are allowed to continue they will eventually lead to a gradual loss of industrial capacity in the United States. At some point an irate Congress is likely to apply the brakes to these trends by passing undifferentiated trade legislation that is even tougher than what is being contemplated today. Uncontrollable consequences in Japan, including political instability and a xenophobic reaction, could follow.
What makes conflict between Japan and the United States so menacing is that the two countries do not know how to cope with each other. The United States does not understand the nature of the Japanese political economy and thus cannot accept the way it behaves. Americans can hardly be blamed for this, as the Japanese themselves present their country as simply another member of the community of democratic nations committed to the free market. Japan is largely unaware of the threat posed by America’s unwillingness to accept it for what it is. Never having experienced its wrath, Japan does not believe in the powers of the American legislature. The Japanese make things worse with ritualistic arguments and empty promises that only convince congressmen, businessmen and other Americans that they are being deceived.
I believe that two fictions are central to the outsiders’ inability to come to grips with Japan.
First there is the
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