The Japan Problem

Courtesy Reuters

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

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