Could Japan, America’s venerable trade nemesis, be the key to future global economic stability generally and the wireless revolution specifically?
Without doubt.
The Clinton administration believes it has Japan over a barrel on trade now that the Asian financial crisis has that region in its grip. The situation gives the United States enormous bargaining leverage on trade with Japan. But America best not get too greedy or pompous about Japan’s predicament.
Japan said it felt snubbed by President Clinton because he didn’t swing by for some sushi after toasting Chinese President Jiang Zemin to a the launch of a new era in U.S.-Sino relations. Chinese dissidents rounded up during Clinton’s visit didn’t seem impressed.
While Japan’s bellyaching conjures up images of Newt Gingrich’s Air Force One tantrum a while back, the truth is Japan is still key to U.S. strategic interests in Asia. Sure, China is the largest emerging market for wireless goods and services. At the same time, the U.S. trade deficit with China could reach $60 billion this year. And, yes, China is a nuclear power, no thanks to gratuitous U.S. technology transfers.
But if Japan goes down, the Chinese economic miracle and all it promises for Motorola Inc., Lucent Technologies Inc. and others will turn morose.
What started in Thailand has now spread to Hong Kong, Indonesia, Malaysia and South Korea. Are Japan, China and Russia next?
The ability of the United States and the international community to keep Japan afloat as it enacts structural economic reforms is essential. If not, a bad problem could get worse. The Asian contagion will become the global contagion.
Consider this: The entire Asian economy is 70 percent Japan. In other words, Japan is Asia.
So what should the United States do? For one thing, it should reject this “tough love” line that would withhold International Monetary Fund assistance. The Republican-led Congress, which has turned anti-IMF and anti-United Nations, is making a huge mistake. This isolationist posture is antithetical to a belief, widely shared in this country and resented overseas, that the United States has a special place in world affairs. It cannot sit idle on the sidelines of the world stage.
Globalization sounds neat and clean, but in reality isn’t. Free markets are good at efficiency, not equity. Social safety nets cut out by globalization could lead to unintended consequences that eclipse would-be benefits of the new economy.
The domino theory is more apt to capitalism than it ever was to Communism in an ironic way. This is especially true for this global economy, which needs Japan now more than ever.
