MAHATHIR’S COCKEYED LOOK EAST POLICY
[Press statement by Kua Kia Soong, 21 May 2022]
More fundamentally, I pointed out the geo-political considerations by the US after the war. By 1948, the US was actively working to rejuvenate Japanese industry despite Japan’s dastardly record during World War II. Even the Japanese war criminals who conducted human experiments on the Chinese in Unit 731 were secretly given immunity in exchange for the data gathered to be used in their own biological warfare program. James Bradley’s recent best-seller ‘The China Mirage’ chronicles how the US worked to prop up Japan against the growth of China. In this effort, Washington put up funds for Southeast Asian countries to purchase Japanese exports. Our raw materials also played a key role in Japan’s manufacturing industries. Japan’s “reparations” programme after the war served to pump taxpayers’ money into industry by bringing Japanese exports back into the former Greater East Asia Co-Prosperity Sphere. The expansion of the Vietnam War after 1965 brought military contracts worth millions to “Japan Inc.”
The Japanese government’s control over capital accumulation ensured it had a strong heavy-industry sector which led to its continuing export competitiveness. This concentration of capital had gone hand in hand with monopoly and oligopoly. Thus, erstwhile zaibatsu rivals such as Mitsubishi, Mitsui and Sumimoto were collaborating and coordinating their operations. This was seen in banking, steel, motor vehicles and computers.
Rising wages and rationalisation of Japanese industry meant that labour-intensive industries such as textiles and electronics assembly could be hived off to countries like Malaysia, where supportive leaders such as Mahathir provided lavish incentives to foreign investors. In the Eighties, Japan had the most inequitable tax system among advanced countries and spent least on social services. Also, many Japanese workers, especially blue-collar workers were not unionised at all and if they were, they tended to be in-house unions. I posed the question whether such a model could be appropriate for Malaysia in the light of our New Economic Policy’s objective of eradicating poverty.
Lessons of the last 40 years
Japan's economy was the envy of the world in the 1980s—as at that time it grew at an average annual rate (as measured by GDP) of 3.89%, compared to 3.07% in the United States. In the 1980s, when Japan’s economy was booming — the second largest in the world — many in the United States feared they were about to be overtaken. Does this sound familiar in relation to China’s phenomenal rise? The US media was full of the "Japanning of America" or an "economic Pearl Harbour," and lawmakers warned of a growing trade deficit between the two countries. And what do you know? They complained of Japanese firms stealing US intellectual property and taking advantage of unfair trade deals. In 1989, Trump was on air complaining that Japan had "systematically sucked the blood out of America — sucked the blood out!"
So, the United States started pressuring Japan to open its market up to American companies and reduce the trade imbalance between the countries. The United States, West Germany, France, the United Kingdom, and Japan signed the Plaza Accord, devaluing the US dollar against the Japanese yen and it led to an increase in exports and a lowering of its trade deficit with many Western European countries. Furthermore, in 1987, Washington imposed 100% tariffs on $300 million worth of Japanese imports, effectively blocking them from the American market. And as the yen increased in value, Japanese products became more and more expensive, and countries turned away from the one-time export powerhouse. When Japan's central bank tried to keep the yen's value low, it sparked a stock price bubble which pushed the country into recession.
Thus, from 1991 to 2003 the Japanese economy, as measured by GDP, grew only 1.14% annually, well below that of other industrialized nations. Japan experienced a period of economic stagnation and price deflation known as "Japan's Lost Decade." While the Japanese economy outgrew this period, it did so at a much slower pace than other industrialized nations.
It’s Geopolitics Stupid!
When Mahathir pushed the ‘Look East Policy’ in 1982, I critiqued his superficial infatuation with the “Japanese work ethic” that was supposed to be responsible for Japan’s post-war growth. (‘Look East: Models & Myths’, Far Eastern Economic Review 31.3.83) In fact, this stereotypical view of the Japanese company being made up of loyal, hardworking workers and paternalistic benevolent bosses only applied to a few big companies. This was not the case among the vast majority of small and medium sized companies. The main component used by the Japanese companies to buy loyalty was the offer of long-term employment. It is this rather than the mythical Japanese cultural trait that has defined their work ethic.
More fundamentally, I pointed out the geo-political considerations by the US after the war. By 1948, the US was actively working to rejuvenate Japanese industry despite Japan’s dastardly record during World War II. Even the Japanese war criminals who conducted human experiments on the Chinese in Unit 731 were secretly given immunity in exchange for the data gathered to be used in their own biological warfare program. James Bradley’s recent best-seller ‘The China Mirage’ chronicles how the US worked to prop up Japan against the growth of China. In this effort, Washington put up funds for Southeast Asian countries to purchase Japanese exports. Our raw materials also played a key role in Japan’s manufacturing industries. Japan’s “reparations” programme after the war served to pump taxpayers’ money into industry by bringing Japanese exports back into the former Greater East Asia Co-Prosperity Sphere. The expansion of the Vietnam War after 1965 brought military contracts worth millions to “Japan Inc.”
The Japanese government’s control over capital accumulation ensured it had a strong heavy-industry sector which led to its continuing export competitiveness. This concentration of capital had gone hand in hand with monopoly and oligopoly. Thus, erstwhile zaibatsu rivals such as Mitsubishi, Mitsui and Sumimoto were collaborating and coordinating their operations. This was seen in banking, steel, motor vehicles and computers.
Rising wages and rationalisation of Japanese industry meant that labour-intensive industries such as textiles and electronics assembly could be hived off to countries like Malaysia, where supportive leaders such as Mahathir provided lavish incentives to foreign investors. In the Eighties, Japan had the most inequitable tax system among advanced countries and spent least on social services. Also, many Japanese workers, especially blue-collar workers were not unionised at all and if they were, they tended to be in-house unions. I posed the question whether such a model could be appropriate for Malaysia in the light of our New Economic Policy’s objective of eradicating poverty.
Lessons of the last 40 years
Japan's economy was the envy of the world in the 1980s—as at that time it grew at an average annual rate (as measured by GDP) of 3.89%, compared to 3.07% in the United States. In the 1980s, when Japan’s economy was booming — the second largest in the world — many in the United States feared they were about to be overtaken. Does this sound familiar in relation to China’s phenomenal rise? The US media was full of the "Japanning of America" or an "economic Pearl Harbour," and lawmakers warned of a growing trade deficit between the two countries. And what do you know? They complained of Japanese firms stealing US intellectual property and taking advantage of unfair trade deals. In 1989, Trump was on air complaining that Japan had "systematically sucked the blood out of America — sucked the blood out!"
So, the United States started pressuring Japan to open its market up to American companies and reduce the trade imbalance between the countries. The United States, West Germany, France, the United Kingdom, and Japan signed the Plaza Accord, devaluing the US dollar against the Japanese yen and it led to an increase in exports and a lowering of its trade deficit with many Western European countries. Furthermore, in 1987, Washington imposed 100% tariffs on $300 million worth of Japanese imports, effectively blocking them from the American market. And as the yen increased in value, Japanese products became more and more expensive, and countries turned away from the one-time export powerhouse. When Japan's central bank tried to keep the yen's value low, it sparked a stock price bubble which pushed the country into recession.
Thus, from 1991 to 2003 the Japanese economy, as measured by GDP, grew only 1.14% annually, well below that of other industrialized nations. Japan experienced a period of economic stagnation and price deflation known as "Japan's Lost Decade." While the Japanese economy outgrew this period, it did so at a much slower pace than other industrialized nations.
It’s Geopolitics Stupid!
Today, when Japan is no longer the second largest economy, having been overtaken by China, Mahathir is still harking back to his “Look East Policy” of the Eighties. One would think that China’s success in lifting 850 million Chinese out of extreme poverty would have prompted him to urge Malaysians to learn how they did it. In this respect, “Chinese characteristics” or “Asian work ethic” has less to do with this phenomenal feat than the political will, the political system, and the dedication to a socialist cause to serve their people. Isn’t this spirit worth emulating?
And of course, China is not Japan. We saw how Japan was propped up by the US after the Second World War despite their fascist and militarist record in order to keep China down. China has developed into the world’s second largest economy and looks primed to overtake the US within the next ten years. Their infrastructure development and renewable energy commitments already surpass that of the US. The fundamental difference between China and Japan is that China has developed from its socialist revolution in 1949 and is far stronger both economically and politically than Tokyo was in the 1980s. Since 1945, Japan has been dependent on the United States for national security, and it will not dare to be on the wrong side of the US which can only boast close to a thousand military bases throughout the world, most of these surrounding China and Russia. So, will the “Look East Policy” prompt us to be more independent like China or to be a US client state like Japan?
And of course, China is not Japan. We saw how Japan was propped up by the US after the Second World War despite their fascist and militarist record in order to keep China down. China has developed into the world’s second largest economy and looks primed to overtake the US within the next ten years. Their infrastructure development and renewable energy commitments already surpass that of the US. The fundamental difference between China and Japan is that China has developed from its socialist revolution in 1949 and is far stronger both economically and politically than Tokyo was in the 1980s. Since 1945, Japan has been dependent on the United States for national security, and it will not dare to be on the wrong side of the US which can only boast close to a thousand military bases throughout the world, most of these surrounding China and Russia. So, will the “Look East Policy” prompt us to be more independent like China or to be a US client state like Japan?
The strength of the Japanese work ethic is a real fact.
ReplyDeleteKua Kia Soong likely has had little or no direct dealings with Japanese manufacturing companies at an operational level.
Either that , or Kua Kia Soong has a cockeyed view of Japan driven by his bias against USA , and by extension Japan, due to its military alliance with USA.
Every country has its flaws, but the Japanese work ethic is a real fact, workers dedication to performing their job to high standards, to even the most junior employees , like cleaners and entry-level manufacturing workers. It is pervasive, not just the domain of a few very large corporations.
To be sure , there are flawed aspects of the Japanese work environment. The excessive, often unforgiving discipline and regimentation , sometimes extending to bullying of employees.
People's Republic of China superior to Japan ?
Japan remains one of the top 5 most productive economies in the world, at the forefront of innovations in electronics, manufacturing technologies, robotics, microprocessor design..
The People's Republic of China is not even among the top 30 most productive economies.