Princeton Weekly Bulletin, April 20, 1998
Ambassador's aide reports on Japan
By Mary Caffrey
Japan's current economic problems are influenced by the country's distinctive way of doing business to a far greater degree than most Americans appreciate, according to Kent Calder, associate professor of politics and international affairs.
Calder, director of Princeton's Program on U.S.-Japan Relations, is currently on leave, serving as special adviser to U.S. Ambassador Thomas Foley at the American Embassy in Tokyo. On April 7 he gave a talk at the Center for International Studies in Bendheim Hall before returning to Japan.
"The single biggest thing that has struck me is the ways in which the process and the institutional context in which U.S.-Japan policy gets made influence outputs and constrain outputs," he said.
Calder, who has been stationed in Tokyo for more than a year, gave an update on his experience. He offered hints of the $75 billion economic stimulus package announced three days later by Japanese Prime Minister Ryutaro Hashimoto.
Hashimoto's initiatives aim to reignite the Japanese economy, which has been stagnant for nearly seven years and has dampened other economies of the Pacific Rim. But while Ambassador Foley called Hashimoto's combination of tax cuts and domestic spending a "bold action," the financial markets were initially less impressed.
This varied reaction fits with Calder's description of the frustration felt by many American policy makers and financiers at Japan's deliberative style, even in the face of a growing crisis. While Japan's many regulations and consensus mode of decision-making are old news, Calder said the extent to which the process slows change has been surprising, even to him -- "and I've been at this for more than 15 years."
Americans, according to Calder, are accustomed to intense competition between political parties; Japan, while a democracy, has historically lacked such dynamism. Also, Japan's business sector and media are more reticent. But Calder said this is changing, and that it may be possible to tap seeds of discontent to help advance American interests.
Calder said it is likely that the upcoming meeting of G-7 nations in Birmingham, England, will touch on Japan's banking crisis and the United States' longstanding call for deregulation, which would make it easier for other countries to bring their products to market in Japan. (The lack of specific calls for deregulation was cited by the New York Times as one reason financial markets did not warm to Hashimoto's April 10 stimulus package.)
The United States has a great stake in the health of the Japanese economy. Japan is one of this country's largest trading partners, and if the economic package does not succeed, Calder said that market forces in Japan may create pressures that would cause an expansion of exports, again widening the U.S.-Japan trade deficit. In addition, Japan is a major trading partner for smaller Asian nations that are also facing economic turmoil; they, too, need a vibrant Japanese economy. "There cannot be only one locomotive, the United States, driving the recovery in the Pacific," Calder said. "Japan needs to be that second locomotive."
Calder encourages what he calls "win-win" projects, which would benefit both the United States and Japan. Examples include attempts to improve telecommunications or create more housing in Japan by taking advantage of advanced earthquake-proof building methods that could permit taller buildings.
The United States' relationship with China also complicates matters, Calder explained. "The cornerstone of American foreign policy in the Pacific is the U.S.-Japan relationship," he said. Yet each overture from the United States toward China affects the U.S-Japan relationship. With the Japanese people voicing displeasure with America's military presence in their country, the U.S.-Japan relationship is one that needs to be handled with care, Calder said.
"Japan is an extremely important ally in terms of security," he said.