From: underdog@leland.Stanford.EDU (Dwight Joe)
Subject: Re: DOES AMERICA SAY YES TO JAPAN? - Off track!!
Organization: Miners for a Heart of Gold
Date: Tue, 5 Jan 93 03:48:21 GMT

In article <4146@randvax.rand.org> edhall@rand.org (Ed Hall) writes:
>In article <C0Cz4r.2yM@world.std.com> cmr@world.std.com (Charles M Richmond)
>writes:
>>. . . The move on the part of "Japan" toward economic hegemony first imposes
>>its costs on the Japanese people in order to gain advantage on others. This
>>leads to such seeming contradictions as a disastrous home economy at the same
>>time as record trade imbalances.
>What contradiction?  The recent increase in the trade imbalance is to a
>large extent the result of troubles in the home economy.  Imports (into
>Japan) are way down as a result.  Exports have changed little of late--
>in fact, part of the cause of their economic problems is that their
>industry overestimated demand.

There are the twin problems of (1) market saturation and (2) no new
products to create yet another market.

For example, consider the VCR.  When it first came out, demand was huge
because the VCR market was an untapped market created by the sales of this
device.  This is like a huge empty beaker into which you pour H20 (i.e.
VCR's).  Matsushita, JVC, etc. profitted greatly from sales to a market that
Japan owned virtually exclusively.  They just spewed H2O into the beaker.

But the laws of economics apply.  The VCR, through a sequence of continuous
improvements, achieves more or less it's final state of advancement[1].
Market fills up to the saturation level.  The beaker is full to brimming.

Where can you sell the VCR's now?  

The same thing has happened to Walkman's, etc.

[1] Unless there is some revolutionary breakthrough, the VCR is pretty
much frozen at its current price/technology points.

>The Japanese economy is in for quite a bumpy ride, in the short term.
>
>Personally, I'm more worried about China, whose economy is growing so

China has a 15 billion dollar trade surplus with the USA; it is, in fact,
the _3rd_ _largest_ _trade_ _surplus_.  China with Taiwan ranks as the #1
abuser of software copywrights.

President Clinton has, correctly, pointed out that we are not going
to play China's game of "let's see how many American products we can
exclude from our market while we steal American know-how".

>explosively that it could well overtake Japan's in the next two decades.
>The Japanese might wind up looking positively genteel in comparison.

What is dangerous is that modernization with American technology will
mean that the Chinese military will modernize right along with the rest
of the economy.  Unless the USA sets some tough economic and political
ground rules with the Chinese, enforced by covert (and otherwise) threats,
we will be in a hell of a lot of trouble in the future.

(And if we aren't careful,)
Even with the Japanese and the Koreans as our economic/military Allies,
we may not be able to stop Chinese hegemony.  Clinton has already pointed
out that the Chinese are still exporting nuclear and missile technology
to the middle east; Gore has emphasized that this will be a major concern
in the new presidenctial administration.  On top of all that, the Chinese
are the principal sponsors of the Khmer Rouge.

>		-Ed Hall
>		edhall@rand.org

P.S.
China has announced it's intent to purchase the latest Soviet naval
vessels from Russia.  Korea, Japan, and S. E. Asia, rightly fear that
the Chinese will "export" it's political influence into the nearby
territorial waters of all concerned nations.

China has also decreed that it will blow up any vessels interfering in
oil exploration in the territorial waters that both Vietnam and China
claim.  The Chinese have sent warships to the region and simultaneously
have contracted with an American company to explore for oil.  This
brinkmanship was directed specifically at the Vietnamese. [Far Eastern
Economic Review]

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