True Story of the 1980s, When Everyone Was Convinced Japan Would Buy America | Hacker News Reader

True Story of the 1980s, When Everyone Was Convinced Japan Would Buy America

businessinsider.com

96 pointsamerf179 comments

If anyone doesn't remember this (perhaps you weren't around then) it's worth reviewing this when you read the absurd statements made about China.

Yes China is big, yes china is (still) growing fast, yes China wants to be more powerful on the world stage. And yes, China raises some challenges/risks to the western/OECD countries. But the level of the risks as they are today and in the near future are significantly overblown because to do so is useful to those who bang the drum.

And china itself faces many internal structural risks which are underweighed (or flat out ignored) both by those who want to tout China as a risk and by the Chinese government itself.

My favorite deal of the 1980s (1990) was when Martin Davis sold Pebble Beach to a Japanese developer. This was widely described in the press as evidence that the Japanese were about to take over the US (OMG the real estate value of the imperial palace exceeds the entire real estate value of California!!!!). Of course a few years later it was back in the hands of its original owners, the Pebble Beach company, for less than the Japanese buyers had paid. Now one story doesn't make a trend, but this high profile one is indicative of the situation. Some low-publicity slow-and-steady purchases have done well and the same in reverse (US companies in Japan). I expect the same with China.

Economists are great at taking the run rate of the last 12 months and extrapolating it for 30 years...

Japan, however, at that point was a liberal democracy with rights and stuff. Can't say that about the PRC.

Hmm it's not a democracy in the traditional sense. A single party has been in power for 40+ years.

> Hmm it's not a democracy in the traditional sense. A single party has been in power for 40+ years.

Thats not true. One party has been dominant over the past 40+ years because it won most of the elections, which are free and fair elections according to international standards.

Plenty of opposition parties have been active the entire time, they just weren't popular enough to win. They are not suppressed or restricted or thrown in jail -- they just aren't able to convince the voters.

There have been periods, including quite recently, when opposition parties held power. Their performance while in power caused the voters to vote for the dominant party next time.

You're a bit out of date, the DPJ managed to get into office recently before losing to the LDP again.

In the USA the Democrats held the House from 1954 to 1994, which is 40 years, but people felt the USA was still a democracy during this time. Even in competitive political systems, sometimes one party puts together a broad coalition that can hold power for decades.

Another example is the UK Conservative Party holding power for 18 years from 1979 to 1997 by winning every election during that period. It would not have been reasonable to say the UK was not a democracy in that period -- it was just the case that the voters preferred one party the entire time.

Exactly. China isn't scary, an oppressive authoritarian regime controlling the world economy is.

It'll be interesting to see the political situation evolve in China. There's a popular perception in American mythology that liberal democracy causes prosperity, but if you look at economic history across many different cultures, the reverse seems to be more true: economic prosperity causes liberal democracy. As a growing middle class gains more economic power, they inevitably try to push for more political power, and because the country ceases to operate without them, they tend to get it.

I suspect that the political situation for Xi Jinping and the CCP is actually a lot more tenuous than is publicized outside of China, and that they're investing so heavily in surveillance & control technologies because they're insecure. It wouldn't surprise me if we see a democratic revolution in China within a decade.

I hope you are right. I never see any indications a democratic revolution is even on the radar there. Is it all hidden?

It would be, right? If the government cracks down on any dissident accused of fomenting revolution, the very last thing you would do is talk about revolution.

I think any revolution is fairly unlikely while China continues to grow rapidly under the CCP, but if growth stutters or corruption becomes overwhelming (or if America collapses and stops buying Chinese goods), it could happen. The catalyst for most revolutions seems to be when people give up on trying to expand the pie and start stealing slices from less powerful countrymen, causing widespread resentment.

I'm just thinking back to other revolutions that have occurred, though, and they usually take people outside the country by complete surprise. I was a kid in the 80s, and the Cold War was basically a fact of life. I had an international relations professor who was in the Pentagon when Gorbachev was deposed, they had just completed their 5-year geostrategic plan, and nowhere in the plan was the possibility that the USSR might not exist. Same with the Arab Spring - from the U.S, it was like "What the hell is happening?"

Interestingly, it was not clear at the time of the American Revolution that it would result in a liberal democracy. It seems that the expectation at the time is that it would result in total anarchy (the way the Syrian Civil War has), with the colonists killing each other, and it almost did, and it wasn't until almost 15 years after Lexington & Concord that it was clear (with the ratification of the U.S. Constitution) that it wouldn't. And maybe that's the mechanism by which a wealthy & well-networked middle class leads to democracy: in states without it, a revolution collapses into anarchy and the elevation of a charismatic dictator, while with it the various interests need to negotiate and share power because each of them needs something that only the others can provide.

South Korea and Taiwan both developed under a military dictatorship and transitioned to democracies. Singapore has been a democracy but not particularly liberal too.

IMO good governance goes beyond ideology. If you need a democracy because your political and economic situation dictates it will be best, then do that.

And under our nuclear umbrella, and housing multiple US bases.

The other thing you got in the 80s was a lot of cargo-culting of Japanese industrial planning practices. People like Lester Thurow (Nobel Prize in Economics) went around telling anyone who would listen that we needed large-scale government/industry partnerships like MITI if we weren't going to fall even further behind. Sematech was one outcome in the US around semiconductors. (It's still around but never had much impact.

Thank you for spurring a search engine trip to this interesting article about Sematech https://www.technologyreview.com/s/424786/lessons-from-semat...

That is interesting. That article sounds a much more positive note than what I recollected. I was admittedly on the periphery of the semiconductor space but I never heard much about them after the initial splash.

There is a really good book on the US reaction: “R&D Collaboration on Trial”[0].

[0]: https://www.amazon.com/Collaboration-Trial-Microelectronics-...

Interestingly, it's happening today on a fairly large scale in software--through open source. Open source has removed a lot of the barriers to cooperation because it can happen at least somewhat informally without a lot of the traditional legal and IP paperwork associated with consortia.

On the other hand, Japan had half the population of the US while China has four times the population. The tendency of countries to converge on similar productivity was working against Japan but is very much working for China.

Can't be repeated enough. Totally incomparable populations, natural resources, military size, and monetary situation between yen and renminbi.

It's quite embarrassing, really, because the frequency of this comparison is almost certainly due to American perception of ethnicity. You don't see India/80's Japan comparisons or Brazil/80's Japan comparisons as often.

> the frequency of this comparison is almost certainly due to American perception of ethnicity. You don't see India/80's Japan comparisons or Brazil/80's Japan comparisons as often.

Isn't it more likely that that's because neither India nor Brazil have economies anywhere near the size or importance of America's, and don't appear to be on any kind of trajectory that will get them there?

maybe in a decade or two, folks myopically focused on building walls and fighting invader-terrorists will realize that immigration is a net good, and the principle way to keep china in check as it grows larger and more formidable (not as a threat but as a competitor). hopefully it won't be too late. think of the children.

The argument being made conflates illegal and legal immigration. American legal immigration continues to exceed one million annually, easily dwarfing any other country.

it doesn't, but regardless, the cia estimates US net migration was 3.9/1000 in 2017, which is 29th. the point was, why shouldn't we take every (legal) immigrant who will make this a stronger and more vibrant country?

https://www.cia.gov/library/publications/the-world-factbook/...

"Stronger" is...vague, and "vibrant" is very much subjective.

I wouldn't say it's the same. China has imperial ambitions which gives the IMF a run for its money (no pun intended). Japan attempted that but faces a much stronger western opposition. While the rest of the world is facing destabilization, China is silently taking over their part of the world.

What imperial ambitions in the 1980's? Selling us cars that don't break isn't conquering manchuria.

attempted to create an IMF rival

I'm not an expert, but for anyone who would like to get more info on geopolitics, I recommend the "Geographical Challenges" videos from Stratfor, which can be found on YouTube. Whether you like or dislike Stratfor, I find the geographic and historical analysis of various countries are spot-on and highly valuable.

This is especially relevant for understanding China in the context of 21st century geopolitics. China has many of the same geographic advantages of Europe and North America. It's likely that China will want to extend its influence in its region, just as the US did when "The Monroe Doctrine" was formulated. On the other hand, China, when viewed on the longest historical time scales, seems somewhat metastable. My guess on the future: China will try to become a rival to the US for global dominance, and there will be naval conflict over who is in charge in the far east -- unless China follows another long term pattern, destabilizes and changes regimes. The former is far likelier than the latter.

I've never understood why people are so insecure about Chinese companies or East Asian companies rising up, given that the world is 1/5 Chinese and even more East Asians, of course there are going to be large and prosperous Chinese companies because if they can manage to scale to dominate the Chinese market, they can thrive on their internal markets alone. Doesn't have to be just American companies dominating another nation's market. (Same with India and South Asia)

Japanese companies still buy up American companies just like American companies buy up Japanese. Indeed, the job search company was bought for a billion dollars by a Japanese company. Sony PlayStation, Nintendo and the car companies are doing better than ever. It's just it's no longer in people's eyes or really news anymore.

It's also why Starbucks, KFC and Apple have been aggressively growing in China cos there is such a great market in China and East Asia in general.

Largely cultural factors and political ones. America still has a good relationship with japan (I.e. can control japan), China has a UNSC seat and is quite fond of going after its ambitions, looking to a world beyond American hegemony.

The fear of Japan was also fossilized in the classic Crichton novel Rising Sun (1992, made a movie the year later). But it quickly became aged, as that was right at the tail of the mania.

It ended when bubble burst in Japan. China is a controlled economy.

Meaning the shock will be worse or such a shock can't happen? If anything, I presume the former.

Japan essentially turned itself into a Western level society in 40 years. Meteoric post-war recovery, climaxing in a shift from manufacturing and agriculture to softer work like software and finance. Property costs started to spike. Debts become silly. And when everybody starts to default after a small economic contraction, banks start going out of business. Economy crumbles. Sound familiar?

China has the numbers and control in a way Japan never did.

Their growth has been slower and in that time, the West, China's market, has all but ceased manufacturing.

China owns (almost quite literally) poorer countries in Africa. They sponsor mining infrastructure, they buy mines and they have a local workforce that will turn up for bread.

If China ever develops a substantial middle class (as the West and Japan did) they can shift their manufacturing to another country they have control. They still own all the natural resources, they just need people (or tech) to build it all.

They don't just own Africa, they underwrite huge national debts. They've started selling these to other cash-rich countries.

China is controlled. They want more agriculture, they say so. They want to avoid explosive growth, they implement a one child policy.

I'll sure something could trip them up, but they have exit routes for most major historical economic issues. And totalitarian control as gravy.

It is more complicated than that.

I was reading recently about how the Shah of Iran was ended and how the US intentionally helped that happen while they were allies. I dug into that more.

Shah of Iran didn't have any imperial ambitions but the west didn't support him because of geopolitics reasons.

> The Shah of Iran had promoted secular rule and thus he believed that he would be embraced by the west. He also believed that his transformation of Iran from a near Middle Ages nation to a modern nation would be appreciated by the world at large. But, instead, he had gone too far too fast for Western interests. https://www.quora.com/Why-didnt-the-USA-help-the-Shah-of-Ira...

Same story but a different reason how British and Roosevelt did influence on Mosaddegh's overthrow! While Mosaddegh was doing everything that we would praise by today's standards and our modern values: https://en.wikipedia.org/wiki/Mohammad_Mosaddegh

When you read two stories you just realize how geopolitics reasons can be unfair sometimes.

Many countries are destabilized because of regimes changes for sake of geopolitics reasons. And it is really hard to say if there is any positive outcome for anyone in it.

You know how in Back to the Future 2 at the beginning Marty of 2015 works for a Japanese company? That's because in 1990, when the movie came out, everyone assumed that you'd work for a Japanese company in 2015.

This belief also manifested itself in the way 2019 Los Angeles is portrayed in Blade Runner.

Also Max Headroom, Neuromancer, Robocop, and a host of others.

The first science fiction that I saw that deliberately bucked this trend was Earth by David Brin. There's a line something like "Can you believe that back in the late 20th century everybody thought Nihon was going to control the world's economy?"

In 1984 or so, I was installing a new system my company designed in an elementary school. One of the kids asked if I could visit their class and talk about computers. During a Q&A, one asked about Japan taking over microprocessor manufacturing. I said something along the lines of "I don't see it. A lot of their chips are just copycats of US chips and they don't work that well. I can't see Japan taking over the market." I immediately noticed all eyes switching over to their teacher and I quickly scrambled to help her save face but I don't remember what I said.