The Rise and Fall of Abacus Banking in Japan and China phần 5 doc

62 The Rise and Fall of Abacus Banking in Japan and China

Total working hours are recognized internationally as long. In the eyes of many

observers, these differences symbolize the failure of workers to share Japan’s

success. After all, we associate long working hours with poorly developed econ￾omies, and short working hours with advanced industrial nations. Japan seems

to be an anomaly in this regard.7

Compounding the problem of small houses, long working hours, and

a high cost of living is a poor infrastructure that lags behind those of

other industrialized countries. ‘‘In areas ranging from roads to sewer

systems to airports, Japan is said to be so far behind her counterparts in

the West as not to deserve the label of an advanced developed country.’’8

Japan’s main sewage system, for instance, serves only 40 percent of the

population, compared to 73 percent and 95 percent of the population

served by the corresponding U.S. and British sewage systems.9

In 1990,

the average urban Japanese enjoyed 2.2 square meters of park space,

compared to 19.2 for the average American living in New York City, 30.4

for the average urban Englishman, and 37.4 for the average urban

German.10

Japan’s rapid rise of asset values, currency appreciation, and economic

growth, in conjunction with unfavorable demographics, had another

negative impact on the Japanese economy—the erosion of her competi￾tive position. Rapid economic growth, for instance, along with an aging

labor force, declining working hours, and tight emigration policies, cre￾ated severe labor shortages that pushed labor costs higher.11 Rising labor

costs and rising commercial leases, and especially the stronger yen, in

turn priced many of Japan’s products out of world markets, contributing

to ‘‘hollowing out,’’ the transfer of traditional manufacturing operations

offshore.12

Hollowization of the economy is closely related to the movement in exchange

rates because the appreciation of the exchange rate will lead to the substitution

of imports for domestic production, the substitution of overseas production for

domestic production, and the shift in resource allocation from production of trad￾able goods to production of nontradable goods.13

Indeed, the precipitous rise of the yen has made it difficult for Japanese

companies, especially consumer electronics companies, to compete effec￾tively in world markets without shifting production in overseas trans￾plants to the United States, the European Union, and especially Asia. In

fact, according to some estimates, a 1 percent yen appreciation is fol￾lowed by a 1.6 percent increase in Japanese investment in Asia.14 Al-

The Fall of Abacus Banking in Japan 63

ready, almost 70 percent of the color television sets and about 30 percent

of VCRs are made overseas. Japanese companies, like Uniden, the cord￾less telephone maker, have already relocated their manufacturing out￾side of Japan.15 A conformation of this trend is the reduction in Japan’s

surplus with the United States and an increase in China’s and Southeast

Asia’s surpluses with the United States on the one side and the rise of

trade deficits of these countries with Japan on the other side.16

‘‘Hollowing out’’ had two major impacts on the Japanese economy.

First, it weakened the traditional keiretsu relations, intensifying compe￾tition. Second, it fueled a ‘‘softomization’’ of the economy (the growing

importance of services over manufacturing), which has contributed to

the slowdown of economic growth. In 1995, the service sector provided

for 55.8 percent of the GDP and 59 percent of employment; the corre￾sponding figures for the United States were 68.8 percent and 72.5 per￾cent. The industrial sector provided for 41.9 percent of the GDP and 34.6

percent of employment; the corresponding figures for the United States

were 29.2 percent and 24.6 percent (see Exhibit 3.4).

As discussed earlier, Japan is further beset by demographic problems

arising from the aging of the country’s population, which has contrib￾uted to the country’s labor shortage and has further challenged the coun￾try’s three major labor institutions (lifetime employment, seniority

wages, and enterprise unionism) and has strained Japan’s government

finance, turning her fiscal surplus into deficit. In this sense, the country

found herself in a situation where it criticized her trade partners, mainly

the United States. In 1996, Japan’s combined central and local govern￾ment deficit approached 7 percent of the GDP, one of the largest among

OECD countries.17

Last but not least, due to the continuing regulation of certain domestic

sectors, Japan has been suffering from an accumulation crisis, the lack of

opportunities to re-invest profits accumulated in the export sector: Ac￾cording to Hirsh and Henry,

The message of the multinationals is this: The low productivity and growth of

this over-regulated marketplace no longer work for us. Japanese firms across the

board have seen a dramatic deterioration in the break-even points and efficiency

of their Japan-based operations.18

Reflecting this trend, the former chairman of Toyota Motor Corporation,

Shoichiro Toyoda, calls for a ‘‘shift from an economy burdened by reg￾ulations to one in which the private sector can operate unfettered.’’19 The