US-Japan-Asia Relations

Trump and Japan

From Foreign Affairs, February 16, 2017

Japanese Prime Minister got more out the summit with President Donald Trump than he had expected. The question is how long  their apparent goodwill can last, especially given the anti-Jpan mood of Trump's voter base.

Asia Security Expert Michael Green--Why I Oppose Donald Trump.pdf

From TOE, September 2016

Michael Green worked for President George W. Bush on the staff of the National Security Council (NSC) during 2001-05, eventually becoming special assistant to the president for national security affairs with responsibility for East Asia and South Asia. He was one of 50 former security officials in Republican administrations who signed a letter on August 8 saying that Donald Trump “lacks the character, values and experience” to be President and “would put at risk our country’s national security and well-being.” Then, on August 8, he was one of eight former Republican administration security officials dealing with Asia who went even further and endorsed Hillary Clinton. In this interview, he elaborates and discusses what these developments mean for US ties with Japan and the rest of Asia.

Trade & Currencies

If Trump Launched a Trade War on Asia

From Wall Street Journal Asia, March 29, 2016

If Donald Trump becomes U.S. president, will he wreak havoc on world trade? Or is he bluffing when he proposes a 45% across-the-board tariff on manufactured imports from China, and 35% on goods made in Mexico by U.S. firms such as Ford Motor? U.S. law enables Mr. Trump to carry out his threats. Second, while such steps would damage the U.S. economy, perhaps sending it into recession, that damage would be dwarfed by the havoc created among U.S. friends such as South Korea, Taiwan and Thailand.  Even if Mr. Trump loses in November, his candidacy could spark a dangerous sea change….

The Myth of Currency Manipulation

From The International Economy, Summer 2015

 By the narrowest of margins, 51–48, the U.S. Senate defeated on May 22 an amendment to the Trade Promotion Authority that would have required that trade pacts such as the Trans-Pacific Partnership include a provision penalizing countries found to be “currency manipulators.” No other members of TPP would have agreed to such a provision; hence, it would have killed TPP.  And yet, most of the talk about currency is based on total myths…

The Real Sources of U.S. Inequality and Unemployment

From Foreign Affairs, November-December 2011 issue

Ignoring the overall dearth of jobs, Michael Spence (“The Impact of Globalization on Income and Unemployment,” July/August 2011) singles out the fraction of employment in sectors related to trade.  The lion’s share of tradable products consists of manufactured goods, leading Spence to conflate the fate of manufacturing jobs with that of jobs in the tradable sector. The United States lost 4.4 million manufacturing jobs between 1990 and 2008. Since Spence says that the total number of tradable-sector jobs grew by 600,000 during this period, then the United States must have gained five million jobs in the tradable sector outside of manufacturing…

China Didn't Take American Jobs

From The International Economy, Summer 2016

In this year, of all years, getting it wrong on whether international
trade is destroying millions of American jobs is not just
a mistake, it’s dangerous. Republican nominee Donald Trump
and Democratic runner-up Bernie Sanders have convinced tens
of millions of voters that the Japanese, Chinese, Mexicans, and
others have “stolen” their jobs...Tough trade actions, they claim, will bring those jobs back....China is not the primary cause of the decline in American factory jobs...Factory jobs mainly declined
because a worker today can produce what it took three
workers to make thirty years ago, but American consumers
are not buying three times as many goods.

American Financial Crisis And Recession, 2008-09

A Response to [Alan Greenspan’s] “Never Saw It Coming”

From Foreign Affairs, December 30, 2013

 In his recent essay “Never Saw It Coming” (November/December 2013), Alan Greenspan makes two central arguments: first, that virtually no one foresaw the 2008 U.S. financial crisis and, second, that irrational “animal spirits” were the root cause. If true, these propositions would absolve policymakers such as Greenspan of blame. But neither holds water. The truth is that many experts worried about the U.S. housing bubble and predicted a crash, even if they couldn’t pin down its timing or severity…

Today's U.S. Financial Crisis Is Not Like Tokyo's “Lost Decade”

From Foreign Affairs, March-April 2009 issue

In periods of crisis, pundits and policymakers tend to scramble for historical analogies. This time, many have seized on Japan's notorious “lost decade,” the decade of stagnation that followed a mammoth property bubble in the late 1980s. But this comparison is wrong....The consequences of the 2008 U.S. financial crisis will be different from Japan's slump in the 1990s for three reasons: the cause of the current crisis is fundamentally different, its scope is far smaller, and the response of policymakers has been quicker and more effective….

Is the Current Economic Collapse Like Japan's in the 1990s?

From Foreign Affairs, May-June 2009 issue

Robert Madsen [in his comment on my essay, The Japan Fallacy] presents the widely shared view that excess borrowing caused the current global economic crisis and that the crisis cannot end without a painful purging of much of this debt….To claim that “the ad hoc policymaking and official vacillation displayed by the Bush and Obama administrations resemble nothing so much as the behavior of Japan's leaders in the early 1990s” simply ignores the fact that for years Tokyo denied that there was even a problem to be solved. The United States now has an activist president and an activist Federal Reserve chair, who, if one measure proves inadequate, will go on to another…

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The Oriental Economist Report (TOE)

20th Anniversary TOE Lead

20 years of TOE: Our hits and misses

From April 2017 issue of TOE.

TOE’s coverage of Japan has been guided by a consistent outlook,
much of which, we like to think, has passed the test of time. It can be
summed up in the following mantra: No political stability without
economic revival; no economic revival without structural reform; no structural reform without political leadership dedicated to reform; no reformist leadership without institutional rejuvenation in
politics and business, including a transition from one-party democracy to truly contestable elections among parties that alternate in power.
We think we have been on target regarding the economic side
of things, but our track record on the politics has been mixed.


Voodoo Abenomics
Japan's Failed Comeback Plan

From Foreign Affairs, July/August 2014 issue

Imagine the predicament currently facing a growing number of Japanese men in their early 30s. Despite having spent years cramming in high school and attending good colleges, many can’t find a full-time job at a good company. Since Japan’s rigid labor laws make it nearly impossible to lay off permanent employees in downtimes, companies now tend to fill open slots with part-time or temporary workers, and they typically pay them a third less. Today, 17 percent of Japanese men aged 25 to 34 hold such second-class jobs, up from four percent in 1988. Low-paid temps and part-timers now make up 38 percent of Japanese employees of all ages and both sexes -- a stunning figure for a society that once prided itself on equality...

Zombie Abenomics
Japan's Missing Economic Revival

From Foreign Affairs, November 24, 2014

Japanese Prime Minister Shinzo Abe’s economic revival is hardly going as planned. A consumption tax hike that he introduced in April triggered a recession over the following six months, prompting him to announce the delay of the second hike, from October 2015 to April 2017....The tax delay is unquestionably necessary. Before the first hike, the Ministry of Finance and the Bank of Japan had blithely promised Abe that Japan would see only a mild and short-lived response, which proved disastrously wrong…

Negative Rates Won’t Save Japan’s Economy

From Wall Street Journal Asia, Feb. 1, 2016

Bank of Japan Governor Haruhiko Kuroda announced on Friday that he would levy a tiny 0.1% charge on the reserves banks add from now on. He says this will make banks more eager to lend to firms. Mr. Kuroda’s prediction is as wrong as all his previous forecasts.

Trans Pacific Partnership (TPP)

Is the TPP Making the United States a Less Benign Hegemon?

From Foreign Affairs, Sept. 21, 2016

The United States may be on the verge of walking away from a trade pact, the Trans-Pacific Partnership (TPP), that it virtually wrote. Around 45 percent of the language in previous U.S. Free Trade Agreements can be found copied verbatim in the TPP. Yet the United States did not offer to open its market very much in return for the concessions that it was able to wrest from others. According to the U.S. International Trade Commission, by 2032 the TPP would boost U.S. imports by a negligible 0.2 percent of GDP. And now, the normally pro-trade leadership in Congress is pushing to reopen settled issues, largely to please special interest groups such as pharmaceutical and tobacco firms. The result is that, to its allies abroad, the U.S. now appears both less benign and less hegemonic.

Trade Trials
Getting TPP Right Is Better than Getting It Fast

From Foreign Affairs, May 12, 2015

If the Trans-Pacific Partnership (TPP) trade talks start to look as if they will drag on interminably (an increasingly likely prospect), the United States’ capacity to function as a benign world hegemon will be diminished. To avoid this, the White House is determined to get the pact signed and ratified this year. Otherwise, campaigning for the 2016 elections will put off a congressional ratification vote until at least 2017, five years after the original target date of 2012. Meeting the 2015 goal will be an uphill climb…

Free Trade and the TPP
Will Republicans Defeat the Trans-Pacific Partnership?

From Foreign Affairs, October 7, 2015

In a surprising development, it is congressional Republicans and a few of their business allies that now pose the biggest threat to the Trans-Pacific Partnership (TPP), a trade agreement among 12 countries with 40 percent of the world’s GDP. When, after five years of talks, an agreement was finally announced on October 5, neither a single Republican leader in Congress, nor any broad business federation could be found to support it. Republican support for the TPP is indispensable since most congressional Democrats oppose it and former Secretary of State Hillary Clinton has just come out against it.

Shinzo Abe Bows to the Farm Lobby

From Wall Street Journal Asia, Sept. 29, 2014

The U.S.-Japan cabinet-level talks on the Trans-Pacific Partnership trade pact broke down on Wednesday largely because of Tokyo's refusal to sufficiently lower farm tariffs and other associated import barriers. The irony is that Japan, not America, has the most to gain from liberalizing food trade, as Japan's own reformers recognize.

Japan-China Relations

Mutual Assured Production
Why Trade Will Limit Conflict Between China and Japan

From Foreign Affairs, July/August 2013 issue

During the Cold War, the United States and the Soviet Union carefully avoided triggering a nuclear war because of the assumption of “mutual assured destruction”: each knew that any such conflict would mean the obliteration of both countries. Today, even though tensions between China and Japan are rising, an economic version of mutual deterrence is preserving the uneasy status quo between the two sides. Last fall, as the countries escalated their quarrel over an island chain that Japan has controlled for more than a century, many Chinese citizens boycotted Japanese products and took to the streets in anti-Japanese riots. This commotion, at times encouraged by the Chinese government, led the Japanese government to fear that Beijing might exploit Japan’s reliance on China as an export market to squeeze Tokyo into making territorial concessions…

Why Chinese-Japanese Economic Relations Are Improving: Delinking Trade From Politics

From Foreign Affairs, December 30, 2013

When it comes to Japan, China seems torn. On security issues, it is becoming increasingly hawkish -- witness its recent declaration of an Air Defense Identification Zone (ADIZ) over the Senkaku (Diaoyu) Islands in the East China Sea. But on economic ties -- from Japanese imports to Japanese investments -- it is becoming increasingly dovish. In short, China has started to delink economics from politics. This represents a big reversal from last year, when the Middle Kingdom believed that it could use Japan’s dependence on the Chinese market to wrest territorial concessions from Japan….