Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Honoring The Dignity Of Work

Thomas L. Friedman New York Times

I found the source of our trade problems with Japan.

I went shopping at the Mitsukoshi department store, the Bloomingdale’s of Tokyo, and when I walked in the front door, I counted 14 sales clerks in the jewelry department alone.

They bowed politely and offered to help with any purchases. The American in me immediately said: “What a waste of labor! Who needs 14 sales clerks? This store needs downsizing immediately!” But that is not the Japanese instinct. And that’s one reason why we have a structural trade deficit with Japan.

Let me explain: Unlike America or Western Europe, Japan long ago decided that its top priority was not to have the lowest prices for its consumers, not to have the highest dividends for its corporate shareholders, but to keep as many of its people (particularly the men) employed in decent-paying jobs - preferably for a lifetime with the same firm.

The Japanese understand that a job gives dignity and stability to people’s lives and pays off in much greater social harmony. Just walk the streets of Tokyo: few homeless sleeping on grates, no muggers lurking in the shadows.

But to maintain such high levels of employment, to keep 14 clerks behind one store counter, Japan basically had to fix the game.

Japan had to regulate its economy in a way that would protect its domestic companies from foreign competition, by controlling access to its markets. That way Japanese companies could maintain a dual price system. They could charge high prices at home, in a protected market, in order to maintain full employment, while charging lower prices abroad in order to get into everyone else’s market and export like crazy.

That is why those who think that Japan’s trade barriers will easily give way, or that its economy will be “deregulated” as its prime minister keeps promising, are fooling themselves.

Many economists argue that in an integrated global economy, Japan will have to become more like America. Its corporations will have to cut costs and downsize to remain globally competitive. Maybe. But for now, the Japanese are resisting that.

Despite five years of zero growth, Japan still has only 3.2 percent unemployment. The sort of job massacres that have become the norm in America - like 40,000 workers at AT&T in one chop - have been unheard of here.

“I am sure that eventually we will be somewhat forced to think American, but we are moving very slowly in that direction,” says Yotaro Kobayashi, the chairman of Fuji Xerox.

“For social and moral reasons, we will try to avoid going all the way to a U.S. model. We will look for a middle ground.”

How? In part it will be by trying to maintain hidden trade barriers. But in part it will be by trying to maintain Japan’s unique corporate values. For Japanese executives, says Glen Fukushima, vice president of the American Chamber of Commerce in Japan, “laying off employees is the last option they look for, not the first.”

And far from being rewarded for layoffs, corporate executives here are censured for them, by both peers and the press. The first priority of a Japanese company is its employees, then come its customers and last its shareholders - just the opposite of the U.S. corporate mentality.

Instead of ordering massive layoffs, Japanese companies cut overtime, they freeze hiring college grads, they freeze dividends, they offer early retirement packages, they shift workers to subsidiary companies, they shift low-skilled jobs to cheaper labor markets in Asia and keep the best jobs here, they inhibit mergers and acquisitions that lead to layoffs, they buy up U.S. high-tech companies to maintain the competitive edge that their own regulated economy sometimes stifles and they even (are you ready?) order pay cuts for top executives - anything but lay off people.

That’s why Pat Buchanan is only partly right. Yes, American workers are being hurt by unfair trade barriers erected by some foreign countries, including Japan, and the United States should fight hard to bring those barriers down.

But U.S. workers are being hurt just as much, if not more, by the skewed sense of priorities that now dominates the U.S. business community, where executives get bonuses for massacring their employees.

Maybe the economists are right. The Japanese will have to become like us. But they are sure trying not to, and it’s worth watching to see if they can pull it off. This is one economic war I’m rooting for Japan to win.

xxxx