The purpose of this paper is to discuss the widening trade deficit between the United States and Japan and to analyze some of the misunderstandings and Japanese cultural elements leading to problems in economic relations. Also, we will look at contradictory Japanese attitudes and some of the historical roots of the problem.
A creditor nation is one whose investments abroad exceed the size of foreign investments in its own economy. A debtor nation is one that owes foreigners more than the sum of its own assets abroad. Creditor nations have a great deal of leverage over those to whom they lend their money; debtor nations often become subservient to the interests of their creditors.
Japan replaced the United States as the world's leading creditor in 1986. The scope of recent Japanese capital outflows has been likened to the period in the 1950s and 1960s when the United States bought up much of Western European industry, but Japanese acquisitions over the last few years have actually far outstripped the American expansion of those days. In fact, Japan's net external assets already surpass by 20 percent the American record established over a thirty-seven year period (Williams 56-61).
Every single working day, Japanese individuals and corporations generate over a billion dollars' worth of savings. This excess cash rushes into domestic bank accounts, stocks, insurance premiums, and real estate speculation, but even these institutions cannot hold it all. Like water seeking its own level, a large amount of it must flow abroad. In 1981 Japanese traded foreign securities worth a total of $15 billion for the year. In 1986 the figure was $2.6 trillion--growth by a factor of 175 in five years' time. A newly popular Japanese saying summarizes the situation: "It took Britain one hundred years to become the richest country and the United States fifty years to become the richest country, but it only took Japan five."
Japan's a...