1. Preparing For the Twenty-First Century by Paul Kennedy Chapter 8: The Japanese "Plan" for a Post-2000 World

2. "Can Japan continue to be an island of prosperity in a sea of discontent"

3. Japan’s Isolation Policy Japan's economy and standard of living have skyrocketed over the past 4 decades. Japan is a tiny island in the large Asian block of countries. Japan has isolated itself from the rest of the Asian countries. Keeping all of the prosperity at home while many of the Asian countries starve.

4. Island of Prosperity Since 1945, Japan’s rate of creation wealth has been the fastest in the world. GNP has exploded: 1951 - The Japanese GNP was 1/3 of Great Britain’s and 1/20 of United States’ 1993 - 3 times Great Britain and 2/3 of United States

5. Island of Prosperity Social Harmony Cultural Uniqueness Strong National Identity Social and Racial Coherence Individual Sacrifice for the Good of the Collective

6. Sea of Discontent Can Japan remain isolationists when an increasingly large number of their Asian neighbors starve? In 25 years Asia's population is expected to be as high as 5 billion. A widening separation between the "haves" and the "have-nots." A more assertive and aggressive China. Severe North Korean hunger crisis which could lead to a war against South Korea Can Japan overcome a potential negative global reaction against their national protectionism policies, and dominating self proclaimed superiority?

7. Japanese Educational System (Positives) Teachers are highly valued. Learning is reinforced at home and with "crammers". Japanese study 220 days/year including Saturday half days. This compares with only 180 days in United States. By the time Japanese are 14 years old, they have as much education as a 17 or 18 year old American. Japanese students continue to outscore US and European students on standardized tests.

8. Japanese Educational System (Negatives) Subjects focus on factual acquisition rather than the free flow of debate and ideas. The rigid education is based on facts and group think. --not creativity This education style tends to lower creativity and self expression. This weakness later appears in Japanese factories and organizations. Higher education has also underperformed in creative research. As of 1987 Japanese had won only four Nobel Prizes in science compared with 142 for the United States.

9. Japan's Financial Strength Tax system encourages personal savings. Aging population and high cost of housing further promotes savings. Banks and insurance companies are flush with capital. Lending money at low interest rates to manufacturers. This gives Japanese companies a significant cost advantages over foreign rivals. The "Keiretsu" is a form of corporate shared ownership of many firms and banks. This shared ownership allows managers plan for the long term without regard for quarterly profits.

10. The Globalization of Japan Japan dominates many international market products and services. Highly integrated with western Pacific and east Asia. In 1991, 36 out of the world's top 100 companies were Japanese. 29 of the world's largest banks are Japanese. Germany has 12, France 10 and US and Italy have 9. 4 of the world's top 5 insurance companies are Japanese. The top 4 Security firms are Japanese. High Soft Power with IMF and World Bank. Global economic vulnerability has always been the price Japan has had to pay in achieving global commercial preeminence: and that vulnerability is, if anything, increasing.

11. Japan’s International Trade Strategy “Japan Inc.” avoids the rules of international free trade. Imposes Discriminative Tariffs. Manipulates the distribution system. Fixing contracts in secret. Buy technology -- and then dominate the production markets with exports. Establish global points of presence, in order to remove own barriers. Japan exports and Sub-contracts on a global scale. Perceived victim: US 40-50 billion dollar trade deficit

12. Japan's Long Term Growth Strategy Plan for decades in advance. Ignore quarterly profit reports. Increase capital spending. Japan's capital spending has exceeded that of the US in absolute terms. Invest heavily in education and Research & Development. Highest rate of qualified scientists and engineers. Over 800,000 Japanese are engaged in R&D, more than Britain, France and Germany combined. Switch to high value added products, and away from labor intense products.

13. Negative Aspects of Culture and Society Rigid Hierarchical Social Structure. Rigid social conformity to the point of repression of civil liberties. High Suicide Rate High cost of living and reduced purchasing power. Emphasis on national superiority transcends to a deep streak of racism. Reflected on views against Koreans, Chinese, American blacks, and other non-Japanese ethnic groups.

14. Negative Aspects of Culture and Society Enormous privileges to a select group of males who run the large corporations and bureaucracies, and control the ruling Liberal Party. Majority of population has cramped accommodations, excessive work hours, group calisthenics, and with the only consolation of national pride. Women are meant to take care of the home, manage the savings, and ensure the children's after-school education.

15. The Costly Life of Japanese Consumers Japan's Average per capita income is the highest in the world. But real purchasing power is diminished with higher living expenses, such as high prices on cost of food, consumer goods, land, and housing. Society is also behind in public facilities, sewage disposal and places of recreation.

16. Japan's Food Crisis Uncompetitive Farms translate into higher food prices. Restrictions on food imports worsens the dilemma. Japan is purchasing agriculture/biotech technologies to improve situation. Purchasing and managing beef farms in the US and at home. Japan’s food source is dependent on the rest of the world. In times of global crisis, food supply and prices could negatively impact their society.

17. Japan's Aging Population/What to do? Life expectancy in Japan has increased dramatically. From a life expectancy of 45 years to 76 years male, 82 years female. Total fertility rate has decreased to 1.5 births per woman. This is below the average 2.1 births per woman needed to maintain the population. In 25 years Japan will have the highest ratio of people over 65.

18. Japan's Aging Population/What to do? The use of robotics and automation of many processes. Allow Immigration only for scientists and engineers. Continued Outsourcing as a solution. Have women enter the workforce.

19. Do we want to a militarized Japan? No military spending. (Less than 1 percent of GNP) Accused of free loading on America's military supremacy. Extremely Efficient with a dominating mentality. Memories and feelings of the past still present. Japan has a proven record of imperialistic expansionist policies.

20. Japan: A Crisis in the making Extraordinary high property prices and almost equally inflated stock prices. Volatile paper assets used as collateral on real estate and overseas operations/acquisitions. Real Estate industry trouble could require major sell- offs to increase bank liquidity at home. Japanese pride and honor could result in an under- reporting of economic problems.

21. The Big Japanese Question: What should Japan do to maintain its global dominance? Switch to more value added products. Spend more and save less. Focus more on consumption, enjoy more luxuries, and be more cosmopolitan. Strive for less structured and hierarchical society. Reduce trade barriers for better public relations and lower consumer prices. Shift from an industrial base to a service based economy. Outsource low value added manufacturing. Some of these points would deviate from current Japanese philosophy.

22. Japan's Current Problem $600 Billion In Bad Loans Billions Of Additional Bad Loans Go Unreported Real Debt May Equal 250% Of Japan's Output (11 Trillion Dollars) Government Gridlock

23. What Needs To Be Done Leadership/Sacrifice Fix The Banks Change The Accounting Rewrite The Tax Code Audit The Government Stop The Market Rigging