Brief thoughts on JETRO’s February newsletter

February 12, 2009
By Ken Worsley

JETRO released its February newsletter a couple of days ago, and it beings with the statement, “Global financial turmoil combined with calls for new ways to manage an increasingly interdependent global economy are just two of many trends requiring companies, nations and consumers to reexamine previously held assumptions concerning their place in the world.”

This is obviously a broad swath to cover in one 13 page newsletter, but JETRO offers plenty of food for thought, and a viewpoint slightly detached from much of the media coverage we’ve seen thus far on both the global financial crisis and the US-Japan relationship.

The newsletter begins by affirming what we all know - that the ability of the US and Japan “to work together will have major implications - not only in promoting global economic recovery - but also in efforts to maintain growth in an increasingly integrated Asia.” This passage goes on to highlight the more positive aspects of the bilateral relationship.

Towards the end of the first page, an interesting sentence pops up: “The inauguration of US President Barack Obama as well as change in Japan - marks a good time to reevaluate the US-Japan relationship (sic).” Two questions: 1) What is this vague “change” in Japan that is mentioned? 2) Is it an anticipation of political change, or an acknowledgment of severe social and demographic forces altering the landscape of Japanese business?

The second section, entitled “Examining Current Turmoil Within Context of Japanese Experience,” begins with this:

Commonly-held assumptions concerning the underlying strength of the US economy, as well as the emergency of the BRIC’s and the theory of their economic decoupling were all severely tested last year (sic).

I do think JETRO is remiss in failing to point out that some questioned the underlying strength of the US economy before last year, and more significantly, that many (including myself) held no faith in the theory of decoupling, especially with the distribution of US Treasury debt as it is.

That’s only the first two pages. On page three, the newsletter goes on to describe what “lessons” the Japanese experience can offer the US today, and quotes the always relevant Richard Jerram of Macquarie Securities as pointing out that US authorities acted much faster in the face of the current crisis than their Japanese counterparts did in the months follow the bursting of the bubble. It would be interesting to see a discussion (theoretical as it may be) comparing the role of the US electoral system and the state of Japan’s parliament at the time when the bubble burst, but that would entail a much larger project.

Nonetheless, I feel that the US reaction to the current crisis will, in the long term, make us realize that it is not just acting swiftly, but also taking the proper actions, that will actually have the greatest benefit for the whole of the economy. If there is an economic categorical imperative, it does not show in the actions taken by the US thus far, and to what extent the role of partisan politics plays in this dissonance would make for an interesting debate.

I still hold that there is nothing positive to learn from Japan’s reaction to the bursting of the bubble, in terms of a road map taken then that should be followed now. There are only blatant mistakes that need to be avoided.

But I digress. The JETRO February newsletter is here.

Filed Under Business