17th March 2000
Just when everything seems to be going right inthe American economy, Eamonn Fingleton steps to the plate. In Praise of Hard Industries is Fingleton's warning that America's foundation in key manufacturing industries is crumbling because of its focus on postindustrial activities such as finance, computer software, and Internet services. Currently based in Tokyo, Fingleton is a former editor at The Financial Times and Forbes. Amazon.com recently spoke with Fingleton about the loss of manufacturing in the U.S. and the real strength of the Japanese economy.
Amazon.com: What's the biggest reason that American business has let
manufacturing slip overseas? Is it the pressure from Wall Street for short-term
profits, which discourages the kind of investment necessary to promote a
manufacturing base, or government policy?
Eamonn Fingleton: It is ideology--the belief that if everything is left to
free markets, things will work out fine. That philosophy was sound in the
18th century and it still is today in many areas of economic policymaking
where the matters at issue are purely domestic. But, given that we now must
contend with a highly globalized market in advanced manufactured goods, a
complacent laissez-faire approach is a recipe for allowing foreign governments
the right by default to shape America's future economic destiny. Other nations
have identified key advanced manufacturing industries as pillars of their
future prosperity. The immediate result is that margins come under severe
pressure in such industries. Obeying the laws of the market, American players
cut back on investment and begin sourcing more and more from abroad, to the
point where today many of them are little more than design and marketing
operations. I won't mention any names, but anyone who analyzes U.S. trade
figures can easily see that most of America's formerly world-beating high-tech
manufacturers are now hollowed-out hulks that depend heavily on higher-wage
nations for their most sophisticated manufactured inputs. The most obvious
such nation is Japan. Despite everything you have heard about Japan's financial
difficulties in recent years, Japanese wages are 20 to 40 percent higher
than American levels. Yet Japan is the principal source of the components
and materials and entire finished products that make up such a big part of
America's supposed manufacturing output these days.
Amazon.com: Is globalization an excuse for American business to focus on
short-term profits?
Fingleton: In globalized conditions, American corporations often stand to
gain handsomely from sourcing abroad even as they lay off thousands of American
workers. In the electronics industry, for instance, the big American players
have increasingly been sourcing from the Japanese. The result is that they
have moved from what was a bitter competitive relationship to a cozy cooperative
one. In effect there is a global division of labor here in which the Americans
come up with designs and do the marketing and the Japanese do all the heavy
lifting in terms of devising ways to mass-produce the products to high-quality
standards and competitive prices. The net effect has been a powerful boost
for the Americans' profit margins. But you don't create a rich nation merely
because your big corporations make fat margins. Just ask the Mexicans. What
is being forgotten here is that the United States is falling rapidly down
the wage league. I don't blame the corporations, because they are preprogrammed
to maximize their profits. But the media, which should look out for society's
overall welfare, should be pointing out that, at current exchange rates,
the United States now lags behind several manufacturing-oriented nations
in wages. Not just Japan and Germany but countries such as Singapore and
Denmark.
Amazon.com: The picture of Japan that most Americans see is that of a very
sick economy. Typical of this view would be Lester Thurow's when he writes,
"Japan is the sickest country on the Pacific Rim. Japan's crash occurred
in 1990, yet eight years later it has made no progress toward recovery" (from
Building Wealth). Your picture of the Japanese economy is much different.
What gives?
Fingleton: What gives is that I have been in Tokyo since 1985 and, therefore,
have a big advantage over Lester Thurow. Although I have the greatest respect
for him, in writing about Japan, he is a victim of what he reads in his morning
paper. The American press has imagined that because Japanese stocks staged
a 1929-style crash, the Japanese economy should follow the American script
of the 1930s. This logic does not apply at all, because the Japanese economy
is so different. I was one of the few commentators who predicted the crashes
in both Japanese real estate and stocks and I can therefore claim to understand
what has been going on better than most. The truth is that although a tiny,
if highly visible, minority of previously plutocratic Japanese citizens has
been impoverished by the financial turmoil, the vast bulk of Japanese people
have never had it so good. Just look at the quality of the cars on the roads
in Japan these days. Look at how many more Japanese citizens are taking foreign
vacations these days. The numbers are up nearly 70 percent since the 1980s.
The American press ignores all the real numbers on Japan. As the Economic
Policy Institute economists John Schmitt and Lawrence Mishel have pointed
out, in the first eight years of the 1990s, per-capita gross domestic product
actually grew faster in Japan than in the supposedly booming United States.
Amazon.com: The subtitle of your last book, Blindside, was "Why Japan Is
Still on Track to Overtake the U.S. by the Year 2000." Do you stand behind
this prediction, and, if so, in what ways will Japan overtake the U.S.?
Fingleton: As conventionally defined, an economy's size is its total output
converted at current exchange rates. Thus, on a conventional view, the dollar
would have to fall to around 70 yen for my prediction to be fulfilled. Although
I am strongly bearish about the dollar over the longer term, I doubt we will
see a move on this scale so quickly. That said, on several other measures
of economic clout, many of them more important than this conventional yardstick,
Japan has indeed passed the United States. Take savings. In 1997, the latest
year available to us, Japan accounted for more than one-third of the OECD
area's savings. By contrast, the United States accounted for less than
one-quarter. Japan has now also passed the United States in net exports,
that is, exports netted for imported content. Perhaps the most stunning way
in which the United States has lost ground to Japan in recent years has been
in the ability to project economic power abroad. On the IMF's figures, Japan
increased its net overseas assets from $294 billion to $891 billion in the
first seven years of the 1990s. The story for the United States was very
different. The United States, of course, no longer has net foreign assets
but rather net foreign liabilities. And these ballooned from $71 billion
to $831 billion in the first seven years of the 1990s. These figures are
of profound historic importance, yet, as far as I know, not a single American
media organization has noticed them.
Amazon.com: You view the software industry as the quintessential postindustrial
business and yet find its growth prospects in this country vastly overrated.
Why?
Fingleton: There is no doubt software has grown enormously in recent decades.
What concerns me is the industry's ability to export. American software exports
are quite disappointing, given the industry's size. The industry's export
prowess has been seriously impaired by foreign piracy, among several other
things. Another reservation I have concerns the long-term outlook for American
software wages. Software is a very labor-intensive industry, and with the
plummeting of international telecommunications costs in recent years, American
software companies are beginning to shift jobs to low-wage countries such
as India, Russia, and even China. It is notable that Japan has made little
effort to develop its software industry in recent years, and the reason is
that the Japanese realize that a high-wage economy has a much better chance
of retaining and enhancing its international competitiveness if it emphasizes
manufacturing rather than postindustrial businesses. The reason is that
manufacturing, at least the sort of manufacturing the Japanese do, is highly
capital-intensive, and in capital-intensive industries, a high-wage economy
can enjoy huge productivity advantages that enable it to pay ultra-high wages
and still dominate world markets.
Amazon.com: You're not very kind to the financial-services industry in this
country. You call it the cuckoo in the economy's nest.
Fingleton: In a previous life, I worked on Wall Street, so I know that the
vast majority of Wall Street people are decent and well-intentioned. But
Wall Street is one of the key ideological mainsprings of the complacency
that has persuaded the United States to acquiesce in the wasting away of
its once world-beating manufacturing prowess. I am also critical of Wall
Street for the explosion in financial activity that has followed deregulation.
Take the many new financial instruments that have been invented in recent
years. As Warren Buffett has pointed out, their main effect is to tempt people
to speculate, and, therefore, in general they serve little or no purpose
other than to line Wall Street's pockets.
Amazon.com: What about the valuations in the U.S. market. Do you see a big
shakeout coming?
Fingleton: U.S. stock market valuations are very high. Although I would not
rule out at least one more upward leg to the boom, anyone investing at these
levels will be disappointed with the performance over the longer term. That
said, I am not among those who are predicting a Tokyo-style crash for Wall
Street. My guess is that any landing will be a soft one and there is still
plenty to go for, among certain small-cap stocks.
Amazon.com: Is it time for Americans to invest abroad--Japan, in particular?
Fingleton: I turned publicly bullish about Japanese stocks in October of
last year after nearly a decade of bearishness. With the market up 30 percent
since then, that seems to have been a well-timed call, but I would not be
surprised to see a serious pullback soon. I would also caution that Japanese
stocks are difficult to analyze and pay at best tiny dividends. Nevertheless,
I am bullish long-term. But the really smart American money these days is
bypassing Japanese stocks for Tokyo real estate, where solid rental yields
of 5 percent and higher are available.
Amazon.com: What will change the perception about the importance of
manufacturing?
Fingleton: That is a good question, and I'm afraid I don't have an answer.
It will take a major shock. A devastating crash on Wall Street might do it,
or a sharp rise in American unemployment. But I don't think shocks on this
scale are in the cards in the foreseeable future. By the time the American
media and the intellectual community wake up, I think, it will probably be
too late.
Amazon.com: What do you like to read?
Fingleton: I spend much of my time keeping up with my own field of global
economics, which I find completely engrossing. I am an admirer of J.K. Galbraith
and recently began rereading his great early work American Capitalism. Among
the younger generation of economic commentators, I particularly like the
work of James Fallows, Robert Kuttner, Jeff Madrick, Lester Thurow, George
Soros, and the British management commentator Robert Heller. On Japanese
issues, I like the work of Pat Choate, Ivan Hall, Brian McVeigh, Clyde
Prestowitz, and Iris Chang. In my spare time recently, I have been reading
biographies. I particularly liked Ron Chernow's recent biography of John
D. Rockefeller and Robert Skidelsky's two-part biography of John Maynard
Keynes. I am currently reading Robert Kanigel's biography of Frederick
In Praise of Hard Industries: Why Manufacturing, Not the Information Economy, Is the key to Future Prosperity by Eamonn Fingleton ---------------------------- Reviews Amazon.com
The supertanker is the image that has come to symbolize America's economic might over the last decade--rock solid and steady. Low inflation, high productivity, and a booming stock market have combined to help create one of the most prosperous periods in American history. But Eamonn Fingleton would argue that this ship is steering the wrong course, and that lurking just below the waterline are some troublesome leaks.
Fingleton argues that American business is sacrificing its once valuable manufacturing base in favor of the new economy, or postindustrialism--an umbrella under which he includes the service, software, information, and entertainment industries, among others. While he writes that he does not seek to dismiss the merits of postindustrialism--although he calls the financial-services industry a "cuckoo in the economy's nest"--Fingleton finds fault with the new economy in three areas: the mix of jobs it produces, its slow income growth, and the fact that postindustrial activities don't export very well. At the same time, he believes that modern manufacturing has become wrongly associated with low-wage or stagnant economies--Japan, in particular, which, he argues, is not the basket case that many believe it to be. At the heart of Fingleton's argument is the idea that postindustrial activities are relatively easy to pursue compared to manufacturing, which requires much more capital and know-how but offers far more upside in the long run. His prescription for revitalizing manufacturing includes boosting savings, directing much of it into industrial investment, and instituting a trade policy designed to allow manufacturing to thrive in the United States.
While Fingleton's dour assessment of the new economy seems overdone, his basic argument about the relative worth of manufacturing is well articulated. In Praise of Hard Industries is a good contrarian read for policymakers, managers, and anyone interested in a different view of both the U.S. and Japanese economies. --Harry C. Edwards
Publishers Weekly: "Bolstered by close analysis and chock full of intriguing examples of manufacturing triumphs and untapped opportunities, Fingleton's sobering report deserves close scrutiny by CEO's, labor leaders and policy makers."
Library Journal: "Fingleton soars beyond today's major media dependence on glib business hype to pose a different economic future for the United States....An important work."
From Booklist , September 15, 1999: Business journalist Fingleton casts a critical eye at the enthusiasm that anoints computer, financial, and other services as worthy wealth-creating successors to the industrial economy. He argues that they will skew the job mix in favor of the highly educated, while the rest tend coffee bars. As bad, in his view, information services cannot export enough to arrest America's relative decline in the world economy. The examples adduced to support this are sharply argued--computer software, for example. It takes intensively trained people to make it, but once made, software can be easily pirated. Further, programming services themselves can be bought abroad; Ireland and India are up-and-coming suppliers. Turning to finance, Fingleton views dimly the sector's claims that their expertise advances the globalized economy. From such skepticism, Fingleton converts to optimism when contemplating manufacturing, specifically that of high-value, high-tech electronics, examples of which he pulls from Japan, his reporting base. For those dubious about the march of laissez-faire, Fingleton provides an info-packed argument with a nationalistic, Buchananite accent. Gilbert Taylor
Copyright© 1999, American Library Association. All rights reserved
From Kirkus Reviews: An economic polemic arguing that the information age is an overblown phenomenon. Fingleton, who has written previously about Japans manufacturing culture (Blindside, 1995), this time explores the hidden failure of American nonmanufacturing industries (using Japan as his major foil). Singly and in aggregate, the author discounts the apparent successes of the computer software, finance, and entertainment industries, among others. In comparison, he claims, traditional manufacturing industries, such as automobiles and steel, may have weaknesses, but their potential has been unfairly overlooked. Fingletons main point is simple: manufacturing is an efficient generator of jobs, income, and export wealth. Look at the success of postwar Japan, he invites us, excusing its economic travails of the 1990s as exaggerated by Western powers. Whatever the merits of this argument, they are wounded by Fingletons unrelenting attack on ``postindustrialists,'' modern bogeymen who tout the wonder of the information economy while ignoring the rusting industries of the past. These demons include named sourcesindividual economists, futurists, and publications like the Economist and the Wall Street Journaland amorphous groups such as the media, depicted as dupes and fawning supporters of the postindustrialist mantra. The press, for example, is blamed for portraying manufacturing as a ``consistently dull activity worthy only of self-evident second-raters.'' The author has credible ideas and offers reasonable descriptions of economic activity, yet readers may have difficulty believing someone whose political biases are so flagrantly exhibited. For example, Fingletons complaint that powerful Microsoft and other software companies are guilty of ``exclusionist hiring'' seems merely bizarre when we discover that what he means is, these firms insist on hiring very smart people (``workers of average intelligence need not apply''). At the end, the author reveals his hidden agenda: the need to resurrect tariffs, because ``good fences make good neighbors.'' Fingletons novel promotion of the value of manufacturing is crippled by unbalanced coverage and patronizing insults. -- Copyright ©1999, Kirkus Associates, LP. All rights reserved.
Business 2.0: "...In Praise of Hard Industries may shock anyone who feels the machinery of the information economy could not be running smoother...Fingleton does readers service in opening their eyes to more economically grounded solutions than the platitudes and hype of the Internet."
The Industry Standard: "Fingleton argues that the Web is unlikely to prevent the United States from losing ground to its competitors."
Book Description: Challenging conventional wisdom, Eamonn Fingleton argues that manufacturing expertise -- not the new information economy -- is crucial to jobs, exports, and growth. It is universally accepted that the future of the U.S. economy depends on its successful adaptation to a postindustrial, information-based global economy. The same conventional wisdom says that advanced economies should abandon manufacturing in favor of information-driven services such as finance, entertainment, and software. In this surprising and provocative book, the acclaimed financial journalist Eamonn Fingleton demonstrates that by every measure, including high-wage job creation, contribution to national income, and balance of trade, the manufacturing sector outperforms the "new economy." In Praise of Hard Industries argues with compelling logic that America's long-term economic success depends on its strategic advantage as a manufacturer of sophisticated equipment and producer goods.
Blindside : Why Japan Is Still on Track to Overtake the U.S. by the Year 2000
by Eamonn Fingleton----------------- Reviews Amazon.com
In the first four years of this decade, Japanese exports rose 32%, the yen rose 27%, and Japanese employers created a net 3.2 million jobs. Though Japan is now the world's largest manufacturing economy, Fingelton argues that Americans are still underestimating the country's economic prowess.
"This provocative and informed analysis is an antidote to the recent flurry of critiques that see Japan's current economic troubles as the same old omens of decline." --Publisher's Weekly
"... a crisp, well- written, well-executed alarum." --New York Times Book Review
From Booklist , February 15, 1995: Catalogers may have to dust off the discredited--and racist--Library of Congress subject heading "yellow peril" for this one. Because there have been a number of recent articles and books about the "bursting" of the Japanese "bubble economy," Japan bashing has been on the wane. But now Fingleton suggests that Japan's Ministry of Finance has manufactured the image of a faltering economy simply to deceive the West as part of a cunning strategy aimed at economic superiority. The author was the Tokyo-based editor of Euromoney and was also previously an editor at Forbes and The Financial Times. He does document the strengths posted by the Japanese economy even during one of the worst global recessions, and he shows how Western observers have consistently underestimated and misunderstood Japan. Fingleton also provides a clear explanation of Japan's managed economy, which he describes as neither capitalism nor socialism--nor, as some suggest, a blend of the two. He argues that Japan has succeeded and will continue to succeed economically by setting limits on the economic freedom of its own citizens, but it is his premise--that Japan's goal is economic domination--that will create attention and controversy. David Rouse
Copyright© 1995, American Library Association. All rights reserved
Revealing traditional Japanese strategies that label the nation's current recession as a deliberate misconception, an examination of Japan's emerging role in the global marketplace predicts that Japan will overtake the United States's economic status. The conventional wisdom is wrong, says Fingleton. Contrary to what we hear, the Japanese are not in an economic slump and are, in fact, poised to overtake America economically by the century's end. Fingleton reveals how the Japanese have intentionally cultivated the image of a sickly economy in order to claim the lion's share of the world's economic growth.
The author, Eamonn Fingleton (efingleton@hotmail.com), comments , July 30, 1999
"BLINDSIDE" REVISITED: THE CASE STANDS
As of the late 1990s, the American economy continues to boom and America’s unemployment rate is at its lowest level since the early 1970s. Meanwhile the Japanese economy is reported to be stagnating and Japan’s unemployment rate is at a post-World War II high.
For me as the author of a book that argued in 1995 that Japan was on target to pass the United States in economic prowess by 2000, these are not auspicious facts. So is it time I threw in the towel and admitted I was wrong? Hardly. In reality, I have seen nothing in the last four years to make me reconsider any significant aspect of the Blindside argument. Quite the contrary. My point in 1995 was that American press commentators were garbling many of the key about the Japanese economy in the 1990s. They still are.
Their main mistake is that they utterly exaggerate the extent to which Japan’s well publicized financial problems have undermined the wider Japanese economy. As one of the few Tokyo-based commentators who predicted both the Tokyo banking crisis and the stock slump, I can claim to be better informed than most on the nature of the financial problems: my analysis shows that though these problems have been a disaster for a small minority of erstwhile plutocratically rich Japanese citizens, most of the rest of the Japanese population have been unaffected by the problems and indeed have seen a large increase in their standard of living in the 1990s.
Consider some facts that the American press consistently overlooks in its constant portrayals of Japan as a fallen giant:
For American policy-makers this latter point is crucial — and its significance can hardly be exaggerated. And the result is abundantly apparently in Japan’s current account surpluses, which in the first eight years of the 1990s ran fully 2.6 times their level in the first eight years of the 1980s. The full significance of this is apparent only when you remember that, other things equal, every extra dollar that a nation earns in foreign trade represents an extra dollar added to its external assets. Hence the fact that, on the IMF’s figures, Japan increased its net overseas assets from $294 billion to $891 billion in the first seven years of the 1990s. In the same period, America’s net overseas liabilities ballooned from $71 billion to $831 billion... In the long run this divergence in the two nation’s external positions will be just about the only thing that historians will remember about U.S.-Japan economic rivalry in the 1990s — but it was the one thing that Western observers utterly overlooked at the time.
For a more complete update on the reality of the Japanese economy in the late 1990s, see my website or refer to chapter 8 of my new book, In Praise of Hard Industries (Houghton Mifflin, 1999).
Eamonn Fingleton, Tokyo 108/E-mail: efingleton@hotmail.com
---------------- Customer Comments Average Customer Review: [3.5 out of 5 stars] Number of Reviews: 9
A reader from Los Angeles, California , September 30, 1999 [1 out of 5 stars] A Very Disappointing Book... Writing in The New York Times Book Review in 1995, “Adam Smith” refers to Blindside as an “alarum.” He is far too generous. That this unbalanced collection of anecdotal reasoning, historical inaccuracies, and revisionist tripe managed to capture the imaginations of so many respectable thinkers wishing to keep the “economic juggernaut” flames alive in the Nineties speaks volumes as to the extent of the ideological problems within Japan Studies. Thankfully, with 92 days remaining until the end of Mr. Fingleton’s punditry career, protectionists, mercantilists and AFL-CIO members will have to look elsewhere for indirect justification of their own political views. Despite Mr. Fingleton’s assertion to the contrary, Japan will not be “overtaking the U.S. by the year 2,000”_if ever. Reality beckons.
A reader from Dallas, Texas , August 28, 1999 [5 out of 5 stars] A Masterpiece. "Blindside" is a tour de force. When I casually picked up this title in a bookstore, I really didn't care much about the topic of economics (or Japan, for that matter). But after reading this absorbing, utterly fascinating book, cover to cover, I found myself reading it again. And again. Fingleton makes an absolutely iron-clad case for the superiority of the Japanese economic model. As it turns out, the Japanese system was specifically designed (and brilliantly so) for the demands of the Information Age. By contrast, the U.S. is still mired in the hopelessly dated, utopian, and simplistic ideas of Adam Smith-style free market theories. Fingleton convincingly explains why Smith's 18th century ideas are less relevant than ever in today's economy. "Blindside" effectively demolishes the "free market" ideology that myopic Western economists espouse these days. It convincingly shows how the U.S. is squandering its lead, just as Britain did in the early part of the century. And it convincingly shows how a smug (and inept) Western media is badly misleading the public about Japan's supposedly weaknesses in the 1990s.
A reader from Japan , July 31, 1999 [1 out of 5 stars] Pure Rubbish! This book is truly looking at Japan through sakura-colored glasses. Nothing close to this fluff has been published since Herman Kahn in the 1970's. Somehow we're supposed to believe that Japan, in its worst economic crisis in FIFTY years, is supposed to economically overrun the U.S. in less than TWO. Well, if you're "persuaded" by that, I have some nice beach-front property in Arizona to sell you cheap. It's ironic that the media praising this book to the skies have never lived in Japan, don't work for a Japanese company, can't speak the language, and know little of the Japanese system. Mr. Fingleton attacks western economists as all myopic dolts (he doesn't say much though about the Japanese economists who largely agree with them though). All of the Japan's miseries above are all just part of a Master Plan to fool the West before Japan races ahead of the world. He puts forth lots of facts and statistics, yet constantly draws the wrong conclusions. He says more Japanese buy diamonds than Americans, a fact in a vacuum that may be true. But to conclude by such that Japanese are now more affluent is absurd--it ignores consumer preferences--such as Americans would prefer to buy something else. Most of his other arguments have already been debunked by other authors. If this book has any value at all, it's not to count the Japanese out--even if they're not going to own the world. I've worked in Japan for 11 years now and I can tell you that Fingleton's rosy predictions aren't going to come true any time soon, if ever. But don't take my word for it--ask those in the Dead Fukuzawa Society, an e-mail discussion group of western and Japanese economists, financial experts, and ex-pats in Japanese corporations (and Fingleton himself is a member). More than a few have attacked the book as pseudo-intellectual rubbish. Not a single member of the 500 people have defended Fingleton's conclusions. But better yet, ask the Japanese themselves. They know their own country better than anyone and you don't see ANY of them rubbing their hands together, gloating about how they're going to storm the U.S. If you really want to learn about Japan, try reading Van Wolferen's "The Enigma of Japanese Power" or John Woronoff's "Japan - As Anything But- #1". They are far less flattering yet far more realistic books on Japan. But skip this lopsided, erroneous book on Japan.
A reader from Wall Street , January 2, 1999 [2 out of 5 stars] Isn't it time to stop worrying about the Japan threat? This is another in a long line of "mercantilism" books on how other nations are going to overtake the US. These books view global economic activity as a zero sum game in which nations gain only at the expense of other nations. This idea fell out of favor in the economics profession in the 1700's but remains a favorite in pop economics. In fact we benefit from economic prosperity overseas: it means better, cheaper goods for us to buy and growing markets for our goods. Unfortunately, as recent experience atests, the Japanese have done a great job of producing and marketing industrial products, but have never put together a modern financial/service sector. Japan's economic demise is drag on the global economy and if the global economy is to right itself, we can only hope the title to this book is correct!
J. Friedrich from Tokyo , May 3, 1998 [5 out of 5 stars] Required Reading: A Very Important Book Fingleton is an alarmist, but that does not detract from his overall message. Alarms exist for a reason. Controversial books will always draw the ire of the mainstream, and this book is no exception. While Fingleton's specific numerical predictions (e.g., "The Year 2000") may fall short at times, this does not detract from his overall thesis. As an American residing in Japan, I have often marveled at the paradox of a Japan "suffering through a lethal recession" while still enjoying lower unemployment figures than those of the US, which is currently experiencing a resounding economic "boom". Having experienced the US recession in the early 1980's, I can personally attest to the fact that what is happening in Japan today is a "horse of a completely different color". In fact, using the standard definition of "recession", i.e., two straight quarters of economic contraction, the Japanese economy is not even in a recession, never mind a "lethal" one. Japan has yet to experience even a single quarter of economic contraction. Fingleton attempts to explain the current situation and why the West, and the US in particular, have consistently underestimated Japan's strengths and miscalculated her intentions, often with diasasterous consequences.
To quote author James Fallows:
"A generation from now, readers will recognize 'Blindside' as having offered crucial and prescient guidance... Those who read it now will be ahead of the game."
Highly recommended. For additional reading on the subject, I also recommend R. Taggert Murphy's "The Weight of the Yen".
mmcdonald@123go.com from Fort Worth, Texas , November 1, 1997 [5 out of 5 stars] Blindside: A visionary book. "Blindside : Why Japan Is Still on Track to Overtake theU.S. by the Year 2000" by virtue of its title alone has a lot to live up to. What makes this brilliant book succeed is that author Eamonn Fingleton not only sounds the warning that America is about to be eclipsed, but he convincingly explains WHY. Fingleton persuasively argues that the Japanese economic model is not capitalism at all, but is an entirely new economic system that is much better suited to cope with the new demands of the Information Age. In describing Japan's new economic model, Fingleton effectively demolishes the conventional wisdom that "the service economy" is the wave of the future for industrialized societies. Indeed, it is impossible to read "Blindside" and not feel that the U.S. has made a critical mistake in allowing the Japanese to capture an ever-increasing share of critical high-tech manufacturing sectors. Far from a dry economic study, though, "Blindside" excels as compelling reading. Fingleton delves into Japan's history in his attempts to explain why the nation's leadership behaves the way it does. The book races along like a Michael Crichton thriller, thanks to Fingleton's vivid, colorful (but extraordinarily well-documented) prose. Perhaps the highest praise one can bestow on "Blindside" is the fact that the book has been vindicated already. Much of what Fingleton predicts, from Japan's ever-widening trade surplus to its increasing clout on the world stage, to America's futility in "reforming" Japan's bureaucrat-driven economy have proven to be true. Indeed, at current growth rates, Japan is still on track to overtake the U.S. in three short years as the world's dominant economic power. If that prospect worries you, read "Blindside." It'll give you insights into what Japan is doing right and what the U.S. is doing wrong and what the U.S. needs to do to counter its steady decline as a world power. Whether we want to believe it or not, Japan's economy, not that of the U.S., is the role model for most of the fastest-growing nations on earth. As Fingleton convincingly argues, the U.S. will be no match for Japan as long as we cling to outdated and simplistic free market ideas.
A reader from Japan , September 6, 1997 [5 out of 5 stars] Money makes the World go round but BLINDSIDE explains why! It is very difficult to usefully understand anything(the tree`s) unless one has an overall view (the forest) of what is going on. Fingleton has written a book which cuts through all the PR and armchair magazine analysis that has been done on Japan to produce a work which should be read by anybody who is wondering why they have been laid-off or why their garduate daughter can`t get a job. In my opinion his analysis goes a long way towards explaining why Japan will be economically stronger than many countries in the near future. I especially liked the way in which his opinion`s were balanced and pointed the finger at Western countries, particularly, America, for being slow to adapt to Japan`s revolutionary economic structures
A reader , June 21, 1997 [4 out of 5 stars] Inside the Puppet Kingdom - From Tokyo Journal Magazine - www.tokyo.to By Robert Guest. The stockmarket is sinking into Tokyo Bay, like a yakuza in concrete geta. GNP is growing like rice planted in a desert. Honda’s stopped hiring, bad debts are menacing several medium-sized banks, and analysts are whispering that the entire financial system might be on the verge of collapse. This is probably not the best time to be publishing a book about the invincibility of the Japanese economic model. But that is exactly what Eamonn Fingleton, former Tokyo correspondent of Euro Money, has done.
Blindside is turning out to be this summer’s beach reading for bright young Japanologists everywhere. At elite private seminars, and on the Internet, young men with joint Japanese/Economics degrees and prominent Adam’s apples are excitedly picking over Fingleton’s thesis: that Japan is poised to overtake the United States as the world’s largest economy by the year 2000. This is what’s politely called a "brave" argument. In other words, almost no one agrees with Fingleton. "Japan seen sliding into second recession," ran a recent headline in the Financial Times; "Crisis Among the Rabbit Hutches," observed the Sunday Telegraph. But Fingleton tackles the doom-merchants head on, with some perceptive observations about their over-reliance on Western securities analysts (who tend to be conventional free marketeers), and ignorance of Japanese economic history. "Some systematic flaw in Western psychology," he believes, "leads Westerners, and particularly Americans, to exaggerate Japan’s weaknesses and belittle its strengths."
We all know that Japan rose from the rubble of defeat and transformed itself, phoenix-like, into the world’s second biggest industrial power etc., etc. Where scholars, journalists and shot-bar bores are unable to agree is how the miracle occurred. The debate works something like this. On one side are those who reckon Japan got to be super-rich for very straightforward reasons: everyone worked hard, and the government orchestrated sensible macro-economic policies like keeping inflation down. This is the conventional, free-market view. Opposed to it is that of the revisionists. Chalmers Johnson, the granddaddy of them all, pointed out a decade and a half ago that the Japanese government intervenes in its economy, and that these interventions seem to make rather a lot of difference. He argued that when those clever bureaucrats at MITI organized low-cost finance for high-tech industries, tolerated cartels, and gave an implicit guarantee that no big company would be allowed to go bust, it was the cozy confidence these policies fostered which allowed the bubble to expand so unstoppably.
Fingleton stands back to back with the revisionists, and in some ways overshadows them. His prose is fizzier and more arresting than scholarly Professor Johnson’s, and commands a wider sweep than trade-negotiator-turned-sanctions-hawk Clyde Prestowitz. In brutal summary, he believes that the Ministry of Finance (whose top bureaucrat has almost as much power at his disposal than the President of the United States) interferes with people’s lives in such a way as to make everyone richer in the long term. For an economy to grow, you need investment, and for investment you need capital. The MOF sees raising capital for industry as its most important task, and it gets its hands on the stuff by taking it from you and me. If we put our hard-earned yen into a Japanese bank, we earn lousy interest, because the boys at MOF want banks to lend money cheaply to the likes of Mitsubishi and Toyota. If Junichiro Sixpack wants a loan to build an extension to his four-and-a-half mat, he can’t have one. If he wants to take his money out of the bank after 7pm, he can’t do that either, because MOF wants to make it hard for him to spend and easy for him to save. The will to save explains a lot about Japanese government. Why do we have trade barriers? Because they reduce the range of goods on Japanese shelves, thus dulling Junichiro’s desire to go shopping. So he saves his money instead.
Such is the power of the sinister MOF that it can make politicians pass laws that their constituents hate. No one in the Diet wanted the consumption tax, but they voted for it anyway. When former Prime Minister Yasuhiro Nakasone made a stand, MOF had investigators look into his murky campaign finances, and forced his resignation. Politicians with equally grubby hands, but who supported the tax, were left alone. The consumption tax discouraged consumption, thus encouraging saving, thus giving industry more money to invest . . . which is what the Ministry of Finance wanted all along. Bureaucratic brilliance is probably what allowed Japan to catch up so rapidly with the west—Fingleton is also right to point out the way in which South Korea has copied the Japanese model with such success. But at a time when the economic backroom boys—on both sides of the Sea of Japan—are pulling back from the economy, and undoing the old control mechanisms, Fingleton is struggling against the tide. As a work of theory, Blindside is readable, engaging and thoroughly recommended; as a chart for the stratospheric future rise of the Japanese economy, it is either a work of a busy ima
A reader , February 25, 1997 [5 out of 5 stars] anglo-america is still blind. Great book. I saw something on TV the other day about the Japanese conquest of Malaya and how the British underestimated the Japanese. Apparently we still do. Also as someone who speaks Japanese semi-fluently, it still amazes me to how little this culture and language is understood. Japan's economy is bigger than France, Italy and Germany's put together and whose languages we usually study. And actually I just wanted to see when this book might come out in paperback. Please let me know when it does at my e-mail address.