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Transition to Post-WW II Era

Transition to Post-WW II Era. Defeat by Allied Forces in WWII, 1945 End Japanese colonial rule Taiwan— to Republic of China Korea—independent Break up zaibatsu  keiretsu. Transition to Post-WW II Era. US Occupation of Japan US seeks to break up zaibatsu Firms continue on as k eiretsu

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Transition to Post-WW II Era

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  1. Transition to Post-WW II Era • Defeat by Allied Forces in WWII, 1945 • End Japanese colonial rule • Taiwan— to Republic of China • Korea—independent • Break up zaibatsu •  keiretsu

  2. Transition to Post-WW II Era • US Occupation of Japan • US seeks to break up zaibatsu • Firms continue on as keiretsu • Example: Mitsubishi

  3. Nature of Japanese System, Post-WW II: Johnson reading • What are the elements of the capitalist developmental state model, according to Johnson?

  4. Nature of Japanese System, Post-WW II: Johnson reading • What are the elements of the capitalist developmental state model, according to Johnson? • Bureaucrats are elite • “Best and brightest” • Very competitive civil service exams • Tokyo University (established 1877) • Educate civil servants

  5. Nature of Japanese System, Post-WW II: Johnson reading • What are the elements of the capitalist developmental state model, according to Johnson? • Bureaucracy has authority

  6. Nature of Japanese System, Post-WW II: Johnson reading • What are the elements of the capitalist developmental state model, according to Johnson? • State policy is market-conforming

  7. Nature of Japanese System, Post-WW II: Johnson reading • What are the elements of the capitalist developmental state model, according to Johnson? • Exemplified by MITI • Ministry of International Trade and Industry • In 2001, MITI became METI • Ministry of Economy, Trade, and Industry

  8. Nature of Japanese Economic System, Post-WW II • Central role of economic bureaucracy • Industrial policy • Sector specific • Promote increasing sophistication • Textiles, consumer goods • Steel, machinery • Automobiles • High-tech • Semi-conductors • Robotics

  9. Nature of Japanese Economic System, Post-WW II • Central role of economic bureaucracy • “Administrative guidance” • “Mercantilism”

  10. Nature of Japanese Economic System, Post-WW II • World’s 3rd largest economy • Economy is highly efficient and competitive in areas linked to international trade, but productivity is far lower in protected areas such as agriculture, distribution, and services

  11. Review: Nature of Japanese System, Post-WW II • What are the elements of the capitalist developmental state model, according to Johnson? • Bureaucrats are elite • Well paid, recruited through merit, w/relevant skills • Bureaucracy has authority • State policy is market-conforming • Exemplified by MITI

  12. Nature of Japanese Economic System, Post-WW II • Close ties between government and keiretsu • “amakudari” (descent from heaven)

  13. Nature of Japanese Economic System, Post-WW II • Close ties between government and keiretsu • “Iron triangle” • What are the three parts of the “iron triangle”?

  14. Nature of Japanese Economic System, Post-WW II • Close ties between government and keiretsu • “ “iron triangle” business interests / \ bureaucrats __ politicians

  15. Recent Sources of Economic Stagnation in Japan • “Close ties between economic bureaucracy and corporations (including banks) under their regulatory jurisdiction…has contributed to Japan’s problems.” Source: Daniel Okimoto, Stanford

  16. “Suicide of one minister under a cloud of corruption (Agriculture Minister Toshikatsu Matsuoka) By July 8 even one of Abe's substitute ministers—Agriculture Minister Norihiko Akagi, named to replace the late Matsuoka—was mired in a fresh campaign-funding scandal. A recent survey by the YOMIURI SHIMBUN newspaper pegged Abe's approval rating at an anemic 32% TIME Thursday, Jul. 12, 2007 Japan: Abe on the Brink Abe's Agriculture Minister Matsuoka, under fire for accepting questionable political donations, died on May 28 at a Tokyo hospital after reportedly hanging himself

  17. Abe announced his resignation on Wednesday afternoon in Tokyo. While he [had] pledged to refocus in his new administration, the daily drip of scandals that forced the resignation of cabinet ministers and other party officials quickly ended any hopes for a fresh start. (There are now reports that Abe himself is involved in financial wrongdoing.) Sep 14, 2007 Japan's Abe takes one for the team

  18. Japan in the 21st Century Which theory best explains Japan’s economic stagnation 1990-2010?

  19. Nature of Japanese Economic System, Post-WW II • Weak position of organized labor • Company-based unions • Loyal to company not union • Ties to national federation of labor weak • Compare British and Japan as of 1980 • 60% of workers in Britain unionized • 30% of workers in Japan unionized

  20. Nature of Japanese Economic System, Post-WW II • Small welfare state • Social protection • Compare British and Japan as of 1990 • 25% of GDP spent on welfare in Britain • 10% of GDP spent on welfare in Japan

  21. Nature of Japanese Economic System, Post-WW II • “Dual economy” of large and small firms • Small, “satellite” firms • Employment • Women • Temporary

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