Reviewing Earlier Calamity
to Understand the Present
Bill Totten
[Part 2 of 4 of Our World, 11 March 1999]
One of my deepest impressions from reading about the atomic
bombing of Hiroshima is that the victims had no idea what was
happening to them, and continued to be unaware for several days
after the bombing. Because it was the world's first atomic bombing,
the victims were hit by a weapon of which nobody else had endured or
been forewarned. Suffering from war, fire, earthquakes or other
natural disasters has to be entirely different from being hit by
something new that nobody else has ever experienced, anticipated or
discussed. Attempting to understand the nature of what the people of
Hiroshima suffered in 1945 might help us comprehend what is
happening to us now in 1999.
I think Japan's current economic maladies have been caused by two
calamities completely new to mankind. Neither of these calamities
has ever afflicted any other nation; at least, neither has been
recognized as such. Neither has been anticipated, analyzed or
discussed by economic pundits our leaders trust and follow. As a
result, our leaders and their pundits, failing to recognize that our
economy is afflicted by completely new calamities, are trying to
cure our afflictions with remedies that are obsolete, ineffective
and, in fact, deleterious.
In this essay I'll address one of these new calamities: economic
warfare. I'll address the second calamity in the next Our World
installment.
New Type of Economic Warfare --
Many Japanese these days remind me of Monica Lewinski. They think
and talk of the United States as their nation's partner, just as
Monica thought and talked of Bill Clinton as her partner. Just as
Bill only exploited Monica for sexual favors, the United States
exploits Japan for military, political and economic favors. Why
can't Japanese see that their nation's only partnership with the
United States is that of a subordinate partner, just as Monica's
only partnership with Bill was that of sex partner? When has the
United States ever treated Japan as an equal, rather than as junior
partner?
What has the United States ever done that benefited Japan as much
as the United States itself benefited? What has the United States
done for the benefit of Japan rather than for itself?
Most of us now in Japan don't seem to comprehend that the United
States is, at this very moment, once again waging war against Japan.
We don't comprehend this situation because it is an entirely new
kind of war, a war that no one else has ever experienced: an
economic war. This is a war fought with financial instead of
military weapons, with dollars instead of bullets, with mind control
instead of physical coercion.
Perhaps a good way to convince readers who doubt this is to
present the facts just as a lawyer would present facts in court to
prove a case. A lawyer would have to prove that a crime had been
committed, that there was a motive, and that there was convincing
evidence to show the accused had committed the crime. If we
juxtapose the relationship between the United States and Japan onto
this scenario, we should consider that Japan is suffering now from
the economic war being waged on it by the United States, and we
should consider why and how that war is being waged.
Devastation from the United States'
Economic War on Japan --
First, let's look at the evidence that proves Japan is suffering
from an economic war being waged on it by the United States. Japan
is suffering the worst rash of bankruptcies, both in the number of
companies going bankrupt and in the amount of debts those companies
leave behind, since such records began being kept after World War
II. The primary cause of these bankruptcies is starvation of funds:
while Japanese citizens continue to save more of their incomes than
citizens of any other nation, Japanese banks are loaning and
gambling those savings overseas, primarily in the United States,
instead of loaning them to companies in Japan. Bankruptcy -- and
fear of bankruptcy -- have prompted companies to cut back on
employment, causing the worst unemployment on record. Unemployment
continues to climb. Since only 80% of this year's graduating
university students have found jobs, the unemployment rate can be
expected to jump dramatically this spring. Unsurprisingly, the
number of suicides attributed to economic failure is the highest on
record.
This economic devastation is widely attributed to the bursting of
Japan's so-called "bubble" of the late 1980s. To the
extent that this is true, I believe the real cause of the current
crisis is the servile capitulation of Japanese leaders to pressure
from the United States. Until Japan's government caved into US
pressure to relax capital controls in the early 1980s, Japanese
companies were able to borrow most of the funds they needed from
Japanese banks. In other words, Japan's own financial system
financed the greatest "economic miracle" in the history of
mankind, and did so efficiently and equitably. Citizens saved
frugally, largely because banks paid them attractively high rates of
interest for depositing their savings. The banks were able to pay
those high interest rates by charging even higher rates to corporate
borrowers. Borrowers could afford to pay the higher interest rates
because frugal savers supplied a safe and steady supply of funds to
support their rapid growth. But as soon as the government
capitulated to US pressure in the early 1980s and relaxed
regulations that had prevented corporations from obtaining funds
outside Japan, short-sighted businessmen rushed overseas in search
of cheaper funds. That process left domestic banks without
sufficient interest income from having made loans to trustworthy
borrowers. As a result those banks could not pay favorable interest
to depositors.
As Michael Hudson explained thoroughly in Our World essays 244,
245 and 246, the Japanese government then caved into the so-called "Plaza
Accord" demands of the United States and agreed to hold its
interest rates below those of the United States. (The Republican
Party then in power wanted to cut US interest rates to stimulate the
US economy in hopes of winning the next election. They worried that
without an agreement with Japan, there would be a massive outflow of
funds from the US to Japan, whose economy was much more vibrant than
that of the United States.)
The sudden ability of Japanese borrowers to attract cheap funds
overseas, plus the cheapening of Japanese funds caused by these two
capitulations by Japan's government to US demands, flooded Japan
with a glut of cheap funds far in excess of what Japanese businesses
could absorb to increase production and distribution capability.
With no socially or economically appropriate place to loan those
funds, Japanese banks turned to gambling on land, stocks, bonds,
currencies, and other assets (and loaning to other such gamblers) to
cover the cost of holding those funds. This gambling naturally
inflated the bubble that eventually burst, leaving Japan in its
current state of devastation.
Motives of the United States to Wage
Economic War on Japan --
Let's look at what the United States gains by waging economic war
on Japan. By keeping Japan weak militarily since World War II, the
United States has made Japan dependent on the assumption of US
protection from foreign attack or invasion. Yet the US has never
unambiguously committed itself to providing such protection. (The
US-Japan Security Treaty is one of the most brazen frauds of the
20th century; it sanctions continued US military occupation of Japan
in exchange for the US commitment merely to do whatever the United
States unilaterally elects to do if Japan is attacked or invaded.)
The United States has gained enormously by keeping Japan weak
militarily, unable to defend itself, and clutching at the mere hope
its servitude will motivate the United States to defend it in case
of military invasion or attack. For example:
1. The United States can occupy Japan militarily as a
base for US objectives that have nothing to do with the defense of
Japan;
2. Japan pays the costs of US forces that occupy it militarily;
3. Japan funds the United Nations, which the United States
manipulates as an instrument of US foreign policy via its veto (as
well as by bribes and intimidation), while the United States doesn't
even pay its UN dues;
4. Japan provides similar funding to the IMF, World Bank and WTO,
which the US controls to serve its own national interests;
5. Japan funds US wars, which the US wages unilaterally without
consulting Japan, even when those wars harm Japan's national
interests (e.g., the Gulf War);
6. Japan funds US projects (like KEDO) where the United States
makes all decisions unilaterally without consulting Japan, then
invoices Japan for the costs, paying little or nothing itself;
7. Japan has run up the highest ratio of government deficits and
public debt to national product of any advanced industrial nation,
but still lends 50 trillion yen of its citizens' money to finance
the US public debt;
8. Japan has brought its food subsistence level down to 30%, by far
the lowest among advanced industrial nations. This leaves Japan as
susceptible as North Korea to economic blockade - merely to please
the United States by serving as the largest receptacle of US
agricultural exports;
With the US benefiting so much from its relationship with Japan,
what does the US gain from waging economic war on such a compliant
ally? I believe it gains the following:
1. The United States has spent most of the 20th century fighting
communism, for two reasons. The first is that US leaders seem to
feel they cannot afford to allow any type of government or economy
other than their own brand of unregulated free competition to
succeed. They seem to feel that to gain and maintain hegemony over
the world, they cannot tolerate the success of any other form of
government or economy that would prove an attractive alternative to
the US model. The second reason, I believe, is that World War II
taught US leaders that war held the most profitable future for their
kind of capitalism. They needed a plausible enemy to justify keeping
the US economy on continued wartime footing. The communist countries
were the most plausible candidates to become enemies until they
opted out of the game in the late 1980s.
2. The United States needed to keep Japan as an ally during that
Cold War, a relationship which required Japan to be economically and
militarily dependent on the US. The US accomplished this by
encouraging Japan to build an economic prosperity dependent on
exports to the United States.
3. But the Cold War crippled the US economy nearly as badly as it
crippled the communist economies, reducing it from the world's
richest creditor to the poorest debtor during the Reagan era. By the
end of the Cold War, Japan had the world's most prosperous economy,
its citizens had the world's highest standard of living, and other
Asian nations were gaining rapidly by emulating the Japanese rather
than the American model. Japan and its Asian emulators had become
the new model that US leaders couldn't tolerate as a successful and
attractive alternative to the US model. Thus, Japan and its Asian
emulators became the new "enemy" of US leaders.
4. Moreover, ever since Senator Albert J Beveridge's celebrated
1900 speech in which he said: "The power that rules the Pacific
... is the power that rules the World", the United States has
refused to tolerate leadership in the Pacific by Japan or any other
power not servile to the United States. Making Japan as dependent on
the United States economically as it already is militarily, and
preventing Japan and other Asian nations from forming close
bilateral relations in place of trilateral relations dominated by
the United States is key to this US strategy of ruling the world by
ruling the Pacific.
5. Finally, on a more immediate and mundane level, Japan is the
world's most attractive target for US economic predators. Japan has
the world's highest per capita income and consumption; gaining
special privileges for US vendors is a high priority for US
politicians who owe their offices to companies that bought them with
campaign contributions. Japan has the world's highest per capita
savings; getting hold of this wealth is vital to keeping the US
financial bubble inflated, or to keeping it from bursting. Japanese
companies have the world's most advanced technology and highest
productivity; crippling them financially to allow US predators to
buy these companies cheaply is the surest way to make and keep Japan
economically dependent on the US.
How the United States Wages
Economic War on Japan --
Finally, let's look at how the United States wages economic war
on Japan. When the United States conquered Japan in 1945, it
immediately set out to colonize the country by destroying the
education system that had taught Japanese to respect and appreciate
their nation and themselves as inheritors of extraordinary
traditions, culture and history. The American colonizers suppressed
the teaching of Confucian, Shinto and Buddhist values as well as the
teachings of classical Japanese and Asian literature. But they
didn't replace this with the teaching of Christian, Judaic or any
other values or classical literature. Japan was reduced to enduring
as a society that teaches no particular values. The result was that
people became obedient followers of authority, unable to think for
themselves. Both through overt channels, such as the altered
education system, and covert channels, such as American movies and
popular culture, US occupiers taught the Japanese to despise
themselves and their culture and to envy, copy - even worship --
American and Western culture, and to obey the United States.
This, of course, had little impact on Japanese who were educated
before 1945, enabling Japan to remain a proud and remarkably
independent nation while the prewar generation held most positions
of leadership in Japan. Japan didn't begin kowtowing and toadying to
the United States until the late 1980s, when Japanese educated
before 1945 had died or retired and were replaced by colonials
educated since 1945. From the late 1980s, one sees little
independent thinking in Japan - just masses of unthinking people who
look like Japanese on the outside but who meekly ape Americans and
obey the commands of the United States.
The only foreign language now taught widely in Japan is English
and it is as requisite for getting into and out of universities as
the Japanese language is. English occupies the same place in
colonized Japan as the Japanese language did in colonized Korea and
Taiwan, and as English did in colonized India. Nearly all Japanese
who study abroad go to the United States to learn to better ape and
obey their masters. Most imports come from the United States and
from low-wage offshore factories of US corporations, just as any
colony imports mostly from its imperial master.
As a result, the current sheep-like generation of colonials run
their own nation for the benefit of the United States instead of for
the benefit of their own people; or, more accurately, they allow the
United States to run Japan for the benefit of the US. Japan now lets
the United States dictate its domestic policies and regulations,
capitulates to US demands to open its markets, agrees to buy US-
dictated quotas of American products, allows the US to dictate
limits on its exports, negotiates its own domestic regulations with
the United States, and follows orders to force weak Japanese
corporations into insolvency to enable US corporations to buy them
cheaply. Meanwhile, every new prime minister obediently travels to
Washington to get his marching orders from his masters there while
repeating the mantra that Japan's only foreign policy is servile
obedience to the United States.
If any prime minister should dare contemplate an act of national
independence, such as Tanaka Kakuei's attempt to circumvent the
Rockefeller monopoly by buying oil from China, undoubtedly he will
meet the same disastrous end that befell Tanaka.
Conclusion of Section:
US Economic Warfare on Japan --
Japan will never overcome its current economic problems until it
recognizes that the United States is the cause of many of those
problems and that the United States is waging economic war on Japan.
Japanese leaders must recognize that because the United States is
waging economic war on them, Japan must stop capitulating to US
pressure, stop following US advice, and stop sending its brightest
prospects for future leaders to the United States to get brainwashed
merely to serve imperial masters instead of their own nation.
In the next Our World essay (No. 259) I will discuss the other
related calamity: the end of the Industrial Revolution.
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