The following is my response to a comment from Matt Dioguardi, with whom I had other enjoyable disagreements in the past, on this post. The blog rejected it as being too long—it only accepts up to 4,096 characters—so I’m posting it here as a separate post.Matt: Always good to hear from you, although—because?—we hold very different views on many things. I think that the notion that major policy changes will not occur in Japan until something happens to drastically alter the U.S.-Japan relationship is certainly a defensible one, but unless properly defined and qualified, it throws out most of severely limits the notion of “major” on the economic front. Moreover, I don’t read anything that McCormack writes since I made it half way through a talk that he gave on North Korea and concluded that he was nuts; we can agree to disagree here. That said, let’s see if I have anything meaningful to say on the points that you raise.
“Japan exports to America, and reinvests in American Treasury bonds.”
Rephrase it “America borrows from Japan and uses the money to buy things from Japan”, and you begin to wonder which one is really the client. Actually, both statements put a highly simplified, anthropomorphic gloss on what is a complex phenomenon with a very large number of actors driven by many factors from both within and outside of the relationship. Moreover, there are so many policy decisions that must be made that have no direct bearing on the relationship (although many if not all of them are bound to affect our external balance in ways that produces changes in our foreign currency reserves) and yet are so momentous.
Incidentally, defined more precisely, there is a conscious choice that the Japanese government could make that would drastically alter the situation that is described in your statement. Namely, the Japanese government could decide not hold currency reserves and leave everything to market forces. Now, to engage in my own anthropomorphism, “Japan” still could run a trade surplus and “reinvest” the proceeds in American Treasury bonds, but this is one road that few countries running trade surpluses if any will ever take.
“Japan keeps a fairly vague stance (with meaningless rumblings of nationalism), while America does the heavy lifting diplomatically for Japan.”
This is a sweeping statement that could be said of every liberal democracy that does not have a) a nuclear arsenal; b) the capacity to project a serious military force beyond its borders (conduct major landing operations, dispatch multiple aircraft carrier fleets); and c) a permanent seat with veto powers on the UN Security Council. Also note that Japan is a regional power. It has played a meaningful role in Asian (defined as east of Bangladesh) politics that has usually but not always been consonant with the interests and values of the government or the majority of the public of the United States. The Middle East is just not our bailiwick, though events there do seriously affect our economy. But then, do France and the U.K. do any “heavy lifting”? Or to put it another way, do their opinions matter to the governments and increasingly the public of Egypt, Iran, Iraq and Saudi Arabia and other states in the region? The United States is the sole global superpower; as such, “America does the heavy lifting [militarily and almost ipso facto] diplomatically for all of us. There is some change afoot, which does not bode well for the rest of us, but there things stand for the moment. There are paradigms and paradigms; that fact that one cannot—should not?—be changed of our own volition does not render all other meaningless. Or is that not the point of your rhetorical flourish?
Note also that for both statements, you could insert “China” in place of “Jaan” and still end up with coherent, defensible statements. So would McCormack consider China to be a “client state” of the United States? Are we all “client states”? Just askin’.
“There's a speech on-line where Abe praises Japan's new two party system, and indirectly the growing opposition. Strange, if he were really ideologically driven, who cares about how many parties there are? Oh, well, gee, America has a two party system, so that must be good.”
Let’s face it, Abe, is only saying the right thing. Anything else would sound pretty gauche. Of course he is not the only one who is calling for a two-party system. The LDP has had a nice 55-year run, but it has gone stale and many serious problems are piling up that cannot all be blamed on the bureaucracy—I think that the idea is, If the bureaucracy is at fault, then what were you guys in the Diet doing on our munificent payroll?—there’s a widely held public desire for an alternative. It’s more a vote against a mono-party system than a vote for a two-party system. Also, note that the United States is not the only two-party democracy on this planet. In fact, at first glance, nations lacking serious social/cultural/ethnic divides and/or powerful regional rivalries tend to drift towards political systems with one or two dominant parties and a smattering of smaller, special-interest or ideology-driven parties. Even the United States has a socialist Senator. So no, nobody wants it just because America has one. If that were the case, it would happened long ago, when U.S. influence was much stronger here.
“We won't see seismic changes in Japan until the relationship with America seriously stumbles and/or collapses.”
I am unable to address this point unless I know what you mean by “seismic.” I have very limited power to think about economic and political matters in purely metaphorical terms.
”Say if the dollar suddenly dropped to about 40 yen to the dollar. That would make Japanese politics very lively over night.”
Hard to argue with that statement.
“Until something happens, well, not much is gonna happen. Of course, you knew that, didn't you?”
No, I don’t, honestly. I don’t know until it actually doesn’t happen. The political inertia is pretty strong though, that I’ll certainly agree to. Is that somehow a side effect of being a “client state”? I know that there are political commentators and academics who will write reams of stuff from such perspectives. Some are entertaining, a few can even be insightful, but it’s not my cup of tea. I prefer sturdy, fact-based logic.
There you are, Matt