BUSINESSWEEK ONLINE : MARCH 22, 1999 ISSUE
INTERNATIONAL -- READERS REPORT

Why the Japanese Market Isn't So Promising (int'l edition)


Professor Jeffrey Garten misreads the implications of the decision by U.S. firms to buy into Japan Inc. (''What's the most promising emerging market? Japan,'' Economic Viewpoint, Mar. 1). For the most part, they bought into world-class multinationals. In all events, most purchases were made at substantial discounts. This does not indicate confidence in Japan's domestic economy.

As for the Keynesian pump-priming he alludes to, my projection is that it will fail miserably. The reason is that there is a chronic disinclination to spend that cannot be resolved by throwing money at Japanese consumers or by inflating the money supply. Japanese workers do not spend because they are worried about whether they will lose their jobs. Demography is also working against rising consumption due to the swelling ranks of the elderly, who are anything but mall rats. Taxpayers who face huge bills for recapitalizing the banks and other government spending must put away funds in anticipation of rising taxes in the future. The young are finding fewer prospects for employment, and many may choose to emigrate. In this environment, it is difficult to imagine businesses will invest.

Perhaps the best solution is for there to be thoroughgoing tax reform, e.g., a flat tax. When businesses and consumers see a lower future burden, they will be willing to spend today.

Christopher Lingle
Hong Kong


_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

BACK TO TOP


INTERACT
E-Mail to Business Week Online

 
Copyright 1999, Bloomberg L.P.
Terms of Use   Privacy Policy