International -- Readers Report
The Pros and Cons of Japan's Deflation
I fully agree with your conclusion that Japan's deflation is a force both damaging and beneficial ("Deflation nation," Asian Edition Cover Story, May 26). I have found it difficult to accept economists' arguments that show only the dark side of the picture. Being a comfortable pensioner for almost 10 years, I have been seeing the beneficial side only, as have some of my fellow countrymen whom you interviewed. For me, falling prices mean my money gives me more buying power, even if my pension income, which is fortunately good enough, may not be growing. I do agree that a majority of people are suffering because of the deflation, as you wrote. I am probably a fortunate minority, having retired almost before the bubble burst. Still, I am determined to enjoy the benefit of deflation, and I am happy to be able to do so. I am sure I am entitled to that.
Naomi Haga
Osaka
"Deflation nation" is well researched. It is deplorable that Japan's economy has been stagnant since the bubble burst in the early 1990s and is now on the brink of a deflation spiral. We are all well aware of the clear and present danger caused by deflation. But also we feel it is a long-awaited opportunity to restructure the irrelevant systems embedded in Japan's economy, such as excessive regulations, administrative guidance, and overprotective safety nets for inefficient industries.
Coping with the situation, the private sector has already taken steps for incremental reform -- forming strategic alliances instead of keiretsu connections, cutting excess capacity, laying off redundant workers, shifting production overseas with the aim of cost reduction for the consumer's benefit. Nobody denies deflation is dangerous for the macro economy, but it is not always bad for consumers.
Notwithstanding the efforts made by the private sector, the real problems today are to be found in the public sector. Overprotected sectors such as farming, energy, transportation, postal service, highways, and government-run corporations are left intact or make cosmetic changes at the most. Any attempt to reform these sectors has been blocked by the Liberal Democratic Party bigwigs, acting in alliance with government bureaucrats. However, without drastic reform in public sectors, there will be no hope of putting our economy back on the right track.
Hideki Kitamura
Nishinomiya, Japan
There is another crucial factor in Japan's deflation spiral: fiercer domestic competition among industries that cannot go global. I am in the property development business. I just cannot come up with ways to export my business in order to cope with the depressed economy. A few large, listed general construction companies have succeeded in exporting their project-management skills overseas, but the overseas business still accounts for a minor part of their overall volume. Meanwhile, I still have to get my business moving, so that I continue to develop property (at a much slower pace) in my area. Other developers also think like me. I know and they know that the pie is shrinking very fast, but we have no other option.
Yungho Pok
Osaka-Shi, Japan
As the dollar become worth less relative to other currencies, it is forcing up the price of imports in dollar-denominated terms, thus countering deflationary forces. I'm on the board of a corporation that purchases manufactured goods from Japan. They sell to us in yen. Accordingly, our costs in dollars have gone up, and our profits are down. Eventually, however, higher prices must follow.
Another major cause of deflation is competition. The old natural barriers that once afforded protection to American businesses and workers (transportation, education, communications, language, currency, tariffs, etc.) have been much reduced. Slave-labor foreign competition is now the norm in many manufacturing and service industries. And when businesses can't import slave-labor-produced products and services, the managers bring in low-cost foreign workers to depress the wages of American workers.
This is an experiment that threatens our economic system, a system that created the greatest prosperity and the least poverty in the history of the world. This experiment is now playing out with potentially catastrophic consequences for the American people. I fear "we ain't seen nothing yet!"
William A. Pauwels Sr.
Franklin Lakes, N.J.
Don't Give the CEO All the Credit
"Novartis" (European Edition Cover Story, May 26) portrays the CEO Daniel L. Vasella as the man who created a blockbuster drug and lots of cash in the bank. This is a disservice to the thousands of scientists who toiled to produce the drug. How many hours did Vasella spend on this drug development process? What was his creative contribution to this drug?
You are continuing to make the mistake of creating an (unjustified) image around a CEO. The one thing that Vasella can do is harm -- blow the cash via some bombastic acquisitions. It would have been good to see BusinessWeek or Vasella choose to put a group of Novartis employees on the front page instead of a beaming CEO face.
Anand Haridh
Edison, N.J.
Dick Parsons Can Save Time Warner, but Not AOL
In reply to "Can Dick Parsons rescue AOL Time Warner?" (The Corporation, May 19): Parsons can save Time Warner, but not AOL. The latter is doomed because it's not necessary anymore. In the beginning, AOL was the amusement park, and the Internet was its entrance. Today, it is the other way around. The Internet is vastly more entertaining, useful, and informative than AOL. And what is left of AOL is not necessary: Connection to the Internet will be as common and uneventful as turning the light on, and money made on it will be marginally profitable. Besides, providing connection will be the domain of the telecommunications companies and cable operators -- not to mention electric power providers.
Antonio Camargo
São Paulo
Are Foreign Workers Cutting American Careers Short?
Catherine Arnst calls for the continued import of foreign nationals into America's colleges and universities, dismissing the call from Representative Dana Rohrbacher (R-Calif.) "to reduce the need to attract such a high percentage of foreign students" ("How the war on terror is damaging the brain pool," Science & Technology, May 19). It is not in the long-range interest of the U.S. to do so.
It is to be expected that the president of Princeton University would testify before Congress that foreign scientists "have helped the U.S. achieve ...preeminence in science and technology...." while, apparently, the work and ingenuity of Americans go unmentioned. Since almost half of Princeton's graduate students are not Americans, what else would you expect its president to say, so financially dependent is that university on foreign students?
Hundreds of thousands of jobs in American companies are either offshore or populated by H1B and L1 visa holders at the direct expense of Americans. An entire generation of educated, trained, and experienced baby boomer information-technology workers are having their careers ended in their 50s. The arguments that America just can't do anything worthwhile without massive amounts of foreign students and workers has become the mantra of both the academic and corporate worlds. I'm not buying it.
Chris Rasmussen
Monument, Colo.
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