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A Second Opinion On Japan's Ills


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A SECOND OPINION ON JAPAN'S ILLS

Professor Rudi Dornbusch's advice for the Japanese economy is only partly on target ("What's the weakest link in the world economy? Japan," Economic Viewpoint, Jan. 12). He is right to insist that Japan must discard its tight fiscal policies. And Tokyo must move urgently to rescue its banking system, regardless of justified populist antibank sentiment.

But the tax cuts he urges would have little impact, given the saving propensities of the Japanese, particularly when times are bad. And Reagan-Thatcherite deregulation would need years to produce effects, even if Japan were as closed a country as Dornbusch likes to think--which it is not. As in South Korea, a major cause of the present crisis was inadequate, rather than excessive, regulation of the finance industry, largely as a result of past U.S. pressure.

Japan's immediate need is for tax changes and other moves to halt the collapse in land prices. Another need: a morale-boosting commitment to expand spending on badly needed public works while cutting fiscal waste in other areas.

Gregory Clark

TokyoReturn to top

THIS VIACOM SHAREHOLDER IS UNHAPPY

I have been a Viacom Inc. stockholder since the company bought Blockbuster Video a few years ago. I have often wondered why my stock has performed so poorly. Now, after reading "Caught: A job-hunter. Penalty: House arrest" (News: Analysis & Commentary, Jan. 12), I have my answer. If Viacom has nothing better to do than prosecute Rich Cronin [former head of Vicaom's Nick At Nite and TV Land cable networks], I see little chance for improvement in my stock.

Allen Ulibarri

Downey, Calif.Return to top

HARPERCOLLINS: BACK IN THE BLACK

While I am flattered to be included in your list of "Managers to watch in 1998" (Cover Story, Jan. 12), I must take issue with your comments on the current state of HarperCollins Publishers. Far from "remaining troubled," the company is on a solid growth track.

The fact is that HarperCollins has firmly returned to profitability. Its reported operating profit for the first quarter (ending September, 1997) was $13 million, a figure that far exceeded industry expectations. Cash flow also improved, compared with the same period a year ago, and we expect further improvement for both trends in the second quarter.

HarperCollins' turnaround performance is the result of a tough 12-month restructuring program completed in June, 1997. The cancellation of 100-plus book contracts--the only initiative to which BUSINESS WEEK refers--was just one aspect of this restructure. It included streamlining our publishing programs, reducing worldwide overhead by $25 million annually, and cleaning up excess inventories and large amounts of unrecouped royalty advances.

HarperCollins' strategy of focusing its publishing programs on core book segments is paying off. As a result of reducing the number of first-quarter title releases by some 32% from the same period last year, HarperCollins' profitability per title has nearly doubled.

These are hard facts, and I hope they will set the record straight.

Anthea Disney

Chairman and CEO

News America Publishing Group

New YorkReturn to top

DEREGULATION FLOPS AGAIN

Your pessimistic report on the deregulation of the electric-power industries is right--but not surprising ("So far, it's all buzz and no zap," News: Analysis & Commentary, Jan 12). Even before deregulation starts, it promises to expire in the same welter of skimming, advertising hysteria, lawsuits, and duplication of facilities as in telecommunications, on which you also report ("Telecom: Congress should reform its reform," News: Analysis & Commentary, Jan. 12).

It will probably be even worse. The reason phone service did not collapse is that Ma Bell was broken up just when everybody had to change from electro-mechanical to electronic switching, a huge cost-saving technical change. So there was not as much capital-intensive "stranded" equipment to worry about. No remotely comparable technical changes exist in electric service.

John E. Ullmann

Professor Emeritus of Management

Hofstra University

Hempstead, N.Y.Return to top


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