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The boom that is propelling Japan toward superpower status has been aided hugely by an unparalleled era of free trade that has prevailed virtually everywhere — except in Japan. Pleading postwar poverty and a paucity of resources, Tokyo's bureaucrats created a hothouse economy, sheltered from foreign competition by a network of quotas, tariffs and other trade barriers.
Some rough spots remain. Japan suffers from a labor shortage. Unemploy ment runs a mere .8%. Those born in the post-1945 baby boom are already at work; those who arrived afterward tend to spend more time in school. As a result, companies have pushed the re-Toyota cars massed on docks at Nagoya, where 3,000 autos are loaded on special ships for export every day. Retirement age from 55 to 60, are hiring housewives for part-time jobs, and are resisting moves to cut the 48-hour work week to 40 hours. With salaries soaring (a high school graduate who started out at $45 a month two years ago now gets $70), and with workers growing scarcer, some firms have built plants in Seoul and Taiwan in search of that vanishing national asset, cheap labor. Inflation, now running at an annual rate of 5.6%, looms as a serious problem, but the Japanese have not done much to slow down their fast-paced economy. The colorful kimono that went for $170 last year now costs $185, a quarter-pint of home-delivered milk has gone from 500 to 640, and a 280 can of tuna is up to 340.
Western economists argue that the yen (360 to $1 at the official rate, 354 oh the open market) is undervalued, thus giving Japanese exports an unfair price advantage in world markets. The U.S., with its ailing textile industry, and other Western governments are putting strong pressure on Tokyo either to revalue the yen or to liberalize trade. Reluctant to tamper with their currency, the Japanese are expected to carry out a gradual, grudging reduction of barriers against foreign trade and capital over the next couple of years.
The Weaning Process
Ultimately, a far more vexatious issue than any of Japan's economic problems is the nation's future role in Asia and the world. Japan today simply stands too tall and too rich to maintain a low profile—or no profile—for many more years. "This country," says Finance Minister Takeo Fukuda, "can no longer be permitted to think of our own problems without paying attention to the outside world." Foreign Minister Kiichi Aichi agrees. Writing in Foreign Affairs recently, he spoke of the need for "gradually weaning the public away from 'little-Japanism.' "
Events may hasten the process. Britain will complete its east-of-Suez withdrawal next year, as Defense Minister Denis Healey confirmed in a White Paper last week. A partial U.S. stand-down in Asia is in prospect under Richard Nixon's Guam doctrine, as the President confirmed in his "State of the World" message last week. The West's withdrawal will make it impossible for Japan to keep its head down much longer. Says Harvard's Historian Edwin O. Reischauer, former Ambassador to Tokyo: "The Japanese choice is either a close special relationship with the U.S. or to become a major force on their own. The concept that they can be an elephant-sized Laos is ridiculous."
While some Asian statesmen would