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Letter from Japan: Back to the Future
Will George W. Bush carry on his father's (barfing) legacy?
By PETER McKILLOP
January 22, 2001
Web posted at 12:35 p.m. Hong Kong time, 11:35 p.m. EDT
For many Japanese, there is an eerie back-to-the-future feel about the
inauguration of George W. Bush. George, of course, is the son of George "Poppy"
Bush, the former U.S. President who is best remembered in Japan for barfing
(vomiting) in the lap of then Prime Minister Kiichi Miyazawa during a state
dinner.
Bush got sick at the dinner after playing a brutal tennis match with the Emperor
of Japan, who along with his son, the Crown Prince, to use a Texas term, kicked
George Bush's butt on the court. George senior is a pretty competitive guy and
almost killed himself trying to cover for his lousy doubles partner, a former
U.S. ambassador to Japan, who shall remain nameless. Barbara Bush has never
forgiven that ambassador for his sub-par tennis performance.
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ASIAWEEK |
Intelligence
The story behind today's news from the editors of Asiaweek
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It's been about a decade since this loopy incident, and Poppy is happily being
an ex-President. He spends his time parachuting, playing tennis, and, until
November, helping his son become America's 43rd President. He is doing what all
sane 70-plus men would like to do: taking it easy, dabbling a bit to keep the
mind sharp, but basically, enjoying the golden years that come with the spoils
of success.
Not poor Kiichi Miyazawa. Ten years on, Japan's economy is so sick that Miyazawa
is still being forced to be the nation's Finance Minister. While Bush is
enjoying the sun, Kiichi has to go into the office every day and has to struggle
with some of the most intractable economic problems a democracy has faced since
the Great Depression. About the only free time Miyazawa has these days is the
occasional walk in the park with his dog -- but even then, he is swarmed by
inquisitive reporters.
You have to feel sorry for this guy. Ten years ago it was President Bush barfing
in his lap. Now, we face the metaphorical equivalent of Japan barfing in the
laps of its G-7 partners. Consider the problems Miyazawa faces as captain of
Japan's sick economy: A decade ago, Japan was the envy of the world, averaging a
growth rate of about 3.5%. Now, the country has recorded the worst economic
performance of any leading industrialized nation: per capital GDP growth has
slowed to an anemic 0.6%. The gap in GDP between the U.S. and Japan has also
grown from 11%, when Poppy was President in 1990, to 20% today.
Meanwhile unemployment has doubled, while in the U.S., a decade-long boom has
halved the jobless rate. Since Poppy's time, Japan has also run up a staggering
national debt as it has used every Keynesian trick in the book to keep the
economy sputtering along. In less than a decade, debt as a share of GDP has
jumped from 60% in 1990 to more than 120%.
Japan is running out of options. Lately, it has taken to weakening the yen,
which in the past month has slumped from a yen/dollar rate of 105 to almost 120.
Most economists believe that the yen will continue to weaken. Just as Miyazawa
offered his lap as solace to Bush when he blew dinner, what can young George
offer the Japanese to help them overcome their economic flu?
Allow the yen to weaken. A weak yen will provide needed support to reduce asset
deflation in Japan and will allow Japan's export engine to kick-start the
economy. Bush must resist political pressure from the American steel and auto
industry to oppose this policy. Incoming Treasury Secretary Paul O'Neil has
promised to defend the dollar, but many are skeptical because of his long ties
with Alcoa, an aluminium producer.
Stop pressuring the Japanese government to keep spending. The legacy of the
Clinton administration is Japan's massive fiscal deficit. For the past eight
years Clinton has been urging the Japanese government to spend its way out of
the recession. Classic Keynesianism has failed. Bush should early on, and often,
tell the Japanese government to get its fiscal act in order, even if it means
less government spending.
Support efforts by the Japanese government to cut taxes, and quietly support
reformists in the ruling Liberal Democratic Party who are looking to help
globalize the Japanese economy.
Ten years ago it was Kiichi who helped a Bush in need. Today, the roles are
reversed. Kiichi needs fresh thinking from the incoming Bush administration.
George W. should provide that leadership by offering new and creative solutions
to help fix the economic mess Japan finds itself in. And by doing so, he may
erase the barf-stained smudge on his father's legacy in Japan.
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