New Priorities for Japan

AS a resource-poor country devastated by war, Japan in the postwar era pursued a policy of rapid industrial development that ultimately brought large trade surpluses with other nations. Having succeeded all too well, Japan's economic strategists were faced with uncertain times as the unbalanced trade relations threatened to destabilize the world economy. It has become abundantly clear that a single nation cannot for long remain an island of prosperity in a world of bleak economic horizons. Japan must step up to its new responsibilities on the world scene, abandoning old approaches that are no longer helpful, however well they may have succeeded in the past.

The purpose of an economy is to serve the individual needs of people. In the past, Japanese planners have assumed that successful economic development would translate automatically into better living conditions. Sadly, that has not always been the case.

The Japanese people have been shortchanged: They work far too many hours; they live in cramped and inadequate houses; as consumers, they often pay higher prices than necessary and lack variety of consumer products. Therefore, a new policy has been devised for the Japanese economy to improve people's daily lives.

This new approach is reflected in a document prepared by the Industrial Structure Council of the Japanese Ministry of International Trade and Industry (MITI) and released on July 5, 1990. ``International Trade and Industrial Policy in the 1990s'' represents a mission statement for Japanese industry as a whole, both in regard to trade relations and domestic economic activity.

Whereas earlier MITI plans have featured development of particular industries or industrial sectors, the new policy gives priority to: (1) contributing to world society and promoting international reforms; (2) improving the quality of life for Japanese people; and (3) laying the foundation for long-term economic growth.

Given the ``workaholic'' reputation of Japanese workers, perhaps the most striking recommendation of the MITI report is the proposed reduction in work hours. The report calls for ``the absolutely necessary promoting of employment for older people and women as well as through streamlining to attain a goal of 1,800 working hours per year, a goal toward which progress has stalled recently and which will become even harder to achieve when the labor supply becomes tighter in the 1990s.''

A preliminary report from MITI stated that ``positive efforts should be made to shorten working hours and provide a more relaxed working environment, even if this policy puts a burden directly on industrial activities over the short term.''

One detects a sense of frustration that working hours have not come down more rapidly in past years and a recognition of the difficulties that lie ahead for such a program.

More free time would also help to achieve a more ``individually-oriented society'' (as opposed to a company-oriented society); for it is in free time that people's individual interests are pursued and expressed. Finally, less work and more leisure would help to bring production and consumption into better balance, easing pressures to export goods to other nations.

Some may find it strange that Japanese industry, having proved its abilities in world trade competition, would seek even larger trade surpluses. From a short-term perspective that might make sense, but in the long run such an approach would be disastrous.

The key to Japan's past successes in trade competition has been the motivation of the Japanese people. If the nation becomes rich but the people do not benefit from the wealth, the seeds will be sown for frustration throughout Japanese society which sooner or later will attack the basis of its economic accomplishments.

The new approach is not without risk. But the prospects for the advancement of world civilization remain equally compelling. With the collapse of hard-line communism in Asia and Europe, the world's people are entering into a new era of opportunity conditioned upon the principles of individual freedom and free markets. At the same time, this new world will require closer cooperation between nations to ensure humanity's ultimate wellbeing. Japan is well-positioned to play a constructive role in the process. MITI's plan attempts to give substance to that possibility.