This trip had originated two years previously as I was trying to figure out my expected graduation from Swarthmore College in June, 1963. I had been an exchange student to Switzerland in high school and had been bitten by the travel bug. I wanted to see the world upon graduation from college, but I had a small problem: money; or rather, the lack thereof. So I looked for grants, and while doing so, stumbled upon the East-West Center, at the University of Hawaii. It was offering a super deal—a two-year grant with tuition, room, board, books, and travel all paid, along with two hundred dollars a month for spending money. Grantees were required to spend a year studying any subject they desired at the university. They were also required to study an Asian language; the second year of the two-year grant period would be spent studying or working in the country of the language that had been chosen. It all sounded like a good deal to me. I applied, was fortunate enough to receive a grant, and set out for a year under the waving palms of Honolulu. Hey, somebody had to do it.
I had initially thought I would study Chinese, but my father was a chemist and metallurgist who worked in the welding and steel industry. Now remember, this was 1963, and China—then under Mao—was one of the poorest countries in the world, while Japan’s economic miracle of postwar recovery was about to be announced in the January 1964 cover story of the Economist. My dad said, “Look, son, why do you want to study Chinese? They don’t make anything. You should study Japanese. They make stuff.” So that’s how I came to register for Japanese when I first enrolled at the East-West Center and the University of Hawaii in September of 1963.
Although the Economist had hailed Japan’s rapid economic development, to a twenty-three-year-old American kid the country didn’t seem all that developed. Most people rode bicycles and buses or walked to their destinations. There were few traffic jams in Tokyo, because there was little auto traffic. I remember marveling at the delivery boys on bicycles who balanced bowls of steaming noodle soup without spilling a drop as they ferried them to customers’ homes. While our Japanese friends described it as a luxury dwelling, the apartment my wife and I managed to find had no hot running water, no bath (remember that our daughter was four months old), no stove, no central heat, no dishwasher, no washer or dryer for clothing, and only two electric bulbs. (We did, however, have a Western toilet.) These were the days before disposable diapers, so we had to boil diaper-washing water every day, and there was no such thing as washing your hands and face with warm water.
We cooked over two small gas devices that looked like the Bunsen burners in my high school chemistry class. We had one four-tatami-mat room in which we lived and slept, and one two-tatami room where we kept the baby’s crib. We heated the rooms with a kerosene stove that had to be turned off at night because of the ever-present danger of earthquakes tipping the stove over in the middle of the night and burning the whole neighborhood down. We bathed at the sento, the public bath where the dividing wall between the women’s and men’s baths was shorter than the average American. After undressing, the men handed their baskets of clothing to young female attendants, who returned them when the men had finished their soak in the public pool. In the streets on winter nights, one could always recognize those who had just been to the bath because they would be enveloped in the white cloud precipitated by the action of the cold air on their moist, warm skin and clothing. Upon returning home from the sento, we went to bed on futons rolled out on our tatami floor and dropped off to sleep as the exhalation of our warm breath formed clouds in the cold of the unheated room.
Luxury it was not. Yet we did not feel deprived by the experience. Rather, we felt greatly enriched by it and privileged to have had it. This was a last glimpse of a less Westernized, less modernized Japan that has vanished forever. That magical time was the first bookend of my ensuing life and career, and nostalgia for that era has been part of the impetus for this book.
I left Japan in late 1965 and entered the US Foreign Service, first as vice-consul at the US Consulate General in Rotterdam and then as third secretary of the US Embassy in the Hague. Later I became a business executive with the Scott Paper Company in Philadelphia and Brussels. But I returned to Japan in 1976 as vice president of the Swiss consulting company Egon Zehnder International. I discovered that in the decade that I had been away, Japan had become a rich, developed country. The bicycles had not only yielded to automobiles, but the automobiles were causing endless traffic jams. Indeed, jutai (traffic jam) became one of my wife’s favorite Japanese words. And the sento were mostly gone also, having been replaced by the o-furo (hot tub) now routinely included as part of the Japanese home or apartment. Of course, this modernization also had its downside. The air quality of Tokyo had become so poor that face masks were routinely worn by a large number of Japanese.
This was the heyday of Japan, Inc., the market-based but government-guided system of capitalism that had accomplished the postwar economic miracle and that now, in the late 1970s, was conquering the world’s markets in steel, textiles, and consumer electronics. It might have been called capitalism with Japanese characteristics. Those special characteristics included lifetime employment for a cadre of “regular” employees; extreme company loyalty on the part of employees who considered themselves part of a corporate family and who would almost never consider changing employers; enterprise unions rather than industry-wide unions; and protection of the domestic market from imports by a variety of means. Japanese businesses also featured a corporate structure dominated by quasi-cartels of interlocking firms known as keiretsu; just-in-time delivery; kaizen (continuous improvement); six-sigma quality control; government targeting of and subsidies for the development of so-called strategic industries (machinery, semiconductors, computers, steel, etc.); and a policy of keeping the yen undervalued versus the dollar as a way of indirectly subsidizing exports and imposing a tariff on imports.
First as a consultant primarily to foreign companies trying to crack the Japanese market, and then as the CEO of the Japan branch of a US medical equipment manufacturer, I learned how the system worked through tough experience in the school of hard knocks, but also through the patient explanations of a few friendly Japanese and American tutors. In the late 1970s, the Japan, Inc. system appeared to be unbeatable: Japan’s automakers were using it to begin attacking the Detroit automakers, while its semiconductor producers started aiming at Silicon Valley. By 1980, both the US semiconductor companies in the Valley and the US auto makers in Detroit had joined representatives from the steel, textile, machine tool, consumer electronics, and other industries in a pilgrimage to Washington, DC to demand that the US government take some action against Japan’s “unfair” trade practices.
Of course, it was in 1980 that Ronald Reagan was elected president, which meant that a whole new set of senior officials would be taking the reins of the US government. In September, 1981 I was appointed to the US Department of Commerce, first as deputy assistant secretary of commerce, then becoming acting assistant secretary, and finally counselor to the secretary. In these positions, one of my main responsibilities was to help lead what had become an endless series of trade negotiations with Japan.
Indeed, it seemed that there were negotiations in virtually every sector of the economy. Semiconductors, television sets, autos, almonds, rice, tobacco, telecommunications equipment and services, insurance—you name the industry, and we had a negotiation going either to open the Japanese market or to stop predatory Japanese practices in the US market. It all looked very complex, and if you tried to absorb all the details, it was. But in essence it boiled down to two competing claims. US industry and the US government negotiators continually complained that Japan was “cheating” by not playing by the rules of free trade and free-market capitalism. They said its industry was being subsidized, and was dumping (selling below cost or below the price in the home market) products into the US market while its home markets were protected like the impregnable