Globalist Responses to Japan and China


I was struck recently by how cruddy the reliability of manufactured products often are today compared to where they ought to be if the positive quality trends in the 1980s and into the 1990s had continued full strength. This is not to say that they`ve gotten worse, but that they aren`t getting better at the same rate as in the late 20th Century.

Granted, when a DVD player or whatever stops working after only two or three years, it doesn`t seem like a big deal. The newer one is cheaper and has more features. Still, besides the down time and time wasted researching new models and looking for sales, there are hidden “systems integration” costs. When you finally get the gizmo home, you have to screw around with connecting everything up with cables, you have to learn a new remote control, and sometimes you never quite get everything working together right. When you add up all the costs, you realize it would have been worthwhile to pay more for a more reliable product in the beginning.

The shift in imports from Japan to China plays a role in this. An important point that gets forgotten sometimes is that just because people have epicanthic folds doesn`t mean everything they make is Lexus-quality. The Japanese worked incredibly hard to build great brands like Toyota, Honda, and Sony that would be tremendous assets for the Japanese nation for generations to come. The Japanese have an elaborate ritual of shame that executives go through when a Japanese firm`s products are scandalously bad, involving resignations and televised apologies to the nation.

In Japan, “nationalist economics” is a serious, well-thought out philosophy that entails short run sacrifices for the long run general welfare. In the West, our elites have been trained to scoff at nationalist economics as mere mindless populism, but the best minds in Japan have developed an economic culture that`s perhaps too sophisticated for American economists and their fellow travelers in the punditry to understand.

The Chinese, in contrast, have followed the Taiwanese model of manufacturing anonymously under contract to Japanese and American brand names. They churn out stuff and let other countries` companies sell it as their own. For the Chinese, it`s all about meeting minimum quality and cost parameters to get the next deal, not to build a reputation with the public for high quality. How many recognizable brand names have the Chinese created so far? There`s Lenovo, and then there`s …

This fuels a “race to the bottom” in pricing, which comes with a cost in quality.

This has had interesting political effects. America`s gigantic trade deficits with China in this decade were much less noticeable to the general public than America`s trade deficits with Japan in the 1970s because Americans back then were seeing Japanese brand names everywhere, in the stores, on the street, and in TV commercials. This generated political pressure that brought about the Reagan Administration`s highly successful protectionist move of imposing import quotas on Japanese car makers, which led them to build factories in the U.S.

In contrast, unless you look for the “Made in China” labels on products or read the trade statistics, you won`t really notice the hollowing out of American industrial capacity.

Unless you, personally, lose your job at the factory. But, really, who cares about factory workers? For American business executives, offshoring manufacturing to China is less of a threat to their own positions than the Japanese competition of a generation ago. The big Japanese brands had their own executives and didn`t need Americans except in subordinate roles. In contrast, today if you are an American executive in marketing, finance, or general management, you still get to run a seemingly big company, but you just offshore all that sweaty manufacturing to China.

So, the Chinese have fit much less threateningly into the Davos Man globalist worldview than the Japanese did.

Still, how`s globalism working out for us lately?