[Congressional Record Volume 142, Number 34 (Wednesday, March 13, 1996)]
[Extensions of Remarks]
[Page E331]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                  LESSONS FROM JAPAN: EMPLOYMENT FIRST

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Tuesday, March 12, 1996

  Mr. STARK. Mr. Speaker, they say Japan learned about quality and 
modern manufacturing from the United States, but we clearly have things 
we should learn from Japan about how to create a sense of society and 
community.
  The following column by Thomas Friedman from the New York Times of 
February 25 explains how Japan avoids the job massacres that mar 
American businesses so often and so casually.

                [From the New York Times, Feb. 25, 1996]

                          Japan Inc. Revisited

                        (By Thomas L. Friedman)

       Tokyo.--I found the source of our trade problems with 
     Japan.
       I went shopping at the Mitsukoshi Department Store, the 
     Bloomingdale's of Tokyo, and when I walked in the front door 
     I counted 14 sales clerks in the jewelry department alone. 
     They bowed politely and offered to help with any purchases. 
     The American in me immediately said: ``What a waste of labor! 
     Who needs 14 sales clerks? This store needs downsizing 
     immediately!'' But that is not the Japanese instinct. And 
     that's one reason why we have a structural trade deficit with 
     Japan.
       Let me explain: Unlike the U.S. or Western Europe, Japan 
     long ago decided that is top priority was not to have the 
     lowest prices for its consumers, not to have the highest 
     dividends for its corporate shareholders, but to keep as many 
     of its people (particularly the men) employed in decent 
     paying jobs--preferably for a lifetime with the same firm. 
     The Japanese understand that a job gives dignity and 
     stability to people's lives and pays off in much greater 
     social harmony. Just walk the streets of Tokyo: few homeless 
     sleeping on grates, no muggers lurking in the shadows.
       But to maintain such high levels of employment, to keep 14 
     clerks behund one store counter, Japan basically had to fix 
     the game. Japan had to regulate its economy in a way that 
     would protect its domestic companies from foreign 
     competition, by controlling access to is markets. That way 
     Japanese companies could maintain a duel price system. They 
     could charge high prices at home, in a protected market, in 
     order to maintain full employment, while charging lower 
     prices abroad in order to get into everyone else's market and 
     export like crazy. That is why those who think that Japan's 
     trade barriers will easily give way, or that is economy will 
     be ``deregulated'' as its Prime Minister keeps promising, are 
     fooling themselves.
       Many economists argue that in an integrated global economy, 
     Japan will have to become more like America. Its corporations 
     will have to cut costs and downsize to remain globally 
     competitive. Maybe. But for now, the Japanese are resisting 
     that. Despite five years of zero growth, Japan still has only 
     3.2 percent unemployment. The sort of job massacres that have 
     become the norm in America--like 40,000 workers at AT&T in 
     one chop--have been unheard of here. ``I am sure that 
     eventually we will be somewhat forced to think American, but 
     we are moving very slowly in that direction,'' says Yotaro 
     Kobayashi, the chairman of Fuji Xeros. ``For social and moral 
     reasons, we will try to avoid going all the way to a U.S. 
     model. We will look for a middle ground.''
       How? In part it will be by trying to maintain hidden trade 
     barriers. But in part it will be by trying to maintain 
     Japan's unique corporate values. For Japanese executives, 
     says Glen Fukushima, vice president of the American Chamber 
     of Commerce in Japan, ``laying off employees is the last 
     option they look for, not the first,'' And far from being 
     rewarded for layoffs, corporate executives here are censured 
     for them, by both peers and the press. The first priority of 
     a Japanese company is its employees, then come its customers 
     and last its shareholders--just the opposite of the U.S. 
     corporate mentality.
       Instead of ordering massive layoffs, Japanese companies cut 
     overtime, they freeze the hiring of college grads, they 
     freeze dividends, they offer early retirement packages, they 
     shift workers to subsidiary companies, they shift low-skilled 
     jobs to cheaper labor markets in Asia and keep the best jobs 
     here, they inhibit mergers and acquisitions that lead to 
     layoffs, they buy up U.S. high-tech companies to maintain the 
     competitive edge that their own regulated economy sometimes 
     stifles and the even (are you ready?) order pay cuts for top 
     executives--anything but lay off people.
       That's why Pat Buchanan is only partly right. Yes, American 
     workers are being hurt by unfair trade barriers erected by 
     some foreign countries, including Japan, and the U.S. should 
     fight hard to bring those barriers down. But U.S. workers are 
     being hurt just as much, if not more, by the skewed sense of 
     priorities that now dominates the U.S. business community, 
     where executives get bonuses for massacring their employees. 
     Maybe the economists are right. The Japanese will have to 
     become like us. But they are sure trying not to, and its' 
     worth watching to see if the they can pull it off. This is 
     one economic war I'm rotting for Japan to win.

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