"New Japan" at 70 [Numbers Don't Lie

Abstract

On 2 September 1945, representatives of the Japanese government signed the instrument of surrender on the deck of the USS Missouri, anchored in Tokyo Bay. So ended perhaps the most reckless of all modern wars, the outcome of which was decided by U.S. technical superiority even before it started. Japan lost in material terms even before it attacked Pearl Harbor: In 1940 the United States produced roughly 10 times as much steel as Japan did, and during the war the difference grew further. • The devastated Japanese economy did not surpass its prewar peak until 1953. But by then the foundations had been laid for the country’s spectacular rise. Soon its fast-selling exports ranged from the first transistor radios (Sony) to the first giant crude-oil tankers ( Sumitomo). The first Honda Civic arrived in the United States in 1973, and by 1980, Japanese cars claimed 30 percent of the U.S. market. Japan, totally dependent on crude-oil imports, was hit hard by the OPEC oil price rises of the 1970s, but it adjusted rapidly by pursuing energy efficiency, and in 1978 it became the world’s second largest economy. By 1985 the yen was so strong that the United States, feeling threatened by Japanese imports, forced its devaluation through the Plaza Accord. But even afterward the economy soared: In the five years following January 1985 the Nikkei index rose more than threefold. • It was too good to be true; indeed, the success reflected the working of an enormous bubble economy driven by inflated stock and real estate prices. In January 2000, ten years after its peak, the Nikkei was still at only half its 1990 value, and only recently has it risen above even that low mark.