ECO100Y1 Lecture : US and Japan Pt.2
Feb 24, 2008
US household savings rate rising
-if saving]]]vPUP]Àv]}v}Z}ÁZ}(À}P}À[v]vPÀXƵ
-in micro theory, consumption depends on expected income, household wealth factor is dominant
-contest between 2 types of capitalism, challenge of US was not met, research and development outside
}(Z/d]vµÇ]vh^ÁEKdZUh^P}À[((µo}(:v}vÀP]vP}vh^
-'}À[]v[oÇ}o]vµ}]vP]vµ]Æu]o]Ç
-still thought large-scale industry is bad
-Every major sector of US did not spend on development, long wave was extended, recovery might not
come for a few years.
-automobile and steel are still inefficient industries today, huge labor force in US, actions suggested by a
whole groups of economists, a new dimension ]vÁZ]ZP}À[v]vµÇvÁ}l}PZUP}À[
have at least some participation
-IT sector was becoming more aggressive(entrepreneurial activities financed by private sector), other
}]oov}P}Á]vPuµZUv]v]vP}À[(µv]vPZÁv}v-military
-no leadership towards new direction for automobiles
-Bailout is only a short-µv}oµ]}vUvo}vPµv]vµ]oPÇZÁ}lUP}À[]]]}v
with industry, need to refuse bailouts to management team or senior level employees of companies
seeking bailout
Z>zõì[-Schumpeter, Kondratieff cycle
-^]µ]}v(]vPh^]µ]o]vZZ]}ÇU^]o]}vÀooÇvÀ]}]vh^v[}uÁ]Z
Japan and the Far East. Is individualism in US fatal flaw, (maximization of consumer satisfaction,
maximization of corporate profits)
-In effort to stop rise of the US dollar relative to Yen or Deutch Mark. Thought US dollar was strong and
appreciate further to the end of the decade because it reflected the strength of US economy, hurts US
export, trade deficit in 1980-85
-WoÌ}}µPZh^}oo}Áv}µîñ9}uoÀozvUµ]oo]v[}oÀ(]]
-US Super computers required Japanese semi-conductors, used in space, military
-Priority now in Japan targets production of super computer
Goal of economy in US
-uÆ]u]Ì](]}v}(}vµuÁvÁ]Zu]v]uµuP}À[]vÀv]}v
-US wants Japan to open its doors with no specific strategy
-Japanese use aluminum in baseball bats in Japan, several crates of bats from US arrived in Japan harbor,
Jap had a ruling that anything dangerous have to be inspected, protectionism in delaying transfer of
imported goods for use
www.notesolution.com
-New airport, US engineering companies were banned from bidding for contracts
-US policy maker expected Japan had same response to economic change, not so, maximize Japanese
salt in world market share
-Japan resists foreign penetration, no branch, trade and capital flow were restricted
-JPN Still wish to push products abroad
-In US, the individual(company) is a source of great strength, but also the source of winding down of
country as a world power-Prestowitz
-US must reassess its priorities
-Semi-conductors are main building blocks of modern electronics, producer of semi-conductors is
national security issue
-21 systems in military use semi-conductors only made in JPN, threat
-1948, Bell invented transistors, the owner AT&T made the knowledge of the transistor available to
anyone in the world, license if want to use,
-Japan would not have done so
-New companies in Silicon Valley were making new semi-}vµ}Uv}P}À[µ}U(]
competition in private sector
-íõóñUh^Á(Z]vZv}o}PÇUh^µZv}o}PÇU]v[Zo(]vvZU]v[Zo(]vv
new companies involved in industryU]v[}}uv](}u(}]Pv}u]]}vUZ]À
(]uÁ}µov[ZÀÆP}À[}Zo
-íõñóU:WE[o}v]]vµÇÁÁlUD/d/P]UÁv}ul]}vPUvµ
(µv]vPvP}ÁZ}(Z(]uU:WEP}À[}Àided what the private sector provided for itself in the US
-1959, JPN targeted IBM(monopolist of mainframe computers at the time), JPN perceived development
of computers as a national security problem in JPN, US has comparative advantage in semi-conductors
and computers, dZ}ÇÇ}Æ}}:WEU:WE]v[o]lZ}oµ]}vUÁv}ulZ]
own industry to supply their own needs and other countries[ needs
-D/d/]]((}v/D[}uµU/DÁv}µ]ovZ]v:v]v}er to meet their
needs, condition for IBM to enter JPN was that IBM had to license technology, knowledge and R&D
material to the new infant industry in JPN, IBM accepted
-MITI asked IBM not to be competitive, and continuous transfer of technology from IBM to JPN
-JPN now had US technology, US welcomed JPN students to visit IT industry
-In US, Company A could not send any information to Company B, Anti-µPµo]}vUÁ}]Àov[
exchange information
-Japan used this to play company against company, also used reverse engineering, created a favorable
environment
-:v}}lðì9}(Á}oul]v[óô-[óõUÆ}]vPU}v}oo}Ávul]v:WE~iv
companies only bought Japanese chips, increased world demand for semi-conductor units, US coµov[
satisfy the demand
-JPN had a higher quality of chips, produced chips at home with own labor, US in order to compete with
Japan, outsourced labor to South Asia=poor quality chips
-Japan in world marketing sold at low cost(illegal in world trade agreement)
-[ôí-87, gained more share, the experience curve, the Average total cost curve was downward-sloping, if
increase output by 30-50%, cost fell by a lot, increasing returns to scale, increasing sales as well
-Japanese invested faster than the US in the industry, they did anything to gain more share, new
customers, by pricing at very low
www.notesolution.com
