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Interviewer | Welcome once again | 0:02 |
as MIT professor Paul Samuelson discusses | 0:03 | |
the current economic scene. | 0:05 | |
This bi-weekly series is produced | 0:07 | |
by Instructional Dynamics Incorporated. | 0:09 | |
This program was recorder April 9th. | 0:11 | |
Samuelson | Today I'd like to talk | 0:15 |
about the economics of the Pacific Basin. | 0:16 | |
I've just returned from an extended tour | 0:21 | |
of that part of the world, and it couldn't help | 0:25 | |
but exciting my imagination, in fact, | 0:29 | |
at a news conference in Australia, | 0:33 | |
I was unguarded enough to say that the last third | 0:35 | |
of the 20th century may turn out | 0:40 | |
to be the era of the Pacific Basin. | 0:44 | |
Well let me begin at the beginning. | 0:49 | |
Many years ago, once upon a time, so to speak, | 0:54 | |
there was, if you can believe it, | 0:58 | |
a dollar shortage, an under valued American dollar. | 1:01 | |
A surplus of unwanted, foreign currencies. | 1:08 | |
Somebody in Washington had the happy idea | 1:13 | |
to use this confederate money in a useful way. | 1:15 | |
And so the Fall Bright program was set up. | 1:19 | |
This I remind you is a program | 1:23 | |
to export from the United States, | 1:25 | |
to the rest of the world, professors, | 1:26 | |
lecturers, students. | 1:30 | |
In academic life we believe that trade | 1:33 | |
should be a two way street, and so, | 1:35 | |
along with this export came the import | 1:38 | |
into the Unites States of professors, | 1:42 | |
lecturers and students. | 1:45 | |
This I believe by most accounts | 1:47 | |
would be considered to have been a very successful program. | 1:49 | |
And President Nixon had the happy thought | 1:55 | |
to celebrate the 25th anniversary of this program | 1:59 | |
by setting up a new category | 2:03 | |
called the Lincoln lecturers. | 2:07 | |
I presume this is named after Abraham Lincoln. | 2:10 | |
He appointed four Lincoln lecturers, John Updike, | 2:13 | |
the novelist, went to Africa. | 2:18 | |
John Hope Franklin, the distinguished historian | 2:21 | |
for the immersive Chicago, | 2:23 | |
went to another part of the world. | 2:25 | |
Charles Towns, the Nobel laureate in physics | 2:27 | |
who invented the laser has gone to Turkey | 2:31 | |
and to parts of Europe. | 2:35 | |
And I was given my choice of some part of the world | 2:37 | |
to go to, and I selected Asia in particular, | 2:41 | |
down under Australia, New Zealand, Indonesia, | 2:46 | |
Hong Kong, and also Japan where I've been before | 2:51 | |
and in which I'm very much interested. | 2:58 | |
It was a | 3:01 | |
busy trip for me, I was gone three weeks, | 3:06 | |
just to give an example of how busy, | 3:11 | |
the last day of the trip, before my well earned rest | 3:13 | |
and recreation period in Hawaii, | 3:19 | |
was spent in New Zealand, on South Island, | 3:22 | |
at Christchurch where Canterbury College is. | 3:26 | |
On that day I had a TV recording, | 3:32 | |
two radio recordings and a lecture. | 3:35 | |
And all this time, the beautiful Mount Cook | 3:37 | |
was hanging there in the distance. | 3:41 | |
Well it'll have to be another trip | 3:44 | |
before I get to enjoy the sights of New Zealand. | 3:45 | |
I went first to Japan, spent a week in Japan. | 3:52 | |
I spent a week in Australia, but in between and after, | 3:57 | |
the Australian visit, I visited Hong Kong, | 4:01 | |
Indonesia and New Zealand. | 4:05 | |
Every one of these countries has much to offer | 4:08 | |
to an economics researcher. | 4:12 | |
You learn about your own country by going abroad. | 4:15 | |
Let me begin now an substantive economic analysis. | 4:20 | |
If this last third of the century | 4:24 | |
is to belong to the Pacific Basin, | 4:29 | |
without doubt, Japan is the pace setter | 4:31 | |
for this development. | 4:35 | |
The Japanese economy continues to renew its miracles. | 4:38 | |
Its rate of growth this year is estimated to be, | 4:45 | |
in real terms, in the ten percent range. | 4:49 | |
The Japanese economy by careful estimates, | 4:53 | |
estimates by the Japanese Economic Center, | 4:57 | |
estimates by other research organizations in Japan, | 4:59 | |
will by the middle of this decade, | 5:06 | |
by 1974, 1975, be in prescapular terms, | 5:09 | |
where America was at the beginning | 5:15 | |
of this decade in 1970, 1971. | 5:18 | |
This is really cause for wonderment. | 5:22 | |
What it means of course is, that even | 5:27 | |
if there is some slowing down in the Japanese rate of growth | 5:29 | |
later in the decade, and I believe | 5:33 | |
there are good reasons to expect that | 5:35 | |
there may be such a slowing down, | 5:38 | |
by the end of the decade, in prescapular terms, | 5:41 | |
the Japanese economy will, in all likelihood, | 5:43 | |
have equaled that of the American economy. | 5:48 | |
And of course, the minute they attain parity with us, | 5:51 | |
that morning, well by afternoon | 5:56 | |
they will be ahead of us because they will be | 5:59 | |
going into that equality with a more rapid rate of growth | 6:01 | |
than we will then be enjoying, | 6:06 | |
even if, at that time, the Japanese do not have | 6:08 | |
so rapid a rate of growth as they now have. | 6:11 | |
You see this, a visitor to Tokyo, | 6:17 | |
if you go at short intervals, only 15 months | 6:21 | |
separated my last visit from the present visit, | 6:25 | |
you can see a difference in 15 months. | 6:27 | |
But the difference between say a 1959 visit | 6:30 | |
and a 1971 or 1973 visit, is absolutely breathtaking | 6:33 | |
in the developments. | 6:41 | |
I may say that from the same point of a simple tourist, | 6:43 | |
by no means are all the changes advantageous. | 6:48 | |
But from the same point of the material wellbeing | 6:53 | |
of the Japanese people, I don't think | 6:55 | |
there can be any doubt that between 1959 | 6:57 | |
and 1973, the Japanese economy has skipped many stages | 7:00 | |
which have taken the advances nations say of western Europe | 7:07 | |
many many decades to achieve. | 7:11 | |
I don't want here today to review | 7:15 | |
the history of that miracle, all miracles in retrospect | 7:19 | |
are explicable, there are no secret weapons | 7:23 | |
in the theory of economic development, | 7:26 | |
and if you do, as Angus Madison of the OACD has done, | 7:28 | |
an analysis of real output growth in Japan | 7:34 | |
in terms of behavior of population, | 7:40 | |
movement of population from the country | 7:43 | |
to the city, in terms of capital formation, | 7:46 | |
very heavy rates of capital formation | 7:51 | |
relative to the growth national product in Japan, | 7:55 | |
has compared to almost any other country in the world, | 7:59 | |
certainly in comparison to the Unites States. | 8:01 | |
And if you, more specifically, pinpoint | 8:04 | |
the qualitative composition of that capital formation | 8:07 | |
which has been very heavily in the direction | 8:12 | |
of machine tools and equipment, | 8:14 | |
and not so heavily in the direction of housing | 8:16 | |
for the Japanese people. | 8:19 | |
And if you go on to measure productivity changes | 8:21 | |
and technological innovations and technological imitations, | 8:25 | |
then you will tightly account for all the growth | 8:29 | |
that took place. | 8:35 | |
And nevertheless to explain something | 8:36 | |
is not to lose your sense of wonderment | 8:39 | |
because it certainly is remarkable people | 8:41 | |
who have been able to achieve | 8:44 | |
and maintain such a productivity rate of growth. | 8:46 | |
I want to concentrate upon the problems ahead for Japan | 8:51 | |
as they impinged upon the rest of the Pacific Basin, | 8:57 | |
and as they impinged upon the Unites States. | 9:00 | |
Just 15 months ago when I was in Japan, | 9:02 | |
we were at the height of the so called Nixon shock. | 9:06 | |
It was in October, after the August 1971, | 9:09 | |
substantial gold convertibility by President Nixon, | 9:13 | |
it was in October, before the December | 9:16 | |
Smithonian resolution of the crisis. | 9:19 | |
A resolution which some people thought | 9:24 | |
was for all time, but, which in the event, | 9:26 | |
prove to be viable only for the 14, 15 months | 9:29 | |
from December 1971 to the last crisis | 9:35 | |
of February 1973. | 9:41 | |
When I was in Japan in October 1971, | 9:44 | |
people were frightened. | 9:47 | |
I mean business people were frightened, | 9:48 | |
I mean people in the government were frightened, | 9:50 | |
I mean that the men in the street were frightened. | 9:52 | |
They had a good thing going with an undervalued Japan Asian | 9:54 | |
for many years, they had been running large surpluses, | 9:58 | |
larger surpluses than really made sense | 10:02 | |
on a long term basis, from the same point | 10:05 | |
of Japan internally, and also from the same point | 10:07 | |
of Japan's relationships with the rest of the world. | 10:11 | |
But, nevertheless, the correction of a dis equality | 10:15 | |
can be very painful, it can be very frightening | 10:20 | |
in anticipation and they really didn't know | 10:23 | |
but what this was gonna send them | 10:28 | |
into a tail spin, into a recession, into a depression, | 10:30 | |
into a lowering of their standards of life, | 10:34 | |
if not a lowering of their rate of improvement | 10:40 | |
in their standards of life. | 10:43 | |
It was very different this time, in March 1973, | 10:45 | |
because these trepidations, these fears, | 10:49 | |
were of course not realized. | 10:53 | |
Indeed we wouldn't have gotten into the new crisis | 10:55 | |
if the Japanese bouncer payments | 10:58 | |
had not remained so very strong | 11:00 | |
as it actually did, and so, this time, | 11:03 | |
the Japanese were really not frightened. | 11:09 | |
They were concerned, they were in some cases bitter | 11:12 | |
about actions which the United States had taken, | 11:15 | |
which the United States was urging upon them, | 11:18 | |
but there really was, I thought I could detect | 11:21 | |
an underlying sense of confidence | 11:23 | |
that this new change would not do them irreparable harm. | 11:27 | |
I may say that I agree with that diagnosis, | 11:34 | |
I didn't think that the change | 11:38 | |
was likely to do the Japanese long run harm, | 11:43 | |
but I couldn't rule out a rather considerable impact, | 11:47 | |
on a temporary basis. | 11:52 | |
However, I argued repeatedly before the Nixon shock, | 11:59 | |
that the Japanese and their own interest | 12:06 | |
should appreciate their undervalued yen. | 12:09 | |
I nagged at them for years, I gave very good advice | 12:13 | |
to the Japanese, I write frequently | 12:16 | |
for a publication there, that good advice is uniformly | 12:18 | |
not heated, I have no complaint | 12:25 | |
because much of the good advice that I give | 12:28 | |
is precisely what their own people | 12:31 | |
have been saying, what their own invest economers | 12:34 | |
have been saying in great numbers, | 12:37 | |
and what, to tell the simple truth, | 12:39 | |
they know in their hearts is the right thing for them to do. | 12:41 | |
To be honest right, before I went to Japan in March, | 12:46 | |
I did my homework, on what was happening | 12:49 | |
with the Japanese economy, and I would see | 12:52 | |
in all of the forecasting projections, | 12:54 | |
that the knowing economists in Japan | 12:59 | |
presume that there would be another up valuation. | 13:02 | |
The up valuation of the yen, which resulted | 13:05 | |
from the unilateral ten percent devaluation | 13:08 | |
by President Nixon in March, in February of 1973, | 13:10 | |
did, in other words, not come as a surprise. | 13:15 | |
Now perhaps its magnitude, when the Japanese yen | 13:17 | |
floated up by 16 percent, was more | 13:20 | |
than most of the analysts had thought. | 13:23 | |
But a typical analyst was building | 13:25 | |
into his 18 months projections ahead | 13:29 | |
at least a ten percent up valuation of the yen. | 13:33 | |
And I learned in Japan, and I learned elsewhere | 13:36 | |
in the Pacific Basin, that the large trading companies | 13:39 | |
have been building their goods | 13:44 | |
and making their long term contracts | 13:47 | |
for quite a while now on the basis, | 13:50 | |
not on the pre February 1973 period of the yen, | 13:52 | |
but on the basis of 250 yen to the dollar, | 13:58 | |
which, I translate for you, means a more appreciated yen | 14:01 | |
than has, in the fact, emerged, | 14:08 | |
after the defacto stabilization. | 14:11 | |
I was in Tokyo by the way, right at the height | 14:13 | |
of the crisis when the markets in Tokyo | 14:17 | |
and in Western Europe were actually closed. | 14:21 | |
It's a matter of interest to me | 14:23 | |
that a traveler like myself, was actually in no trouble. | 14:26 | |
I was able, by whose arrangements I don't know, | 14:30 | |
in any American type hotel in Tokyo, | 14:36 | |
to convert my dollars into yen freely, | 14:40 | |
the rate wasn't a very favorable one, | 14:46 | |
it was 256 to the dollar if I remember correctly, | 14:48 | |
but in the other hand it's not a terribly unfavorable one. | 14:51 | |
And in the event after the defacto float steadied down, | 14:53 | |
after the markets were open, the rate which I got | 15:01 | |
256 was not much worse than the 265 rate | 15:05 | |
which then prevailed. | 15:09 | |
I wanna say a word about these trading companies. | 15:13 | |
I think that my listeners should read | 15:17 | |
for trading company conglomerate. | 15:20 | |
Conglomerates are a dirty word in the United States, | 15:22 | |
if you take a typical conglomerate | 15:24 | |
and if you look through its bookkeeping | 15:26 | |
and you'd better know how to look | 15:28 | |
through the bookkeeping of a typical conglomerate, | 15:30 | |
you will still find that the price | 15:32 | |
which the stock market attaches to the shares | 15:35 | |
of a typical conglomerate in terms of its genuine earnings | 15:39 | |
and in terms of its earning prospects, | 15:43 | |
as calculated by the prudent man, | 15:47 | |
is a very low multiple. | 15:49 | |
In other words, conglomerates are in the dog house | 15:50 | |
in the United States, people don't really believe | 15:53 | |
in the principle that one company can run | 15:56 | |
many unrelated activities. | 16:00 | |
Yet when we turn to Japan, a typical trading company, | 16:03 | |
a typical group, the Mitsuis, Mistubashis, | 16:07 | |
and so forth, those are all | 16:13 | |
what we would call a conglomerate. | 16:16 | |
And if you look into economic history, | 16:19 | |
you will realize that as soon as you go abroad, | 16:21 | |
as soon as you go to smaller economies, | 16:24 | |
there is really no substitute because of the laws | 16:26 | |
of increasing returns for conglomerates. | 16:29 | |
In a typical small country, | 16:32 | |
in a typical less developed country, | 16:34 | |
you will find corporations like WR Grayson company, | 16:36 | |
which do a great number of only partially related activities | 16:40 | |
and I remind you that this ginger company | 16:45 | |
which helped to develop India and the East | 16:49 | |
are, was a conglomerate by modern standards | 16:52 | |
Hudson Bay company which helped to develop | 16:56 | |
our Northern neighbors Canada, | 16:59 | |
was India's a conglomerate. | 17:01 | |
Well this has a bearing because, just as an example, | 17:05 | |
I wanna go on to appraise what the two devaluations in Japan | 17:10 | |
have done to relative prices. | 17:16 | |
And what those devaluations are likely | 17:18 | |
to accomplish in the way of corrective action | 17:20 | |
on the imbalance in our payments relationship | 17:23 | |
to the Japanese. | 17:29 | |
But to anticipate just one small aspect of that discussion, | 17:31 | |
let me mention that I received evidence | 17:37 | |
on my return here from American business men in Tokyo, | 17:40 | |
some of whom had listened to me | 17:44 | |
and on one or another of the many lectures | 17:47 | |
that I found I had to give in a very few days, | 17:51 | |
in the week that I was in Tokyo, | 17:55 | |
there is evidence that the trading companies | 17:57 | |
are both on the import side | 18:01 | |
and on the export side of the market. | 18:03 | |
Now of course, they're more on the export side | 18:05 | |
than on the import side because Japan doesn't import | 18:07 | |
as much as she exports, she has a very large, | 18:10 | |
positive, swollen surplus in her balance | 18:13 | |
of trades and her balance of merchandise trade. | 18:18 | |
But they are in both sides. | 18:22 | |
And, one of the corrective effects which we should expect | 18:24 | |
from the depreciation of the American dollar | 18:30 | |
by about a third relative to the Japanese yen, | 18:35 | |
or what's the same thing, the appreciation | 18:39 | |
of the Japanese yen relative to the American dollar | 18:41 | |
by about a third, is, that the prices | 18:43 | |
of delivered American goods in yen | 18:48 | |
should now be cheaper. | 18:50 | |
But there's some evidence that the trading companies, | 18:53 | |
who feel that they're gonna take a loss, | 18:58 | |
and gonna be squeezed on their exports, | 18:59 | |
have been raising their prices in Japan | 19:01 | |
on American goods. | 19:05 | |
Now that's exactly in the wrong direction. | 19:08 | |
And one suppose that that's a short run effect. | 19:11 | |
But even if they maintain the prices intact, | 19:14 | |
and I was able to check for myself, | 19:18 | |
that many of the American prices were, | 19:20 | |
in the short run at least, maintained intact | 19:23 | |
in the face of this 33 | 19:26 | |
and a third percent depreciation of the dollar. | 19:28 | |
They, if they continue to maintain such practices, | 19:32 | |
then those of us who are trying to be elasticity optimist, | 19:37 | |
and are trying to tell ourselves | 19:41 | |
that the depreciation of the dollar will help | 19:43 | |
to correct the situation, we'll find ourselves | 19:46 | |
in very gloomy position because of course | 19:49 | |
the classical medicine won't have a chance to work | 19:51 | |
unless it's given that chance to work. | 19:53 | |
Now you may say, how can they do this, | 19:56 | |
and why do they do it, well it's easier | 19:58 | |
to explain why they do it than to explain | 19:59 | |
how they can do it. | 20:02 | |
The reason that they give is that technical loss | 20:04 | |
on their export in comparison with their previous hopes | 20:07 | |
and anticipations, expectations, desires, | 20:11 | |
they try to make up for it by, | 20:14 | |
as you might say, increasing their monopoly profit | 20:17 | |
on the import side. | 20:21 | |
This perhaps gives us a key, as to | 20:23 | |
how they're able to do it, if they are able to do it, | 20:26 | |
namely it must be the effect of some monopoly power. | 20:29 | |
In fact, it must be the effect | 20:33 | |
of someone using monopoly power, | 20:36 | |
it must be that they have some market power, | 20:38 | |
if it really exists in any considerable amount, | 20:40 | |
but that they were utilizing all of that market power | 20:44 | |
to the hilts and it's not of course a question | 20:48 | |
of one Japanese trading company, | 20:52 | |
of one Japanese importer, if you have a common psychology | 20:55 | |
and a common elusive practice, | 20:59 | |
then it's easier for an economist to believe | 21:02 | |
that a whole group of them, at least in the short run, | 21:04 | |
acting in concert, could have some unused monopoly power | 21:07 | |
which, under the threat of necessity, | 21:11 | |
they began to use. | 21:15 | |
Now I must caution myself and any listener, | 21:17 | |
not to extrapolate into the long run | 21:23 | |
all the perversity that happen in the short run. | 21:27 | |
But, I do just wanna report to you, | 21:30 | |
that if you talk to a representative group | 21:32 | |
of American business men who are in very close | 21:34 | |
of a relationship to the Japanese, | 21:37 | |
you will not find yourself surrounded | 21:40 | |
by a bunch of elasticity optimists, | 21:43 | |
on the contrary, and perhaps it's the bias inherent | 21:45 | |
in any practical means special pleading. | 21:49 | |
The anecdotal and casual empirical material | 21:53 | |
which they provide to a person like me, | 21:57 | |
if I took it at face value, would be | 22:00 | |
in the direction that you've gotta hold your breath | 22:03 | |
for a long time before you can hope | 22:06 | |
to see strong influences in the balance of payments, | 22:09 | |
as a result of the two dollar depreciations. | 22:16 | |
However, I have to stand back a little, | 22:26 | |
and use my judgment, not as a practical man, | 22:28 | |
but as a student of economics. | 22:32 | |
Prices in Japan are very high. | 22:37 | |
To an American tourist, they seem really astronomical. | 22:41 | |
We're accustomed here back at home, | 22:47 | |
and in the three weeks interval that we were gone, | 22:50 | |
my wife reports coming back home, | 22:54 | |
that she had a strong impression | 22:56 | |
that prices had risen significantly, | 22:59 | |
and noticeably, just in that three weeks interval. | 23:03 | |
Well that says nothing, compared to what's happened | 23:07 | |
to the purchasing power of the American abroad. | 23:09 | |
Tokyo, it's well known, is the most expensive place | 23:14 | |
in the world for an American business man to live. | 23:18 | |
If a business firm sends an executive to Tokyo, | 23:21 | |
and provides him with their special cost of living allowance | 23:26 | |
and they do, they must, nobody could live | 23:30 | |
as an American in an American style of living | 23:35 | |
in Tokyo without such a special, a living allowance. | 23:37 | |
That allowance must be a very large one. | 23:41 | |
I asked a business man there whether the home offices | 23:44 | |
had been making adjustments to the depreciation | 23:48 | |
of the buying power of an American income | 23:52 | |
spent in Tokyo and usually I got the report | 23:56 | |
was that the home office was making such adjustments | 24:00 | |
but belatedly and inadequately. | 24:03 | |
To illustrate what I have in mind, | 24:06 | |
supposed that you had a young couple, | 24:09 | |
with one child or two children, | 24:14 | |
assigned to Tokyo and they had to find | 24:16 | |
for themselves a relatively modern, | 24:20 | |
relatively up to date, American style apartment, | 24:24 | |
with two bedrooms, with one or two beds, | 24:29 | |
with a modern kitchen and in an area | 24:36 | |
where they could live, where somebody | 24:41 | |
would know their language if they weren't able | 24:43 | |
to speak more than a little bit of kitchen Japanese. | 24:45 | |
Now, such an apartment in Boston, Greater Boston, | 24:50 | |
the area which I know best, would, I think, | 24:55 | |
cost, let me say 250 dollars a month. | 24:59 | |
You could get an apartment like, what I've described, | 25:03 | |
for less than that, but if it was suitable | 25:08 | |
to a young executive, it might well cost that amount. | 25:12 | |
You also by the way could pay more than that. | 25:15 | |
Now, those of you who're listening from New York City, | 25:17 | |
I will, unless you are in a rent controlled area, | 25:21 | |
will not think this figure to be high, | 25:26 | |
so raise it by a hundred dollars if you'd like | 25:29 | |
for Greater New York and call it 350 dollars a month. | 25:31 | |
In Tokyo, such an apartment I think | 25:37 | |
would cost you a thousand dollars a month. | 25:40 | |
It might cost you 12 000 dollars a month. | 25:42 | |
A typical large oil company, will have a compound | 25:45 | |
for its executives and as one moves out, | 25:48 | |
another moves in the the bed they just change the sheets, | 25:51 | |
so to speak. | 25:55 | |
I want to separate out the effects | 25:58 | |
of the depreciation from certain other things | 26:01 | |
that are going on in connection to relative prices | 26:04 | |
in Japan and in some of these other areas. | 26:07 | |
So let me just turn to the problem of hotel rooms. | 26:10 | |
A traveler in the Pacific today | 26:15 | |
will find American type hotels everywhere. | 26:18 | |
Hiltons, Intercontinentals, they are not great luxury hotels | 26:21 | |
but they're very comfortable by American standards. | 26:27 | |
You can expect to pay more abroad, | 26:31 | |
this is shocking to people in those areas, | 26:34 | |
than you'd have to pay in American cities, | 26:37 | |
and you'd have to pay more than you'd have to pay | 26:40 | |
in New York and Washington which, | 26:41 | |
in my experience, are the most expensive places. | 26:43 | |
In other words, you've gotta figure out | 26:45 | |
about 45 dollars a day for a couple | 26:47 | |
and you might not even get twin beds | 26:51 | |
under those circumstances, they would not be | 26:53 | |
considered choice hotel accommodations | 26:55 | |
by American standards. | 26:58 | |
To capital one business man was trying | 27:01 | |
to explain to me how the home offices | 27:03 | |
could never really learn the facts of life | 27:05 | |
as fast as the people on the scene, | 27:09 | |
he mentioned to me that he'd gone to lunch | 27:11 | |
in the Oakroom of the hotel Acora, | 27:13 | |
that's the typical American hotel near the embassy, | 27:17 | |
and had paid six dollars for a hamburger. | 27:19 | |
That's an exaggeration because | 27:23 | |
you could go to McDonald's in Japan | 27:25 | |
and you'd probably pay about, little under a dollar, | 27:27 | |
more than at home, but it's an exaggeration in a good cause. | 27:30 | |
That's how it goes, everything in Japan, | 27:35 | |
for an American, every Japanese quoted price | 27:37 | |
has to be multiplied by four now, | 27:41 | |
and not by three. | 27:43 | |
The result is that all of the Japanese are not frightened | 27:45 | |
by the second appreciation, anywhere near so much | 27:48 | |
as they were by the first, I suspect that | 27:53 | |
by the second appreciation, it'll begin | 27:56 | |
to really cut into their exports. | 27:59 | |
And I did get some evidence for this, | 28:04 | |
as for example if I talked to an American | 28:05 | |
in the firearm equipment business in New Zealand. | 28:09 | |
He already is finding it advantageous | 28:12 | |
for his multinational company to being | 28:16 | |
to get some items in the United States | 28:19 | |
which were marginally unattractive before | 28:21 | |
in comparison to Japan and elsewhere, | 28:24 | |
because of the changed value of the dollar. | 28:26 | |
So, I'm left with the impression, | 28:30 | |
strong impression, that these appreciations are a good thing | 28:34 | |
that they are needed to bring out adjustments | 28:40 | |
which if long delayed, will cause festering protectionism | 28:44 | |
in the United States, and will cause continuation | 28:48 | |
of swollen invested interest in the Japanese | 28:53 | |
and other surplus country export industries. | 28:57 | |
This therapy is needed, it's in the right direction. | 29:02 | |
But, being on the scene, being impressed | 29:06 | |
by short run effects, I have to report | 29:11 | |
that as far as the trip was concerned, | 29:13 | |
it did not bring me home | 29:15 | |
a more confirmed elasticity optimist, | 29:17 | |
and it did not suggest to me that, within the next year | 29:20 | |
or two, you're gonna get a massive swing | 29:26 | |
in the American balance of payments. | 29:29 | |
Let me say, by the way, | 29:33 | |
that something that's happening in Japan | 29:35 | |
which I think is probably a good thing, | 29:37 | |
there is less cow telling to Americans. | 29:40 | |
Even going through the politeness of the Japanese, | 29:44 | |
which is traditional, almost notorious, | 29:49 | |
you're not so overwhelmed with hospitality, | 29:53 | |
you're not treated as great white Gods | 29:56 | |
in the way that, from the time of the McCarthur occupation | 29:59 | |
Americans tended to be treated. | 30:03 | |
I have a simple materialist interpretation | 30:06 | |
of history for this. | 30:09 | |
Poor people envy rich people, and treat them with difference | 30:11 | |
the Japanese are becoming almost as rich as we are, | 30:16 | |
in fact there's gained to be a suspicion in Japan | 30:19 | |
that America is something of a paper tiger | 30:21 | |
in terms of industry, and in terms of productivity, | 30:24 | |
and you're beginning to get a certain amount | 30:29 | |
of defensive comment on America, like that | 30:31 | |
that we have been getting for a long time | 30:34 | |
from the French, why is it that the Americans expect us | 30:37 | |
to make all of the adjustments? | 30:40 | |
Why don't they pull up their socks? | 30:41 | |
Why don't they work harder? | 30:42 | |
Why aren't they more productive? | 30:44 | |
Why don't they save more? | 30:45 | |
Why don't they stop bellyaching? | 30:47 | |
Why don't they control their inflation better? | 30:49 | |
They are controlling their inflation, the American, | 30:53 | |
better than us Japanese, but they have more need to | 30:55 | |
because it's they who have the balance of payments. | 30:58 | |
I suspect that all of this is the sign | 31:01 | |
of some profound changes to come | 31:06 | |
in the patterns of subordination | 31:08 | |
of Japanese foreign policy to that | 31:11 | |
of our own state department. | 31:13 | |
But, I think too, from the long run view point, | 31:15 | |
it is part of a process of growing up | 31:18 | |
and it's partly, it's probably a good thing. | 31:20 | |
Now, my time is up, I wanna get back to the American scene, | 31:23 | |
I haven't scratched the surface of the Pacific | 31:27 | |
but in later tapes I hope to do that. | 31:29 | |
Interviewer | If you have any comments | 31:32 |
or questions for Professor Samuelson, | 31:33 | |
address them to Instructional Dynamics Incorporated | 31:35 | |
166 East Superior Street, Chicago, Illinois, 60611. | 31:39 |
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