

			THE JAPAN THAT CAN SAY NO
 
      INTRODUCTORY NOTE
 
      This is ... a translation of a best-selling Japanese book called "The
      Japan That Can Say No."  If you read no further in this introductory
      note, please at least read this: the group that has typed in and
      posted this translation wishes to secure for it the widest possible
      distribution.  Please ... mail [this document] either in print or 
      electronically, to colleagues, newspaper editors, members of the
      national and local government, academics, radio talk-show hosts,
      friends, and family; hand them out at work; leave piles of them by
      the coffee machine.  Note that the book is rather short, and so can
      be conveniently Xerox-copied.
 
      This book has been a best-seller in Japan, and has been the subject
      of some attention in the United States; members of Congress have read
      it, and some spoke of reading it into the Congressional Record, but
      none of them ever did that.  It has been excerpted in newspaper
      articles and Usenet postings, but these excerpts are always the same,
      because nearly no one has available the full text of a translation.

      This has not been an oversight on the part of the authors, Akio
      Morita and Shintaro Ishihara.  Akio Morita is the chairman of Sony,
      the very large electronics conglomerate that has recently purchased
      Columbia Pictures. Shintaro Ishihara has been described in some news
      accounts as a right-wing extremist, and Morita's association with him
      has been described as a foolish mistake.  These accounts are very
      misleading; so nearly as I can tell, Mr. Ishihara is no more an
      extremist in his country than, say, Bob Dole is in ours.  He is a
      somewhat right-of-center, charismatic and powerful member of the
      ruling Liberal Democratic Party who placed third in the race to
      succeed Prime Minister Sosuke Uno this past August.  Ishihara has
      served as the Minister of Transport, and is currently a member of the
      Diet, Japan's legislative body.

      The writers of American news accounts that call Mr. Morita's
      co-authorship of the book with Mr. Ishihara a foolish mistake are
      making a basic error of a sort that has complicated our understanding
      of the relationship between the United States and Japan: they are
      imagining that the reception the book would be given in the United
      States should have played a major factor in Morita's decision.  But
      this book was not written to be read in the United States (and, so
      far, it has not been); it was written to be read by a Japanese public
      that questions the nature of the post-war political relationship
      between the United States and Japan.  It is a political instrument
      that has helped to define for the public the positions of its authors
      in much the same way that a popular book of political essays might do
      so for an up-and-coming politician in the United States, and more so,
      because the Japanese read such books more avidly than does the
      American public.

      The book's publisher, Kobunsha Publishing Ltd., has said that it has
      no plans to publish the book in English and has authorized no
      translations. Ishihara and Morita have spoken of how the United
      States government has violated their copyright in distributing
      translations of the book to members of Congress, and Morita has gone
      on record as saying that he does not want to publish the book in the
      United States, as this might inflame relations between the two
      countries.

      According to rumor, the translations available in Washington have
      been written by either DARPA or the CIA.  We have no idea if this is
      true, or which translation this might be; however, it is one of those
      circulated in Washington.  It was apparently done in haste (and
      perhaps by non-native speakers of English), as it contains numerous
      typographical errors, errors of grammar, and errors of diction, which
      we have made no attempt to rectify.
 
      This translation has been entered and electronically distributed by a
      group that wishes to remain anonymous.  This is because we have no
      wish to be bear-hugged in court by a powerful Japanese politician and
      the CEO of an immense Japanese conglomerate, all under the approving
      eye of the U.S. Department of State.  However, we should like to
      explain why we wished to embark on a project whose success could only
      worsen the trade relationship, and even the political relationship
      between the United States and Japan.

      We Americans live in a country controlled by a variety of interests.
      Over the past ten years we have repeatedly put into government a
      group of people who cannot even make up their minds as to whether
      public education should be funded; who are against the creation of a
      national industrial policy; and who do not believe that the
      government should take any steps to ensure that manufacturing jobs
      should continue to exist in the United States.

      Like many Americans, those of us who have undertaken to distribute
      this book are able to make up our minds about all of these issues. 
      We believe that public education should be one of the first national
      priorities and that the United States should have national industrial
      and trade policies to ensure the continued existence of domestic
      manufacturing.  Our feelings about this are based on a simple desire
      to see the United States maintain a decent standard of living for its
      citizens.  People who flip burgers are able to realize fewer of their
      dreams than are skilled laborers who build things, not least because
      people who flip burgers create less value for the economy and so make
      less money.

      How does "The Japan That Can Say No" figure in this?  Our country is
      obsessed with feeling good, to the exclusion of good sense.  The
      popular conception of our time runs something like this:
      "Everything's great, just like the president says.  Those crazy folks
      on Wall Street go up and down, but they do okay, and if some more
      factories close, if a few shiftless characters can't afford housing,
      what the hell, huh?  And those clever Japanese, what will they think
      of next?  They're always thinking of neat new toys to make for us."

      The reality is much more grim.  It seems very possible that in ten or
      twenty years there will be no sector in which American-made products
      are internationally competitive.  Many American industrial concerns
      no longer establish domestic manufacturing plants because they are
      unable to find laborers sufficiently skilled to operate them
      efficiently.  We educate fewer and fewer engineers each year.  Much
      of American commerce is controlled by a managerial class that has
      been trained mostly in marketing, has trouble with simple technical
      concepts, and prefers the ease of marketing foreign products to the
      complexities of managing manufacturing and development.  Meanwhile,
      many American citizens are unable to make ends meet, and their number
      is clearly increasing.

      All of these points are made regularly by domestic policy analysts,
      to absolutely no significant effect.  We were struck by the fact that
      they are also made repeatedly in "The Japan That Can Say No,"
      although here they are often couched in racist and belligerent
      language.  Ishihara and Morita wrote their book for domestic
      consumption, to promote themselves and particular Japanese national
      policies.  We wish to use the book for an analogous purpose: we hope
      that reading "The Japan That Can Say No" will help to jolt Americans
      out of their complacency.

      We believe that the urgency of our country's situation justifies our
      disregard for the wishes of the book's authors.  Their interest in
      analyzing the United States' problems seems to be motivated at best
      by a penchant for self-congratulation and at worst by one for
      jingoistic sentiment and self-promotion.  The fact that they are
      attempting to ensure that their audience remains exclusively Japanese
      reinforces our sense that they do not see our country's interests as
      theirs.  Still, much of what they say is accurate, and we believe
      that reading it may help our country to act in its own interests.

      Consider the analogy of a family who make their living by farming,
      and who are in domestic trouble.  The head of the family (say the
      father) is a compulsive gambler, and, although some family members do
      their best to wake him up to the fact that he is destroying the
      family's livelihood, he pays no attention, selling off the tractor,
      the truck, the cows, mortgaging the house and the fields.  He points
      out to his family that his good friends in town who run the bank, the
      general store, and the casino are still happy to do business with
      him.  The bank still gives him mortgages, the general store still
      buys what's left of the farming equipment, and the casino always lets
      him in to play.

      Perhaps if the farmer knew he was the laugh of the town, he'd pay
      some attention.  If he heard his friends clucking their tongues and
      saying that it was an awful shame, what he was doing to his family
      and that they didn't think he'd ever again get back on his feet, even
      as they eagerly bought his tractor and his fields and continued
      taking his money at the casino, he might think twice.  Maybe he'd
      even realize how far he'd fallen, and set about the difficult work of
      putting his farm back in order.
 
 
      If this makes sense to you, please work to disseminate copies of this
      book as much as possible, especially to people outside of the Usenet
      community -- those of us with access to networks are, after all, a
      small minority of the national community.  Please feel free to
      disseminate as well this introductory note.



 
 
			 THE JAPAN THAT CAN SAY NO
		     The New U.S.-Japan Relations Card
				    by
				Akio Morita
			     Shintaro Ishihara
 
 
	      Published in Japan by Kobunsha Publishing Ltd.
 
			[the cover sheet then says:]
			       Kappa-Holmes
 
 
      Translator's Note: The material written by Mr. Morita is very
      straightforward; however, Mr. Ishihara tends to ramble, change from
      one subject to another without much transition, and uses a great deal
      of sayings and proverbs which when directly translated to English make
      no sense.  What has been translated is the closest equivalent in
      English we could get.
 
      Editor's Note: This material was given numbered section headings and
      reformatted for easier reading.  Also, a number of small misspellings
      were corrected.

 
   1.0 THE NECESSITY FOR PRESENT DAY JAPANESE TO REFORM THEIR CONSCIOUSNESS
       (Ishihara)
 
   1.1 Japanese People Have Become Top Heavy
 
      Each month, there is the Cabinet meeting for the economic report.  I
      am one of those kinds of guys who gets up early and goes before the
      cabinet meeting, which winds up by 9 a.m., or 8 at the earliest. 
      While rubbing my sleepy eyes, I go over the reports by the Bureau
      Chief of the Economic Planning Agency and by the Director of the Bank
      of Japan.  Each month, the reports are almost identical.  Generally,
      the Cabinet ministers sleep through it.  When I suggested to the Chief
      Cabinet Secretary that in this age of governmental administra- tive
      reform, why not give up these meetings, the reponse, not entirely
      unexpected on my part, was that these were absolutely necessary, even
      if there were some Party executives who did not attend.

      Thus, each month, there is a repetition of a nearly identical report.

      The Bureau Chief of the Economic Planning Agency said this month, just
      as he did last month, that the magnitude of Japan's surplus in
      international revenues was tending to shrink.  In other words, this
      means he is saying that it is perfectly alright for business not to be
      so good.  The Cabinet members all nod and underline this in red.

      Myself, I thought this was a really strange phenomenon, so I turned to
      the Minister for Home Affairs, Mr. Kajiyama, who was sitting beside
      me, and asked what was going on here.  Everybody is thinking it's just
      great that business isn't prospering that much and eagerly red-lining
      that information.  Couldn't you say, however, that a country like that
      won't last long?  Words, words -- if the meaning of words keeps
      changing, you can never be really sure what is being said.  In other
      words, aren't our values changing?

      If we take Japan's vast trade surpluses as one type of crisis
      situation, then this points to the necessity of changing Japan's
      economic and industrial structure.  While leaving undetermined for the
      moment whether or not the conclusions of the Maekawa Report were
      valid, it is true that the "comprehensive and vast" industries are
      tending to recede and the lean and mean knowledge-intensive types are
      coming into their own.  When the term "comprehensive and vast"
      (jukochodai) is applied to human beings, it is a form of praise, while
      the opposite, "light and small" would be to berate the same. However,
      when these terms are applied to the industrial structure, their
      meaning has come to change.

      What matters, however, is whether or not this is good.  Should we all
      be at ease, not that we are not dirtying our hands and sweating in
      order to make things with our own hands?  Certainly know-how comes
      about from one type of mental activity, and coming up with it is a
      work worthy of respect.  Looking at history, however, in cases where
      the whole society of the country was using their brains instead of
      their hands, not one has lasted to prosper today.  In some sense, it
      may be true that the Japanese people are being forced into a new
      historical experience, but can we go on now, as we are, thinking we
      are the chosen people?

      When looking at the actions of the Japanese people these days, I
      recall that these seem similar to ET, the extra-terrestrial, in the
      Speilburg films. I feel that it may well be the Japanese people will
      evolve into something like ET with pronounced eyes and noses and a big
      head making them top-heavy, over an abnormally thin body and slender
      arms and legs.

      Therefore, it was impossible for Japan to get more than a few gold
      medals at the Seoul Olympics, which many Japanese read as being
      abnormal.  While it may be that this is a sign that a new people has
      arisen to make contributions in other areas, it seems more natural to
      me that our descendants would be able to continue to sweat and work to
      keep the country strong.
 

   1.2 Japan's Advanced Technology Is at the Heart of Military Strength
 
      This is something advocated by Mr. Morita, who is a company leader
      that has driven Japan's advanced technology and who is known for
      manufacturing excellent products.  He pointed out that the INF
      limitations (the restrictions on intermediate range nuclear forces)
      was something that the Soviet and American leaders came to each other
      on.  While this was an epoch-making event, it was certainly not done
      because Americans and Russians had a new sense of the danger of
      nuclear weapons, they were not acting from the standpoint of human
      morality.

      There may be some people who took the INF negotiaions as a sign that
      both countries were beginning to act from their sense of humanity, but
      I think the reason why they got together on this is different.

      Whether it be mid-range nuclear weapons or inter-continental ballistic
      missiles, what ensures the accuracy of weapons is none other than
      compact, high-precision computers.  As everyone knows, current ICBMs
      use the MIRV concept where there are multiple warheads.  When an
      attacking missile gets near enough to be detected, the warhead splits
      into 8 or 9 separate heads. Not all of them contain hydrogen bombs,
      however, some are dummies designed just to dupe the enemy.

      The remaining warheads lose speed, reenter from space, fall, run
      sideways and follow complicated paths, but in the end, they hit the
      targets picked for them by spy satellites and destroy them to within 1
      second of latitudinal and longitudinal accuracy.  For a Soviet ICBM,
      this would mean hitting the silo containing the retaliatory ICBM in
      Vandenburg AFB California.

      These silos go 50 or 60 meters underground and are strong fortresses
      having thick walls of reinforced concrete.  If a direct hit is not
      scored upon them, one cannot destroy the hydrogen bombs inside.  The
      equipment will not even be affected as much as it is in an earthquake
      if a direct hit is not made.  Thus, it is absolutely vital that a
      direct hit is made.

      At the present time, Soviet technology allows these missiles to hit
      within a 60 meter accuracy, while for the U.S., it is 15 meters, and
      there is concern that this 15 meters has to be brought down to zero. 
      This type of precision calls for a more complex orbit the further the
      attack proceeds, and only artificial intelligence can ensure accuracy. 
      It may well be that America was the 4th generation leader and that the
      1 megabit and several megabit devices which will support the next, the
      5th generation, can be developed by American know-how.  However, to
      use this know-how across diverse applications, including weapons,
      requires a country with dramatically advanced production management;
      it is only Japan that can deliver on it.

      In sum, if Japanese semiconductors are not used, this accuracy cannot
      be assured.  It has come to the point that no matter how much they
      continue military expansion, if Japan stopped selling them the chips,
      there would be nothing more they could do.

      If, for example, Japan sold chips to the Soviet Union and stopped
      selling them to the U.S., this would upset the entire military
      balance.  Some Americans say that if Japan were thinking of doing
      that, it would be occupied. Certainly, this is an age where things
      could come to that.  The more technology advances, the more the U.S.
      and the Soviet Union will become dependent upon the initiative of the
      Japanese people -- this is getting crazy now, but the point is clear.

      The U.S. Defense Department's Science Commission recently prepared a
      huge classified report on electronic engineering.  Looking at this,
      one can well understand the sense of crisis that the U.S. has with
      respect to Japan.

      The report states that if Japan is left to go as it is, it will be
      impossible to get the lead back.  This report is very accurate in
      assessing the areas of weakness in the U.S. and the strengths in
      Japan, but only the President and a few select people have seen the
      report.  If it were seen by the general public, it would certainly
      raise quite a commotion.  It is in this area where the U.S.
      specialists have their greatest sense of danger, primarily centering
      on Japan's semiconductor technology.

      -- We have grown very dependent upon America's technological
      superiority in military strength.  In that technology, electronic
      equipment is the most effective technology.  Semiconductors are the
      "key" to preserving this superiority in electronic equipment, they are
      the "heart of the equipment." If competitive, mass production of
      semiconductors is the key, then this is in turn dependent upon having
      the market to support mass production. --

      This dependence on the market for supporting mass production can be
      seen in that America did not have the vast and diverse needs for
      semiconductors, as Japan did in rice cookers and other household
      appliances.  In Japan, these sizable and diverse needs created the
      market for semiconductor production. The report continues:

      -- American's Semiconductor Industry for its commercial mass
      production is losing its superiority minute by minute.  There is a
      strong relationship between superiority in production technology and
      superiority in semiconductor technology, this is being transferred to
      foreign countries minute by minute. Very soon now, the defense of
      America will become dependent upon supply sources abroad.  It is the
      opinion of the task team that this is something which is absolutely
      unacceptable for the United States. --

      What is meant in the report by "foreign supply sources" is none other
      than Japan.  Further, they seem to worry about the following:

      -- What is more problematic is that the electronic equipment systems
      are being transferred abroad, where they could more easily get
      transferred into the hands of the Soviet Union. --

      In other words, their sense of crisis stems from the fact that the
      semiconductor technology is absolutely vital in maintaining military
      superiority, and that this might flow from Japan to the Soviet Union. 
      I feel that what is behind this abnormal hysteria on the part of this
      country is that this pivotal military technology is in the hands of
      another country, not even Europe, but in the hands of an Asian
      country, Japan.

      Toshiba, etc. which was speared by COCOM is the fault of this hysteria
      by the U.S.  If that had been criticism from the pure perspective of
      the law, it would not for a moment have any basis at all.

      The 1 megabit semiconductors which are used in the hearts of
      computers, which carry hundreds of millions of circuits in an area
      which is one-third the size of your little fingernail, are only made
      in Japan.  Japan has nearly a 100 percent share of these 1 megabit
      semiconductors.

      The United States has the know-how to make them, but when it comes
      down to actual production, they don't have the technicians; they don't
      have the employees.  Further, they don't have the production
      management.  Because they don't have development and production linked
      into one unit, they guard know-how like a jewel.

      America went after cheap labor and set up factories in Southeast Asia,
      where they could make 256k chips (1/4 the capacity of 1 megabit
      chips), but they could not catch Japan.  Now, Japan is at least 5
      years ahead of the U.S. in this area and the gap is widening.  There
      is even some kinds of basic research which cannot be accomplished
      without using one of these advanced computers.  It take excellent
      computers in order to develop other advanced computers -- it is a
      cycle of technology.  In other words, the bigger the gap in advanced
      computer technology, the more difficult it is to catch up.

      The current situation in the world is that those kinds of computers
      are central to military strength and therefore central to national
      power.  This is why the U.S. is being driven so hard.  For example, in
      performing simulations of what elements would be needed by aircraft
      flying at mach 2, a regular computer might take 40 years to perform
      the necessary computations.  If the same query is put to a new,
      advanced, computer, however, the answer will come out in a year. 
      Japan has almost the total share of the 1 megabit chips which are at
      the heart of these computers.  In that sense, Japan has become a very
      important country.
 
 
   1.3 There Is A Need for Japanese to Change Their Consciousness in Light	
      	of High Technology
 
      As the world goes smaller, and issues in the world further settle
      down, whether it be China or Siberia, development will proceed.  In
      order to get the needed access (participation in the market), the most
      important possibility lies in linear technology.  Japan and West
      Germany are the most advanced countries in this research and
      development, and the theoretical base of Japanese technology is far
      superior.  West Germany has given up in research on superconducting,
      but Japan has cleared three technological obstacles which were
      envisioned by West Germany.

      To make a long story short, the West German magnetic floating train
      development realized a levitation of only 8mm, but Japan's "Maglevel"
      superconducting linear motorcar realized a levitation of 10
      centimeters, and speeds of 500 kilometers per hour.  This type of
      technology does not exist anywhere in the Soviet Union or the United
      States, it only exists in Japan and West Germany.  If the giants in
      the economic field and the politicians can join together around this
      type of technology, it would open up new possibilities for our
      advancement.  Whether or not this can be achieved depends upon our
      large and small choices in the future; in sum, it is a question
      involving the sensibilities of our politicians.

      There is a Jiyu Shakai Kenkyu-kai (Free Society Research Association)
      which is presided over by Mr. Morita.  This was formed more than 10
      years ago as an association of politicians and businessmen.  I am the
      youngest, but I also participate.  We get together for discussions one
      or twice per year.

      Recently, Mr. Kissinger predicted that Japan might become a military
      superpower.  This, however, was not the foolish step of Japan getting
      ICBMs and refurbishing the old Yamato battleship, it pointed to the
      danger that no matter how much the U.S. or Soviet Union developed
      space, equippped themselves with space platform weapons, the military
      initiative to control these would be dependent upon Japanese
      technology.  The question now is whether Japan has politicians who
      accurately understand the history behind what we have now become.

      We Japanese now face choices on whether we can boldly proceed or stand
      back quietly.  It may be possible that Japan can secure a new culture
      for itself based upon the skeleton of the development of high
      technology.  We must not restrain ourselves to what we have done up to
      this point.  The dregs of the postwar period are too prominent in the
      consciousness of Japanese.  I feel that however hesitatingly, the
      revolution in our consciousness has already begun.

      The Soviet Union implemented a revolution in consciousness with its
      criticism of Stalinism, and China achieved the Great Cultural
      Revolution.  The United States also realized a type of consciousness
      reform through its bitter experiences in the Vietnam War.  Japan is
      the only one which has not felt the need for some kind of reform since
      the end of the war.  We do not need a drastic reform of consciousness,
      but rather, a smooth reform based upon the technology that we have
      developed for ourselves.  I think that only by doing this will we
      realize a society which is mature in the true sense of the word.
 

   2.0 THE DECLINE OF AN AMERICAN WHICH CAN ONLY SEE 10 MINUTES AHEAD (Morita)
 
   2.1 American Neglects the Significance of Production
 
      The gist of the Ishihara message is the importance of production
      activities.

      I have had frequent occasion to deliver speeches, both in Europe and
      in the United States, due to the nature of my business activities, and
      have involved myself in many debates at international conferences.  As
      a result of my conversations with Europeans and Americans, I have
      become very aware of and concerned about the fact that they appear to
      have forgotten the importance of production acitivities.

      Americans make money by playing "money games," namely M&A (mergers and
      acquistions), by simply moving money back and forth.  If you look at
      the exchange rate, for example, the dollar is now worth about 120
      Japanese yen, and enormous and quick profits are made by just moving
      money by computer, satellite, and even by telephone.

      The summer before last, I had the opportunity to talk to a group of
      three thousand foreign currency dealers, who specialize in buying and
      selling money, at a conference on the future of money transfers and
      financing.  I have been known to be critical of the floating exchange
      rate system.  Talking to money dealers about my ideas was like telling
      stockbrokers that the movement of stock prices if wrong; it takes a
      lot of courage.  I stressed that money should not be the subject of
      speculation, because the fundamental function of money should not be
      to enrich banks and security companies, but to smooth the path of
      production activities.  It has been said that America is entering a
      so-called post-industrialist society where the weight of the service
      industry sector is growing.  Yet, when people forget how to produce
      goods, and that appears to be the case in America, they will not be
      able to supply themselves even with their most basic needs.

      Last summer, a friend of mine who is always criticizing Japan for
      being "unfair" invited me to his summer home to play golf.  At the
      first tee, I pulled out my MacGregor driver whereas my friend had a
      Japanese Yonex club.  I criticized him for using Japanese clubs since
      he had been telling everyone not to buy Japanese products.  He
      responded simply: "These clubs give me better distance." Well, I was
      not able to sacrifice distance and so I kept quiet. After the game, he
      invited me to his house and while his wife was preparing dinner, he
      showed me around.  In the garage, I saw a Kawasaki snowmobile, which
      he said he needed because winters in the northern part of New York
      State have a lot of snow.  Next to it was a Japanese motor boat, which
      he said he needs because his house is surrounded by lakes.  I also saw
      an off-road vehicle made in Japan.

      Finally, dinner was ready and as I went into the house, I saw a Sony
      television and numerous other Japanese-made products.  I said, "You
      criticize us all the time for not buying American products while it's
      obvious that you prefer Japanese products.  Are you asking us to buy
      something you won't buy yourself?"

      Americans today make money by "handling" money and shuffling it
      around, instead of creating and producing goods with some actual
      value.
 
 
   2.2 America Looks 10 Minutes Ahead; Japan Looks 10 Years
 
      I delivered a speech in Chicago entitled "Ten Minutes vs. Ten Years." 
      I stated that we Japanese plan and develop our business strategies ten
      years ahead.  When I asked an American money trader, "how far ahead do
      you plan...one week?"  The reply was "no, no...ten minutes."  He was
      moving money through a computer, targeting the fate of that
      transaction ten minutes later. So, as I told the Americans, we are
      focusing on business ten years in advance, while you seem to be
      concerned only with profits ten minutes from now.  At that rate, you
      may well never be able to compete with us.

      A well-known economist, Peter Drucker, wrote recently: "Americans
      cannot live in a symbol economy where businessmen play only with
      numbers; Americans should come back to a real economy where money
      moves in accordance with real production acitivities."

      Unfortunately, in America, stocks are owned and handled by
      institutional investors whose fund managers actually buy and sell
      stocks in huge numbers in an attempt to maximize profits in a given
      short period of time.  At the slightest increase in stock prices, they
      sell, and when the profit margin of any company declines as a result
      of poor management, they sell before the company's stock prices begin
      to decline.  For them, the name of the game of nothing but quick
      profits.

      It is expected that the American service industry will flourish.  This
      includes finance and financial services, where entrepreneurs and
      investors alike do not leave their money in long-term projects, such
      as the ten-year projects that have been implemented in Japan.  The
      American economy is, then, an economy without substance.  It must
      return to a real production economy.

      In America, R&D is closely linked to the military budget.  R&D in the
      private sector is heavily dependent on military expenditure.  As a
      result, a corporation can engage in the development of a new fighter
      without worrying about profit or loss.  On the other hand, budget
      constraints on NASA and the military agencies will directly reduce the
      volume of R&D.

      A ten-minute profit cycle economy does not permit companies to invest
      in long term development.  There are some exceptions, such as IBM,
      AT&T, DuPont, and some others.  But they do not represent the
      mainstream of American business nowadays.  Gradually but surely,
      American business is shifting toward a symbol economy.  In addition,
      it seems fashionable to call the service industry the "futuristic
      third wave" and information and intelligence is the business of the
      future.  But these produce nothing.  Business, in my mind, is nothing
      but "value added;" we must add value and wisdom to things and this is
      what America seems to have forgotten.  And this is the most deplorable
      aspect of America today.

      Japan will do fine as long as it continues to develop and produce
      things of tangible value; a shift from high-technology industry to
      quick profits from the money game will only serve to accelerate the
      degeneration of the country. We must take precautions against such
      developments, providing for, for example, tax advantages for long term
      investments.

      It is even more the case in America.  A quick profit from a stock deal
      should be taxed at a higher rate than those on long term investments. 
      Capital gains should be subject to a lower rate of taxation.

      Recently I said, "America is supposedly the number one industrial
      country in the world.  Why don't you have a Department of Industry?" 
      Seated next to me was the chairman of the Ford Motor Corporation, Mr.
      Caldwell, who replied, "that's right - we are supervised by the
      Department of Transportation."  The Department of Transportation is
      interested in emissions control and highway safety, but has no
      interest or jurisdiction over the future of the automobile industry in
      the United States.

      America is the only nation among the advanced industrial countries
      that does not have a Department of Industry which is responsible for
      industrial policy.  Instead, the Department of Commerce and U.S.T.R.
      preside and their only real concern is trade-related matters and they
      criticize others for the failure of American industry.
 
 
   2.3 Japan's Impact on the World Economy Will Be Recognized
 
      The American Economy appears to be deteriorating.  I assume that the
      Bush administration will take steps to tackle the present problems,
      but the country as a whole seems to be extremely nonchalant about the
      so-called twin deficits: budget and trade.

      There seems to be the feeling that Reaganomics raised the standard of
      living, taxes are relatively low, and they can buy goods from all over
      the world.  When the Republicans captured the White House again, I
      began to wonder if there was any sector in America which was truly
      concerned about the twin deficits since Bush repeatedly denies any
      possibility of a tax increase.  How in the world do the Americans
      expect to restore their economy?

      Let's examine the price of gasoline.  Consumption of gasoline is
      growing rapidly, yet the price is still below a dollar a gallon.  The
      ongoing world price per gallon is $4 U.S.  A one-cent per gallon tax
      increase means an additional $10 billion; think what the government
      could get if they levied an additional 25 cents per gallon.  Yet the
      government will not even begin to initiate such a move.

      In fact, even with such an additional tax, American gasoline prices
      will still remain less than international prices.  Politicians are
      simply afraid of losing votes by adopting unpopular policies.  Some of
      my closest American friends have said that Bush could have been
      elected without promising not to raise taxes.  He has so firmly
      committed himself and his Administration to not raising taxes, yet it
      is so obvious that the twin deficits cannot be solved without
      additional national revenue.

      Bush should have been more realistic if he was, and is, honestly
      concerned with the American bugdet crisis.  Tactically, he could have
      said early on that he would not raise taxes, but as he gained support,
      he should have become more honest and direct, and told the people that
      it was necessary to pursue a more realistic financial policy.  On the
      contrary, he confirmed his pledge even after he was elected. 
      Solutions to the deficit problem seem even more remote.

      This being the case, the U.S. dollar has continued to decline, and the
      U.S. has had to increase interest rates to further attract foreign
      money to the U.S., for which it will have to pay a great deal of
      interest.  The result is an increasingly vicious circle.

      The U.S. inflation situation might well become an even more chronic
      phenomenon.  Economic growth without inflation is ideal, whereas
      endless inflation might well bring the dollar's value to the level of
      trash.  This, in turn will make European and Japanese assets trash
      since sizable asset of both are in U.S. dollars.

      Both the Europeans and the Japanese cannot sit idly by, ignoring or
      overlooking the trend in the American economy.  At one time, when the
      U.S. dollar was very high, the Japanese and Europeans asked Americans
      if "they could absorb the trade deficit caused by the high dollar?" 
      At that time, Treasury Secretary Regan was of the opinion that the
      U.S. dollar should stay high and strong.  When James Baker became the
      new Secretary of the Treasury, he recognized the problem and entered
      into the Plaza Accord to lower the value of the dollar.

      The American economy does not stand alone.  It is not only a domestic
      issue.  The collapse of the American economy would cause a worldwide
      disaster. 1987's Black Monday chilled all nations momentarily.  I am
      not a pessimist, but I cannot help thinking that unless the Bush
      Adminstration handles economic issues very seriously, a worldwide
      collapse is not just a worry, but a very real possibility.  The
      ever-growing American inflation and thus its economic crisis will not
      only make other nations catch cold, but bring their economies into
      crisis as well.

      It is said that Japan contributed to efforts to stop a possible
      disastrous chain reaction ignited by Black Monday which began in
      America and soon affected the London stock market as well.  At that
      point, the Japanese Ministry of Finance asked Japanese institutional
      investors to support prices for a time, which instantly normalized
      Japanese stock prices.  Later, the chairman of one of the major U.S.
      banks, who was visiting Japan, told me, "It was Japan who put a stop
      to the chain reaction and it was the Ministry of Finance who was able
      to move the Tokyo stock market.  The Japanese government now has the
      clout to sustain Wall Street and the City of London.  So-called
      Japanese guidance is truly powerful."

      This gentlemen went on to say, "we are worried about the fact that the
      Japanese people are unaware of the fact that they have a significant
      impact on the world economy.  And I believe that it is true that
      Japan's economic status has been much enhanced."

      Like it or not, this is the picture held by Americans, and the
      Japanese people have to recognize it and, inevitably, they have to
      behave in accordance with that status in the world community today.
 

   3.0 RACIAL PREJUDICE IS AT THE ROOT OF JAPAN BASHING (Ishihara)
 
   3.1 America Will Never Hold Its World Leadership Position Unless It Ends 
        Its Racial Prejudice
 
      I had the opportunity to visit Washingotn, D.C. in April a year ago,
      and was suprised at the very hostile atmosphere.  It was only five
      days after Congress passed the resolution condemning Japan on the
      semiconductor issue.  I met some of my old friends, senators and
      congressmen, who with subtle smiles admitted that racial
      considerations, or more directly, racial prejudice, played a role in
      U.S.-Japan relations.  This was after I had discussed several concrete
      examples with them.  Although they shied away from the subject of
      racial prejudice as if it were taboo, they did admit that it is there.

      Initially, they violently denied my allegations, citing that the
      Pacific War of 40-some years ago as the only real source of prejudice
      against the Japanese.  I declared that it was not as simple as that. 
      It appears that the Americans were firmly of the opinion that it was
      the West, namely Euro-Americans, who established modernism.  My
      reaction was as follows.

      It may be true that the modern era is a creation of the white race,
      but you have become somewhat presumptous about it.  In the pre-modern
      era, Asiatic races such as Genghis Khan and his armies raided the
      European continent, destroying towns and villages, looting and raping. 
      Yet at that time, many Europeans actually imitated the style and
      behavior of Khan's hordes, cutting their hair short, shaving their
      eyebrows, and walking menacingly with knees apart.  That was nothing
      compared to the strange ways modern Europeans and American adopt the
      style and fashions of some of the present era's heros, such as the
      Beatles and Michael Jackson.  Even Asian kids do this.  Probably Khan
      was some kind of cult figure then and while women regarded him as a
      "hero" of sorts.

      Some say that the roots of the so-called "yellow peril" can be traced
      back to the atrocities committed by Khan and his men.  At any rate, we
      should keep in mind that there is prejudice committed by Khan and his
      men.  At any rate, we should keep in mind that there is prejudice
      against Orientals, as the following episode illustrates.

      I had a chance to talk with the Secretary of the Navy about the Amber
      System.  Amber is supposed to be the color of caution and danger and
      this system is named for this concept.  Under the Amber System,
      ordinary vessels such as tankers and container ships, are equipped
      with sonar on their bows. The sonar can detect underwater objects. 
      Some objects are rocks, etc. which navigational charts will show. 
      What the system is looking for are nuclear submarines.
l
      The Amber System alone cannot detect the nationality of the submarines
      detected; it cannot tell if they are American, Russian, or whatever. 
      It simply detects the presence of some foreign object and this
      information is relayed directly to the Pentagon, which knows what is
      on the navigational charts and also where U.S. subs are located, so
      they will be able to ascertain whether the particular sub is American
      or not.

      I suggested that the Navy equip all Japanese commerical vessels with
      this system.  Japanese seamen are reliable and the Japanese merchant
      marine travels all the oceans and seas.  Japanese vessels, including
      our oil tankers, could gather information along vital cargo routes and
      the U.S. could analyze the information received from the Japanese
      ships.

      To my suprise, the Americans said that it was none of Japan's
      business. I asked that how, in light of the very limited number of
      U.S. ships, how can you deny the need for such assistance.  Their
      answer: "We cannot leave such a critical matter with Japan."  I asked
      if it was appropriate to involve the British and the Germans, and they
      said it would be.

      The fact of the matter is that Americans do not trust Japan.  Japan
      would have no basis with which to analyze the information collected by
      the Amber System, yet they were still worried about the Japanese
      reliability in merely collecting the information.  It seems that in
      their minds, even the Soviets are more trustworthy than the Japanese. 
      American racial prejudice toward Japan is very fundamental and we
      should always keep it in mind when dealing with the Americans.

      During the Second World War, Americans bombed civilian targets in
      Germany, but only on Japan did they use the atomic bomb.  While they
      refuse to admit it, the only reason they could use the atomic bomb on
      Japan was because of their racial attitude toward Japan.  The fact
      that they actually dropped the atomic bomb on Japan is sufficient
      indication that racial prejudice was a factor.

      It is my firm conviction that the roots of the U.S.-Japan friction lie
      in the soil of racial prejudice.  American racial prejudice is based
      upon the cultural belief that the modern era is the creation of the
      white race, including Americans.  This confidence appears a bit
      overwhelming, probably due to America's relative youth as a nation,
      which tends to blind it to other cultures.  If Americans were ever to
      be made aware of the presence of a real Japanese culture in the
      Azuchi-Momoyama period as did the Spanish and Portuguese missionaries,
      they might develop some respect for Japanese cultural history. 
      Unfortunately, the present American education system does not teach
      children the value of other cultures.  In the period noted above,
      there were over 20,000 "terakoya" schools all over Japan.  No other
      nation had such an extensive schooling system at such an early point
      in their history.

      During the Edo period, even farmers and peasants were able to read and
      write at least one or two thousand characters, including hiragana and
      katakana.  Japan already, at that time, had a complete postal network,
      called "hikyaku" as far as the southernmost end of Kyushu.  Documents
      and information of various kinds were available in libraries in many
      cities and towns.

      This is the kind of information I give to Americans who exhibit
      ignorance of our culture.  Unfortunately, most Americans don't like to
      see these facts, and they tend to change the subject.  In short, their
      historical prejudice and cultural narrowness has reached a point where
      they cannot see another's point or see the value of another culture. 
      All this has made Americans, in the post war period, very irritable on
      the issue.

      The American position at this point seems to be that the British and
      Germans can play whatever role the Japanese could, and can do so
      without irritating the U.S.  Americans are essentially an honest
      people, and in fact do admit to the existence of racial prejudice, if
      they are pressed on the subject, which I do.  However, this is not
      enough.  They should also admit that prejudice does not hold any
      solutions to the problems developing in the world today.  It is
      important that they face the situation, aware of the historical
      context, seeing that the reality is that the power in the world,
      including the economic power, is shifting gradually from West to East. 
      It may not be as strong a shift as is expressed in the expression the
      "Pacific era," but at any rate it is in America's interest to rid
      itself of prejudice against Asis, including that against Japan, in
      order to maintain a position of leadership in the world.
 

   3.2 Japan Should Become More Cosmopolitan
 
      The calendar clearly indicates that we are moving toward the end of a
      century, and with it is coming the end of the modern era as developed
      by white Westerners.  History is entering a period of new genesis. 
      The promoter of this era is Japan as well as the U.S.  It is a
      historical development which America's political leaders should make
      known, so that America will be better equipped to meet the tasks of
      the future.

      The Japanese have their own problems.  They may have to go through a
      mental evolution to meet the needs of this new era.  As Mr. Morita has
      pride and confidence in the products of his company, and attitude
      which has made him a truly cosmopolitan man, so must the Japanese
      develop pride and confidence in our culture and our technology.  We
      cannot become overbearing, which will not be tolerated in the new era,
      but by the same token, an inferiority complex is equally harmful.  The
      Japanese people must move out of their current mental stagnation; I
      feel this is especially important for Japanese diplomats.

      Except for the young and especially qualified, most Japanese diplomats
      suffer from a peculiar inferiority complex [and] as a result are
      spreading the seeds of misunderstanding throughout the world.  When I
      was young, I had the opportunity to live with one of Japan's
      ambassadors and his family.  He was a hell of a nice guy -- a really
      wonderful human being.  However, he seldom socialized with anyone.  At
      the end of a game of golf, if someone suggested dropping into the
      lounge for beer, he would refuse, saying that he preferred to have one
      when he got home.  This is the same attitude that some Japanese have
      when they won't even accept a cup of tea while a guest in another's
      home. It may be for most Japanese that only in his home and only with
      his family can he really relax.  If this is true, then the Japanese
      can never truly be cosmopolitan.  When the heads of some of Japan's
      top trading companies, such as Mitsubishi and Mitsui, wanted to join
      prestigious country clubs in the countries in which they were
      stationed, their applications were rejected because it was felt that
      Japanese were too parochial, staying to themselves and not socializing
      with others.  Some Japanese diplomats don't hesitate to show their
      inferiority complex.  One ambassador even publicly said that the
      Japanese were a race a "pygmies."  Such things happen all the time!

      The Ministry of Foreign Affairs tried to cover up the news of the
      firing training by an American cruiser (the Towers, 3370 tons) last
      year in Tokyo Bay.  A single cannon on the Towers, the Mark 42, can
      send a 32kg ball over 23 kilometers at 36 rounds per minute.  American
      authorities said non-explosive training ammunition was being used. 
      But even these could easily damage of Uraga class Japanese Coast Guard
      frigate (33231 [sic] tons), not to mention what it could do to small
      fishing vessels.  Tokyo Bay is a busy commerical harbor, similar to
      New York Harbor inside the Verrazano Bridge.  American television
      reported that the American people would be furious if that happened in
      their country.

      The Ministry of Foreign Affairs asked the Japanese media to hold the
      story until further notice, since that event was incidental.  I was
      very angry and protested, saying that I would release the news on my
      own.  This happened on Japanese soverign territory in an area clearly
      barred from such firings due to the fact it was a vital maritime
      channel.  It was a clear violation of Japan's sovereign rights.  I
      observed that "It was like seeing a ranking Self Defense Agency
      official firing his service revolver at the Ginza junction."  I still
      feel the same way.

      Americans can say that they are here to protect Japan under the
      U.S.-Japan Security Treaty.  But at times, it appears to me that the
      Americans behave more like mad dogs instead of watch dogs.

      I use the term "mad dogs" when referring to the Americans recalling
      that Mr. Shiina, Deputy President of the LDP, used it when he was
      Foreign Minister. This is another instance where "no" clearly [must
      be] said when that is what is meant [and] would be useful.  One must
      say "no" when he means "no" and failure to do so reduces credibility. 
      In the case of the U.S.-Japan relationship, such an attitude only
      further increases American racial prejudice.  The Japanese people
      should know that they are in essence protecting American interests as
      the new era in international relations begins, something the Americans
      seem quicker to sense.  This is the reality of the U.S.-Japan
      relationship today.
 

   4.0 BASHING JAPAN GETS VOTES (Morita)
 
   4.1 The Paradox of Welcoming Investment but Criticism of Japan
 
      I am worried about the tide of attitude in America with respect to
      Japan. The U.S. Government and the Congress have adopted a number of
      harsh policies with respect to Japan.  Some 37 states in the U.S. have
      established offices in Tokyo.  Since I am responsible for
      investment-related matters in the Keidanren (Federation of Economic
      Organizations), when the state governors visit, I am the one to meet
      with them, if my time permits.

      It never fails, they are always coming to Japan saying, "invest,
      please invest."  Just when I am about to assume that America welcomes
      Japanese, U.S. congressmen elected from these same states are bashing
      Japan.  The state government has no involvement with this, of course,
      but they are saying to Japan's big business, "come on, come on."

      "What in the world is the meaning of this?" I wonder.  In addition,
      recently a number of famous academics and journalists have published
      books which are critical of Japan.  Recently, there has been a book,
      "Buying into America" which suggests that Japan is buying up America,
      and there is a book called "Yen" which envisions a future after the
      year 200 in which Japan uses its financial power to control the world. 
      The latter is rather calm in its perspective, but both books reveal a
      clear Japanese menace - the tides have really shifted since "Japan As
      Number One" was published.

      A book written by a famous journalist which depicts Japan in a very
      harsh light has become a best seller, so this is indicative of the
      critical attitude on Japan held by the American masses.  The more this
      attitude increases, politicians will beat up on Japan in an attempt to
      make votes for themselves, because getting votes is the most important
      aspect of being a politician.

      The politicians themselves are not at all concerned, however.  When
      asked why they bash Japan, they respond that if they say "Japan is
      good," votes will drop off.  If Japan is bashed, further, if a Toshiba
      radio-cassette player is smashed, this is not indicative of hating
      Toshiba, but they think if they do such things, votes will increase.

      The state governments welcome Japanese industry because if they invest
      in their state, tax collections increase, along with employment, but
      among the American people, the attitude with respect to Japan is
      becomming more and more critical.

      The Keidanren has established a "Council for Better Investment in the
      United States," which is the English language name of the council
      (literally it is the "Council for Investment in the U.S." -
      translator).  What we mean by "better investment" is the type of
      investment which will get Americans on Japan's side.  If the number of
      Americans who view things the way Japan does increases, then bashing
      Japan will cause lower vote counts.  That would probably make
      politicians stop bashing Japan.

      I think that it is vital that we help build a feeling of friendship
      among the American masses with respect to Japan.  At the present time,
      everyone buys Japanese goods and is delighted with them.  They do not
      hate Japanese products.  What makes them hate Japan, however, is that
      when Japanese businesses enter the American society, they have the
      feeling that foreigners are coming.
 
 
   4.2 Japanese Industries in the U.S. Should Work at Community Service
 
      Direct investment in the United States is currently expanding very
      rapidly.  The end result of this is that Japanese companies, including
      Sony, have established themselves in local districts throughout the
      country.  When the English or French invest in a local area, the
      communities and local society do not see this as an invasion of
      foreigners.  However, when the Japanese come, they feel that
      strangers, or something foreign has entered their midst.  This gives
      them strong feelings of fear and anxiety.
 
      To give a simple example, when Japanese go to the U.S., their children
      go to schools.  The schools have an organization, the P.T.A.  This
      stands for Parent and Teachers Association.  The corresponding
      organization in Japan is called the "Fathers and Brothers Association"
      but no fathers and brothers participate, it is more of a "mothers and
      sisters" association.  Myself, I have never attended the Fathers and
      Brothers Association in Japan.  In the case of America, however,
      husbands go with their wives to attend meetings for their elementary
      school or local area school and discuss how those schools should be
      run.  In Japan, it is the mother's duty to take care of educational
      matters for the children, so the father does not attend.  In America,
      however, when the father takes off work to attend a PTA meeting, his
      company does not charge him leave.  The man, therefore, must go to the
      PTA meetings.

      When I was living in the U.S., I went to PTA meetings where I was able
      to associate with persons from various walks of life.  My daughter
      went to the Nightingale Bonford School in Manhattan and my son went to
      St. Bernards.  I got to know Stokowski (the late) conductor at one of
      the PTA meetings.  John Gunther, a very influential behind-the-scenes
      man was also someone I met through [the] PTA; he is now the Ambassador
      to Austria.  Henry Grunwald, the editor of Time, was [the father of] a
      classmate of my daughter's who I also got to know.

      At a gathering of Japanese businessment in the United States, I got up
      and told them "to go as a couple to the PTA to get to know the other
      people involved and to start getting personally involved in the
      school."  The people I was speaking to made such remarks as "I don't
      like to hear that," or "Why do we have to do that?"  When I told them
      there was actually a meeting the other night and asked what they did,
      the responses were "I was too busy, I sent my wife," or "My wife can't
      speak English, so she just gossiped with the other Japanese women and
      came home."  Because of instances like this, there is no doubt that
      the PTA would view them as the foreigners who'd come to town.

      Also, when Sunday morning came, the whole community dresses up and
      goes to church. At that time, however, the Japanese are all walking in
      the opposite direction to the country club.  When they are asked why
      they are not going to church, they are likely to respond that "I'm a
      Buddhist," or a similar reply. I'm not saying that they should
      necessarily go to church, but it is natural for the people in the
      community to think that some really strange foreigners are in their
      midst when they see them all trotting off to the golf course on Sunday
      morning.

      I golf in America too.  But I always do it with foreigners.  When
      Saturday night comes, I take my wife to the country club, have dinner
      and talk with the other members.  However, golf for Japanese is
      usually a business-related event; there are usually guests from Japan
      and a group solely composed of Japanese people plays the course.  This
      is another way in which a strange image is transmitted to the local
      community.

      Another example is that American wives often volunteer their spare
      time for community service activities, such as preparing Braille for
      the visually handicapped.  Japanese housewives normally do not
      participate in such activities.

      There are also public fund-raising dinner parties for local community
      centers, which do not involve mere contributions, it is a major social
      event where funds are raised.  Tickets for the party are $30, $50,
      $100 and $200 which represent contributions to the fund-raising event. 
      They view participation in these events as a contribution to their
      local society.  While this is a little different than the golf example
      above, it is another area where Japanese isolate themselves as strange
      foreigners.

      It is vital that we participate in the local society in order to
      resolve any racial problems.  When Japanese build factories in the
      United States, these usually go to the regional or rural areas due to
      the large amount of space they require.  In such a small community
      context, if Japanese avoid contributing to the local community, they
      will be disliked in the area, and then the people of that area will
      cast their votes for Japan-bashing politicians.

      One Japanese company that had established in the U.S. had its
      headquarters in Japan make a very substantial contribution to build a
      community center, in an effort to counter any adverse prejudice, even
      though the local company had not yet become profitable.  The local
      community was delighted and named the hall after the company that had
      contributed.  When the plant manager was reassigned back to Japan, the
      whole community threw a "sayonara" party for him.

      I am not saying that all Japanese companies coming to the United
      States are bad, but just a little kindness and consideration can turn
      around attitudes about Japanese people.  The Council for Better
      Investment in the United States is trying very hard to get this
      information out in an effort to have the Japanese company weave itself
      into the fabric of the local community in which it is locating.

      At the current time, two hundred and forty or fifty companies who have
      invested in the U.S. are members of the Council, but it aims to
      attract even more members.

      Information about these efforts is gradually becoming known in the
      U.S., and this has already done much to change perceptions there.  I
      think Japanese people in the U.S. are also making better efforts.
 
 
   4.3 Let's Build an American Society Where Japan Bashing Causes Votes to 
      	Decline
 
      Therefore, I think that the only way to erase the perception Mr.
      Ishihara points to where Japanese are disliked just for being Japanese
      is to make the above types of efforts.  This is because they
      [Americans] are stubborn and not likely to be induced by saying "you
      guys change."

      I have so many American friends myself that I have been accused of
      being an American.  Since I have lived in America and have been
      counted as a friend by many Americans, I am not overly sensitive to
      what is said about me.  As Ishihara has said, to Americans, they feel
      that because their hair color is different, it is difficult for them
      to know what Japanese are thinking.  I think there is another
      important point.  The structure of the Japanese language and English
      is different, and this affects our discussions together.

      I have written this elsewhere in a book, but when Japanese read
      Chinese, they put in arrows and symbols to change word order, but
      Chinese read it directly and understand the meaning of the sentence
      immediately.  English is the same kind of language, which is read one
      word after another.  In sum, this means that Americans have a
      different sequential order in thought processes. Therefore, no matter
      if you use interpreters, it is impossible to interpret in the same
      sequential order as the thought processes that that generated the
      words in Japanese.  Thus, when a message is to be delivered, it is
      regrettable but true, that the sequential thought process of Japanese
      is in the minority in the world.  When communicating with occidentals,
      who are in the majority, if things are not communicated in an order
      they can comprehend, they do not understand what we are saying.  It is
      necessary that we be cognizant of this disadvantage that Japan has in
      this area.

      While the color of our hair will never be identical to Americans, from
      the point of view of practical businessmen, I think we must recognize
      that if the current trade imbalance with the U.S. is not rectified,
      America will always say Japan is at fault.  If Japanese business does
      not go to the U.S. with manufacturing and sales to bring down the
      imbalance, there is no way the problem will be rectified.  We must
      bring our factories to foreign shores, and invest in these areas where
      our goods are sold.

      At this point, if there are any racial problems, it would be the fault
      of the Americans, but that does nothing to resolve them.  Through the
      success of Japanese-American citizens' groups, racial problems are not
      so prominent anymore.  When the Second World War began, all
      Japanese-Americans were placed in detention camps.

      In the United States, people having different colored skin have
      realized great successes.  An example is the Wang company which was
      founded by a Chinese.  In our quest to find out why it is only Japan
      that is bashed, it would be a bit strange to say it is because Japan
      is not internationalized, but it is really because we have been lax in
      not following the "when in Rome, do as the Romans do" in incorporating
      ourselves in the local community.  I think this is why we remain
      foreign.  That is exactly why I am saying we need to make such
      efforts.  I am not saying that everything they do is alright, but I am
      saying there is a need for internationalization by both parties, and
      we have the need to do business.

      The internment of Japanese-Americans during the war was a prime
      example of the emotionalism that the U.S. displayed with respect to
      Japan.  After the passage of 40 years, the President has finally
      publicly recognized that this was wrong.  It would be nice if
      emotionalism with respect to Japan ended right there, but that is not
      the case.  An example is the Toshiba clause included in the Omnibus
      Trade and Competitiveness Bill -- no buying of Toshiba products --
      Toshiba Machine is bad.

      I said in a speech that this was a violation of the U.S. Constitution.
      This was due to the provision in the Constitution that proscribes the
      enactment of laws which would deal retroactively with crimes.  It also
      allows anyone accused of a crime the opportunity to defend himself. 
      In the process of compiling this bill, sanctions were put on Toshiba
      for its crime.  Toshiba had already been punished for its crime under
      Japanese law; but by adopting these sanctions restricting Toshiba's
      business activities, the Bill would impose retroactive punishment.

      When I recently spoke in Seattle, I suggested that this Bill was
      unconstitutional, that it was an emotional response, and that it
      should be treated as an emotional international issue, which was
      similar in substance to the internment of Japanese-Americans during
      the war.

      When something can become this emotional, perhaps Mr. Ishihara is
      right in his contention that racial problems lie at the root of the
      problem.  During the occupation era, the Americans built fences and
      stayed inside and didn't mingle too much with the Japanese people. 
      This created an unpleasant atmosphere.  Now, however, there are no
      occupation zones and we are at peace, we must behave appropriately and
      associate with each other.

      If we do make efforts in this direction I have indicated to establish
      a framework where Japan-bashing politicians are rewarded by fewer
      votes for their efforts, there is no doubt that political pressure
      will be exerted to the point where there can be no reduction in
      frictions between the countries.

      Thus, it is my way of thinking that Japan must take the kind of action
      this situation calls for.
 

   5.0 THE CRITICISM OF JAPAN AS AN IMITATOR IS OFF THE MARK (Ishihara)
 
   5.1 The America Which Closes Its Eyes to Its Own Unfairness, and Criticizes 
      	Japan
 
      The more I hear Americans bellowing complaints that Japan is unfair,
      the more I would like them to calm down and think.  An example is a
      harsh exchange between myself and the U.S. Secretary of Commerce.  It
      was a coincidence, but at the time when Commerce Secretary Verity
      visited Japan, there had been an agreement for an American company to
      participate in the second phase construction at Haneda International
      Airport.  Verity was in Japan, and his mission included offering his
      thanks for this deal.  However, I threw some cold water on him by
      saying that this would be the only time I would permit such a big
      commotion over such an issue.

      The U.S. Congress had been criticizing Japan for having a "closed"
      market in large construction projects.  In fact, however, there was
      only one U.S. construction firm that had been licensed to work in
      Japan - two, if you count pending applications.  They say that the
      barriers are too thick, but I think that anyone wishing to do business
      in a foreign country has to make some adjustments to correspond to the
      local conditions.

      After we went back and forth along that line, I commented that Japan's
      design for the Airport Building and the Shinkansen [bullet train]
      station, including the interior was poor -- not refined enough and too
      idiosyncratic. I went on to say that this might well be something
      which could be consigned to a foreign country.

      This was true of Narita International Airport too.  I noticed the
      other day that the pillars were painted with rust-proofing primer
      coat.  When I suggested to the person in charge that he get busy and
      have them painted, he said, "Mr.  Minister, did you just notice this? 
      They have been that way since the airport was completed."  When I
      asked why, he replied that it was OK this way because of the contrast
      between the red, white and black.  When I asked whose design that was,
      he calmly replied that the painting contractor had made the
      determination.

      Actually, there is not even a bar in the whole airport.  One might
      like to have a drink to ease one's tension about flying before the
      flight, or one after to relax.  Foreign airports always have a place
      where you can get a drink.  Day or night, there is a place where the
      customer can get a drink. This is an integral part of air travel.

      When I relayed these stories, Secretary Verity nodded his head,
      indicating that he understood my point.  You could tell he was the
      Commerce Secretary, because when we went on to discuss the Kansai
      Airport, he said it would be a great idea if American companies could
      do the design.

      Just that would be nice, he went on, but after it is completed, he
      said that the same number of U.S. aircraft should be permitted to fly
      from the airport as was permitted by Japanese carriers.  I replied
      sharply, "No, that won't do."  He turned colors and asked back, "Why
      not?"

      There is an aviation treaty between the U.S. and Japan.  It is a relic
      of the occupation era.  Not only is it not balanced, it is outright
      unfair.

      Among the mutually agreed upon rights in this treaty is the right for
      air transport to points in the signatory country, and for rights from
      those airports to points beyond in third countries.  These rights are
      all rights held unilaterally by the U.S. side.  American can fly into
      whatever Japanese airport it pleases and then fly to anywhere else. 
      In other words, it has unlimited rights to fly through Japan to
      destinations beyond.

      Japan, however, only has the right to navigate through limited
      airports, the economically unprofitable routes from San Francisco->New
      York->Europe. Actually, these routes are not even being used.  During
      the U.S.-Japan Summit in 1982, we were allowed two flights per week
      from Los Angeles to Rio and San Paulo, Brazil.  One of the concerns on
      the Japan side is that Nippon Cargo Airlines (NCA) was finally
      obtaining 9 flights weekly in 1985 on the Tokyo->San Francisco->New
      York route.

      However, in exchange for this, America got the right to land jumbo
      jets in Japan, and then fly from there further in small cargo aircraft
      to Manila, Taiwan, and Korea.  The most profitable rights went to the
      U.S. in this agreement too.  In the midst of all this, Japan cannot
      get the right to fly a cargo aircraft in and out of Chicago.

      While points of origin are limited by land space, Japan is restricted
      to just three points, Tokyo, Nagoya, and Osaka.  America can fly to
      Japan from 19 airports.  Looking at the number of flights, according
      to a study made in November of 1988, Japan had 204.5 and the U.S. 371
      passenger flights, and 60 cargo flights for Japan versus 170 for the
      U.S.  This is really unfair of the U.S. to be party to the U.S.-Japan
      Aviation Treaty which gives it so overwhelming of an advantage.

      American specialists are well aware of this situation, so they do not
      want to engage in further negotiations.  This type of situation
      continues while the U.S makes selfish assertions.

      I explained to the Secretary that since the U.S. maintained that
      attitude, it was at fault.  The Secretary said he knew nothing of
      these matters.  I pointed out to him that we couldn't even begin
      talking about getting negotiations started if he knew nothing about
      these matters.

      An official from the State Department was accompanying the Secretary
      on his visit.  He was an honest guy, and told the Secretary that the
      Treaty was indeed unfair.  Secretary Verity became troubled.  It was a
      very strange atmosphere between the Commerce Secretary and the
      official from the State Department, standing there in front of me, a
      Japanese.  America is not the solid rock we thought it to be.

      For example, relations are extremely poor between the Department of
      Commerce and the U.S. Trade Representative.  Yeutter and Verity
      quarreled like dogs and monkeys, they never got along and were always
      bad mouthing each other.  While none of these references about these
      two went on in front of me, there was an official from the U.S.T.R in
      the delegation who was there to keep an eye on things.

      Anyway, once the potential for a scene between the Secretary and me
      had quieted down, the "spy" from the U.S.T.R. caught my eye and said
      "Hang in there."  I laughed, thinking what an interesting country the
      U.S. was.
 
 
   5.2 Japan, A Country Where Each Person Is Highly Creative
 
      America closes its eyes to its own unfairness and criticizes others. 
      I think that it should not be forgotten what such a shifty country has
      done.

      As Mr. Morita has pointed out, it is off the mark to say that Japan
      has relied on the U.S. for the creativity to develop technology, and
      then has just cleverly developed and marketed it.  Americans and
      Europeans say that Japan can do nothing but imitate, but it is not
      right for Japanese themselves to begin to agree with such a statement. 
      The Japanese people have been possessed of creativity for ages.

      There has been a gradual increase in the number of Americans and
      Europeans who recognize creativity in the Japanese.  The same can be
      said for cultural creativity.

      Take the field of literature.  Some while ago, the French did not
      recognize Japanese literature at all.  They did not think it had any
      value. More recently, however, the French have grown to appreciate
      Japanese literature more and more.  The reason for this is quite
      interesting; it came about because of Japan's high technology.  That
      is, foreigners who were interested in Japan's high technology began
      studying the Japanese language and started reading modern Japanese
      novels.

      They recognized that modern Japanese literature was indeed quite
      interesting.  It was not their masters of literature or translators
      who pointed this out, but the intelligentsia who were coming from
      scientific backgrounds.

      In any case, I do not think we should stand still and agree that
      outside of literature, we are still nothing but imitators as the
      Americans say.  It is time that Japanese take pride in their own
      spontaneous creativity and march forward.

      Sony developed the transistor [possible ambiguity in translation -- as
      Morita notes in essay 4, Sony licensed the transistor from Bell
      Laboratories in 1953] and took it to the U.S. market and changed the
      way Americans thought. In other words, they ripped apart the immutable
      principle of one radio per each family.  The concept of making radios
      a personal appliance was nothing other than an exhibition of
      creativity on the order of that shown by Columbus.

      The bountiful creativity of the Japanese is not something which can
      only be seen in a few of the elite, but something which can be broadly
      witnessed across the board in the general citizenry.

      Japanese technology has found its way to the very heart of the world's
      military forces.  I think this the product of the integration of our
      creativity.

      Even if you have one creative genius, unless you can produce the
      product of his creativity in a factory, it will not come to anything. 
      It takes a large number of excellent general technicians and excellent
      employees or one will not begin to see the light of day.
 
 
   5.3 The Excellence of Japanese Products Relates to the Educational High 
      	Level of the Employees
 
      One can partially grasp the superiority of Japan's technological
      ability in the low rate of breakdown in Japanese products.  The vital
      element in the excellence of technology and in tackling the problem of
      product breakdowns is possible because of the excellence in abilities
      of the general employees.

      The U.S. Boeing Corporation which was scrutinized due to an aircraft
      crash was found to have problems with its employees' work methods, and
      they quickly set about making improvements.  Certainly the
      re-education of the management could be undertaken quickly to the
      satisfaction of Japan and other countries, but since the level of the
      general employees was so low, concern remains in that area.  When the
      president of Boeing's Seattle plant was asked: "How long will it take
      after re-education has begun before the technological strength [of
      your company] will begin bearing fruit?"  His answer was seven years.
      Seven years!  How can we ride around in jumbo jets for seven years not
      knowing what types of defects they might have?

      As we learned from the tragic Boeing crash in Japan, all of those
      responsible got off, bearing no criminal responsibility.  The legal
      systems in Japan and the U.S. are different: in Japan, a national
      inspector is sent out, but in America, aircraft manufacturers are not
      held responsible.  The Boeing company did not even name the
      responsible persons.  They say that it is better to prevent a
      recurrence than to spend all of their energies in finding fault, but
      the thinking that exemption from prosecution is the only way the truth
      can be told is something that is very hard to take for the families of
      those killed in the accident.  According to an investigation by the
      Japanese police, there were four Boeing employees who should have been
      further pursued to assess their responsibility.  The U.S. side
      acknowledges this.

      The Boeing accident was nothing more than a worker's mistake -- it
      happened well before the crash.  There was no follow up after the
      crash except to say that the maintenance operations were sloppily
      done.  While the specifications had called for three thick divider
      walls to be tightly bolted on, it just was not done.

      Bolts had been placed on the left and right, but they did not reach
      through the three sheets, just to the second one.  This caused a
      serious weakening of the aircraft strength.  This tells the story of
      the low level of the people who are performing maintenance.

      Despite the fact that they are employees of the Boeing Corporation, a
      world-class manufacturer of aircraft, it would still take 7 years to
      re-educate them.  This is a story which could not be comprehended in
      Japan's industrial circles.

      The United States wants everyone to buy American-made semiconductors,
      and these are even being used in Japan, but the number of defective
      ones is amazingly high.  When we complain, the answer is: Japan is the
      only country that is complaining, nobody else has any complaints.  It
      leads me to think that there is no hope for the U.S.

      The manufacturing defect rate in the United States has improved
      somewhat recently, but it is still 5 to 6 times higher than that in
      Japan - it used to be 10 times higher.  The report by the task team in
      the Pentagon also admits this.

      To contrast this with Japan, I would like to insert the following
      episode.

      This is an episode illustrating the exceptional knowledge and decision
      making capability of one female employee of the Kumamoto plant of
      Nippon Electric Corporation(NEC).  For one reason or the other, the
      rate of rejects at the Kumamoto plant had been higher than it was at
      other NEC plants.  No matter how hard they tried, they could not get
      the reject rate down.  If it could be done in other plants, why
      couldn't it be done in Kumamoto?  There were all-hands meetings with
      the plant supervisor daily on this problem.

      One day, a female shift worker at the plant stopped at a crossing for
      the Kagoshima Line which ran in front of the factory.  This was on her
      way to work.  It was a rare event, but this day, she had to wait while
      a long freight train passed.  Rumbling vibrations were sent through
      her legs as the train passed.  The thought crossed her mind that these
      vibrations might have some sort of adverse effect on the products made
      at the plant.  While she was working, she paid attention to the time
      and stopped when a train was scheduled to pass by.  In the factory,
      however, she couldn't feel anything unusual.  She still wondered,
      however, if the machines were not being affected.  She reported her
      concerns to the foreman, suggesting that the precision machinery in
      the plant might be so affected.

      The plant supervisor said, "That's it."  He reacted immediately by
      digging a large ditch between the plant and the railroad tracks and
      filling it with water.  The result was a drastic decline in the number
      of rejects.

      That woman was 18 years old.  This woman took pride in the products
      made by her company and identified with it.  It is my feeling that
      this type of result is due to the vast differences in our formal
      education system.

      In any case, when it comes to economics among the free world
      countries, the basis for existence is economic warfare, or, if that is
      too harsh of [a] word, in economic competition.  It is probably
      natural, therefore, that various cheerleading groups of the other
      party will rough you up by calling you unfair, but we cannot stand
      still and be defeated just because our adversary is making a lot of
      noise.  This is exactly the position Japan is in today.


   6.0 IS AMERICA A COUNTRY WHICH PROTECTS HUMAN RIGHTS? (Morita)
 
   6.1 Workers' Rights Are Ignored by American Companies
 
      American demands of Japan may increase in the future but America has a
      great many defects of its own, to which we must continuously direct
      its attention.

      My long observation of American corporations leaves me puzzled about
      American human rights legitimacy.  Human rights are held to be such
      high moral values in America and it preaches on the subject
      continuously all over the world.  America has been criticizing and
      condemning nations such as South Africa and Afghanistan on human
      rights issues; however, I must ask Americans if they are applying
      these same standards to their own workers.

      American corporations hire workers right and left and build new plants
      all over whenever the market is bullish, in an attempt to maximize
      their profits. Yet once the tide shifts, they lay off workers simply
      to protect company profits.  These laid-off workers have nothing to do
      with poor market conditions.

      American corporate executives are of the opinion that it is a
      corporate right to pursue maximum profits and that fired workers
      should be able to live on their savings.  However, people do not work
      for wages alone.  Work has more meaning to most people than just as a
      means of subsistence.  A Japanese worker has a sense of mission in
      holding his job for his lifetime as well as supporting the corporation
      which provides him with meaning to his life.  This may well not be the
      case in America.  American workers may only expect a comfortable wage
      for their work.  However, this attitude could change.  People can
      easily develop loyalty to a group or to a company to which they
      belong, depending upon conditions and guidance provided.  This sense
      of loyalty to the company is a formidable asset.  Repetitive hiring
      and firing denies any possibility of cultivating a sense of loyalty.

      I must ask American executives if they regard workers as mere tools
      which they can use to assure profits and then dump whenever the market
      sags.  It seems that workers are treated simply as resources or tools
      rather than as human beings with inalienable rights.  I would like to
      suggest that they should first do something to protect the human
      rights of workers in America before they start asking other nations to
      protect and enhance the human rights of their citizens.  There are
      good reasons why American labor unions must be confrontational in
      protecting their members and attempting to assure maximum wages during
      periods of employment since they have no assurance that the jobs will
      continue.  Attitudes of executives are not actually much different
      than those of the union to the extent that they grab whatever they can
      - as much as half the company's annual profits in the form of huge
      bonuses, claiming that this is just since they were responsible for
      the profits.

      A corporate chairman with whom I am acquainted, complained that he has
      no use for all the money he receives.  His company is doing well and
      his income is in the multi-million dollar a year range.  His children
      are all grown and he and his wife already have vacation villas, a
      yacht and a private airplane; he said they just have no way to spend
      any more money on themselves.

      Japanese executives work morning to night to improve the position of
      their companies, and yet the majority of their salaries are wiped out
      by taxes.  The income gap between American and Japanese business
      executives is astounding. In Japan, even if one works very hard to
      increase his income to assure himself of some of the amenities of
      life, there is no way that he could expect to equal the luxuries
      enjoyed by American executives.  Mr. Matsushita, probably the
      wealthiest man in Japan, when traveling abroad with his secretary,
      uses regular commercial flights.  Having a private plane is simply out
      of his realm of consideration.

      There is some talk in Japan concerning levying taxes on profits
      generated by the founder of a corporation.  I am opposed to this
      proposal as I believe the spirit of free enterprise must be protected. 
      While an unbridled pursuit of personal gain is not ideal, those who
      have created new business through extraordinary effort and who have
      made this contribution to society, should be rewarded financially to a
      certain extent as this will provide encouragement to young people,
      motivating them to follow their dreams and create new industries.

      The current popular idea that everyone belongs in the middle class and
      the wealthy are suspect may undermine the very basis of a free
      economy.  The Liberal Democratic Party, however, tends to accept this
      premise, as put forth by the opposition for the sole purpose of
      parliamentary manipulation, which is a shame since they have a
      300-seat majority.

      Japan has been a practicing free economy and a good majority of the
      people do in fact belong to the so-called middle class, which I think
      is marvelous. We have no real social classes and everyone is free to
      choose whatever profession or occupation they wish.

      Today in Japan, nearly all company executives dine out on company
      accounts and ride in corporate-owned cars.  As a child, I never saw
      this kind of lavish living by corporate executives such as my father. 
      He had a car and a chauffeur, but they were financed directly by him,
      out of his own pocket.  It would be beyond his comprehension to use a
      company car and driver for his personal use.  I am not particularly
      opposed to such benefits enjoyed by today's executives, as they can be
      correct rewards and incentives.

      American corporate practices, from my personal observations, are
      extreme. An example is the so-called "golden parachute," which is the
      ultimate executive privilege.  When one's reputation as an executive
      is well established, and he is hired by another company, his contract
      may well contain these "golden parachutes."  The executive may demand
      a certain percentage of corporate profits as his bonus, or perhaps
      some stock options.  Upon retirement, he may still receive his salary
      for a number of years.  Should he pass away during this period, his
      wife may be entitled to receive all or a percentage of these benefits. 
      Should he be fired, for whatever reason, he may still collect his
      salary under his contract.  A contract is a contract and "golden
      parachutes" are a part of the system.

      So even though the corporation may stall or crash, the executive is
      equipped with his "golden parachute" and is thereby guaranteed to land
      safely and comfortably.  He may go to Florida and elsewhere to enjoy a
      rich retirement life.  Who suffers?  Who suffers is America: the
      American economy suffers from this outrageous system.
 
 
   6.2 American Executives Prefer Immediate Rewards
 
      Poverty is very visible all over America, particularly among blacks
      and Hispanics.  The minority issue is a crucial one in America.  The
      gap between rich and poor is enormous.  Only one percent of the
      population controls 36% of the national wealth, an outrageous
      condition that should somehow be corrected.

      A free economy basically should assure profit to anyone who works. 
      Yet if an individual's gains go to the extreme, he becomes a celebrity
      and an egotist.  This is what I have seen to be the case in many
      corporations today.

      Such individuals regard their employees as their own tools to enhance
      their personal performance for which they collect all the rewards. 
      Should one fail and be fired, he will land comfortable on his feet,
      thanks to his golden parachute.  As an example of an extreme case of
      such, a friend of mine mismanaged his company while he was its
      chairman.  The company failed, but he and his wife are leading a
      luxurious life, something that would never happen in Japan.  This man
      simply played the American game.  He had no real intention of
      remaining with that company in any case; he was only working to
      maximize his personal income during that time.

      I have been involved in a number of joint venture projects in America. 
      I make every effort to improve my joint venture situations.  I want to
      close the deal as quickly as possible whenever we are involved in
      substantial capital investment.  When we spend capital on facilities
      investment, we are entitled to tax benefits.  I like to utilize the
      extra profits generated by these tax benefits to get rid of debt
      service.  Whenever I suggest that, my partners ask "why do we have to
      sacrifice our profits for people in the future?"

      For me, the most crucial objective is to make the company healthy and
      free of debt service, hoping that our successors will do the same for
      their successors by availing whatever profits we get from repaying the
      debt, while my joint venture partners feel that their personal gains
      should not be so sacrificed.  They have no intention of remaining with
      these companies for very long and so they want to increase their
      personal income by maximizing disposable company profits in the short
      run.

      For example, they moved production facilities to Singapore or Japan
      when the U.S. dollar was high because they could not expect to
      maintain high profits when production costs were high.

      This is the case in the semiconductor industry as well.  Production
      has been moved out of the U.S., leaving production primarily with
      Japan.  This has deprived America of the capacity for anything other
      than 256K bit chips.  It is cheaper and easier to buy them from Japan
      rather than dealing with expensive, unionized workers in America. 
      These very same business executives have been blaming the trade
      imbalance and the Japanese trade surplus for their difficulties while
      at the same time choosing to import these products from Japan.  Japan
      has not forced them to buy its products, but it cannot begin to catch
      up on orders placed by American firms.
 
 
   6.3 A Japanese Corporation is a Community Bound Together by a Common 
      	Destiny
 
      The fundamental principles which govern a Japanese corporation are
      basically different from those of an American corporation, from the
      viewpoint of both executives and workers.

      The structure of pre-war Japanese corporations bear some resemblance
      to American corporations today to the extent that the president could
      fire anyone at his discretion.  A variety of labor activities were
      implemented to meet such situations.  Taxes were low and executives
      were leading comfortable lives, able to have company stock allocated,
      assuring themselves of a comfortable retirement.  A top executive was
      able to buy a house with just one bonus.  By the time he retired, he
      could have several houses for rental, which alone would have ensured a
      luxurious life.

      After the war, General MacArthur changed Japanese labor laws as well
      as tax laws, among other things, which put Japanese business
      executives in a different situation.  First, they were now unable to
      fire employees at their discretion, not even to reduce the size of
      their labor force.  At times a company must reduce the size of the
      work force if it cannot afford to keep them or if they are
      unproductive.

      When I first found that American companies can hire and fire and
      rehire at will, I wondered perhaps if Japanese companies were more
      charitable organizations than profit making institutions.  However,
      Japanese managers have developed a concept which, in essence binds the
      company, workers, and management, into a community with a common fate
      or destiny.  I have explained to American corporate managers that in
      Japan, once an individual is hired, he has been hired for life and
      unless he commits some serious offense, the company cannot fire him. 
      Americans want to know how in the world we are capable of operating
      profitably.  I say that since a Japanese company is a community bound
      together by a common destiny, like the relationship between a married
      couple, all must work together to solve common problems.

      This concept of a fate-sharing community might sound particular to
      Japan. However, recently, it appears to have had some impact on
      American corporations, which are showing interest in the Japanese
      corporate management system.  They seem anxious to absorb some of the
      positive elements of the Japanese system.

      When I find an employee who turns out to be wrong for a job, I feel it
      is my fault because I made the decision to hire him.  Generally, I
      would invest in additional training, education, or change of duty,
      even perhaps sending him overseas for additional experience.  As a
      result, he will usually turn out to be an asset in the long run.  Even
      if the positive return is only one out of every five, that one
      individual's productivity will cover the losses incurred by the other
      four.  It is a greater loss to lose that one productive person than to
      maintain the presence of the four incompetents.

      In a fate-sharing corporation, one capable individual can easily carry
      a number of other not-so-capable individuals.  The confidence of
      Japanese employees in their company, knowing that he is employed for
      life, means that he will develop a strong sense of dedication to that
      company.  For these reasons, Japanese corporate executives are anxious
      to train their employees well, as they will be their successors.

      As the chief executive officer, it is my responsibility not only to
      pursue profit, but also to create a community where those I have
      employed can complete their careers 20-30 years from now with the
      feeling that he had truly made a good life with the company.

      Japanese company employees know that they are members of a community
      bound together by a mutual fate for which they bear the hardships of
      today in anticipation of a better future.  There are many company
      presidents today in Japan who at one time or another served as union
      leaders.  This fact makes present union leaders feel that they too
      may, sometime in the future, move into management positions within
      their company, and therefore their long term interests are closely
      tied to the company.  They do not pursue short term, myopic profits
      for the immediate future.  When the company proposes a plan to save a
      certain portion of profits for facility investment or to pool to the
      following year, unions may well be willing to make compromises,
      because they know that the future of the workers is tied to the future
      of the corporation. I would like to ask presidents of American
      corporations if they ever heard of any American union leaders who have
      become heads of corporations.  Japanese executives have a
      categorically different corporate philosophy than do American
      executives, who are more anxious to demonstrate profitability to
      please stockholders.  I have asked Americans what, in their minds, is
      the meaning of "company."  In my mind, it is a group of people
      conforming where interests are shared.  I must point out that in the
      American interpretation of company, this concept does not exist.  It
      is my firm conviction that man is created equal, irrespective of color
      of skin or nationality and it is natural that my concept of company
      includes the employees of my overseas Sony operations.  My California
      plant opened in 1972, initially with 250 employees. Soon after the
      plant opened, we were hit with the worldwide oil crisis, which caused
      a recession.  The California plant was not immune to this development
      and the facility lost business and was unable to support its 250
      employees.

      The president of Sony America was, of course, an American and he came
      to me saying that there was no other choice but to lay off some of the
      employees. I refused his proposal, telling him that I would take the
      responsibility for possible losses in order to retain the employees. 
      We sent capital from the Japanese headquarters to sustain the 250
      person work force for some time.  During this period, there was not
      enough work to keep everyone busy, so we developed educational
      programs, out of which grew not only a sense of appreciation, but also
      a real emotional involvement with the company.  They began to feel
      that the plant was their home, and began to clean and polish the
      facilities, and take care of their work sites on their own.  These
      people became the central core of the California plant, which now
      employs 1500 people.  They don't even talk about unionizing
      themselves.  American unions are basically industrial, which means
      that there is always active union leaders from outside who attempt to
      unionize our plant.  Our workers had T-shirts made, with their own
      money, saying "WE DON'T NEED THE UNION."

      The United Kingdom has a unique law which unionizes every company. 
      Sony U.K. is no exception.  Yet our women union members insisted, in
      an interview on the BBC, that their union is different than other,
      ordinary ones.  This is a positive demonstration of the feeling that
      we all share the same fate, no matter where we are in the world.

      In the U.S. and the U.K., most employees never have even seen their
      top executives.  When I go to one of our plants, I normally mingle
      with the employees and eat together with them in the company
      cafeteria.  This helps in developing communication and trust.  It may
      be a bit difficult to expect the same response from foreign employees,
      but it is still the best approach.  The Japanese system is not
      completely applicable to the American system, of course.  Yet patient
      demonstration to show that the company truly wishes to protect their
      interests, even when business is at its worst, will show results. 
      People tend to develop trust under these circumstances.  The best
      thing a company can do is to treat its employees as dignified human
      beings.
 
 
   6.4 The Japanese Approach Can Be Used Worldwide
 
      European corporations appear to be treating their employees more
      humanely than their American counterparts, although they are still far
      from the concept of lifetime employment.  Large corporations do not
      hesitate to lay off employees whenever business is down; they even
      close operations without notice or sell out, treating employees as if
      they were tools or equipment.

      There is also obvious class discrimination within companies. 
      Engineers, for example, wear white collars, stay in their offices, and
      seldom show up in the factories.  They want to tell workers what to
      do, rather than donning blues and showing them.  In my company, all
      workers wear the same uniforms.  I also wear the same uniform, not
      only in the plants, but also at company headquarters.  All our plant
      managers do the same.  Those who are in training have been instructed
      to walk through the plant frequently, establishing personal contacts
      with the workers.  Those who become foremen or section managers are
      encouraged to hold brief meetings each morning with their subordinates
      to read their mood and detect problems in advance.  They are
      instructed to talk with those who seem ill or depressed, to find out
      if they need medical care or if they are having family or personal
      problems.  Should this be the case, they should be allowed to take
      time off and deal with these problems first, while the other workers
      cover for them.  This also helps the sense of togetherness among
      workers.

      On the occasion of 20th and 25th anniversaries of Sony America, my
      wife and I visited all our American plants, gave talks, had dinner
      with our employees and shook the hands of all our workers.  Since at
      some plants we had three shifts, we had dinner three times in one day,
      with the night shift taking their turn at 4:00a.m.  I told everyone
      that we greatly appreciated their contributions which helped make the
      25th anniversary a celebration and shook everyone's hand.  I was able
      to feel their response even physically. These employees told me that
      this experience was something they never would have had in an American
      company.  I felt our Japanese approach was not foreign to them at all!

      One episode made me particularly happy.  I visited one of our rather
      small laboratories, and said that I wanted to meet all of its members,
      [when] the head of the lab asked if he could take my picture.  He took
      his camera from his desk drawer and took me to each member of his
      staff, introducing me to him or her and taking our picture as we shook
      hands.  There were almost 80 people at this facility and he promised
      to make a print for each person.  I was surprised that this typically
      Japanese activity was taking place in a facility where there were no
      Japanese!  There again, I felt that we are all basically the same,
      irrespective of national and cultural differences.

      Our style and our efforts have a ripple effect and make other members
      of our company feel the Sony spirit.  I am not saying that whatever
      style and customs we have developed are automatically good and
      acceptable everywhere. What I am emphasizing here is that the basic
      attitude of a corporation and its philosophy can be understood
      worldwide, and certain aspects of Japanese tradition and style can be
      rooted overseas.

      On the other hand, I recognize fully that certain aspects of American
      business administration, such as numerical and analytical operations,
      are excellent as we have sent many individuals from our company to
      American business schools to learn such matters.  Combining good
      traditions and practices of both the Japanese and American systems
      will, I believe, make for a very strong corporation.
 

   7.0 LET'S BECOME A JAPAN THAT CAN SAY NO (Morita)
 
   7.1 Saying "No" Actually Represents a Deepening of Mutual Understanding
 
      It is inevitable that Japanese companies have been establishing
      American operations.  America after the era of Reaganomics is now
      responding to that trend with new Bush Administration policies.  In
      response, Japan should now begin to make it a habit to say no when its
      position is clearly negative.  It [is] the rule in the West to say
      "no" whenever one's position is clearly negative.  We are in a
      business environment where "well" or "probably" have no place in
      normal business conduct.  I have been saying "no" to foreigners for
      the last thirty years.  Clearly, the Japanese Government has missed
      many, many opportunities to say "no."

      Take the auto trade issue, for example.  America forced Japan to limit
      its auto exports to two million units per year under the guise of
      voluntary restrictions.  When the American market became more
      lucrative, and the number of imported cars could have been increased,
      American auto manufacturers demanded that the quota be tripled.  MITI
      and the Prime Minister gave in to American demands.

      In my opinion, this was a great mistake.  Both the MITI minister and
      the prime minister at that time should have taken the position that
      the American demands were unfair.  The Big Three had already increased
      their profits enormously and individuals such as Lee Iacocca and Roger
      Smith were receiving more than a million dollars each in bonuses. 
      They simply demanded special treatment in order to increase profits
      from the Japanese imports which they sold under their company brands
      when they requested that the quotas be tripled.  That was the time for
      Japan to have said "you are being hypocritical, criticizing others as
      unfair when in fact what you are demanding is what is really unfair." 
      The timing was crucial; unless one registers opposition or negative
      reaction at precisely the right time, Americans take the situation for
      granted and later insist that they were right as no opposition was
      registered at the time of the demand.  This has always been the case
      in the past.

      The trade imbalance is another case which should be scrutinized as to
      whether or not American demands are based on fact and reality.  I once
      asked Americans to investigate what Americans had been importing from
      Japan.

      American imports from Japan are mostly products which require a high
      tech capacity to produce.  Many of these products fall into the area
      of military procurement, but it is true that even the private sector
      is buying Japanese products which are technologically indispensable. 
      Even some of the inexpensive home electrical appliances may be
      obtained from Japanese manufacturers within a short time frame if they
      require high technological skills in the production process.

      America has left the production responsibility with Japan, resulting
      in a heavy dependency upon Japan.  American politicians only talk
      about the results of this situation, blaming Japan for the trade
      deficit to get votes.  Yet it seems that these same politicians don't
      even know specifically what it is that America buys from Japan.  If
      they took the time and the effort to seriously investigate the matter,
      they could not condemn Japan so out of hand.

      Japan should tell America that it may buy these quality products
      irrespective of the exchange rates, even when the U.S. dollar falls to
      the 100 [presumably yen] to 1 ratio.  Artificial manipulation of the
      exchange rate does not benefit the American economy.  Such products as
      transistors, which Sony originally marketed, may today be purchased
      anywhere outside Japan, and so are not a matter of friction between
      the U.S. and Japan.  Products recently developed in Japan are not as
      easily obtained elsewhere.  There are some things that can only be
      found in Japan and Japan cannot be blamed for over-exporting.  Those
      who say otherwise simply do not know the facts.

      Computer terminals are in short supply and are being rapidly developed
      in Japan.  Japan should let America know what the situation is and
      make the U.S. realize that the relationship between the two nations is
      increasingly mutually dependent.

      My purpose in advocating saying "no" is to promote that awareness. 
      "No" is not the beginning of a disagreement or a serious argument.  On
      the contrary, "no" is the beginning of a new collaboration.  If Japan
      truly says "no" when it means "no" it will serve as a means of
      improving the U.S.-Japan relationship.
 
 
   7.2 National Characteristics Which Make It Difficult for the Japanese to 
      	Say "No"
 
      The question arises as to who should say "no?"  Japan's Confucian
      background makes it very difficult for its people to say "no" within
      the context of normal human relationships.  In a traditional
      hierarchy, subordinates dare not say "no" to higher-ups without
      violating normal courtesy.  The higher-up takes a "no" from a
      subordinate as insubordination. In a staff relationship, "no" is
      something to be avoided in order to maintain smooth human
      relationships.

      Living in a homogeneous society since childhood, we Japanese have
      grown up without practical experience in quarreling and fighting in a
      heterocultural environment.  Many of us feel that others will
      eventually understand our true feelings on an issue without [our]
      verbalizing them.  In short, we expect a lot when it comes to mutual
      understanding.  Americans may go directly to their boss to offer an
      explanation when they feel they are not properly understood. Japanese,
      on the other fand, even if they feel they are not properly understood,
      remain hopeful that they will eventually be understood or that the
      truth will reveal itself sooner or later.  They do the same with
      foreigners in foreign countries.  They feel that sincerity and effort
      should automatically be reciprocated.  In my mind, this can only
      happen in Japan, but never in foreign countries.  Wordless
      communication and telepathy will just not happen.

      I admit that I may be more westernized than most Japanese, since I
      believe that we should be more straightforward as we become closer,
      and that a serious quarrel need not destroy a friendship.  This may
      not be accepted in a traditional Japanese relationship; we avoid
      serious confrontation by turning away from the cold facts.  Instead,
      we tend to make loose compromises.  It is quite simply not our
      tradition to say "no" to our friends.

      We should not expect to find a similar understanding from foreigners
      concerning this particular Japanese mentality.  It is too easy to
      expect understanding of one's opposition without using "no."  I could
      say it is a Japanese defect to expect something without using the
      rational verbal procedures.

      If you stay silent when you have a particular demand or an opposing
      position to express, the other party will take it for granted that you
      have no demands or opposition.  When you close your mind to the
      outside, remaining in a uniquely Japanese mental framework, you will
      be isolated in this modern, interdependent world.

 
   8.0 LET'S NOT GIVE IN TO AMERICA'S BLUSTER (Ishihara)
 
   8.1 Statesmen Ought to Make Best Use of All Available Cards
 
      America has renewed its bluster in the last year.  Politicians must
      sense that they will win more votes bashing Japan than bashing the
      Soviet Union.  Criticism of Japan by U.S. politicians has taken on a
      rather hysterical tone these days.  I experienced it personally when I
      was there and met with politicians who told me that there was a new
      power shift between the U.S. and U.S.S.R., as if this development
      should scare Japan somehow.  These same politicians indicated that
      since both Americans and the Soviets are white, at a final
      confrontation, they might gang up against a non-white Japan.

      Japan should never give in to such irrational threats.  Japan also
      holds very strong cards in high technology capabilities which are
      indispensable to military equipment in both the U.S. and U.S.S.R.  Yet
      Japan has never played this card to improve its position vis-a-vis the
      U.S.  Japan could well have said "no" to making available specific
      technology.  Japan has substantial national strength to deal with
      other nations, yet some of the powerful cards it holds have been
      wasted diplomatically.

      I happened to be in America at the time the U.S. Congress passed a
      resolution to impose sanctions on Japan on the semiconductor issue. 
      Congress seemed to be very excited, almost in the same mood as was the
      League of Nations when it sent the Litton Mission to Manchuria to
      observe Japanese activities there in relation to the Manchukuo
      incident.

      I talked with members of Congress in this tense atmosphere, and I did
      not feel they were conducting matters on a rational basis.  Some
      Congressmen were actually brandishing sledgehammers, smashing Toshiba
      electronic equipment, with their sleeves rolled up.  It was just ugly
      to watch them behave so.

      I commented at that time that the U.S. Congress is too hysterical to
      trust. their faces turned red in anger and they demanded an
      explanation.  I told them: "Look -- only a few decades ago you passed
      the Prohibition Amendment. No sincere Congress would ever pass such
      irrational legislation."  They all just grinned at me in response.

      Yet I must admit, that it was Japan who aggravated the semiconductor
      issue to such a low level, by not saying "no" on the appropriate
      occasions.

      After he was elected to a second term, Mr. Nakasone promised America
      that Japan would avail highly strategic technology without giving
      adequate thought to the significance of that kind of commitment.  The
      strongest card, which he should have played, was virtually given away
      free to America.  He probably wanted to impress America, hoping for a
      tacit reciprocity from a thankful U.S.  Unfortunately, it was only Mr.
      Nakasone who recognized the value of that card at the time.  Both the
      Liberal Democrats and opposition parties overlooked the significance
      of this issue.  I assume that the leaders of those parties, such as
      Takeshita, Miyazawa and Abe did not know it either.  It is such a pity
      that Japan's politicians are not aware of the political significance
      of Japan's high technology capabilities.

      In reality, Japanese technology has advanced so much that America gets
      hysterical, an indication of the tremendous value of that card --
      perhaps our ace.  My frustration stems from the fact that Japan has
      not, so far, utilized that powerful card in the arena of international
      relations.

      What Mr. Nakasone got out of the free gift was Reagan's friendship,
      so-called.  We all know that love and friendship alone cannot solve
      international conflicts and hardships.
 
 
   8.2 Nakasone Bungled the Relationship
 
      I truly regret that Japanese diplomacy has been based on a series of
      "yesses" instead of skillful manipulation of strong ace cards.  Former
      prime minister Nakasone has done a substantial disservice to Japan in
      terms of his handling of relations with the U.S.  These are among his
      most unfortunate mistakes.  He boasted of the so-called "Ron-Yasu"
      relationship as if he had succeeded in bringing about a skillful
      policy toward the U.S.  In reality, he was simply a lowly yes-man to
      Reagan.

      It was actually I who introduced Mr. Nakasone to Mr. Reagan.  I asked
      one of Mr. Reagan's assistants if he ever recalled a "no" from
      Nakasone to reagan. He immediately replied he did not know of any, and
      Mr. Nakasone was a "nice guy with a sardonic smile."

      Former Prime Minister Nakasone was in a position to know that Japan's
      leading edge technology was superior to that of the U.S.; so much so
      that Americans had become nervous concerning the magnitude of Japan's
      superiority in the area.  Yet he still did not say "no."  Was he taken
      advantage of?  Did he have some weak spot as did the prime minister
      (Tanaka) at the time of the Lockheed scandal during the Nixon
      Administration?  Otherwise, Japanese leaders who hold such high cards
      should be able to play them in dealing with American demands.

      The FSX, the next generation of fighters, developed by Mitsubishi
      Heavy Industries during the Nakasone era, has become another source of
      controversy in the U.S. as it relates to defense matters.  Further
      development of the FSX appears to be quashed by the U.S.  I am unaware
      of any deals made under the table, but there is considerable
      frustration in Japan over the matter.

      Mitsubishi Heavy industries is a conglomerate with a wide variety of
      technology used in manufacturing advanced products.  The chief
      engineer there is a contemporary of mine who developed the most
      advanced land-to-air missile. He is also the man responsible for the
      design of the next generation fighter and he believes that Japan
      should have its own capacity to provide such equipment, which of
      course astonishes Americans.

      The FSX is a marvelous and formidable fighter.  No existing fighter,
      including the F-15 and F-16 can match it in a dog fight.  I recall
      when Secretary of Defense Weinberger became serious about quashing the
      FSX Japanese development plan, simply out of fear.

      Unfortunately, Japan has not yet developed a powerful enough jet
      engine, although I advocated such development while I was a member of
      the Upper House. Japan still must purchase jet engines, which are
      mounted on the F-15 and F-16. If America gets really nasty, Japan
      could buy engines from France, which is quite anxious to export
      military equipment (at the same time that that country's president is
      advocating truces all over the world, I might add).  If France is
      reluctant to sell what we need, I would not mind going to the Soviet
      Union, although the quality of the Russian engines is not particularly
      impressive.

      New Mitsubishi-designed jet fighters equipped with Russian engines may
      only have a top speed of 95% of existing F-15 and -16 class fighters,
      so one might think them inferior.  On the contrary: their combat
      capability is far superior in a dogfight situation.  It can make a 380
      degree turn [sic] with a third of the diameter needed by other top
      fighters.  The F-15 and -16 require 5000 meters; the Mitsubishi
      fighter only requires 1600 meters.  Just think of war as a game of
      tag.  What is necessary is not maximum speed but great maneuver-
      ability.  Mitsubishi's FSX fighter can get right on an enemy plane
      and send heat-seeking missiles with 100% accuracy.  Incidentally,
      there are two types of air-to-air missiles, heat-seeking and
      radar-controlled.  The radar-controlled type may even fail to hit a
      jumbo jet, while the heat-tracing type can fine-tune its direction to
      head for the enemy's source of heat.

      The FSX was a surprise to Americans, as were to Zero fighters at the
      beginning of the Second World War.  They never expected to see such an
      advanced fighter as the Zero, which virtually controlled the air at
      the beginning of the war.  That such a formidable weapon as the FSX is
      in production today outside the U.S. came as a shock to Americans. 
      The Japanese FSX is equipped with four vertical fins, similar to a
      shark's fins.  Each acts as a steering mechanism, like the steering
      wheel of a four wheel drive [four-wheel steering intended, presumably]
      automobile that can make a complete turn in a small area without
      moving back and forth.  Such a marvelous idea probably is not the
      monopoly of Japan, but it was a Japanese manufacturer who developed
      the idea to reality, thanks to Japanese advanced high technology.

      Russian fighters are also equipped using Japanese know-how, especially
      in the areas of ceramics and carbon fibers.  Special paints on
      American reconaissance planes which assist in avoiding radar detection
      are also made in Japan.

      Shocked by the high standards of the FSX, I guess that the U.S.
      pressured Mr. Nakasone, probably citing his earlier commitment on
      technology.  His submission to American pressure eventually caused the
      mothballing of the FSX, to be replaced by future products of a joint
      U.S.-Japan development plan.  In November 1988, the governments signed
      an agreement that set the course for the joint development of the FSX;
      an agreement which leaves many unsolved problems at the industry
      level.

      One of the manufacturers involved, General Dynamics, was very anxious
      to assume the initiative on the project, dividing it up among others. 
      It met with resistance from Mitsubishi, and General Dynamics came up
      with a plan that would separate the development of the left and right
      wing -- a very peculiar approach.

      In short, America wants to steal Japanese know-how.  They cannot
      manufacture the most technologically advanced fighters without
      advanced ceramic and carbon fiber technology from Japan.  That is why
      America is applying so much pressure, attempting to force Japan to
      come to American terms.  Some of Japan's industry representatives
      appear willing to deal with the Americans under the table, probably
      with the good intentions of smoothing U.S.-Japan relations on the
      issue.  I happen to disagree with such an approach. We just cannot
      give in on this issue.  We must be persistent -- to the maximum
      degree.  If America does not appreciate a rational division of labor
      on the project, we should discontinue the project and start all over
      from scratch.

      The joint development idea is a legacy of the Reagan-Nakasone era. 
      Both men are now out of power and we can retract the whole thing and
      tell the U.S. that we have decided to develop our own project without
      its participation.  It is our choice.  We must bluff to counter
      American bluff, otherwise we will continue to be the loser.

      I brought this subject up the other day to Mr. Nakasone.  He
      responded, "Well, you had a pretty sharp interest in that issue at
      that time."  I said that I was "probably the only one concerned about
      the issue at the time."  Mr. Nakasone then insisted that he made the
      decision to compromise in order to maintain good U.S.-Japan relations. 
      He also admitted that America was then already very much afraid of
      further Japanese technical advances.  Well, compromise is fine, but in
      reality this was not a compromise: it was a sell-out -- a simple
      sell-out of Japan's interests.

      I don't regret it any less when we make the silly mistake of not
      saying "no" especially when we hold the strong cards.  Such freebies
      are now taken for granted and America comes back with more bluff.  On
      the record, U.S.T.R.'s Yeutter stated that the "application of high
      pressure is the best way to manipulate Japan."

      My position may draw some criticism in Japan, where it probably will
      be said that I am playing with dynamite in dealing with America in
      this fashion. It goes without saying that an equal partnership must be
      carried out without humiliating pressure or compromise as the result
      of such pressure.  This is the reason I am advocating that Japan say
      "no."  "No" is an important instrument in the bargaining process.
 
 
   8.3 Diplomacy Should Be Free of External Pressures
 
      Diplomacy which lacks the "no" factor cannot be diplomacy for the
      benefit of Japan.  Japan has a solid basis for saying "no" on many
      occasions.  All we must do is play our cards wisely, playing our ace
      intelligently.  Japan is very poor at diplomatic tactics.  It is a
      wonder too me that Japan has failed to recognize that its initiatives
      are instrumental in the ultimate decision-making process in the
      international arena.

      Mr. Glen Fukushima, an American of Japanese descent in the office of
      the U.S.T.R. (Deputy Assistant U.S.T.R. for Japan and China), who was
      acquainted with Senator Aquino of the Philippines while both were at
      Harvard, is one of the most capable Asian specialists.  His wife is an
      intellectual Keio University graduate, who prefers to live in Japan,
      forcing Glen to commute to Japan two or three times a month.

      On one occasion, I had dinner with him and asked him what America's
      next Japan-bashing scenario would entail.  He replied that the U.S.
      would take up the distribution issue since this cannot be rectified by
      Japanese politicians without pressure from the U.S.  I have to use
      American pressure in order to accomplish a national objective, yet, I
      must admit that the distribution system is one of Japan's biggest
      headaches today.  There is no question that the high prices in Japan
      are caused by the distribution system itself, which is made worse by
      Japanese politicians.

      There are domestic areas where we Japanese must say "no" also, even
      before we say "no" to outsiders.  The liberalization of rice is one
      such issue. Opinions on the rice issue sharply divide politicians such
      as I, whose constituents are urban, from those representing farmers.

      Former Minister of Agriculture Sato is a good friend of mine, but his
      advocacy of food security is becoming diminished.  Inevitably, mutual
      dependence is becoming more and more a reality in our world today. 
      America was not even able to place [a] ban on exports of grain to the
      Soviet Union when the Russians invaded Afghanistan.  There would have
      been too much pressure from American farmers.  If that is the case, it
      would probably be practically impossible to put a ban on agricultural
      exports to Japan.  The rice issue has its sentimental aspects in Japan
      as well as its practical aspects, which make the overall issue more
      complicated.  Yet it is obvious that we must liberalize the market. 
      Such is also true of construction projects.  It is inevitable that we
      allow foreign construction firms to participate in Japanese public
      construction projects.  Japanese general contractors have been
      maintaining prices as much as 40% higher in comparison to foreign
      bidders, due to bid-rigging traditions to assure a monopoly on
      business for themselves.  There is no way these practices could ever
      be free of foreign criticism.

      In the course of my conversation with Glen Fukushima, I asked whom
      among the Japanese negotiators he considers the best.  He immediately
      came up with the name of MITI's Kuroda, whom the Japanese press used
      to criticize for his tough positions.  The press claimed that his
      participation aggravated the problems with the U.S.  The Americans
      criticized him for being stubborn. Strabgely, the American negotiator
      named him the most effective.  He is stubborn and is able to say "no"
      decisively whenever he should do so.  The Americans usually try to
      overpower negotiations by increasing pressure.  But Kuroda does not
      feel that he must say "yes" to American pressure.  America is a giant
      in many ways, and, in many ways, Japan is a dwarf.  This obvious
      contrast has been exploited by the Americans often in the past.

      Mr. Kuroda kept pointing out that irrational pressure is not always
      the result of reason or logic, and reinforced this position by
      withstanding increased pressure.  His "no" is not a no for its own
      sake; he always states his reasons.  This is the proper approach and
      attitude in negotiations.  In the past, there have been allegations
      that Japanese logic and opinions have not made any sense to the other
      side.

      When the opposing side points out that Japanese opinions and demands
      have no logical basis, all of a sudden the illogical Japanese start
      saying "yes, yes, yes..." in a panic.  But these "yesses" do not
      necessarily mean yes in the sense of positive assertion.  At any rate,
      the other side then comes to the conclusion that Japan will not take
      action unless pressure is placed on them. This is a rather unfortunate
      situation for the people of Japan.  The Japanese image of being soft
      in the face of pressure does not help Japan's diplomatic efforts at
      all.

      I have often suggested that at least half of Japan's diplomats
      stationed abroad be civilians.  Those who are in business and other
      professions who have dealt with foreigners are in a better position to
      represent the interests of Japan than are career diplomats.  Send Mr.
      Morita to America as our ambassador: a brilliant idea!  But it should
      not be just an idea.  I truly believe that it would be most beneficial
      to the U.S.-Japan relationship to have such an ambassador from Japan
      to the U.S.


   9.0 THE U.S. AND JAPAN ARE "INESCAPABLY INTERDEPENDENT" (Morita)
 
   9.1 No Way To Avoid the Trade Frictions
 
      Recently the expression, "inescapable interdependence" has been heard
      quite often among Americans.  If we dare to explain this concept in a
      more extreme way, perhaps we can say it's a "fatal attraction".  With
      this trend now prevailing in the world, we have no choice but to live
      cooperatively. Everyone on earth, not just the United States and
      Japan, is mutually dependent and this is unavoidable.  This is the
      times that we are facing now.  What does cooperation mean?

      A Japanese tends to say, "Let's work together".  But I often wonder
      whether they really understand its meaning.  This can be applicable to
      Americans as well.  We are at home using this expression but it seems
      to only be used as a convenience.  Furthermore it is out of the
      question to force "cooperation" through threats.

      To cooperate means to maintain harmony.  It is not harmonious to force
      your adversary.  When they cope with you, you too, must cope with
      them.  You have to give up some of your interests; you must abandon
      something.

      I tell people whenever I have a chance that we know what it is to be
      selfish but hardly anybody is aware when he himself is being selfish. 
      We say that one is selfish but actually this person probably has no
      idea that he is perceived as such.  In this sense, Japan also can be
      thought a little bit selfish by other countries, although we hardly
      have such ideas.

      Looking for the reason, we are so perceived, the opening of the
      domestic market can be one example.  Everyone agrees that we should
      open our markets to foreign traders, but when it comes to individual,
      this is hard to actualize since someone says, "no, I cannot accept
      this", and then someone says, "no, I cannot accept that."  Although at
      summit meetings, Japanese leaders assure others that they will do
      their best, and they actually do try to open the market.  In the end,
      however, this is never actualized since their promise goes against
      domestic interest groups and they are forced to back down.  Only
      lip-service followed by no achievement might result in being called
      "liars" and this is surely worse than "selfish".

      The development of communication technologies means this is a
      shrinking world and any country will be left alone if it does not talk
      frankly to its people and friendly countries about the compromises
      that they must accept.

      Free people in the free world ask for their freedom but at the same
      time they respect the freedom of others.  And I think it is genuine
      freedom to think "we should abandon some so that we can respect
      others."  It will simply increase friction if we just look out for our
      own benefit, and put priority on winning the race based on the premise
      that we simply can focus on our interests alone since we are in the
      world of free economy.

      We should also recognize that friction seldom occurs with those who
      are far from you.  Friction occurs as we move closer.  We cannot
      escape from the trade friction as long as we belong to the world of
      "inescapable interdependence".
 
 
   9.2 Japan's Central Role is Asia
 
      The closer we become, the harsher the friction can be.  So it would be
      wise for us to prepare for problems with neighboring Asian countries.

      I went to Singapore recently to attend a ceremony marking the opening
      of our new plant, and had a chance to talk with President Lee Kuan Yew
      who has been a friend for a long time.  He invited me to his home, we
      talked over dinner and I stayed with him.

      The plant our company opened this time in Singapore is operated
      automatically by robots.  We use materials Singapore supplies and
      employ able engineers graduated from good schools in Singapore,
      producing special parts in large numbers.  The plant itself will be a
      foothold to supply the products all over the world.  When I proudly
      held forth my new plant, he was very pleased and said that in the past
      when Japanese firms opened plants in his country, they needed a large
      number of employees, where they in fact have never had enough
      personnel.  Because of the nature of his country, that is, Singapore
      is a small island, this caused wage increases at a drastic pace.  This
      is what they had wanted; a plant with sophisticated technology.

      Transferring our technologies, not teaching management, I believe, is
      the best way to alleviate friction between Southeast Asian countries
      and Japan. These countries, NICS, then NIES, are now the Four Tigers
      or Five Tigers.  It might be too much to say they developed thanks to
      the Japanese economy and industrial technologies, but I believe we
      contributed to them in such a way that contributed to their current
      prosperity.  From now on Japan will need to take a major role in Asia. 
      You are already able to see this is happening when you recognize that
      Tokyo has taken on a major role as a finance and money center like New
      York and London.

      In the past, we yearned to go to New York when we were young. 
      Similarly, the youth of Southeast Asia yearn to visit Tokyo or
      Disneyland in Japan.  I should avoid the expression, "leadership", but
      Japan has begun to assume that role as a center in Asia.

      To take on the role as an initiator means we must also be able to take
      on the role of arbitrator.  That is, we must think carefully what
      constitutes a real leadership role in this mutually dependent world.
 
 
   9.3 America, You Had Better Give Up Certain Arrogance
 
      As you (Mr. Ishihara) mentioned before, rapprochement between the
      United States and the Soviet Union and Japan's involvement in their
      military strategies because of its highly-sophisticated technology
      directly affects new trends on the world scene.

      I do not think anybody imagined a decade ago that these two
      superpowers would be mutually dependent on each other in a military
      sense and that there would be a strange structure in the power balance
      among the United States, the Soviet Union, and Japan.  Nobody can deny
      that we are going to have a totally new configuration in the balance
      of power in the world.

      Facing this, most important to Japan in the practical sense is the
      relationship between Japan and the United States.  Japan needs the
      United States.  I think the United States need Japan as well.  It is a
      bond we can never cut, and this might be the "fatal attraction"
      between us.  Since we can never seperate, we had better look for the
      way to develop through cooperation a healthy relationship through
      cooperation.  And we want to ask you Americans, "what is going on now
      in your country?  Do Americans really understand the meaning of
      'freedom' and the role of Japan which is so necessary to the United
      States?."  When you see present conditions, it is obvious that the
      United States is not strong enough in a fundamental and structural
      sense.  So, I think what is most important is that we ask them frankly
      as equal and not as a subordinate, "Are you really sure that you are
      all right?"  We will be in trouble as will the whole world if the
      United States is not strong enough in the fundamentals and this means
      more than talking about something that is current.  It must be
      recognized by Mr. Bush as well.  In this sense, it is important for
      Mr. Takeshita to deliver our message correctly at the coming summit. 
      In my understanding, however, these summit meetings are held according
      to an itinerary prepared at the working level and they decided what
      was supposed to be said by the leaders.  In negotiations among
      business leaders, we, top management hold discussions face to face,
      saying "yes" or "no", or "if you do that we will do this."  However,
      we have a tendency to prepare answers for negotiations even in
      business world in Japan.  Take my case, for example.  Once a chairman
      of a large Japanese firm was vistiting me and I planned to talk to him
      face to face.  Then, someone from that office called us and asked what
      I was going to talk about when we met.  "Our chairman is going to say
      such and such.  How will you respond?"  They wanted to prepare all
      answers beforehand.  I do not think we need to have meetings if the
      content is planned beforehand.  I want Mr. Takeshita to say correctly
      how we, Japanese, see the present situation in the United States and
      tell them clearly what we want to do.  I think we should tell them,
      "please do not cling to the image that you are the superpower, but
      rather look for the way to get your economy on the road to recovery." 
      We should tell them, "we are going to back up your dollar, so face the
      fact and issue yen-bonds, for example, as Carter Administration issued
      pound-bonds."  Americans have to abandon the idea, such as, "our
      federal obligations do not bother us since we can print more green
      backs."  They have to change the way they think about their own
      economy.  To this end, we Japanese must deliver the message, "if you
      cannot make both ends meet, we cannot either."  We must do this even
      if it takes time to make them understand.

      It is high time to let them know we might go bankrupt together if
      things are not worked.  The United States and Japan relationship is in
      serious trouble.  Because of our historical discipline, Japan has
      adhered to the principle that "silence is golden," but I believe Japan
      must insist that the United States do what must be done.  An outspoken
      person like me is easily criticized from every corner and I am sure
      Mr. Ishihara has had the same experience since he is also very
      outspoken.  But to be silent and to put up with things do not work at
      all in the West.  As Ishihara has suggested, I think we should say
      what we have to say.  If not, I am afraid we will lose our own
      identity as Japanese in the world.

 
   10.0 AMERICAN ITSELF IS UNFAIR (Morita)
 
   10.1 America Lacks Business Creativity
 
      Americans and Europeans are always saying "We're getting ripped off by
      Japan.  They take the ideas we have invented, make products, and then
      the onslaught comes.  We are being damaged, they're disgraceful." 
      Japan has certainly done better more recently, but the U.S. and Europe
      are very much advanced in basic research.

      Last year, I was invited to speak to about 100 researchers who worked
      at the Bell Laboratories at ATT.

      The Bell Laboratories have about 7 people who have won the Nobel
      Prize. To me, it seemed that I would be speaking before some of the
      greatest men of our time.  Prior to the speech, I was shown around the
      Bell Laboratories, where a number of wonderful research projects were
      underway.

      As you must know, the transistor and the semiconductor, which are at
      the root of the current revolution in industry were invented at the
      Bell Laboratories.  It really brought home to me how wonderful America
      was.

      The basic message I brought that day was that this type of research
      was extremely significant academically in terms of both science and
      culture, but to be significant from the standpoint of business and
      industry, two other types of creativity, in addition to the creativity
      required to make the original invention, were absolutely necessary.

      Industry requires three types of creativity.  The first, of course, is
      the basic creativity necessary to make technological inventions and
      discoveries. This alone, however, does not make for good business or
      good industry.

      The second type of creativity that is necessary is that involving how
      to use this new technology, and how to use it in large quantities and
      in a manner that is appropriate.  In English, this would be called
      "product planning and production creativity."

      The third type of creativity is in marketing.  That is, selling the
      things you have produced.  Even if you succeed in manufacturing
      something, it takes marketing to put that article into actual use
      before you have a business.

      The strength in Japanese industry is in finding many ways to turn
      basic technology into products and using basic technology.  In basic
      technology, it is true that Japan has relied on a number of foreign
      sources.  Turning technology into products is where Japan is number 1
      in the world.

      Sony was the first company in Japan to license the transistor patent
      from Bell Laboratories, back in 1953.  At that time, the transistor
      was only being used in hearing aids.  We were repeatedly told to take
      this transistor and manufacture hearing aids.

      When we brought this new transistor back to Japan, however, Mr. Ibuka
      of Sony said, "There is not much potential in hearing aids, let's make
      a new transistor and build radios."  At that point, we put all of our
      energies each day in developing radios which used transistors.  One of
      our researchers during this development effort, Mr. Esaki,
      subsequently went to work for IBM where he earned a Nobel Prize, but
      it was at our company where he did work worthy of the Prize.  There
      are a number of Japanese who have received Nobel Prizes, but Esaki was
      the only one who worked for a research laboratory of a company.  We
      poured money into development of new transistors, and developed small
      radios for the market, an effort that was worthy of the Nobel Prize.

      It was an American company, however, who made the first transistor
      radio. I became a salesman, and took my product with full confidence
      to the United States to sell it.  Prior to this sales effort, the
      newest invention was a vacuum tube type of amplifier which required a
      lot of space.  When the American company, which was a famous radio
      manufacturer, was initially rebuffed by people telling him "since we
      have this great sound and large speakers, who would want to buy your
      little radio?", that company just quit trying to manufacture
      transistor radios.

      We, however, had something else in mind as a way to sell these radios.
      "Currently in New York, there are 20 radio stations broadcasting 20
      different programs during the same time frame.  If everyone had their
      own radio, then each person could tune in to the program he or she
      wanted to listen to.  Don't be satisfied with one radio for the whole
      family, get your own radio.  The next step was to do the same for
      televisions."  This was a new marketing concept.  One radio for one
      person became a kind of catch phrase in this campaign and the result
      was that Sony transistor radios became famous throughout the world.

      While it was true that Sony was second in developing the transistor
      radio, the company who did it first lacked the marketing creativity,
      so without much thought, they simply quit and pulled out of the
      market.

      America has stopped manufacturing things, but this does not mean that
      they do not have the technology.  The reason why the link between this
      technology and business has not been firmly connected is because they
      lack the second and third types of creativity, turning products made
      with the new technology into a business.  I feel that this is a big
      problem for them.  This exact area happens to be Japan's stronghold
      for the moment.

      When I went to speak at the Bell Laboratories, I got the chance to
      look at a lot of their research on advanced technology.  I felt that
      they may well come up with something new that was even more important
      than the transistor, but since Bell Labs is a part of ATT, they are
      not thinking of anything except telecommunications applications. 
      There is not one person there who is thinking about how to use the new
      technology they are developing as a business.  I think that this is
      one area where the U.S. comes up wanting.  It is my feeling that even
      though times are good in American now and employment is up, the time
      will never again come when America will regain its strength in
      industry.

      There is a television network in the U.S. called CBS.  CBS has a
      weekly program which airs every Sunday evening called "60 Minutes,"
      which has a very high viewership rating.  This is a news program which
      devotes segments just under 20 minutes to various stories and opinion
      from around the whole world. More than 10 years ago, I was on the
      program.  This is a program that takes a lot of money to produce.  A
      crew followed me around Europe for about 6 months to prepare the
      segment.

      Now they want me to do another one.  A cameraman followed me to
      London, and when I went to Singapore, they followed me there too.  
      The other day, a famous and beautiful interviewer in the U.S., Diane
      Sawyer, came to Japan to interview me for the program.  We spent a
      long time in front of the TV cameras, and the questions grew sharper. 
      This made me mad and at the end, it was like we were in a fight.

      She asked me what I thought of Lee Iacocca.  Since this is a program
      he would be sure to see, I was frank in my statements.  I said he was
      a disgrace, and that he was unfair.  Iacocca comes to Japan and says
      Japanese are unfair.  Very recently, he headed his sentence with, "Let
      me make myself very clear," and then he went on to slander Japan.  I
      know he wrote that book which labeled Japan as "unfair" but I think it
      is Iacocca who is unfair, and that is what I said.

      When I was asked why he was unfair, I answered clearly, in front of
      the camera.

      The president of a Chrysler company came to Japan.  I had met this
      person before.  I knew he was involved in selling Chrysler auto-
      mobiles, so I asked him how sales were going.  He turned to me and
      said quite plainly that he had not come to Japan to sell cars, but he
      had come to purchase Japanese parts and engines.  He said he had come
      to Japan to buy Japanese products so they could sell them in the U.S.

      At the present time, the three big automobile manufacturers have
      purchased 250,000 automobiles from Japan in 1987.  How many have they
      sold to Japan? Only 4,000.  They make no effort at all to sell their
      cars in Japan, and then call Japan unfair because Japan sells too much
      in the U.S. and Japan will not buy their products.

      One of the reasons why U.S.-Japan relations are in such a mess is that
      Japan has not told the U.S. the things that need to be said.
 
 
   10.2 Japan Has Not Forced Its Sales on the U.S.
 
      When I go to foreign countries, I hear that Japanese work too much. 
      But why is working too hard so bad?  Our society cannot continue to
      eat unless we keep producing products.  People have to have products
      in order to live.  They use golf clubs, and drive automobiles.  If
      they want these products and do not wish to import them, they must
      manufacture them.  I am a businessman.  I am not forcing my customers
      to buy things from me.  We expend our energies on how to make our
      products most attractive to the customer.

      The Americans say that there is a U.S.-Japan trade imbalance, and it
      is not because Japan is not buying U.S. products or because Japan is
      forcibly selling the products.  There are few things in the U.S. that
      Japanese want to buy, but there are a lot of things in Japan that
      Americans want to buy.  This is at the root of the trade imbalance. 
      The problem arises in that American politicians fail to understand
      this simple fact.  It could never be the case that we are selling too
      much; it is not because we are exporting; the imbalance arises as a
      result of commercial transactions based on preferences.

      Therefore, the only thing that Americans or Europeans can do to
      correct this imbalance is reassess themselves and make an effort to
      produce products which are attractive to Japanese consumers.  It is in
      this area where I would like to see Japanese politicians get courage
      enough to expound abroad to our trading partners.

      Recently, U.S. Secretary of Commerce Verity brought representatives of
      25 companies to Japan who wanted to sell their company's products in
      Japan.  I was the person responsible for welcoming this group, and I
      told them Japan would do its best to help out.  I remarked, however,
      that I had been doing my best to sell Japanese products in the United
      States over the past 30 years.  Yet, not once had the Minister of
      International Trade and Industry accompanied me and helped out in my
      efforts.  I asked the Secretary of Commerce if it was his intention to
      create an "America Incorporated."  Secretary Verity smiled, but
      everyone else laughed out loud.

      The Government of Japan has, in both the good sense and the bad sense,
      passed along various types of administrative guidance, which have been
      criticized by foreign countries as being an alliance between
      government and business -- even if the Minister of international Trade
      and Industry does not go on trade missions.

      One of the Americans in the group then asked me why the Japanese
      government backed up Japanese industry.  Let's think about it.  Even
      though the government does not own one share of my stock, I pay more
      than half of my profits to the government in taxes.  If my business
      does not do well, the government does not receive more revenues. 
      Thus, the government, we feel, is a kind of partner.  I asked them why
      American industries, which are paying taxes to the government say,
      "the government is trying to control industry; don't touch us."  Your
      viewing of the government as the enemy seems strange.

      During this visit, Secretary Verity did voice his support for
      cooperation between government and business to sell products, but it
      is my feeling that the establishment of a framework for this type of
      cooperation is still a long way off.
 
 
   10.3 Let Us Think About the Role Japan Should Play in the World
 
      On the other side of the question, however, there are certainly
      aspects of Japan which are "unfair" when viewed from the U.S.
      perspective.  When you consider what Japan has done for the world in
      the course of its becoming the second largest economy, I think this is
      an area where Japan is in line for some critical reflection.

      Recently, since the time of Prime Minister Takeshita, Japan has been
      making enormous efforts to become the second most open country in the
      world for trading.  The long-boiling problems over beef and citrus
      imports were gradually resolved through efforts directed at those
      problems.  However, from the perspective of Americans, Japan has still
      not done what it should do.  I am not saying we should put more money
      in defense spending, but if we are not to exceed 1% of GNP on defense,
      then the government should put more money into Official Development
      Assistance (ODA) (foreign aid), which helps the other countries of the
      world.

      In addressing the ODA to GNP ratio, of the 18 countries in the world
      who provide foreign aid, Japan is number 15.  Also, if we look at the
      amount of non-loan foreign aid for which there is no remuneration,
      Japan is number eighteen of eighteen.  I shrink when I am asked
      whether that record is something Japan can be proud of.

      Almost all U.S. corporations make donations of about 1 percent of
      their pre-tax profits to the community -- using some of their money
      for the community is a kind of custom with them.  In Japan too, we
      also make some contributions to return money to society, and at the
      current time many Japanese companies are returning more than 1
      percent.

      But when Japan is looked at as a state, it is perceived as unfair by
      the rest of the world because it is not returning some of the benefits
      it reaps from the world back into the world society.

      Therefore, when I speak before Japanese groups, I emphasize what is
      meant when America says Japan is acting disgracefully.  I tell them,
      "Shouldn't we review what we are doing once again?"  Japan should be
      bold in telling the U.S. what it needs to be told, but at the same
      time, Japan must establish a code of standards for the role it should
      be playing in the world.

      Japan should open its markets to the extent where there would be no
      room for their complaints, and money that Japan has should be provided
      to help developing countries where people are not being oppressed. 
      This would be a magnificaent behavior on Japan's part, and I think
      that Japan needs to become aware of its responsibilities.

      Certainly the full opening of our markets and advancing large sums of
      money for developing countries is very painful.  However, things will
      not get better in the world until the pain is shared more equitably. 
      How much pain do you think was involved during the Meiji Restoration
      where the privileged class of samurai gave up their power, cut their
      special hair styles, and tossed out their swords?  It allowed a
      bloodless revolution to take place within Japan.

      Mr. Ishihara has said there is a need for a reform of consciousness in
      Japan.  He is exactly on the mark.  If we do not reorient our
      consciousness from the perspective of being international people, then
      I do not feel Japan will be able to continue to walk the globe as an
      economic power.
 

  11.0 JAPAN SHOULD LIVE IN HARMONY WITH ASIA (Ishihara)
 
  11.1 Restrain America!
 
      When the time comes when Japan does say "no" decisively on a
      particular issue, there may be a dramatic reaction.  It could come as
      a shock to the Americans, and a number of different reactions would be
      possible.  Even now, some Americans suggest the possible physical
      occupation of Japan in case Japan engages in semicondcutor trade with
      the Soviet Union.

      Yet when the time comes, we may well dare say "no."  The relationship
      between Japan and the U.S., as Mr. Morita describes it, is unbreakable.
      However, the whole world does not exist for the sake of Japan and the
      U.S.  Japan's relationship with the rest of the world does not exist
      only in relation to or through the U.S.  Should America behave
      unreasonably toward Japan, Japan must open channels to deal with the
      rest of the world from a different standpoint than on the basis of the
      U.S.-Japan relationship and it must show that it is doing this to the
      Americans.

      America itself has already exhibited certain indications that it is
      shifting towards a closer relationship with the Soviet Union, as Alvin
      Toffler stated, insinuating that Japan will be threatened once the
      U.S. establishes a more collaborative realetionship with the Soviet
      Union similar to the case of the U.S. movement toward China, which burst
      forth in December 1978, there was also an astonishing high technolgy
      demostration.

      I for one had a chance to observe some of that demonstration.  It
      began with a set of satellte photos which Dr. Kissinger brought to
      China.  At that time Viet Nam was engaged in a military conflict with
      China, subsequent to the fall of the Saigon government in April 1970
      and the Cambodian war.  The Sino-Vietnamese war was recklessly
      provoked by Deng Shoa Ping, chief of staff in China.  In the initial
      encounters, China was severely defeated.  The real power behind Viet
      Nam was the Soviet Union.  The Soviets provided Viet Nam with detailed
      satellite photos illustrating the movements of the Chinese military,
      the number of soldiers and divisions, the number of tanks unloaded at
      Kuang Tong station and which direction all these troops took.  Taking
      adavantage of the superior information available to them, as provided
      by the Soviet Union, Viet Nam was able to lure the Chinese troops deep
      into the mountains, then desroy them with anti-tank missiles.  This
      miserable battle was all recorded by American satellites, which Dr.
      Kissinger presented to the Chinese with the comment "what a silly war
      you have conducted."

      Needless to say, it was a shock to the Chinese leaders to see how step
      by step their military was demolished.

      I assume that the Americans showed another series of satellite
      pictures showing the horrible massacre of Chinese soldiers at the
      siege of Damansky Island (in Russian) or Chin Pao Island (in Chinese),
      which is located in the middle of the Amur (phonetic rendering) River. 
      At first, only a small number of Russian soldiers occupied the island
      and they were soon driven off by the Chinese, who had many more troops
      than did the Russians.  The Russians returned in greater numbers and
      recaptured the island.  Fianlly, the Chinese sent the equivalent of a
      human wave of troops, almost flooding the island with soldiers.  As
      the Chinese shouted victory, the island was surrounded by a sudden
      mist and eventually it was covered by a dense fog.  The Russians
      exploited this climactic assistance, surrounding the island with tanks
      and opening a salvo.  At dawn, there were a great many dead Chinese
      troops.  The Russians landed their tanks, rolling over the dead,
      wounded, and living, reducing all to nothing.

      The Americans showed clear pictures of the events, illustrating what
      had taken place using satellite pictures, a great demonstration of the
      combination of technology and intelligence gathering.  China was
      shocked and disturbed that it could not effectively counter a
      situation like that as they simply did not have access to the
      technology required.  They listened to the Americans, and agreed to
      the development of a bilateral relationship with the U.S. on American
      terms.  America had played its high tech card quite effectively.

      The normalization of relations with China, by-passing Japan, set a
      precedent and provided a basis for other such threats to Japan by the
      U.S. America can bluff Japan by indicating that it can develop a
      similar relationship with the Soviet Union, without consultation, so
      that Japan would be less needed within the framework of U.S. global
      strategy.  But Japan has a similar card to play, counter to the
      American bluff.

      Some of Japan's business leaders have long had an interest in Siberian
      development, which now appears to be a realistic possibility.  Some of
      them are of the opinion that Japan could go neutral, revoking the
      U.S.-Japan Security Treaty, if the Soviets will return the northern
      islands, granted that Japan would be given the right to develop
      Siberian resources.

      This may be a realistice choice from the Soviet point of view since
      some critical technologies such as linear technology are available
      from Japan.  The U.S. simply does not have them.  Japan had better
      start sending some signals of its own to America.  My American friends
      comment that my behavior in the U.S. is too provocative; I feel that
      more of us should speak out like this more often.

      Japan could have the Soviets formally request Japan's linear
      technolgy.  The COCOM would claim that it is illegal for Japan to
      provide this technology. Japan would then mount a public relations
      campaign, appealing to the rest of the world that the use of its
      linear technology is simply to enhance the efficiency of the Soviet
      railroad system in Siberia so that travel time is shortened and the
      whole thing will be rationalized as an attempt to restrain American
      intervention.  In fact, the U.K. and France are champions at this kind
      of public relations game, in combination with diplomacy.  We need more
      skillful players in the game to counter the formidable American
      challenges in the international arena.
 
 
   11.2 Japan Is Not a Free Ride on the U.S.-Japan Security Pact
 
      It goes witout saying that the U.S.-Japan relationship is a vital one. 
      The security treaty has certainly been helpful to Japan.  America,
      however, has chosen to become involved for American interests; it did
      not want to see the restoration of Japanese military power.  However,
      the so-called American nuclear umbrella as a deterent power for Japan
      is not as valuable as the Americans have said.  I verified this myself
      twenty years ago and put it into the official record.  The American
      nuclear umbrella is just an illusion as far as the Japanese people are
      concerned.  Also, the so-called "free ride" on the U.S.-Japan Security
      treaty is no such thing and has no earthly basis.  I have stated this
      repeatedly.  The Japanese people have been forced to thank the U.S.
      for an illusion.  Both the U.S. and the U.S.S.R. had to enter the INF
      agreement due to the nature of a changing power shift in the world,
      which on the bottom line, is inevitable in light of the high tech-
      nology dominance by Japan.  This has been clearly seen by individuals
      such as Dr. Kissinger, who even foresaw the situation today long ago,
      a position he has stated on a number of occasions.  Poor Japanese
      politicians have never studied these issues systematically and
      therefore can never provide a rebuttal to American allegations. 
      Americans, for their part, seem to have emotional and intellectual
      difficulties in admitting to changes and new developments.

      A Pentagon task force sent a warning on electronics, with particular
      emphasis on semiconductors, those who have nothing to worry about but
      Japan [sic].  America is very seriously concerned about losing power
      of any kind to Japan.  Some Americans have been raising their voices
      in advocation of an increased Japanese defense capacity.  This may be
      a worthwile suggestion.  We should overhaul our current defense
      system, although I am not advocating an abrupt cutting of ties with
      the U.S.  We have accepted this absurd defense formal [formula?]
      consisting of three defense forces.  This system must be completely
      overhauled to suit present realities, including a much greater
      deterrent capacity, exploiting our high technology to the maximum.  We
      should develop the most persuasive and demonstratable deterrent
      formula which would, without any doubt, show our adversaries that any
      attack on Japn will end with unbearable damage to the aggressor from
      both a stategic and a tactical viewpoint.

      Production and maintenance of escort ships which can only exhaust
      their missiles and ammunition in a few minutes, and then sit and wait
      for death is absurd.  Participation in RIMPAC with such equipment
      makes no sense.  RIMPAC has nothing to do with the concept of active
      defense.

      In a lecture that the Defense College of Japan, the commander of the
      U.S. 7th Fleet declared it 100% unlikely that Soviet forces could land
      on Japanese territory.  This is [an] honest -- but stupid -- comment. 
      Some time ago we invited a famous Israeli tank division commander
      named Tam (phonetic rendering) to Japan.  He kept annoying the Defense
      Agency by asking why Japan was building tanks.  He was considered to
      be one of the top tank strategists in the world, and he told us that
      even on Hokkaido there is no need [for] tanks for defense.  He said
      that Soviet attacks would have to be destroyed at sea.  He also
      expressed doubt in the value of escort ships.

      His points are absolutely valid.  Tanks and escort ships were built
      and maintained at the direction of the Americans.  America has imposed
      its defense formula for Japan on Japan, reproducing its own defense
      formula within Japan. Thus, Japan has ended up with the defense system
      it has simply because of one-sided, pro-American diplomacy: one in
      which Japan says only "yes."

      I conducted my own cost analysis of Japanese defense systems and
      discovered that the whole thing would be far less expensive if Japan
      developed its own system in accordance with its own initiative and
      planning, in comparison to the expenditures forced on us today by the
      U.S.  Despite the bowing under to American will by Japan, it is still
      the target of American politicians such as McClosky who charge that
      "Japan is protected by American bloodshed in the Persian Gulf."

      The time has come for Japan to tell the U.S. that we do not need
      American protection.  Japan will protect itself with its own power and
      wisdom.  This will require a strong commitment and will on our part. 
      We can do it as long as there is a national consensus to do so.  There
      may be some political difficulties at this point in forming this
      consensus.  From both a financial and technological point of view,
      there are no barriers to accomplishing this goal in the near future. 
      We can develop a more effective and efficient defense capability at
      less than we are paying today.

      In reality, the abrupt cancellation of the security treaty is not
      feasible.  But it is a diplomatic option and a powerful card. 
      Outright refusal to consider such an option means giving up a valuable
      diplomatic card. The fact remains that we do not necessarily need the
      security treaty and a security system which will meet Japanese [needs]
      can be built by Japan alone.

      Both the right and left on this issue tend to become fanatical on the
      security treaty debate.  It is most regrettable that we do not have a
      cool and rational forum where the objective profit and loss aspects of
      the issue can be analyzed.  But the time will come when we will have
      to face this issue and this time is in the near future.

      The current state of the Liberal Democratic Party means that it cannot
      afford a serious deliberation on this issue.  Once the opposition
      parties disassociate themselves from a one-sided pro Russian and
      Chinese policy and demonstrate their capacity to be able to replace
      the LDP as alternative political parties fully recognized by the
      voters, we will be in the position to examine our options with greater
      flexibility.
 
 
   11.3 Japan Should Live in Harmony With Asia
 
      Japanese popular songs are heard all over Asia these days; it reminds
      me of the time when Japanese became so interested in American pop
      music, which, at the time, conditioned our psycho-emotional base so
      that post-war Japan evolved into a consumer-oriented society. 
      Structurally, there must be similar powers during such social
      phenomena and I wonder what it is today.

      As a matter of fact, it has always been some technological
      breakthrough which has moved history into the next stage, during any
      given era, even as far back as the stone age or the copper epoch. 
      Technology has always set the pace of civilization and cultures
      flourish on this basis.  When we start seeing only the pretty flowers
      that are the result of this flourishing, and forget about the roots
      that nourish the blossoms, we soon experience the decline of the
      civilization, as has been the case of nations in the past.  This is
      the way I interpret history, in cool and orthodox terms.

      With respect to the development of commercial uses of the
      semiconductor, materialized by Japan in Asia, I must say that we can
      easily understand the reason why this happened.  When the French
      minister of culture, Andre Malroux, came to Japan, he pointed out the
      distinction between Western religious artifacts and those of Japan. 
      He told an audience that the Western expression of a crucified Christ
      is bloody and even grotesque and might well discourage a religious
      attachment to Christ.  However, he said, the Miroku Buddha at the
      Horiyuji Temple emits such a sublime beauty, beyond the barriers of
      race and religion, that it is raised to the level of an eternal or
      ultimate object to be revered.

      What he meant was that the type of beauty and the impression given in
      such an artifact as the Miroku Buddha or the Horiyuji Temple attract
      interest and respect from all over the world, beyond national, racial,
      and cultual boundaries.  These are products of refinement from the
      Japanese people.  The original image of Buddha came from India, by way
      of China and the Korean peninsula.  The image of Buddha in Japan is
      the product of refinement of Japanese art.  The process has been
      constantly refined and it becomes a product of Japanese intellectual
      processes, as the Minister explained, it is clearly Japanese.

      In my judgement, Japan has acquired this ability primarily because of
      the particular geographical environment surrounding the Japanese
      archipelago.  In the long journey from West to East, Japan is located
      at a dead end; there is nothing beyond except the Pacific Ocean. 
      Japan is in no position to pass on to other nations what it has
      received; it must live with what it receives for the rest of history. 
      Everything stops at Japan; the Japanese people refine what has come
      their way; Japan is the last stop in cultural transition.

      Among Japanese statesmen, Mr. Minoru Genda is one I truly respect.  He
      once said that Western swords were basically instruments of killing,
      although there are some variations, such as those used in the sport of
      fencing.  But these swords are just tools and we cannot be impressed
      looking at Western swords.  Japanese swords make viewers feel they are
      looking at artifacts and that they are being invited in the world of
      art and mystery.  He went on to say that the Japanese people have
      converted these awful tools, made originally to butcher other people,
      into art objects.

      Another time, Mr Genda told me: "Mr Ishihara -- after all, in the end,
      Japan will be all right.  It is able to defend itself."  When I
      replied, "how," he said that "Japan's technology can be the basis of
      Japan's defense." What he pointed out was that Japanese technology,
      which has been refined and polished to the ultimate extent, just like
      the swords, would provide the basis for Japan's future existence.

      Mr. Genda also affirmed the points I made, suggesting that in certain
      crucial technological areas, Japan should move at least five years
      ahead of other nations and if possible, further, to at least ten
      years.  As long as Japan maintains that ten year advance, it will be
      in a safe position for the first twenty-five years of the 21st
      century.  And this can be accomplished if politicians use their ace
      card wisely.

      I had an argument with an American correspondent recently.  I asked
      him to look at those developing nations which were under American
      auspices.  The Philippines and those in Africa, Central and South
      America are all in hopeless situations.  Americans once called the
      Philippines "a showcase for democracy." I said that Americans are
      mistaken.

      While the Philippines may have felt more comfortable under American
      administration than under Spanish colonial rule, and while they still
      listen to America, the U.S. never really imparted to them an under-
      standing of genuine democracy.  The chairman of the House Subcommittee
      on Southeast Asia once suggested to me that the U.S. and Japan should
      split the cost of financial aid to the Philippines.  I responded
      "You're kidding!"  He said that money alone cannot improve the
      situation in the Pilippines because of the internal situation.  The
      U.S. does not even know where its aid money actually ends up. And most
      fundamentally, social conflict in a nation cannot be solved with an
      outsider's cash.

      The most crucial task in the Philippines if to face the cause of
      social turmoil there.  The cause is the role of the landowners;
      Philippine landowners have accumulated incredible power and wealth,
      siphoning everything from the ordinary people.  These landowners will
      get no sympathy from me.  The Philippines must act to redistribute the
      land and wealth in much the same manner as took place in Japan after
      the war.  Landowners cannot remain landowners unless the country is
      stabilized.  Should a military junta take power, and decide upon a
      socialist economic policy, these landowners would be wiped out.

      Usurpers must be removed, otherwise there is no way the seeds of
      democracy can be planted.  This so-called "showcase of democracy" is
      empty.  And pouring additonal aid money into the hands of the
      landowners in the form of compensation for losing their land is not
      only a utter waste of funds, but also ruins any basis for self-help
      and self-motivation.

      There is a chieftan in the Truk Islands, who speaks Japanese, and who
      said that since the Japanese left, their children have only learned to
      be lazy as the Americans give aid-money and things which spoil human
      beings.  If you give people lettuce seeds, they will learn to grow
      lettuce, but if you give them money they will simply import lettuce
      and learn nothing.

      America is reluctant to recognize the importance and value of local
      cultures.  Christian missionaries do not permit the natives to chant
      their charms and they prohibit the use of herbs as medicine -- herbs
      that have traditionally been used in healing sicknesses, found in
      certain localities and used according to local customs.  Local
      festivals are banned so that traditional songs and dances are
      forgotten.  Tradition is dismantled. Americans force other cultures to
      give up their traditional value and impose American culture upon them. 
      And they do not even recognize that this is an atrocity -- a barbaric
      act!

      Natives who once had a traditional festival similar to Japan's
      ceremony of tasting the fruits of the first harvest.  (Our ancestors
      may well have come from these southern islands, by the way).  The
      festival was held on the night of the full moon.  Beating drums and
      dancing, the people indulged in open sex as the festival had by its
      nature this element of fertility.  Christian priests prohibited these
      festivals and instructed the natives to bring the fruits of the
      harvest to the church altar.  One hour after this was done, the
      priests ate the gifts.  The chieftan, still speaking Japanese,
      complained "we did not grow this to feed priests."  This kind of
      misunderstanding goes on and on and Americans don't even realize it.

      Those Asian nations where the economy has been a success story, such
      as Korea, Taiwan, and Singapore, were all, at one time or another,
      under Japanese administration.  We are aware that some negative things
      happened under the Japanese administration, but it cannot be denied
      that many positive changes were left behind.

      Among the resource-supplying nations, the only Southeast Asian nations
      which have developed stable socio-economic systems are those where
      Japan has cooperated as a fellow Asian country.  I pointed this out to
      that correspondent with whom I had the argument; in return he only
      kept silent.

      In any case, these NICS are turning into NIES who are catching up to
      Japan, which make Japan nervous.  However, this is fine with me. 
      Japan should work more positively, basing its approach on the premise
      that we must live in harmony with other Asian nations, developing
      constructive political strategies to assist these countries
      economically and politically.  Entering a new era -- the Pacific Age
      -- Japan cannot remain prosperous without the rest of Asia. We need
      Asia more than we need America.
 
 
   11.4 Japan Can Be Admitted to the World Community by Saying "No"
 
      Japan is not quite the tiny country most Japanese think it is.  We
      should not be presumptuous or arrogant, ending up hated by others, but
      we should have pride and dignity as a respected memeber of the world
      community.

      Our world view appears to be very peculiar, conditioned in part by our
      geography and our climate.  In our mind, Japan and the rest of the
      world do not exist in a concentric circle.  The rest of the world has
      its center and the center of Japan is somewhere outside this.  I feel
      it is time to overhaul this concept and enter into the concentric
      world.

      We want to enter that arena not through the kind is individual
      performance as given by Mr. Nakasone [sic], but rather by saying "no"
      decisively.  The Japanese people will define their position in facing
      the consequences and significance of their "no" and will be able to
      join the world community in the concentric circle as a true "adult"
      member.  It is therefore imperative to normalize our relationship with
      the U.S., so we can get on with becoming a true member of the world
      community

      I often suggested a G2 conference with the U.S.  This would help
      establish Japan's status and America might welcome the suggestion. 
      When there are only two parties meeting, Japan will have no choice but
      to say "yes" or "no" without resorting to gray areas.  Japan must be
      equipped with logic and reason whenever it says "no."  Best of all, by
      holding a G2, Japan will only have itself and the U.S. with which to
      be concerned, making it easier to stick to the "no."  No other nation
      will pay attention to Japan if Japan cannot say "no" to the U.S.  A
      good example is China.

      Japan is flattered by many nations these days for no reason than its
      wealth.  Money is important, but Japan has many more valuable assets,
      such as tradition, culture, creativity, as well as powerful high
      technology; this last item is one that even the U.S. and U.S.S.R.
      cannot afford to ignore.  In order to make the rest of the world
      realize that Japan has much more to offer than wealth, we must develop
      the logic and reasoning to be able to say "no", explain why, and stick
      to it at certain crucial moments.
