An analysis of Japan’s “lost 20 years” from the perspective of state capitalism. The author contrasts South Korea’s weak-currency policy with Japan’s deregulation rhetoric, harshly criticizing Japanese media and some intellectuals as “second-rate.” The essay cites the U.S. government’s pressure on Japan over the TRON project and the role of Japanese engineers in Samsung’s success, arguing for the root causes of Japan’s current state and labeling certain business figures as “robber barons.”

Correct State Capitalism.

In reality, the world is entirely state capitalist. It’s no exaggeration to say that Japan is the only country naively talking about “deregulation” and “regulatory reform.”

While some countries, like South Korea, are so distorted that they are practically a “Samsung state,” the correct state capitalism I wish to convey to the Japanese government is, of course, not that. It goes without saying that such a deeply distorted country has major unfair problems like disparity. Moreover, a country where the foreign exchange market is not only extremely small but also practically in the financial authorities’ backyard should, in principle, be out of the question.

However, Japan, as South Korea’s biggest stakeholder, has for some reason never raised a voice of criticism against their fraudulent policies. Just as Germany is now making completely off-base criticisms in speeches at the Davos conference, from the head of the German central bank yesterday to Chancellor Merkel today, Japan has never criticized South Korea. The truth is probably that because Japan, the country suffering the most damage, remained silent, the rest of the world also stayed silent. I will write about correct state capitalism, which is not like South Korea’s flawed version, in the next chapter.

State capitalism is not something only South Korea has pursued for the last 10 years. When Ken Sakamura, now a professor at the University of Tokyo, invented PC software and named it TRON, Japan’s Ministry of Education decided to adopt the TRON system for PC classes in all elementary and middle schools across Japan. At that time, Bill Gates instigated the U.S. government to make a strong threat to the Japanese government, mentioning trade measures. Why? Because the U.S. government judged that Bill Gates’s plan for world domination with Windows would also serve U.S. interests. Using what I’ve described as the prime example of a modern-day robber baron as his vanguard, he persistently pressured the Japanese government, particularly the Ministry of Education, which was the point of contact.

Ultimately, the Japanese government yielded to this pressure. I have argued that this was one of the major causes of Japan’s lost 20 years. Yet, the mass media raised no voice about this matter. They are still not raising any voice about it, but recently, a newspaper brazenly wrote that technological innovation is necessary. If you knew that great technological innovation was so important, why didn’t you raise a loud voice then? It goes without saying that this is what I thought.

There is one more thing about the cause of Samsung’s great leap forward that the Nikkei newspaper recently reported correctly. From the Nikkei, January 24, 2013, page 14, “Asia Soars”: “Supporting the rise of today’s Asian manufacturing industry, including Samsung Electronics, both in the shadows and in the spotlight, were many Japanese engineers. They crossed the seas and raised the level of technology. They were sometimes pointed at with a disapproving finger for taking corporate secrets with them… (omitted).”

I came out to expose the lie of slogans like “deregulation” and “regulatory reform.” It is already a historical fact that these past 20 years have been Japan’s lost 20 years. During this time, the slogan from the beginning of this essay has been repeated continuously. Has Japan escaped its great policy failure as a result? The fact is the exact opposite. And that’s to be expected.

Ten years ago, the Asian Financial Crisis occurred, and South Korea, its government, and its chaebol corporations were on the verge of bankruptcy. And today, Samsung has not only become a state within a state in South Korea but also surpassed the combined profits of nine of Japan’s world-class electronics manufacturers a few years ago. During this time, the Korean won fell by 60% against the yen. What South Korea did during this period was not a mere platitude like deregulation. It pursued a relentless weak-currency policy. In other words, it continued state capitalism for 10 years. And now it is even threatening Apple.

A person who can see through to the essence is called a first-rate person, a true elite. A second-rate person is one who ultimately cannot see the essence and only sees the phenomena. That’s why they can only see the present. Many of those who emerged in inverse proportion to Japan’s lost 20 years are second-rate. Many have the trait of being a lump of egoism. In Japan’s case, in particular, there were many who were indistinguishable as either Korean or Japanese. One of them, looking askance at Japan’s lost 20 years, kept repeating “deregulation, deregulation” for his own self-interest, continuously seeking maximum profit for his company, and eventually became Japan’s richest person. The number of people this person employs is negligible, but the assets he accumulated during this time were enormous.

Recently, a great American economist described this kind of behavior as being a “robber baron.” I think that is exactly right. For a person who even goes so far as to say foolish things like “Japanese nuclear power is no good, Korean nuclear power is good,” even the term “robber baron” is too mild. How much more does this person intend to weaken and shrink Japan before he is satisfied?

For the past 10 years… and especially in the last few years… South Korea has pursued an extremely weak-currency policy, but Japan’s mass media has not raised a single voice of criticism. They have stood by and watched as Japan’s world-class major corporations—especially its electronics manufacturers—were suddenly overtaken and fell into dire straits. They didn’t just stand by. Over these 20 years in Japan, the second-rate people who have dominated the world of public discourse have described these corporations as if they were zombie companies. The second-raters, in chorus, have slandered these true first-rate, true great corporations, each of which has continued to employ over 100,000 citizens.

It is no exaggeration to say that these are people who are indistinguishable as either Korean or Japanese. It is no exaggeration to say that their repeating “deregulation, deregulation” like a broken record was intended to divert attention from the weak-currency policy that South Korea has been pursuing. In addition, the person who served as the standard-bearer for deregulation during this period was also maneuvering to acquire the nation’s important assets for next to nothing.