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		America's Asian "Berlin Wall" has crumbled - - - - - - - - page 2 of 2 Is Japan one of the dominoes? No, it has much too much money in the bank. Japan is wealthy beyond what we can imagine. The postal savings system there has something like $800 billion in it. At the same time, Japan is a quintessential case of what I'm talking about. There's a leadership vacuum because we never encouraged leadership to develop after the war. You can't go on like that forever. Do you think Japan will try to export its way out of economic troubles and send a lot more goods America's way? It's already started to do that, and who can blame them? And we started all that after the war. We put a few strategic industries back together, we reconstructed the Ministry of Trade and Industry and said, "Here, export. It will make you strong." Since then, every recession has seen the Japanese export their way out it. They are going to report a trade surplus with the United States worth $65 billion this year. That's a big number. Meanwhile, America's trade gap gets ever wider. Are we going to see more friction between the U.S. and Japan? We already are. In Vancouver, Clinton had a meeting with (Japanese Prime Minister) Hashimoto and really barked at him. "Stop exporting and raise domestic demand," he said. But that's not very realistic. The Japanese already consume their asses off. A friend of mine in Tokyo who was working for British Petroleum had a perfectly functioning Sony Trinitron color TV in his living room. He found it in a garbage heap at the end of the block. I think we assume an elasticity of demand in Japan that simply isn't there. They are closer to the limits of their consumption than we understand. But their economy remains highly regulated. It's still difficult to get American companies and American goods into the country. They've been cranking out the exports for a long time, and by their experience, it hasn't exactly been an abject failure. They think, "The Americans are groaning? Well, hey, they've been doing that for nearly 30 years. We know how to keep them in line. We'll just keep talking and keep the ball in the air." So it's difficult to expect overnight change. What will it take for Japan to change? None of the changes that we want to take place will happen before there is a greater measure of democracy, and the Japanese citizenry are able and informed enough to turn people out of office, to make choices politically and to manifest those choices publicly. That's not a short-term process. The (ruling) LDP (Liberal Democratic Party) is not going to take itself out of office because it judges it best for Japan. The bureaucracy is not going to write new regulations and reduce its power. This comes down to popular preferences, and until they get the mechanisms to organize and articulate those preferences politically, Japan is going to be a problem nation. Overall, how do you see Asia's economic turmoil affecting the U.S.? Through markets, mostly. There'll be more Asian exports, and they're going to be cheaper. And the Asians are going to be buying less from Japan and less from us. Already economic forecasters are predicting that three-quarters of a point could be shaved off the U.S. growth rate in 1998 because the Asians aren't going to be buying. That could be a big problem. Is there an upside? Yes. I think many Asian companies could begin to move away from management styles and ownership philosophies that were based on family relationships -- a kind of pre-modern management, if you will. There could be more room for mergers and acquisitions, joint venture partnerships, shared equity and all those other 20th century ideas that even good, solid companies in Asia didn't want to have anything to do with. All those Confucian management practices could go, and that might be a good thing for American companies. On the equity side? Obviously, these markets are right down in the basement now. A moment will surely arrive when it's time to buy stock. Following on the domino theory analogy, is there light at the end of the economic turmoil tunnel for Asia? It could go either way. Some other things have been unleashed here that are going to ripple through the economies and the politics of the region for a very long time. My point is that Asia can't stand still any longer. There are a lot of transitions coming. There could be a lot of violence. But let's go back to where we began. Our Berlin Wall has fallen. There's no more coddling these economies. They make mistakes; they pay for them. They're going into a different world, and they're going to have to decide: authority or democracy, primitive or modern, global or not. It will be an interesting period. SALON | Dec. 1, 1997 Jonathan Broder is Salon's Washington correspondent. How serious is the Asian financial domino effect? Join the discussion in the Money area of Table Talk.