Power in the Pacific; No. 104; Power Without Purpose

<v Speaker>Funding for power in the Pacific has been provided by the Corporation for Public <v Speaker>Broadcasting. <v Speaker>And by the financial support of viewers like you. <v narrator>September 1st, 1945, on the <v narrator>battleship Missouri. <v Speaker>I now invite ?inaudible? of the Emperor of Japan, find the ?inaudible? of surrender at the places <v Speaker>indicated. <v narrator>The end of the great Pacific War. <v narrator>Americans at the surrender felt the elation of absolute victory. <v Al Bartholomew>I looked at them just like they were nothing because we'd beat <v Al Bartholomew>them so bad. <v Al Bartholomew>I realized then that America was king, that we were, as we <v Al Bartholomew>say, the top dog.

<v narrator>At that moment no nation on earth had ever been as powerful as the United <v narrator>States. <v narrator>The vanquished nations set about rebuilding infant industries under the watchful <v narrator>eyes of the American occupiers. <v Speaker>The big problem in Japan is obtaining the raw material. <v Speaker>Any raw material. <v Speaker>Waste into wealth with skill and ingenuity. <v Speaker>From one normal sized can, three car bodies. <v Speaker>4000 of these tiny autos per day. <v Speaker>All metal turret top, just like the Detroit model. <v narrator>1990. Detroit reels as another 12 hundred Japanese cars <v narrator>arrive in Los Angeles. <v narrator>Japan is now the world's strongest exporter and leading predator. <v narrator>The United States is now the largest debtor nation the world has ever seen. <v Al Bartholomew>It's amazing, I'm sitting here in this harbor were during the

<v Al Bartholomew>war, in the early part of the war it was a main area for shipbuilding. <v Al Bartholomew>U.S. ships. Now, I look at all the Nissans and Japanese cars <v Al Bartholomew>around here and the Japanese freighter behind us. <v Al Bartholomew>I wondered sometimes whether we really won the war or not. <v narrator>This film is about economic power and the rise of Japan. <v narrator>A nation that holds that power in unsteady hands. <v narrator>Times Square on V-J Day.

<v narrator>Hundreds of thousands celebrated America's industrial and military victory <v narrator>over Japan. <v narrator>Forty five years later, the neon lights in Times Square proclaim victory <v narrator>of a different sort. <v narrator>Now, markets once controlled by U.S. <v narrator>companies are dominated by the Japanese. <v narrator>Every month, Americans buy from Japan four billion dollars more in <v narrator>goods, then they sell. <v narrator>In the 1980s, while Japan concentrated on expanding its export empire, <v narrator>the United States launched into the greatest peacetime military buildup in its history. <v narrator>Installations like Clark Air Base in the Philippines saw a dramatic rise in their <v narrator>construction and operating budgets.

<v narrator>But as military spending soared, events in the 80s redefined the <v narrator>meaning of power. <v Chalmers Johnson>I think there is no doubt that we are today returning to a period in which the true <v Chalmers Johnson>measure of national power is economic and technological prowess rather than <v Chalmers Johnson>standing armies. This is a lesson that the Russians and the Americans have both <v Chalmers Johnson>taught each other. This puts Japan in a very prominent <v Chalmers Johnson>position. But at the same time, Japan seems to be the world's leading <v Chalmers Johnson>number two. Japan is not number one. <v Chalmers Johnson>And it's enormously nervous at the thought that it might be number one. <v Chalmers Johnson>And it makes everybody enormously nervous. <v narrator>Wall Street. <v narrator>The Americans who work here are accustomed to being at the center of global finance, <v narrator>stockbrokers respond to a dizzying barrage of financial data reflecting

<v narrator>the health of individual companies and national economies. <v narrator>Each month, they wait for news of America's trade deficit. <v narrator>In April 1987, the figures were bad. <v narrator>The deficit with Japan was another four billion dollars. <v narrator>Many American businessmen were convinced that the Japanese were cornering U.S. <v narrator>markets by dumping goods at subsidized prices. <v Speaker>President Reagan agreed and responded with a 100 percent tariff <v Speaker>on a list of Japanese computers, television sets and power tools. <v Speaker>We had clear evidence that Japanese companies were engaging in unfair trade <v Speaker>practices that violated an agreement between Japan and the United States. <v Speaker>We expect our trading partners to live up to their agreements. <v Speaker>As I've often said, our commitment to free trade Israel show a commitment <v Speaker>to fair trade. <v Speaker>The brokers on Tokyo's stock exchange were stunned.

<v Speaker>The tariffs were America's toughest retaliatory action against Japan since <v Speaker>the war. <v Speaker>But President Reagan had overestimated the strength of his hand. <v Speaker>By 1987, Tokyo's moneymen had gained enormous power of their own. <v Speaker>They resented being blamed for America's poor economic performance. <v Speaker>I think Americans tend to look tend <v Speaker>to blame others on their own problems. <v Speaker>It is rather unfortunate in the sense that Japan has <v Speaker>been used as a kind of scapegoat <v Speaker>for the American economic should <v Speaker>shortcomings. <v Speaker>The primary shortcoming was that the United States government now spent four hundred <v Speaker>million dollars a day more than it took in in revenues. <v Speaker>Much of the 150 billion dollar annual debt was financed here in Tokyo

<v Speaker>through the purchase of U.S. Treasury bonds. <v Speaker>In effect, Japan had become America's banker. <v Speaker>The next Treasury bond auction was held within days of President Reagan's announcement, <v Speaker>the first day came and went and the Japanese bought no bonds. <v Speaker>A rumor spread that Japan was retaliating against the U.S. <v Speaker>by boycotting the auction. <v Speaker>Wall Street began to worry. <v Speaker>What am I supposed to do? <v Speaker>Without Japanese buyers, higher interest rates would be necessary to attract other <v Speaker>buyers. <v Speaker>Higher rates would cost American businesses and consumers billions of dollars. <v Speaker>Japanese investors, like all foreign investors, have the choice of coming into the dollar <v Speaker>or keeping their money at home or going into third currencies.

<v Speaker>Since the United States has to get 10 billion dollars a month of additional capital, we <v Speaker>have to be extremely sensitive to what motivates them, including trade issues. <v Speaker>Not going away. <v Speaker>The three day auction was nearing its end. <v Speaker>The Japanese were in a position if they chose to teach America a most <v Speaker>expensive lesson, six tasks, correct? <v Speaker>Some of the American people learn that <v Speaker>from a long American interest rates are no more interest <v Speaker>just to buy American monetary authorities. <v Speaker>But by Japanese institutional investors, other with the Japanese monetary <v Speaker>authorities. <v Speaker>Finally, on the last day of the auction, orders were phoned into New York by a Japanese <v Speaker>securities firm. A billion dollars worth. <v Speaker>But the message, intended or not, had come through loud and clear.

<v Speaker>The Japanese now had the power to push back and push back hard. <v Speaker>I would say that somewhere from the beginning of the 70s and certainly <v Speaker>by the 80s, Japan emerged as an economic superpower. <v Speaker>Global economic power. I think in the course of the 80s and certainly into the 90s, <v Speaker>we're seeing the emergence of Japan as a global political power, maybe <v Speaker>even superpower, not in the conventional sense, that is to say, a power of which basis <v Speaker>its capability on military forces, but one which has such enormous economic <v Speaker>power that it cannot help but have massive political influence. <v Speaker>Since 1987, Japan's wealth has increased even more dramatically <v Speaker>at a faster rate than any nation in history. <v Speaker>The once bombed out city of Tokyo is now the most expensive piece of real estate

<v Speaker>in the world. <v Speaker>The central Shiota district alone is worth more than all of Canada. <v Speaker>Every square yard commuters walk across is worth nearly two hundred thousand <v Speaker>dollars. <v Speaker>Lining the streets are branches of the world's 10 largest banks. <v Speaker>All Japanese. <v Speaker>This meteoric rise of economic power has surprised not only the West, <v Speaker>but the Japanese themselves. <v Speaker>This is a great problem as we suspect it's power without purpose. <v Speaker>They're not. They've not indicated what they want to do with it. <v Speaker>They're aware that this power does threaten the structure <v Speaker>of the world that they have profited from. <v Speaker>This is one of. This is why the world is today at a turning point is <v Speaker>to reconceive how we integrate a super rich <v Speaker>but politically very insecure and very nervous Japan. <v Speaker>I think the true cause of fear is suspicion.

<v Speaker>What Japan Japan's going to do with this economic power. <v Speaker>Formidable power. And the image of Japan is so big <v Speaker>in the eyes of Americans or Europeans. <v Speaker>Whereas in the eyes of Japanese image of Japan is not so big. <v Speaker>We have not said they'll come out of our own. <v Speaker>They miss a very small nation who was beaten in the war. <v Speaker>But this is the image much of the rest of the world. <v Speaker>Homes of Japan's. <v Speaker>A nation where wealthy businessman have gone on an international buying spree <v Speaker>in places such as Los Angeles. <v Speaker>Although he does always talk to Shagan Yota, don't say if I share a <v Speaker>joke since Handycam editorial player to Gurjit taking notes saying I do not demus, this <v Speaker>sales video for a Palm Springs home was made by American Jeffrey Gotthard, <v Speaker>not Kinsky, in the studios of the video agency.

<v Speaker>Potential Japanese investors sample Southern California homes that offer <v Speaker>the spaciousness lacking in crowded Japan. <v Speaker>Not great. Your living room. <v Speaker>Sure, he knows about. I'm in California. <v Speaker>Real estate agents find that targeting the Japanese market is their best hope for <v Speaker>the highest price. <v Speaker>And you can catch yourself. <v Speaker>Putu, your kois synonymous. <v Speaker>So where do I go? <v Speaker>We must go on a video. <v Speaker>So, as you will know, you are fully equal to us, are they? <v Speaker>Huckabee like goodness because they've had a chance to call Mitt the whole lot. <v Speaker>They may not you. <v Speaker>The Japanese have bought more than homes downtown Los <v Speaker>Angeles, the business hub of the West Coast. <v Speaker>One third of it is in Japanese hands. <v Speaker>And that percentage is rising. <v Speaker>In the mid Pacific is the Hawaiian island of Oahu.

<v Speaker>Just a few miles from Pearl Harbor. <v Speaker>Still, the U.S. Navy's Pacific headquarters lies Waikiki Beach. <v Speaker>Traditionally, it's a Pacific paradise for many retired American. <v Speaker>Now, each year, they're joined by more than a million Japanese tourists and <v Speaker>honeymooners. <v Speaker>With them come Japanese developers and investors. <v Speaker>They're on their way to controlling virtually every beach front, hotel, shop <v Speaker>and restaurant. <v Speaker>In the South Pacific is Australia's Gold Coast. <v Speaker>The Japanese liked what they saw. <v Speaker>Their money now supports more than half of all new tourist development in this beachfront <v Speaker>resort. <v Speaker>Lone Pine Koala Sanctuary outside Brisbane, Australia, is another

<v Speaker>favorite tourist stop where Japanese honeymooners and for 13 million dollars. <v Speaker>It's now owned by the Community Comfort Company. <v Speaker>Said to me, like the British and Americans before them. <v Speaker>The Japanese are now accused of buying little pieces of other nations <v Speaker>identities. <v Speaker>Columbia Pictures, an American dream badly. <v Speaker>Sony bought it or more than three billion dollars. <v Speaker>Rockefeller Center, one of New York's most popular landmarks, a monument to <v Speaker>the Rockefeller family whose name symbolizes American wealth. <v Speaker>In 1989, Mitsubishi, a state paid nearly one billion dollars to gain <v Speaker>control. <v Speaker>Such investments have led to a backlash that may put the West on a collision course <v Speaker>with Japan.

<v Speaker>As we continue to be in debt and deficit, we'll have to sell off the family jewels. <v Speaker>We've been selling off American companies, American real estate. <v Speaker>We'll have to continue doing that because the foreigners who keep financing us will <v Speaker>increasingly demand real assets. <v Speaker>They won't put their money into just Treasury bills and bank deposits forever. <v Speaker>They want real American assets, companies, real estate, property and <v Speaker>more and more, our country comes under foreign control. <v Speaker>This is leading up to the potentiality for very serious <v Speaker>damage to an extremely important alliance, an alliance that has <v Speaker>also made both Japan, the United States the richest people on Earth. <v Speaker>So that I regard it as simply irresponsible to allow <v Speaker>investment in America to go at this pace and uncontrolled. <v Speaker>Moreover, the reason I regard it as irresponsible is because we will in America <v Speaker>blame the buyer and not the seller. <v Speaker>And that is an error, in my opinion. <v Speaker>There is no shortage of sellers lining up for a share of the Japanese miracle.

<v Speaker>The annual Conference of Southeast Governors is one of many pilgrimages Western <v Speaker>politicians make to Japan's. <v Speaker>Three governors, along with dozens of staff members and local businessmen, <v Speaker>have made the journey to encourage Japanese investment in their states. <v Speaker>That's a very good job, making us welcome each. <v Speaker>Thirty eight American states maintain full time offices in Tokyo, <v Speaker>all vying with each other for a nod from the new financial power brokers <v Speaker>across the Pacific. <v Speaker>The governors can meet Japanese tycoons like a feel maldita, chairman of <v Speaker>the Sony Corporation studio. <v Speaker>Maybe I should ask Mr.. <v Speaker>All right.

<v Speaker>Yes, me, too. <v Speaker>Gautreaux is another sought after dinner companion. <v Speaker>He's frequently asked to help find Japanese buyers for American property. <v Speaker>I now know about 100 such real estate items <v Speaker>that are up for sale, hotels and shopping <v Speaker>centers, things like that. <v Speaker>So I think Americans should be blamed for wanting to <v Speaker>sell what they own. <v Speaker>The governor's mission is not to sell individual properties, but their state, <v Speaker>their land and their labor force. <v Speaker>The ultimate prize is an investment like this ultra modern Toyota plant, an <v Speaker>exact replica of the factory in Nagoya, Japan, <v Speaker>four years ago. Governor Martha Collins of Kentucky led a successful competition <v Speaker>to convince Toyota to build a new auto plant in her state.

<v Speaker>While the Detroit car industry suffers a severe recession, this plant can't <v Speaker>keep up with demand. Buyers are waiting for every car on the assembly line <v Speaker>to Martha Collins. It's proof of success and quality. <v Speaker>I think it's important that we form strong partnerships with the Japanese and with other <v Speaker>Asian companies in countries, I should say, because <v Speaker>it makes us strong. It. <v Speaker>We learn a lot from each other. Management styles. <v Speaker>The competition is good. <v Speaker>But even before this site was chosen, the governor's opponents asked who would <v Speaker>really benefit. <v Speaker>Toyota drew up a short list of states in the American South where trade unionism <v Speaker>is weak. Than the real competition began. <v Speaker>To win the plant away from rival states, Kentucky gave Toyota on nearly sixty thousand <v Speaker>dollars worth of tax breaks and land for every job created.

<v Speaker>The tragedy of this whole situation in Kentucky is that it <v Speaker>should not have happened. Kentucky should not have to invest three or 400 million or a <v Speaker>half a billion dollars to attract the opportunity <v Speaker>to work for someone else. It's a it's a failure of national policy that allows the states <v Speaker>to compete against one another. And that's what's happened here. <v Speaker>What would we be talking about in Kentucky if Toyota hadn't come here? <v Speaker>It would probably be the unemployment rate. <v Speaker>And I'd much prefer to answer questions with regard to Toyota being here and talk <v Speaker>about the tremendous impact and influence that they've had, all the other companies <v Speaker>that have come then to be the moning, the fact <v Speaker>that we have a very high unemployment rate. <v Speaker>Toyota brought more than thirty five hundred jobs to Kentucky. <v Speaker>They re-created the Japanese economic model right in the middle of America's financially <v Speaker>depressed heartland. <v Speaker>To ensure control over production, they saw to it that the plant was built and supplied

<v Speaker>by Toyota's corporate partners from Japan. <v Speaker>The Japanese investment in Kentucky is a classic example of economic colonialism, <v Speaker>and we furnish labor to furnish land and we furnish <v Speaker>raw materials and finished product is exported, as is the profits from the venture. <v Speaker>These American capitalists are getting a free degree and capitalism from the Japanese. <v Speaker>The company that built the plant, the window manufacturers, the air conditioning <v Speaker>assemblers, the sunroof makers, the paint suppliers and 30 other <v Speaker>companies are all wholly or partially owned Japanese businesses that followed <v Speaker>Toyota into Kentucky to Toyota. <v Speaker>This was the best way of ensuring quality, but not to American investor <v Speaker>T. Boone Pickens. <v Speaker>People in America are fed up with the Japanese and they're fed up with them for this

<v Speaker>reason is because they don't feel that that we're getting <v Speaker>the same treatment in Japan as the Japanese get getting the United States. <v Speaker>I feel I have an open door to the United States and a closed door to Japan. <v Speaker>So I think the governors are starting to look at this a little different than maybe eight <v Speaker>years ago. And I think one of the reasons that they are on is one of the things that we <v Speaker>have pointed out that when you embrace these people, be sure that they have their arms <v Speaker>around you, too, and not around your neck. <v Speaker>Look at T. Boone Pickens was one of the key players during America's junk bond <v Speaker>and takeover mania of the 1980s. <v Speaker>In one maneuver, his bid to take over Gulf oil forced it to merge with Chevron <v Speaker>Oil in order to survive. <v Speaker>As a result of his financial manipulations, Pickens and his investors walked <v Speaker>away from the deal with more than 400 million dollars in profits. <v Speaker>What you want is now he would try to force his way into Japan's corporate system. <v Speaker>He bought a billion dollars worth of stock in point to a manufacturing <v Speaker>maker of headlights for Toyota.

<v Speaker>He then requested a seat on Koito board of directors. <v Speaker>I was trying to make a profit. It's what I was trying to do. <v Speaker>And the profit was one of long term. We totally were long term holders. <v Speaker>We weren't trying to green mailmen and that we would be constructive and helpful. <v Speaker>And we weren't trying to make a tender offer for the company. <v Speaker>But at the same time, they gave me a wonderful opportunity to prove <v Speaker>that corporate Japan is close to Americans. <v Speaker>No foreigner had made such a demand on a Japanese company. <v Speaker>The Koito board resisted. <v Speaker>My staff was with all companies to this day. <v Speaker>It's so hard to believe that a man like me taken with his bag in my hand <v Speaker>and with no experience in manufacturing, is <v Speaker>seriously interested in the management of our company. <v Speaker>How do you like this crisis? That is why we have denied his request <v Speaker>to go down at the next coital board <v Speaker>meeting.

<v Speaker>The dispute became an international media event, a showdown between divergent <v Speaker>views of capitalism. <v Speaker>Koito board members arrive to present a united front against Pickens. <v Speaker>To them, Pickens embodied America's failing economy, an economy <v Speaker>that had lost its strength through an obsession with short term profits. <v Speaker>To my knowledge, Mr. Pickens has never made corporations <v Speaker>if more effective and even about contributed to their society. <v Speaker>What he did may contribute to his pocket because as some arbitrages, <v Speaker>but I'm afraid that does never <v Speaker>make corporations more stronger where more effective. <v Speaker>Pickens flew in from Texas to press his demand to stop write <v Speaker>to him. The culprit was Japan, a nation that had become wealthy <v Speaker>by selling to foreigners whose own markets remain closed. <v Speaker>I'm a free trader. I believe in free trade and the global economy.

<v Speaker>But on a level playing field, and as long as it's not a level playing field, <v Speaker>I think our government is going to have to come forward with legislation to level the <v Speaker>field. <v Speaker>It's very much annoying to hear that we are playing on different rules <v Speaker>or we are behaving not fairly enough from the view <v Speaker>of the Americans that if we start talking about the uniqueness or <v Speaker>compare the uniqueness of each country, I can assure you that <v Speaker>the United States is one of the most unique countries in the lot. <v narrator> The Pickens affair has given ammunition to a new school of economic critics of Japan <v narrator>who have begun to dominate the debate. <v narrator>The movement's godfather is Professor Chalmers Johnson. <v Speaker>The truth of the matter is the reason why we do not single out English or Dutch <v Speaker>or Canadian investment in America, as is contrasted with Japanese investment, is because <v Speaker>we know we have full reciprocity there.

<v Speaker>You and I could open a business in Amsterdam tomorrow. <v Speaker>We found, as we see everyday in the paper, T. <v Speaker>Boone Pickens can't even buy a miserable little Japanese auto parts company without <v Speaker>the entire Japanese apparatus, including Toyota ganging <v Speaker>up on him and telling him he can't do this. <v Speaker>There's an even more extreme view that the Japanese power structure is obsessed <v Speaker>with gaining control of global finances. <v Speaker>The most radical exponent of this view has become an influential voice in Washington, <v Speaker>Dutch journalist Karel van Wolferen. <v Karel van Wolferen>Japanese administrators are moved ultimately by <v Karel van Wolferen>fears of disorder in the rest of the world and of a world that is <v Karel van Wolferen>unpredictable. Now they are trying to cope with this <v Karel van Wolferen>world, too, by increasing their own control over international economic <v Karel van Wolferen>processes, thereby bringing about the situation that they are most <v Karel van Wolferen>fearful of.

<v Speaker>According to van Wolferen, the Japanese fear disorder and chaos. <v Speaker>In Australia, a shipment of Japanese cement is met by Australian workers <v Speaker>afraid of losing their jobs. <v Speaker>As the Fiji angel approached the waft the crowd made its howls of protest. <v Speaker>In the United States recent opinion polls show a majority of Americans see Japan <v Speaker>replacing the Soviet Union as the biggest threat to their national security. <v Speaker>The trade frictions have ignited popular resentment in Japan, too. <v Speaker>When the U.S. demanded that Japan buy American rice, the farmers took out

<v Speaker>their anger on American goods. <v Speaker>In 1987, the U.S. Congress got into the act when Toshiba was found <v Speaker>to be selling American technology to the Soviet Union. <v Speaker>Helen Bentley was among a handful of congressmen who decided that a violent response <v Speaker>was called for. <v Rep. Helen Bentley>Japan is coming in and just taking off all of <v Rep. Helen Bentley>our most important prizes. <v Rep. Helen Bentley>They are moving in almost lock, stock and barrel as if they want to make the <v Rep. Helen Bentley>United States a colony of Japan. <v Rep. Helen Bentley>And that is really what's on the minds of a lot of people. <v Rep. Helen Bentley>Are we becoming a colony today? <v Speaker>The board of directors and chairman of Toshiba? <v Speaker>I have to say that there was a large supporting cast that <v Speaker>supporting cast-. <v Speaker>This hostility coming from a nation that is still the world's largest economy is seen <v Speaker>by many Asians as irrational, even racist.

<v Speaker>Probably go with it. Thank you. <v Lee Kuan Yew>The emotional reaction to Japanese investments <v Lee Kuan Yew>in America that I think is psychological <v Lee Kuan Yew>and inability to accept that our vanquished <v Lee Kuan Yew>World War Two adversary has caught up with them <v Lee Kuan Yew>and are now getting wealthy. <v Lee Kuan Yew>The Americans did not get excited when the Germans caught up with them. <v Lee Kuan Yew>Germans enjoy almost as large trace volumes of trade surpluses. <v Lee Kuan Yew>I think it's because they have always accepted the Germans as <v Lee Kuan Yew>equals of the Americans. <v Taizo Watanabe>What worries us is a certain segment of people <v Taizo Watanabe>still possess to is preconceived perception of others, <v Taizo Watanabe>culture, people, and that kind of suspicion might <v Taizo Watanabe>destroy the base of relationship of trust.

<v Speaker>Fears of being overwhelmed by a Japanese economic juggernaut reached a peak <v Speaker>in Australia in 1990. <v Speaker>Could we build a city of the future. <v Speaker>A technopolis right now, an international city based on how we will live and <v Speaker>work in the future. <v Speaker>It's an exciting. <v Speaker>The Japanese government proposed this high tech metropolis to be built in Australia. <v Speaker>A futuristic city that truly integrates lifestyle and wood patterns. <v Speaker>A city that will bring all aspects of being human. <v Speaker>The city called the multifunction polis was proposed as a co-operative Pan Asian <v Speaker>venture, but it became a call to arms for those who were unwilling to let go <v Speaker>of old racial animosities. <v Speaker>How many of you generally believe that this project is not going to benefit Australia, <v Speaker>but will benefit that the Japanese won't be prepared to share their technological secrets <v Speaker>with us? A large proportion of it. <v Speaker>Does it strike? You want 50 to 100000 thousand Japanese migrants coming into the country?

<v Speaker>No one mentioned it here tonight. I'm suggesting to you and I'm talking about Australia <v Speaker>out there because I think that completely out of touch we would want they. <v Speaker>We want a hole in the head to put it into the black. <v Speaker>Mr Okumura is paying a visit to a new NBC dealership. <v Speaker>He's Japanese firms are aware of their increasingly negative image abroad, have attempted <v Speaker>to calm Australian fears. <v Speaker>Desktop TV ads were designed to show that the Japanese are unthreatening <v Speaker>and adaptable to local customs. <v Speaker>It's the annual review of NBC computers, and it seems they're still the world's <v Speaker>biggest manufacturer of integrated circuits. <v Speaker>There's still one of the world's top 10 computer companies. <v Speaker>And here to report on the Australian market is Mr Okamura. <v Speaker>This document, Mr <v Speaker>Pennisi, Japan's most experienced computer company, now very much at home in Australia.

<v Speaker>It's the view of the same commercial was remade for New Zealand <v Speaker>as part of a public relations strategy to convince the whole region that its future <v Speaker>lies not with old friends, but with a new one. <v Speaker>And he had a report on the New Zealand market. <v Speaker>Is Mr Kiwi Muru Mr Key with <v Speaker>any? <v Speaker>Japan's most experienced computer company now very much at home in New Zealand. <v Speaker>To the extent that Japanese productivity exceeds that of the United States, <v Speaker>to the extent that Japanese financial strength exceeds that of the United States, <v Speaker>a point will be reached in which the United States will become less <v Speaker>relevant, more and more countries. And those countries, whatever it may be, their <v Speaker>preferences will be drawn more and more to Japan. <v Speaker>And I think this is happening in an unusual degree in Asia. <v Speaker>The first political evidence of a shift was seen in New Zealand in 1984

<v Speaker>in response to popular protests. <v Speaker>The New Zealand government took an historic step by refusing to allow U.S. <v Speaker>nuclear vessels into its waters. <v Speaker>The U.S. attempted to get New Zealand to back down by severing all military <v Speaker>ties. But in a world where the importance of military power was declining. <v Speaker>New Zealanders solve little need for America's nuclear umbrella. <v Speaker>There is not and cannot be any security alliance between the United <v Speaker>States and New Zealand. <v Speaker>There simply can't be any going back to the way it works as between the <v Speaker>United States and New Zealand. <v Speaker>The security alliance is dead. <v Speaker>The U.S. government reacted with alarm to this erosion of American influence <v Speaker>in the Pacific. <v Speaker>What we have there is a country that has hurt itself very badly. <v Speaker>They have some kind of really idiotic theory that

<v Speaker>if they don't allow any new theater ships to protect themselves <v Speaker>and their and their harbors or whether they're nuclear or not, don't allow them in. <v Speaker>They think somehow they will become less of a target. <v Speaker>This is the same kind of philosophy Belgium had in two world wars, that if they were <v Speaker>neutral and disarmed, nobody would attack. It would attack them. <v Speaker>And it's just nonsense. <v Speaker>What concerned the Americans was the prospect that New Zealand's rejection of the <v Speaker>traditional military alliance would spread throughout the Pacific region. <v Speaker>That fear may well be justified. <v Speaker>Clark Airfield in the Philippines is America's largest overseas air force base <v Speaker>in the Pacific. <v Speaker>The rent it pays and the jobs it provides constitute about five percent of <v Speaker>the Philippines economy. <v Speaker>Cinnabar seven north, northwest, southeast orbit. <v Speaker>Today, Clark is a vital link in the supply and transfer of American troops <v Speaker>and weapons to the Persian Gulf. <v Speaker>Target USA three to the northern airfield there and the essay to the southern airfield. <v Speaker>Still, it's only a matter of time before the U.S.

<v Speaker>will be forced to leave its Philippine bases. <v Speaker>It makes the basic issues surrounding the presence of U.S. <v Speaker>bases. Here is the issue of sovereignty. <v Speaker>They are an affront to the sovereignty and independence of the Philippines <v Speaker>and therefore does not speak well of our country supposedly <v Speaker>being an independent country. <v Speaker>I think they are being not only naive, I think they are also hurting themselves very <v Speaker>badly because the Philippine economy is not one of the greatest in the world. <v Speaker>And it is. This is a these bases constitute major payroll. <v Speaker>But even the American economic relationship with the Philippines is being questioned. <v Speaker>For many Filipinos, work in clubs outside the U.S. <v Speaker>bases is their best opportunity to benefit from the American presence <v Speaker>on hallis city. Next to Clark Air Base thrives on the presence of thousands of <v Speaker>free spending guys.

<v Speaker>Should the base close, the town could be devastated. <v Speaker>The opponents of America's military presence say the bases add nothing to the long <v Speaker>term health of the economy. <v Speaker>Demonstrators rally repeatedly to get the American bases out <v Speaker>as Filipinos chant, Yankee, go home. <v Speaker>They have a different message for the new Pacific superpower. <v Speaker>Come in. Come <v Speaker>in. <v Speaker>Cebu, the second largest city in the Philippines. <v Speaker>Regional officials hosted a visit by potential Japanese investors 100 percent. <v Speaker>The visitors are anxious to see what the Philippines has to offer. <v Speaker>So you're exempted from building any local and provincial taxes, <v Speaker>but are fighting the companies that the right thing?

<v Speaker>So you will be paying any income taxes for <v Speaker>the first six years of inflation. <v Speaker>So the presentation must be effective. <v Speaker>In the last two years of Japanese investment in Cebu has increased by 5000 <v Speaker>percent. <v Speaker>The indication said that in the Philippines they're going to replace one day the <v Speaker>Americans as the number one investors in the country. <v Speaker>And for that matter, even the Taiwanese investors are coming in heavily. <v Speaker>So what Japan did not that see during the war through <v Speaker>a very painful period of occupation of the Philippines is being achieved economically <v Speaker>right now. <v Speaker>The highlight of the Japanese tour is a trip to a brand new electronics factory <v Speaker>owned and operated by the Mitsubishi company. <v Speaker>Thirty four hundred Filipinos who work here consider themselves fortunate to have these <v Speaker>jobs. <v Speaker>They assemble components that will later be used in radios and television sets with

<v Speaker>names like Sony and Iowa. <v Speaker>They are at the bottom rung in a Japanese controlled assembly line that stretches from <v Speaker>the Philippines to Thailand and Malaysia. <v Speaker>Over the years, Japan has been shifting labor intensive and relatively <v Speaker>cheaper types of industries from Japan to host countries like the Philippines. <v Speaker>So Japan will retain high technology type industries <v Speaker>and shift the low cost and labor intensive activities <v Speaker>to countries like the Philippines. <v Speaker>Like American and European companies before them. <v Speaker>Japanese manufacturers are discovering the benefits of foreign labor <v Speaker>by paying the minimum wage. The Japanese owners get manual labor at less than <v Speaker>one tenth the cost in Japan. <v Speaker>What we see happening here is an extension of Japan's economy. <v Speaker>And if it's an extension of Japan's economy, then the obvious conclusion is that these

<v Speaker>industries will not make the Philippines any more independent <v Speaker>in terms of developing a self-reliant and self generating economy <v Speaker>after a century as America's colony and client state. <v Speaker>The Philippines is still one of the poorest nations in Asia. <v Speaker>One half of Filipinos live below the poverty line. <v Speaker>Now the United States is asking Japan to give the Philippines the aid the <v Speaker>U.S. can no longer afford. <v Speaker>And many hope that Japanese investment will be successful after so many years <v Speaker>of American failure. <v Speaker>Yet throughout the region, there's a deep seated fear of Japan's increasing presence. <v Speaker>We are quite apprehensive in the light of our historical experience as <v Speaker>having been invaded by the Japanese. <v Speaker>We always feel that the economic potential is convertible

<v Speaker>into militated by what we did. <v Speaker>And if Japan becomes the dominant power in Southeast <v Speaker>Asia, the memory of the <v Speaker>40s would always truncal. <v Speaker>There are still people like us who belong to that generation that went through <v Speaker>that horrible period of Japanese occupation. <v Speaker>The young generation of Filipinos has little memory of the past. <v Speaker>They're more than willing to cast their lot with the Japanese. <v Speaker>Ironically, they are presenting one of the greatest challenges to Japan's new identity <v Speaker>as a global power. <v Speaker>In the last two years, tens of thousands of young Filipinos have decided to leave <v Speaker>the poverty in Manila for the prosperity in Japan. <v Speaker>I am I am a father of two kids. <v Speaker>And in coming there, my country becomes insufficient to balance <v Speaker>a family. So a job. I tried my luck going out.

<v Speaker>Trouble first in Bangkok, then Singapore and Singapore. <v Speaker>I've learned that many foreign workers had been going <v Speaker>to Japan because Japan dense economy hasn't been rising <v Speaker>so hot so fast. So I come here to Japan to try <v Speaker>Malath. <v Speaker>Ruben Rivera and his friend JJ R.A. <v Speaker>are two of the estimated 400000 illegal migrants who have shown up <v Speaker>on Japan's doorstep. <v Speaker>The Japanese economy has grown so strong that their labor is essential. <v Speaker>Still, some Japanese make foreign workers aggressively unwelcome, <v Speaker>walking around Yokohama, especially in the shopping areas. <v Speaker>There are some stores even by now do not accept <v Speaker>Muslim Filipinos in their shop. <v Speaker>We don't know the reason why, but when they say that you are Filipino, <v Speaker>they will tell you that Filipinos are not allowed.

<v Speaker>That hurts our feelings of course. <v Speaker>The traditional Japanese view is that their economic success and their racial purity <v Speaker>are inseparable. <v Speaker>They have been an insular and homogenous nation for centuries. <v Speaker>Now, the widespread presence of foreign workers is shaking long held assumptions. <v Speaker>As Japan's economy becomes increasingly international, they're forced to reassess <v Speaker>their old sense of separateness. <v Speaker>This is the first broadcast of a current affairs program called The Scoop. <v Speaker>The topic for this premiere show, the impact of foreign immigrants.

<v Speaker>Shows like these are common in the West, but in Japan, they are a sign of dramatic <v Speaker>change. <v Speaker>[Speaks in Japanese] <v Speaker>Japan's economic might is forcing it to reevaluate its relations with its <v Speaker>weaker neighbors. <v Speaker>But that same mite is enabling Japan to reevaluate other relationships to <v Speaker>others, including the 40 year partnership that has been the pillar of the postwar Pacific <v Speaker>order. <v Speaker>[Speaks in Japanese]

<v Speaker>At Chitose, say Air Force Base, Japanese pilots fly defense missions in American <v Speaker>designed warplanes. <v Speaker>The F 15 and the F-16 are among the most sophisticated fighters in the <v Speaker>world. <v Speaker>Japan envisioned a new technologically superior generation of jetfighter, <v Speaker>one that would be worthy of Japan's new role. <v Speaker>You could play your role. How many Japanese designers gave TV viewers a preview <v Speaker>of how they could remodel the F-16 into a new fighter called the FSS <v Speaker>X? Although it did not <v Speaker>work, the Pentagon officials were anxious to add the plane with its new Japanese <v Speaker>technology to the Western arsenal. <v Speaker>They agreed to a transfer of American Aerospace Know-How. <v Speaker>The overriding consideration ought to be the the kind of security that <v Speaker>that kind of security relationship that we need.

<v Speaker>And in the case of the FSS X, we had a signed agreement with <v Speaker>the Japanese government, negotiated very carefully difficult agreement to negotiate, <v Speaker>one that gave us everything that we needed. <v Speaker>That is co-production in the sense of signing to the United States <v Speaker>billions of dollars worth of Japanese purchases and gave us access to Japanese avionics <v Speaker>and electronics technology, which we've never had before. <v Speaker>And in every way they were. <v Speaker>It was an agreement that was, I think, entirely satisfactory to both sides, <v Speaker>but it was not satisfactory to many congressmen who were growing increasingly angry <v Speaker>over Japan's industrial triumph. <v Speaker>They saw the FSX as a scheme by the Japanese to use America's own technology <v Speaker>to challenge yet another American industry. <v Speaker>The FSX will allow them to take away one of our last industries. <v Speaker>The last one that we are superior in, and that is <v Speaker>airplane manufacturing.

<v Speaker>Natalie and her colleagues demanded that the Bush administration negotiate substantial <v Speaker>changes in the FSX agreement. <v Speaker>It was the first time that a defense issue was forced to take a back seat <v Speaker>to trade concerns in America's dealings with Japan. <v Speaker>The problems today between Japan and America reflect the vested interests <v Speaker>that were created back in the early 1950s. <v Speaker>In the case of America, these are vested interests in essentially <v Speaker>defensive security definition of our relationship with Japan. <v Speaker>A refusal to link security issues and economic issues. <v Speaker>They are starting to be linked today, but they were not for many, many years <v Speaker>with the FSX. <v Speaker>The issue has become more than Japan learning America's secrets. <v Speaker>The Japanese were beginning to feel that in technology, as in finance, they <v Speaker>were now the dominant partner. <v Speaker>The aircraft carrier Eisenhower is a quintessential symbol of American power.

<v Speaker>Critical electronic components are now dependent on tiny microchips developed <v Speaker>and produced exclusively in Japan. <v Speaker>This technology is deeply associated <v Speaker>with how to procure the components of <v Speaker>American weapons. That is dependance on Japan's technology. <v Speaker>Therefore, one fear we rely in the possibility <v Speaker>that what would happen to American security power <v Speaker>if such dependance on Japanese technology may not <v Speaker>is not available. <v Speaker>I think that if the Japanese keep talking about it, we ought to be concerned about it <v Speaker>because it cannot be healthy that the United States is dependent for a key <v Speaker>element of its defense technology on any foreign country, no matter <v Speaker>how benevolent that country is.

<v Speaker>In a bestselling book called The Japan that Can Say No. <v Speaker>A prominent politician raised the specter of withholding essential microchips from the <v Speaker>Americans and selling them to the Soviet Union. <v Speaker>It is a striking example of how a split between the U.S. <v Speaker>and Japan could have international repercussions. <v Speaker>There is always a danger if some of the friction <v Speaker>is not well managed contained. <v Speaker>There will be some danger of much confrontational. <v Speaker>The situation may take place, but this is detrimental to the <v Speaker>Japanese, but also very much damaging to the Americans <v Speaker>as well, and also very much have <v Speaker>negative impact on the world in general. <v Speaker>I would argue that the consequences of conflict between <v Speaker>the United States and Japan in any field would be so serious for both countries <v Speaker>that they have an extraordinary incentive to cooperate.

<v Speaker>The foreign currency exchange in Tokyo is where investors change tens of billions <v Speaker>of yen into dollars every day. <v Speaker>Many of those dollars are used to finance much of the debt of the U.S. <v Speaker>and other Western nations. <v Speaker>In turn, those nations trade is the lifeblood of the Japanese economy. <v Speaker>Japan depends on us for markets. <v Speaker>Technology for defense. <v Speaker>The United States continues to depend on Japan for technology and particularly on <v Speaker>financial inflows. Japan is the world's largest creditor country where the world's <v Speaker>largest debtor. They are our main financier. <v Speaker>That sets up an interdependence of power. <v Speaker>If Japanese capital stops flowing into the United States, our interest rates soar and our <v Speaker>economy is in trouble. On the other hand, if our economy gets in trouble, it's difficult <v Speaker>for the Japanese. They have over 300 billion dollars invested here at an extreme.

<v Speaker>We could even expropriate or take over their investments. <v Speaker>The worst scenario is that the unrest will continue to grow further, domestic <v Speaker>pressures may force governments to enact even more punitive trade sanctions. <v Speaker>The effects could mirror those of a military confrontation. <v Speaker>The economic relationship between the United States and Japan is now somewhat akin <v Speaker>to the military relationship between the United States and the Soviet Union, at least <v Speaker>until recently. We had a military situation of mutual assured destruction <v Speaker>where the United States and the Soviet Union could destroy the other. <v Speaker>And therefore the incentives were enormous to avoid a breakdown and a relapse into <v Speaker>conflict. Something the same occurs now in the economic sphere as <v Speaker>in nuclear war. <v Speaker>It's not just the superpowers that could be affected. <v Speaker>The danger is the disintegration of the world's economic system into a competing <v Speaker>trading blocs, all fighting to survive.

<v Speaker>For this scenario to be avoided, American policy is that Japan must concern <v Speaker>itself with more than its own economic growth. <v Speaker>It's got to become a world leader, not on its own, but jointly with America and probably <v Speaker>a uniting Europe to form a triumvirate that will collectively manage, collectively <v Speaker>manage the world economy, to maintain open trade, to maintain open capital markets, <v Speaker>to stabilize and support a prosperous world through joint economic leadership. <v Speaker>That's the only possible model I can see for the 21st century. <v Speaker>And our countries should set about constructing it right from now. <v Speaker>Sharing burden is in a sense, easy to say, <v Speaker>but sharing power is really transforming <v Speaker>part of the power you have already held to other <v Speaker>persons. <v Speaker>The United States tends to act like a big brother <v Speaker>to many countries because we tend to believe <v Speaker>that our institutions are universally relevant.

<v Speaker>And secondly, because the American public has not yet learned that in some <v Speaker>areas we are no longer competitive. So we are no longer that big brother with <v Speaker>some of the American public still thinks we are dominant in every category. <v Speaker>Yes, America, too, has to make an adjustment and learn <v Speaker>to deal with Japan on the basis of equality. <v Speaker>In 1945, at the Potsdam Conference, the victorious superpowers met <v Speaker>to divide postwar Asia. <v Speaker>They shaped the region into sharply defined spheres of influence and power blocs. <v Speaker>Japan's economic success coincides with an historic breakdown of that <v Speaker>global order. <v Speaker>Some of the most basic parameters are starting to change. <v Speaker>Today, the United States is no longer a hegemonic power. <v Speaker>It's an ordinary nation. <v Speaker>We've also had revealed remarkably and unexpectedly how

<v Speaker>decrepit the USSR actually is. <v Speaker>We have the emergence of of a common market in Europe. <v Speaker>The timing of which is clearly a reaction to Pacific economic <v Speaker>dynamism. It is these it is the combination of these forces that seems to <v Speaker>me lead us to recognize that the old paradigm, the old <v Speaker>order, the old conception that made sense out of the world is today <v Speaker>anachronistic, is outdated. <v Speaker>We don't yet know what's going to replace it, but we're all thinking very hard about it. <v Speaker>What we do know is that even as the Cold War ends, new conflicts are emerging. <v Speaker>Can the United States afford to remain the world's leading military power? <v Speaker>And what role will Japan play as it moves beyond the pursuit of its own economic <v Speaker>destiny? <v Speaker>The answer to these questions may define the meaning of power in the Pacific <v Speaker>and around the world.

<v Speaker>Funding for power in the Pacific was provided by the Corporation for Public Broadcasting

<v Speaker>and by the financial support of viewers like you. <v Speaker>Videocassettes of this program can be purchased for educational use only by calling <v Speaker>one 800 four two four seven nine six three home video sales are not <v Speaker>available through this offer. <v Speaker>This is PBS.