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October 10, 2025 47 mins

These days, there's a non-stop drumbeat of concern that China and its dominant companies will eat America's economic lunch, so to speak. Of course, this isn't the first time in our history that there were worries about a rising Asian industrial power. In the 1980s and early 1990s, there was a lot of concern about the rise of corporate Japan. And that fear was seen all over movies and pop culture, from Die Hard to the Michael Crichton novel Rising Sun. This time there is one big difference: Chinese dominance doesn't permeate our pop culture in the same way. And furthermore, the US has long had military bases in Japan, so that dimension was quite different, too. To understand this period further, we talk to John Ganz, who writes the Unpopular Front newsletter, and is the author of the recent book, When the Clock Broke: Con Men, Conspiracists, and How America Cracked Up in the Early 1990s. We discuss how this fear came about and disappeared, but also how it still influences American politics to this day.

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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.

Speaker 2 (00:18):
Hello and welcome to another episode of The Odd Laws podcast.

Speaker 1 (00:21):
I'm joll Wisenthal, and.

Speaker 3 (00:22):
I'm Tracy Alloway.

Speaker 2 (00:23):
Tracy, here's something I've been thinking about with respect to
China and all of the tensions with China, which is
that it feels very elite, as in, people in DC
talk about it, people in obviously in finance and business.

Speaker 1 (00:36):
Talk about it.

Speaker 2 (00:37):
It does not strike me that in the broad and
I could be wrong, My judgment could be off, but
it does not strike me that in the broad public
that there are a lot of people that it's top
of mind for a lot of the public.

Speaker 3 (00:52):
Weirdly, I think it was probably more top of mind
in the past. And the hollowing out of America's manufacturer sector.
I mean that argument is kind of what has given
rise to a lot of the populist politics that we
see nowadays. Right, Yeah, that's true.

Speaker 2 (01:07):
Right during the China shock, Yeah, there were a lot
of people aware that their factories or the towns that
dependent on these factories were getting hollowed out, et cetera.

Speaker 1 (01:17):
But you know, there's so much China, China, China.

Speaker 2 (01:20):
It's not in the media right, it's not like it
or sorry, it's not in the movies. And I'm thinking
of like Back to the Future two. Was it where
the main character's dad lost his job and they had
the scene when he was getting laid off by his
Japanese boss.

Speaker 3 (01:35):
Oh you know what. My favorite example of this is yeah,
die Hard of course, best Christmas movie ever, but also
the Nakatomi Corporation.

Speaker 1 (01:44):
Yeah, right, this was like a whole thing in pop culture.
It's just not at all.

Speaker 2 (01:48):
Maybe that has something to do with the fact that
studios still want to do they still distribute American movies
still getting wide distribution like for a while in China
because for a while this was.

Speaker 1 (01:57):
Like a big story. Or are they not going to
talk about certain things?

Speaker 3 (02:00):
Is partially why we have a bunch of superhero movies,
by the way, because they're just because they play in
international markets.

Speaker 1 (02:05):
And they're not going to like offend anyone too much.
Probably it just doesn't feel to me for that from like.

Speaker 2 (02:12):
A pop culture standpoint, that the threats from China, whatever
they are, are like getting that much play.

Speaker 3 (02:19):
We need a good movie about China developing. An AI
chat bot goes rogue and tries to take over the world.
I think there was an AI plot in the Last
Mission Impossible or one of the recent ones. I haven't
seen it. I don't know who developed the technology.

Speaker 1 (02:32):
Yeah it was China, it could have been.

Speaker 2 (02:34):
But anyway, like you said, with die Hard, and there
were several others. I think Michael Crichton had a book
that talked about it. And certainly when I was younger,
when I was like eleven or twelve, it first became
aware of the existence of the world around me, you know.

Speaker 1 (02:48):
I remember I had.

Speaker 2 (02:48):
A teacher who was like really scoldy about people who
drove Japanese cars, for example, and she talked about.

Speaker 3 (02:54):
How anti America.

Speaker 2 (02:56):
Yeah, how awful it was that there were people coming
into our high school parking lot or whatever that drove
Japanese cars.

Speaker 3 (03:02):
Destroying the fabric of America by purchasing at Toyota.

Speaker 2 (03:05):
Yeah, of course, now you know by Toyota's are made
in the US, et cetera. No one talks like that
with respect to Japan. But it is interesting thinking about
like similarities and differences between our relationship with China today
in our relationship with Japan in the eighties late eighties,
et cetera. When it seemed like that was going to
be the economy that really sort of hollowed out with There's.

Speaker 3 (03:26):
A clear parallel here, there are also some key differences.
I'm sure we'll get into all of that.

Speaker 2 (03:31):
A land of contradictions similarities. Anyway, I'm very excited. I
have a guest I've wanted to talk to for a
long time, the perfect guest, because he recently wrote about this.
We're going to be speaking with John Gans. He has
an author and historian. He's publisher of the unpopular front Substeck,
which I am a paid subscriber to. I'm a big fan,
and he's also the author of the recent book When
the Clock Broke Common Conspiracists and How America Cracked Up

(03:55):
in the early nineteen nineties talk a little history.

Speaker 1 (03:58):
So, John, thank you so much for coming on outlaws.

Speaker 4 (04:01):
Thank you so much for having me. I'm a big fan.
It's very exciting for me.

Speaker 1 (04:04):
Very nice of you to say.

Speaker 2 (04:05):
Does that seem right to you that, like you probably
pay attention to pop culture just today with the China anxiety,
it feels like a DC kind of thing more than
a general public thing.

Speaker 4 (04:16):
I think that's true. It does feel sort of an
Elite project. There's a lot of interest curiosity about what's
going on China and what they do well, both in
d C, among policymakers and I think also.

Speaker 5 (04:27):
Obviously in the Silicon Valley.

Speaker 4 (04:28):
Yeah, a lot of think tanks are studying China, thinking
about China. A lot of business people are very interested
in China. But yeah, I don't know. It's strange because
you would think in an age that you know has
a lot of one might argue paranoid thinking going on.
It doesn't factor that much into a lot of pop culture.
I think the movies thing might be a part of that.

(04:50):
That wasn't the case.

Speaker 1 (04:51):
Just the sure box office the exposure.

Speaker 4 (04:53):
The box office exposure, But I think in the eighties
and nineties there was definitely more cultural product which I'm
sure will discuss more cultural products that brought this kind
of fear, curiosity, interest, paranoia to the surface.

Speaker 3 (05:07):
All right, well, why don't we get into the japan
panic of the nineteen eighties and where it actually started.
And by the way, I was reading the substack that
you wrote on this particular topic, and I fell into
a giant rabbit hole reading the emerging Japanese super state
and coverage of it. So I didn't know the author
of one of the first provocative japan Is Going to

(05:29):
take Over the World type books was a guy called
Herman Khan, I think. And he is the inspiration for
Stanley Kubrick's Doctor Strangelove.

Speaker 1 (05:38):
I didn't know that.

Speaker 3 (05:39):
Yeah, And if you read some of the coverage of
his book that came out in the nineteen seventies, it's
really funny because it's just stuff that you would never
get away with writing today. The New York Times New
York Times review actually starts out by saying a billion
to Herman Khan, who boasts that under all these three
hundred pounds of friendly fat there lies a lean and

(06:00):
sinewy intellect. I don't think. I don't think you could
start a book review by saying the author is author's way.

Speaker 4 (06:08):
Yeah, yeah, no, that's true. Yeah, Herman kahnnon is a
really strange and interesting character. He is. He is one
of the models for Doctor Strange Love. He wrote a
book called on Thermonuclear War, which is probably one of
the strangest books you'll ever read. In it's extremely cheerful
book about thermonuclear war, basically kind of saying it wouldn't
be that bad and saying that, you know, yeah, And

(06:30):
I think this is where the term he may have originated,
the term mega deaths and saying, you know, yeah, we'll
get a little messed up, but actually, there's so many
people in this country were so productive. How bad would
it really be?

Speaker 3 (06:41):
Well, have some mega deaths, still worry, We'll.

Speaker 4 (06:42):
Have a few mega deaths, but I don't think And
he thought that the United States shouldn't be so fearful
about it. But there's another weird interpretation of the book
that this was kind of like some signaling strategy that
the United States, because in the book he said, you
can't show that you're afraid to actually pull the trigger,
because then the other side will push you around.

Speaker 5 (07:01):
So in a way, the book.

Speaker 4 (07:02):
Was some kind of signaling strategy in his game theory
mine to be like, hey man, we're not worried. Well,
we we're writing books that say thermonuclear war is not
that big of a deal. Very very bizarre figure, and
I think some people consider him very sinister obviously, but
real eccentric.

Speaker 3 (07:17):
But he was actually worried about Japan.

Speaker 4 (07:19):
Yeah, I think he was worried about Japan, and he
was a little ahead of the curve actually, because he
wrote his book in the I think it was in
the late nineteen sixties and came out in the early
nineteen seventies, and he was describing Japan and its institutions
and predicted that by the year two thousand that Japan

(07:40):
would be the first economy in the world and overtake
the United States. This is a little bit before now
that later books make a little more sense. This is
really before you start to see the economic problems in
the United States. It would make this kind of interest.
And also before the trade deficit with the United States
had really exploded. So he was a kind of not

(08:00):
and that he got it right, but he kind of
prefigured a genre of books that would only really hit
about a decade or so later.

Speaker 3 (08:08):
Yeah, Joe, I clipped this, but reading some of the
book now, it's kind of quaint. But he says his
best estimate is his medium scenario, and the medium scenario
is that Japan probably passes the US in per capita
income around nineteen ninety huh okay, and probably equals the
US in a gross national product by about the year

(08:29):
two thousand. That's the media. The media, so he's being conservative,
but it sounds.

Speaker 2 (08:35):
Interesting because it's very easy to say, oh, this is
going to be a big problem once the trade deficit
is gigantic, Right, it's like, oh, really dependent, we're you know,
Upper Creek, et cetera. But he seemed to have some
intuition that there was something there in Japan that was like, Okay,
there's going to be some great out competing in terms
of just based on their productivity.

Speaker 4 (08:55):
Yeah. I think that he observed correctly that Japan had
made a miraculous comeback after the war. They had transformed
themselves from being totally destroyed in the world and from
being kind of a producer of goods that were considered
kind of cheap, just in the way we used to
think made in China or made and Taiwan weren't necessarily
signs of quality. And then Japan becomes, you know, a
place where manufacturer's items that are still not terribly expensive

(09:18):
but are known for engineering feats and are quite good.
And he also gets into some things we might today
call orientalists or essentralizing. But he had these what he
thought were sociological insights about the solidity of Japanese society
of their education system, of the relationships between the state
and businesses, and other writers kind of developed these themes

(09:41):
in different directions.

Speaker 2 (09:42):
Maybe we'll get into this. Peter Navarro's book Death by
China came out in twenty eleven. He was pretty ahead
of the curve in terms of you know, twenty eleven.
Certainly not as much as people are talking about today, But.

Speaker 4 (09:53):
In a way, it wasn't the real China shock in
the definitely, yeah, yeah.

Speaker 3 (09:59):
Yeah, the whole wto I feel like that was really
when it kind of peaked. You mentioned the cultural aspects
of this, and it is funny reading again some of
the coverage where everyone's like, I read the Chrysanthemum and
the Sword, or I read Mishima and now I've cracked
the code of Japanese economic success. But so much of
the panic was actually trying to figure out how Japan

(10:22):
had done this before we get into all those different interpretations.
What's your story of the Japanese economic miracle in the
nineteen eighties.

Speaker 4 (10:31):
You know, I think that there's obviously the actual economic
facts and the relationship of the United States with Japan,
and then there is the discourse about it. I think
what happened is you had a situation where you have
the beginnings of the industrialization in the United States. You
had a very strong dollar. You had a lot of

(10:53):
products that are coming in. They were extremely high quality
and attractive to American consumers. You also had some policy
that are very strange. Caterpillar was a big competitor with Komatsu.
They went to the Reagan administration. They brought this economic
study to the Reagan administration and they said, well, we
want to open up Japan's financial markets because the difference

(11:17):
in our currencies is causing this problem. Now, this doesn't
even make sense in economic theory. What actually happened is
Japan is the country with excess savings. So Japanese investments
began to flow into the United States. Caterpillar suddenly finds
Komatsu with a plant next door to it. So this

(11:38):
little scheme to undermine its competitors through currency wizardry didn't work.
The Reagan administration was open to it because they were
into free trade stuff, so it didn't really break with
their ideology. But it was a strange move that backfired.
And then also Japanese investors were used to very meager
returns and the United States had very attractive investment's going

(12:00):
on at that time, like treasuries because of the vulgar policies,
had very high returns, so Japanese savers were very interested
in them. And Japanese investors also started to look at
real assets, like they started to look at real estate,
and there returns on those things were so fantastic compared
to the way things were in Japan.

Speaker 3 (12:22):
Yeah, Mitsubishi bought the Rockefeller Center.

Speaker 4 (12:24):
They bought the Rockefeller Center. There was talk of Nintendo
buying the Seattle Mariners. There was a lot of purchasing
a lot of downtown La You mentioned that Nakatomi Tower. Like,
there was all this idea of Japan investing in American
real estate and buying quintessentially American properties, and this was
kind of upsetting to people. So the trade deficit was

(12:45):
obviously upsetting people who actually had a skin in the
game of the industries, workers, the businesses. Le Leyakoca was
not very happy about it. He wrote about it and
complained about it on TV. But the actual purchasing of
American like these kind of symbols of Americana made people
kind of get more tense about this nationalistic fervor. So, yeah,

(13:08):
the money was just flowing in and at that time
with the United States had a lot of deficit spending
and we were pumping out ships and military equipment, and
the interest in Japanese savers and American treasuries just came
along at the right time. Paul Songis who was I
don't know how many of your listeners are gonna remember him.

Speaker 5 (13:28):
Okay, So he was.

Speaker 4 (13:29):
Kind of like centrist, business friendly democratic politician who was
a candidate for president, not someone you would expect to
kind of like demagogue on populist terms. But he said
in a speech the uaw, the Cold War.

Speaker 5 (13:44):
Is over in Japan won.

Speaker 4 (13:46):
This is obviously a huge exaggeration, but it was more
like the Cold War ended in Japan kind of paid
for it. So I can understand from the perspective of
Japan when they're seeing these things bubble up in anger,
bubble up into America, They're like, we thought we were
competitors a little bit, but but yeah, mostly friendly, mostly friendly.

Speaker 1 (14:08):
Yeah, what was Trump doing this time? Did he have? Well?
Where was Trump?

Speaker 5 (14:12):
And all that?

Speaker 4 (14:12):
It was extremely upset about both the trade deficits of
Japan and the investment in Japanese. He's he's been extremely consistent.
He published ads in the newspaper, he went on TV
and complained about it. He said, Japanese Japan was ripping
us off, and Japan was buying all these wonderful American
things that you belong to us. So that economic nationalism

(14:33):
goes way back when, and there might be an argument
that his protectious instincts were really shaped by that encounter
with Japan as a potential rival. So I think that,
you know, the japan panic and Trump kind of being
of another age in a certain way. Although again some
of these things apply well too.

Speaker 2 (14:51):
But it's like left its fingerprints on American society, hasn't it.

Speaker 5 (14:54):
Absolutely absolutely?

Speaker 4 (14:56):
So I think that weirdly, those unconscious impressions or or
institutional knowledge or just hang ups that.

Speaker 5 (15:03):
Stick with individuals.

Speaker 4 (15:04):
Yeah, definitely, And you know, you may just still be
thinking of Japan.

Speaker 2 (15:25):
It's interesting because with the China anxiety these days, like
the fear is right, some breakthrough is going to happen
with semiconductors or something in China, and the American companies
would just sort of go out of business, et cetera.
But in the anxiety with Japan was like your boss
is going to be Jeopanese, or the name of the
office building that you brought to will be renamed Jeopanese, etcetera.

(15:46):
That's very different because people don't really talk about they're
all gonna be working for Chinese international corporations in.

Speaker 4 (15:51):
The future, right. And if you look at the image
of Dystopia in the eighties, like in cyberpunk literature or
in Blade, it's a lot of Japanese company signage and
a city of mixed ethnic makeup that looks very chaotic.
It looks a lot like cities in Japan. So yeah,
I think people were really thought and I think it

(16:13):
was just kind of common sense. If you got into
a if you took an airplane ride and you got
into a conversation with businessman next to you, guy who
owned a small business he had read in magazines, newspapers, books,
everyone kind of like the mid I'm sorry to use
this meme. The Midwind take at the time was sort
of like Japan is.

Speaker 5 (16:32):
Going to take over the United States.

Speaker 3 (16:33):
Yeah, okay, so clearly that did not happen. No, And
the per capita income of Japan is still a lot
lower than the US. Walk US through like, I guess
the bursting of the bubble and what exactly, like why
this vision of Japan as a super state or whatever
did not come to pass.

Speaker 4 (16:52):
You know, what's really interesting is that the that the
panic coincided not with the peak of Japanese power, but
with about the asset bubble bursting. So you see in
nineteen ninety two, Rising Sun, the Michael Crichton book come out,
and then and that also.

Speaker 3 (17:11):
To yeah, and has anyone read it?

Speaker 4 (17:15):
I have seen the movie. I have read the book
partially when I was doing research for the book for
my book. And at the end of the book, in
case no one got the very subtle message of the book,
he included a bibliography of books he had written he
had read about Japan that that detailed the threat. The
book is not subtle. A group of Japanese businessmen are

(17:36):
involved in the murder of a very beautiful blonde woman,
and the detective is taskifying this out and he has
a meeting with the senator, and the senator they talk
about maybe the possibility of dropping another bomb on Japan.
That's another thing to remember is that Japan, the United States,
and Japan in living memory had fought a war, and

(17:58):
there was Pearl Harbor, which Americans felt very sensitive about.
So what happened was there was a credit fueled bubble
in Japan and it burst, and it was followed by
a banking crisis deflation, and then all of a sudden
everything that everyone believed was so wonderful about Japanese capitalism.

(18:20):
So in nineteen eighty two, Charles Johnson wrote a book
called Midi in the Japanese Miracle, and this said, okay, well,
the reason why they did it is because they had
this wonderful industrial policy which coordinated investment, protected industries, guided firms,
and it was kind of a mixture of state intervention
and private capitalism. That was one theory that was a

(18:43):
little different from the theories that said, oh, the Japanese
have some special cultural Confucianism or whatever shinto Buddhism that
was making them do this. And everyone said, oh, well,
Japanese firms are insulated from financial markets, right because they
have this close relationship with banks. They don't have to
do they don't have to raise funds on capital markets.

(19:04):
They have these long standing relationships, so they can do
these great long term development projects, research and development projects.
They're not exposed to the quarterly pressures of American company,
so on and so forth. Then after the bubble crashes,
everyone looks at all this stuff. It's like, oh, wait,
they say, oh, this was a horrible system of crony
capitalism where the government was protecting people and there were

(19:29):
bad loans on the books, and if there had been
functioning markets and a lot of these things wouldn't happen.
So suddenly all of the things that appeared, most of
the things, not all of them, but many of the
things that appeared really impressive.

Speaker 5 (19:40):
About Japanese capitalism, all.

Speaker 4 (19:42):
Of a sudden people discovered what.

Speaker 5 (19:44):
The downsides were.

Speaker 4 (19:45):
But this didn't set in in the United States. Japan
was there was an outflow. There was a sudden, huge
outflow of Japanese funds they had invested. Yeah, I mean,
between nineteen eighty eight to the end of nineteen ninety
the Japanese investors invested about fifty two billion dollars in
the United States from you know, that includes everything from

(20:06):
buying companies to real estate to new factories. And then
in the first few months of nineteen ninety two that
figure had dropped to two point three billion, and they
made a net investment of thirty almost thirty one billion
dollars in securities, and by nineteen ninety two they were
net sellers of government securities. They took some real baths,

(20:29):
like this financier, Minuro Issutani. He and this was one
of these things that upset Americans. He bought Pebble Beach.
He sold it for a loss of about three hundred
and fifty million dollars. Yeah, so by the early ninety nineties,
the tide was kind of going out, but the upset wasn't.
And part of why this happened was the United States
still had a close economic relationship. But there was a

(20:52):
election going on and a Japanese election in the United States,
and a Japanese politician made a very very intemperate remark
about the appearance and abilities of American workers. He said
that they were not able to read in many cases,
that they were overweight, and this caused a massive rage

(21:13):
in the United States and a lot of politicians going
into the election year obviously gin this up.

Speaker 1 (21:19):
We talked about ninety two.

Speaker 5 (21:20):
Here this is in nineteen ninety two.

Speaker 3 (21:22):
Oh, is this the whole Atari Democrat thing?

Speaker 4 (21:24):
The Atari Democrats are a little different.

Speaker 5 (21:27):
They wanted.

Speaker 4 (21:28):
They were among the people who were really curious about
I think state industrial policy in Japan.

Speaker 3 (21:34):
I missed this whole era of American history, by the way,
firstly because I was like eight years old, but secondly
because I was in Japan right and we didn't hear
a lot about it.

Speaker 4 (21:43):
So you were there as as the bubble pop.

Speaker 3 (21:47):
Yeah, so I never I have no memories of experiencing
this feeling of Japanese supremacy. I have a lot of
memories of feeling like the economy was very downbeat.

Speaker 5 (21:57):
Oh wow, in.

Speaker 3 (21:58):
The sort of early two thousand when I came back
and when I was actually a teenager and sort of
aware of my surroundings.

Speaker 4 (22:04):
Yeah, did you ever get the sense that they felt
like it was a miss? It was a lost Golden era,
a missed opportunity.

Speaker 3 (22:10):
I mean, I think there was a little bit of nostalgia,
certainly in the finance community. You know, people could remember
what the deal making days were actually like. But beyond that,
I'm not entirely.

Speaker 2 (22:21):
Sure got you This summer, all the bros read Ezra
Vogel's Dongshell Pang biography, but he also.

Speaker 1 (22:29):
Wrote, and I think you talk about it.

Speaker 2 (22:30):
He wrote a Japan book in nineteen seventy nine, Japan
is Number one Lessons for America, which I.

Speaker 1 (22:35):
Think you yeah talk about is that Does that book
hold up? Was it good?

Speaker 4 (22:39):
I think that that book is one of the more
serious books. I mean, you know, yeah, he's a real scholar. Yeah,
and it was more a real analysis of institutions. It
doesn't get into the kind of there may be a
little armchair sociology in there about Japanese cultural mores, but
there's definitely much more hard analysis of the relationship between
government and business in Japan.

Speaker 2 (23:00):
Let's talk a little bit more about actually nineteen ninety
two in the politics of that time, you mentioned Paul's songis. Yeah,
he did win a primary somewhere, didn't he look win
New Hampshire something anyway? But more importantly that was also
the year that Ross Parrot ran as an independent and
then he dropped out, and then he got back in
the race and he had a pretty good showing. He
may have took the election to Clinton. I think there's

(23:21):
some debate about that. I know his main focus was NAFTA,
but was there a japan element to his populism.

Speaker 4 (23:29):
There was no one in politics at that time, who
was worried about the future of American economy, industry, even
our political supremacy in the world, that was not fixated
or focused or had a comment to say about Japan.
And Ross Pero was not an exception. He was both
a protectionist, so he thought that the United States has

(23:51):
trade policies were giving us or leaving us in a
bad place with regards to not only Japan, but also
at that time West Germany German unification, it just happened
in South Korea.

Speaker 5 (24:02):
But he also.

Speaker 4 (24:05):
Was very curious about the way he believed he wasn't
really much. He was a big capitalist, not much of
a free trader. So he was really attracted to the
close relationship between business and government in Japan. And he
also was very proud of the close knit nature of
his companies. A delegation of Japanese businessman I think from

(24:27):
Toyota came to visit Electronic Data Systems his firm, and
they praised him and they said, you're of all the
companies in the United States, you're the most Japanese.

Speaker 5 (24:37):
But he was.

Speaker 4 (24:38):
Extremely he was like he said, every worker as a brother.
That's that's the way Japanese companies run, and that's the
way I run. So he thought we needed to adopt
policies more like Japan between cooperation of business and government.

Speaker 3 (24:53):
This is something I find so interesting because in the
Japan panic at that time, like one of thoughts was, well,
Japan is very bureaucratic, but in a good way. It's
very like consensus driven, and we have big groups of
people who get together and make a decision that's good
for everyone. And then when you fast forward to today
and all the angst about China, it's very much like, well,

(25:17):
China has an authoritarian system of government, and China can
decide by a single person what it's going to do.
It's going to build like a huge high speed rail,
and that's not consensus driven. It's funny how it kind
of flipped.

Speaker 4 (25:29):
Yeah, that is interesting. There wasn't the sense that there
was direction or command and there was like a really
strong political system behind all this. It was a series of,
you know, on the smarter end, really good institutions and
great education. On the more pulpy, poppy end of cultural
essential features that made them extremely good at this. The
way that they presented Japan was like, there's no center

(25:51):
of power. This is an interlocking borglike corporations and businesses
are all cooperating in different ways. It wasn't like, oh,
there's in a miraitarian state and the leader this leaderless authoritarianism,
and there was some kind of fears that were reminiscent.
Maybe you got to also remember that the Cold War
is winding up. The Soviet Union is no longer the

(26:12):
primary opponent or rivally United States. So the collectivism of
Japan becomes the thing that's set against American free enterprise
and rugged individualism. Some people view that in a it's
an interesting mix of admiration and envy and also kind
of fear and saying, oh, we're not like that as Americans.

(26:33):
So it's a little bit different. I mean, it's also
different because the United States and Japan were ostensibly military allies.
They were in the same kind of block in the
Cold War. They were arguably part of our empire, kind
of under our protection. The discourse was that Japan was
sneakily kind of getting out from under American hegemony to

(26:57):
set up their own and that does make a whole
lot of sense in historical retrospect or even was a possibility.
Now China was obviously never had that kind of relationship
with the United States. They were always I mean they
were we organized a approachment with them, but they were
never an ally or even One might say, I think
vassal State is putting it far too strongly. But part

(27:20):
of the Western blackca.

Speaker 2 (27:22):
This is I want this is exactly where I want
to go do because one obvious difference besides the pop
culture and everything else with US China is that today
in twenty twenty five, there are people who are very
worried about war with China. If China were too forcibly
were too blockade Taiwan, would DC feel impelled to enter

(27:42):
a war. Is the Chinese industrial might going to sort
of hollow out our capacity to even like build weapons
at some point because we don't have any efficient factories
in the United States.

Speaker 1 (27:54):
I think that is a very that's very different, right
or shade.

Speaker 4 (27:58):
There were some very all shades of it. The more
hysterical books imagined a shooting war between the United States
and Japan and Japanese total reindustrialization that included remilitarization. This
doesn't make a lot of sense because Japan is very
insistent on his pacifism. I mean that might be changing now,
but that fear was really not one of the more

(28:21):
realistic ones projections, so there was a little bit of
worry about that. I think people were fantasizing and imagining
Japan as a rival to the United States that would
eventually be a military rival. It could be a military rival,
but no, as so far as I know. There was
one book, the Coming War with Japan. Most of the
others viewed it as a economic war and a cultural war,

(28:43):
with the fantasy of like they were going to do.

Speaker 5 (28:47):
Pat Buchanan had.

Speaker 4 (28:48):
An essay and a book about trade policy where he
talked about They've decided, after losing World War Two, they're
going to take the economic road to build their empire.
So it was more like using war as a metafold,
but there was I think fewer worries about the actual
military might, which makes sense.

Speaker 3 (29:21):
Can I push back on one thing, which is the
premise of this entire conversation at least? No, But the
way we started out, we were talking about like the
Japan panic really resonated with America, And I guess my
question is, like, yes, there were books, Yes there were
some characters and movies and things like that, but did
it actually resonate in the political or social sense, because

(29:43):
you know, I'm looking at a headline right now from
nineteen ninety two and it says harsh views on Japan
may help fuel Pero campaign. Well, Perro ran unsuccessfully for presidents,
so I would argue they did not in fact help him.

Speaker 4 (29:58):
Well, I would say that he had the most successful
third party candidate. That is true about twenty percent of
the vote, which is significant. I think about two thirds
of Americans by nineteen eighty nine believed. I mean, there's
reason for this because the Sovietian looked like it was
on its last legs, but believe that Japan was a

(30:20):
bigger threat than the Soviet Union, and a lot of
politicians went on the stump songists tried to Japan bash,
as they called it. Papy Cannon went Japan bashing Clinton
less So, but I would say there was a side
of Clinton's campaign and the side of his eventual staffing
of his administration that was definitely a lot closer in
thinking to the people who were both worried about and

(30:43):
admiring of Japan. They went in with the intention of
being really hard nosed about certain trade negotiations, and they
also and this is not We talk a lot about
industrial policy. There was a discussion of industrial policy back then.
There was a side of the Clinton administration that looked
at Japanese industrial policy and protectionism and said, this looked
very interesting. We may be living in a very different

(31:07):
world if the bubble doesn't pop in Japan and those
policies start to make more sense. So the side of
the Clinton administration, I mean that is both interested and
wants to take a tougher line in Japan. It kind
of becomes a moot point as Japanese economy kind of
collapses and fades away. So it was a really pivotal moment.

(31:28):
And yeah, I think that it's such a strange thing
that everybody was fixated on it with such common sense.
Politicians ran on it, arguably demagogued on it. And then
it's kind of a historical curiosity.

Speaker 3 (31:41):
Can I ask one more question, of course, which I
don't know if you'll have the answer to this, but
I've always wondered about it. Why was there not as
much handbringing over Korea, say, because on the face of it,
this is a country that also very rapidly developed economically,
also had similar relationships with the US. US military presence

(32:03):
and some US investment and things like that, but it
all seemed to be directed at Japan rather than Korea.

Speaker 4 (32:11):
I think that that is because of the United States'
history with Japan and the war, which had in our imagination.
I think also Japan at that time was a kind
of cultural hedgemon in East Asia, and the way that
maybe South Korea is now in terms of their exports
of pop culture and video games and art and music
and so on and so forth. I think that's a

(32:32):
big part of it. I think also there's a great
book by an author, Drew mckivot called Consuming Japan. I
think Japan in a way was a lot of Americans
for and he argues that Japan away was a lot
of Americans first contact with globalization, and it was both
very interesting but also a little scary and alien. And

(32:53):
I think perhaps China is the rise of China, the
rise of South Korea. It doesn't look so weird anymore
because we went through the experience of Japan, and also
because the experience of Japan kind of turned into nothing.
So perhaps some of the cultural memory of that or
the familiarity we have with other cultures from Japan. I

(33:13):
don't think we we Americans are so used to are
more cosmopolitan than I would say that we are at
the beginning of the eighties.

Speaker 2 (33:19):
Yeah, Japan throughout all of this, I mean it was cool, right,
Like Sony Walkman were always cool in the United States.
People look at this the Chinese evs, and they're very impressive, right,
I don't know if any of them are like cool, Like,
we don't really have Chinese branded other than Labuo.

Speaker 1 (33:36):
Boo's actually, yeah, which I think.

Speaker 2 (33:37):
Is like the first time there was a specific Chinese
made capital B brand that sort of I was gonna.

Speaker 3 (33:44):
Say, like we joked about doing a La Bubu episode before,
but like I think we actually should because this is
probably China's biggest cultural expert rand thing.

Speaker 1 (33:53):
But like, Japan is just so cool.

Speaker 4 (33:55):
They created a lot of really inexpensive but extremely interesting
and fun devices.

Speaker 3 (34:02):
I mean, and I missed my game Boy.

Speaker 4 (34:04):
I gotta say, I missed my Many displayer And it
wasn't even that useful. It was just really it was
just really neat. Yeah, Nintendo Sega, the design was terrific.
I think one thing that Japan and this was also
American businesses were really curious about how japan Is they say, oh,
they have all these wonderful craft traditions, and all these
wonderful craft traditions are not left behind. They're incorporated into industrial.

Speaker 3 (34:27):
Production, detail orient.

Speaker 4 (34:29):
Detail oriented engineering, a lot of paid attention to design
and aesthetics, so that I think was a big reason
why a lot of those products were really nicely designed.
I think it's a sad thing in a way. I
think there's a little bit of China of people think
starting to think Chinese cars are cool. Japanese cars were
always like that's reliable and well built, but they weren't

(34:53):
like they were kind of like, it's a little boring,
okay to own a Japanese car. Japanese electronics. I think
we're always like this. Really, I think it was not
necessarily maybe Lexus was the exception, right, but Toyota Honda,
I think these were It's very practical, practical choice. I
think there's a little bit of Chinese car culture starting
that's like, oh, yeah, they're really making some cool looking

(35:15):
stuff over there now. And also there is a beginning,
you know, you see lots of tiktoks and reels and
so on and so forth of Japanese I'm sorry, Chinese city.
So I think there's a beginning of I don't know
what to call it, China chic, but definitely like wow,
the amazing things are happening in China. So I think
there's a little bit of that. I'm not a young
person anymore so, and I think there's also just like

(35:40):
you know, Apple is so dominant in consumer electronics, and
you don't need that many devices anymore. So the fact
is we don't need CD players, we don't need walkmen,
we don't need many discs, we don't need all these
different things. So there was this kind of wonderful market
that had all these different interesting gadget it's in it,

(36:00):
and I think that that fascinated people.

Speaker 5 (36:03):
And your phone or your computer.

Speaker 4 (36:05):
Does all of that. I find that to be I mean,
this is just a factor totally of aging and nostalgia.
But as we were just saying, I find that to
be a little sad, and I thought those devices were
actually better in certain ways.

Speaker 3 (36:16):
Yeah, Joe, I just remember the car my mom had
in Tokyo in the early nineteen nineties, was it It
was called my Fair Lady what it was manufactured by Nissan,
and it was actually a really cool looking car, but
it had a terrible name, so I don't know if
it would be considered cool or not.

Speaker 4 (36:35):
They often switched names. I think when they came to
the United States they would have consultants tell them that branded.

Speaker 1 (36:42):
Fair lady z. I think, so have to like, look
a really nice looking car.

Speaker 3 (36:48):
It was some sort of sports car.

Speaker 1 (36:51):
Yeah, yeah, cooler than would assume a typical Yeah.

Speaker 4 (36:54):
I thought it was going to be some kind of
like mini van or suburban yeaheah.

Speaker 1 (36:59):
Very could extremely cool looking car.

Speaker 3 (37:02):
Yeah yeah it was. It just had a very strange name.
I always remember that. I remember like staring at the
steering wheel because I think it was like printed on it. Anyway,
back to the topic at hand, So there are clearly
parallels between the japan Panic and a lot of the
fear around China at the moment. On the other hand,
there do seem to be a lot of big differences.

(37:23):
Number one, China is not a tiny island with a
lack of natural resources and farmable land and things like that.
It has a much bigger population. Walk us through where
you see the biggest areas I guess of similarity and difference.

Speaker 4 (37:39):
I mean, exports were a big part of the growth
of both. There's obviously a strong state in both. In
one case it's more this vaunted Japanese bureaucracy, which then
turned out not to be so great, and the other
side it's the communist party and state banks. Big trade
surplus is a big part of it. But they're a
big difference. I mean, China's a lot bigger, has a

(37:59):
way bigger popua. I think it's political system, as you're saying,
it can kind of make things happen and prevent things
from happening, make really radical intrusions in the financial system.
It doesn't have infinite power in that regard. I think
I've heard you guys discuss that on them on but
I think they have definitely a little more political economic
firepower than Japan has. And I think part of that is,

(38:23):
you know, the strength of the communist parties and institution
and the size of the population.

Speaker 2 (38:27):
It is interesting to think, like here in twenty twenty five,
we could have a conversation and you know what, China
is really successful because it coordinates its banks with its manufacturers.
They have this very intense ideological grooming such that executives
are major They believe in the Chinese Communist National Project and.

Speaker 3 (38:48):
Right willing to sacrifice returns.

Speaker 2 (38:51):
Really to sacrifice returns, and all these things. And in theory,
and I don't know what's going to happen, but in theory,
in two years we could go back and say, oh,
they had all these corrupt relationships between the companies and
the banks. It was all this crony capitalism, et cetera.
It is hard to know in real time what factors
are real in success, because I do find when I

(39:13):
read stories about the degree to which the CEO of
Huawe League deeply believes in the CCP and the sort
of nationalist agenda, like, yeah, oh, that's very compelling. I
could see how there's this alignment. But then you know,
something could happen in a few years later you're like, oh,
that was really silly.

Speaker 1 (39:29):
How they like you? Right, it's hard to know in
real time.

Speaker 4 (39:32):
Yeah, I think that's absolutely true. I don't think, you know,
we should be complacent or sure, but I think it's
an interesting lesson of the history here. It's just things
can go from being common sensical. The biggest threat everybody
knows that they're gonna they're gonna win. Everybody knows that
they have a better system, and then a few years
later everyone is like, what were we thinking?

Speaker 5 (39:52):
Why did we think that?

Speaker 4 (39:53):
And we could they had so many internal problems that
were just out of this And that's kind of the
same way with financial bubbles. I guess you could talk
about these is also it's like political bubbles. Is that
everyone's like, oh, wow, look at this big combine, this
big system that's kind of humming along, and then things
are going on behind the behind the scenes that are like, oh,
there's an intrinsic flaw that's making its way to the surface,

(40:15):
and then it kind of manifests itself.

Speaker 2 (40:17):
So George Soros gave a great speech one time making
this exact point that there is a similarity between what
you he would financial bubbles and like political bubbles, where
you believe in a system and then something emerges that
sort of irrevocably shakes your confidence in the system. So
I think I find that analogy very compelling.

Speaker 4 (40:37):
Yeah, but dependence cease to exist. It's still the richest,
it's not a terrible place to live. Yeah, it's not
like it went back to the stony. So I think
that that's also just a very growth mindset but it's
still I think, has an extremely low rate of unemployment, healthy,
relatively healthy population, good education, not a terrible place to live.

Speaker 3 (40:58):
Just on this point, though, why didn't you get into
the sort of software side of technology as much as
it did on the sort of hardware side in the
eighties and nineties.

Speaker 4 (41:07):
You know, I think that that is a question I
don't exactly know the answer for, but that's often given
as the big mistake that they made. Right, So, Japanese
companies made an investment decision at just the wrong time
that hardware, and I think it was partially because they
were always just really good at developing hardware, and they
had developed a lot of institutional knowledge about making devices

(41:30):
and improving devices, improving hardware, and they were like, look,
this is what we're good at. I also think that
there is a certain not to get into too many
cultural explanation, but there is a certain conservatism in Japan
about tools, about devices, and things that are seen to
work aren't quickly gotten rid of. The Japanese government just

(41:53):
had to kind of wage an internal jihad to get
people to get its own bureaucracy to stop using floppy disks.
Japanese companies still often use fax machines.

Speaker 1 (42:03):
Yes, it's enough. I know.

Speaker 3 (42:05):
I used to. Part of my job used to be
monitoring a fax machine for press releases and most of
them that came in were from Japan. And this was
like the mid two thousands.

Speaker 4 (42:15):
Yeah, and I think that there's that sense that some things,
some ways of doing things, some processes, some technologies are
good and there's not any real reason to replace them.
And obviously, like when productivity is your number one goal,
that's not necessarily Again, it may make us in some way.

(42:39):
I find it very charming and I find it also.
One theory I've read is that the reason why unemployment
is very low is because somebody has to be there
to get those factxes, and they're not that. Japanese companies
are not that keen to adopt software that might replace
a worker. So there's a certain kind of pro social
attitude and not doing these upgrades. But yeah, the transition

(43:01):
to the software the age was one of those places
where Japan is thought to have made a wrong term.

Speaker 2 (43:08):
Yeah, New Jersey, they still don't like you pump your
own guess right, we have our own cultural cultural dimensions.

Speaker 3 (43:15):
New Jersey famously socially oriented that's right.

Speaker 2 (43:18):
John Gann's author of the unpopular front subjac and the
recent book When the Clock Broke. Thank you so much
for coming on Odd Laws World.

Speaker 1 (43:25):
That we made this happen.

Speaker 5 (43:26):
Yeah, thank you, say so.

Speaker 1 (43:27):
Much, Tracy.

Speaker 2 (43:41):
That was a lot of fun. I do think that
Japanese stuff seemed really cool back then in a way again,
and maybe we should talk more soon about the rise
of China the brand and whether there's whether it.

Speaker 1 (43:52):
Will break labooboos.

Speaker 3 (43:53):
Yeah, just do the Yeah, we'll do it.

Speaker 1 (43:56):
We'll do it.

Speaker 3 (43:56):
Just give in. It's inevitable.

Speaker 2 (43:58):
Someone told me that if you go to the the
Running Shoe subreddit, there's a lot more mentioned of there's
I think there's an anta is like the Nike of
Japan that you see more mentions of them on. Like
I tried to build a scraper of brand mentions over
the time. I couldn't get it done on reddit. So
I do think we should talk about that. But you know,
there was this a whole aspect of Walkman, Nintendo, those

(44:20):
were cool brands the whole time.

Speaker 3 (44:22):
You know what's interesting about Nike and China, yeah, is
that there was a big pushback domestically against Nike products
because of rising nationalism in China and the idea that
maybe Nike had made some missteps that like offended policy
makers or people there, but.

Speaker 2 (44:41):
No overall, like having this conversation from twenty twenty five,
given what we know about Japan today, the whole thing,
she was like, Wow, that's you know, it seems very surreal.

Speaker 3 (44:51):
It was very quaint.

Speaker 1 (44:52):
It feels very like.

Speaker 3 (44:54):
This idea that we were really worried that a relatively
small island was going to take were the military that
we hit a base on right there more than one basis, just.

Speaker 2 (45:02):
Multi multiple bases on that we were as military related,
that there was that much anxiety. It's sort of interesting
chapter in our history.

Speaker 3 (45:12):
I do think it's also interesting again to think about,
like how much a lot of the strengths and weaknesses
have flipped in perception. The idea that bureaucracy and consensus
decision making was once seen as this competitive advantage and
now it's totally the opposite.

Speaker 2 (45:28):
I mean in every context, right, you say, oh, one
of the great things about the US we have all
these great checks and balances, et cetera, and then suddenly
we can't build anything or get any laws passed out
One of the big problems with the US is there's
so many veto points and you can't get anything done.
It's just whatever the mood is at the time, the
same set of conditions will either be get the blame
or the credit.

Speaker 3 (45:49):
It's just a giant pendulum swing.

Speaker 1 (45:50):
Yeah, that's right.

Speaker 3 (45:51):
Fourth Markets and politics.

Speaker 1 (45:53):
That's right.

Speaker 4 (45:53):
All right.

Speaker 3 (45:53):
Shall we leave it there.

Speaker 1 (45:54):
Let's leave it there.

Speaker 3 (45:55):
This has been another episode of the Authoughts podcast. I'm
Tracy Allaway. You can follow me at Tracy Alloway.

Speaker 2 (46:01):
And I'm joll Wisenthal. You can follow me at the Stalwart.
Follow John Gans He's at Lionel Underscore Trolling. Follow our
producers Carmen Rodriguez at carman Erman dash, Ol Bennett at
dashbod and Kelbrooks at Kelbrooks. For more Odd Laws content,
go to Bloomberg dot com flash Odd Lots with the
daily newsletter and all of our episodes, and you can
chat about all of these topics twenty four seven in

(46:22):
our discord Discord dot gg slash odlines and.

Speaker 3 (46:25):
If you enjoy odd Lots, if you like it when
we talk about parallels between Japan and China, then please
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And remember, if you are a Bloomberg subscriber, you can
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(47:02):
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