During the 1980s, I thought a lot about Japan. Many Americans did. Much of my time spent during that decade was consumed by travel across the country, presenting seminars on behalf of financial firms, most often for the national brokerage firm PaineWebber. My seminar topic was the importance of saving money. I would arrive at a nice hotel in Kansas City, Dallas, Portland, Birmingham, Chicago, or wherever else, make my presentation on income-tax advantaged retirement income to between 50 and 200 “buying units” as the Paine Webber folks referred to the attendees, and then leave the following morning to catch a flight to my next stop. The stockbrokers’ job was to follow-up with the attendees and make sales. On average, I travelled to three cities per week. This went on for a few years. When my wife occasionally asks me why I don’t sound like a Bostonian, I remind her that this is why. “I had to find a neutral voice considering all the diverse places I visited across this vast country.”
Japan was the topic of a highly emotional close to my seminar. My voice would rise: “I just saw a survey that says eight of the 10 largest banks in the world are Japanese! Why? The Japanese save money! We don’t! The Japanese save more than 14.5% of their incomes. We Americans barely save 2%!”
I would continue on with an impassioned plea, exhorting my audiences to commit to greater levels of personal savings. It was highly effective. The Paine Webber brokers wrote lots of business. The industry was quite different three-plus decades ago.
Why did my presentation place such a sharp focus on Japan? Well, my final year on this seminar circuit was in 1989. Back then, many Americans harbored an acute sense of concern about Japan. In 1989, the Japanese economy was a juggernaut. Japan’s aggressive economic growth posed a genuine threat to The U.S. economy. In addition to enjoying fantastic economic expansion, the Japanese were innovating at a rapid rate. For example, the Japanese launched a vast new market for personal electronics. In 1989, the world’s most admired company was Sony. Makes sense. Sony invented the insanely popular Walkman, the Trinitron color TV and the VCR. As Americans’ purchasing preferences shifted to the new and exciting Japanese products, American companies began to feel pain. Many good jobs were lost. In 1990, the Washington Post published an article written by Pat Choate entitled “ How did Japan destroy the American television industry?” The article included this:
Today, only one American television manufacturer—Zenith—is left (and under intense pressure to give up its TV division). Zenith is alone because between 1968 and 1988, a roster of some of the most distinguished names in U.S. consumer electronics—Philco, Sylvania, Emerson, Motorola, RCA, Westinghouse, Admiral, GE, Magnavox, and many others—either went out of the TV manufacturing business or were acquired by foreign competitors.
As American television brands faded away, and Japanese brands such as Sony, Panasonic, Toshiba and Sharp commanded the market, a great deal of anxiety about America’s future took root. Newspapers featured frequent stories about Japanese companies buying signature American assets such as the Rockefeller Center, Pebble Beach Golf Club, the Mobil Building, Columbia Pictures and Firestone Tire. On September 6, 1988, Paul Harvey wrote, “Japan right now could create an economic Pearl Harbor by abrupt reconversion of dollars to yen.”
As Japan’s influence over the U.S. economy expanded, more and more Americans grew concerned. Writing about the growing sense of conflict between the world’s two largest economies, in May 1989, The Atlantic wrote, “That conflict arises from Japan's inability or unwillingness to restrain the one-sided and destructive expansion of its economic power.”
This was serious stuff. News reports in the U.S. frequently detailed the boom in the Japanese economy. In December 1989, the NIKKEI 225 reached its all-time high of 39,300. Japanese commercial real estate became the world’s most expensive. In Tokyo, the small Ginza District was valued at more than the entire state of California. Prices reached as high as $139,000 per square foot.
In 1989, if you had told me that what followed in Japan was really going to happen, I would have said to you… “That’s impossible!”