Cartels Of Japan Essay, Research Paper
Amid the world today, Japan is a weak link in the chain of the world economies. It is not the miracle it used to be. Japan, after the war, has made some decisions that caused some problems for the future. Those decisions ultimately caused the economic distress it is now striving to get out of. One such decision was the approval of the formation of cartels. This was enhanced with the government passing of the Industries Control Law. This law enable the cartels to control and establish fixed rates in prices, production, and an important link. A link that enables a country to grow, the entrance of new firms. The entrance of firms increases capital, labor, tax revenue etc. The problem surrounding Japan’s unfortunate economic distress is due to the governments protectionism, the slowly withdrawal of Japan’s key corporations, and the formation of cartels.
Many major problems arose with the governments intervention to protect it’s businesses. The ramifications of those actions are now quite visible, and is now proved to be the wrong methods of controlling an economy. It worked for the circumstances after the war, however, an economy has to adapt to the changing times. What worked for today may not work for tomorrow. The government only witnessed the success of their decisions, however they were unable to adapt that success to continue through the changing times. By protecting their businesses, they were shutting out the rest of the world, and by doing this, they would have to sustain themselves. Not that the world did not want any part of Japan, on the other hand, Japan (because of protectionism) seemed not to want any part of the world. In addition, the protectionism had some bias characteristics to it as well. It seems that the government favored only a small elite of the businesses. These businesses were known as the zaibatsu, a group of corporations who have good bonds with top leaders in the bureaucracy. It is because of this favoritism that later down the road, Japan would encounter major problems.
Another problem was the withdrawal of major corporations. The corporations have to pay outrageous prices for the factors that enables a corporation to expand. Such factors as cement, machinery, electrical wiring, trucking etc., simple factors that we here in the United States take for granted, that enable a corporation to expand and grow. The cost of producing a good in Japan is more expensive than in any other country. Why the prices are so outrageous is because of the cartels. They control too much of the economy with their monopolistic influence. This is the major reason why the corporations started to withdraw from Japan. The cost were getting too high to maintain profits. I don’t see why the corporations would remain in Japan but for patronage to their home country.
I think it is quite evident that my essay is based around the cartels. They are the foremost reason why Japan is in the situation it is now. Ever since the government condoned the formation of these cartels, problems unseen by the governing parties was unfortunately in progress. The monopolistic effectiveness the cartels have are both direct and indirectly influenced. It is directly influenced in the form of a coercive competition. There are just too many cartels. The whole system is like a tightly knitted web. As discussed in class, if a domestic business purchased goods from a foreign business, the domestic cartels would cease relations with that business. In addition, the indirect influence is displayed by the businesses decision to abstain from consuming foreign products. I believe it is mainly because of fear. For example, if I choose to add on a room to my home and did not purchase from the local store, I might not be able to purchase my next meal from the domestic supermarket. What a life! It is almost unreal how a country could survive under such conditions. The tightly knitted web of the cartels is so strong that it was able to make US companies like the American Pacific Mail Line withdraw from its ports. The cartels influence in Japan is very strong. If Japan is able to get out of the slump it is now in, it would do so by ending the cartels. The cartels are hindering the country’s ability to succeed.
Japan is the miraculous country gone sour. The main reason why, is cartels. The cartels has to go, so Japan can proceed forward. Once the cartels are gone, the corporations would have a reason to return to Japan. Furthermore, once the corporations return, revenue, capital, and labor employment; therefore, bettering the overall standard of living. In order to get rid of the cartels, Japan would have to abolish its protectionism. World competition would eradicate the cartels, also bringing in more capital and more technological innovations from other corporations. I think Japan is in a position now that it has only one option, that is to open up to the world. In doing so, the present governing party is unable to see the light at the end of the tunnel. Like how the governing parties after the Meiji restoration could not foresee the out come of their decisions. However, the benefits that will be reaped will be better than the present one. Japan ultimately has to get rid of it’s cartels so that the economy can fully function.