Strategic objectives: Japan’s ODA program aims to contribute to the peace and development of the international community, and also to Japan’s own security and prosperity. This includes fostering friendly relations with recipient countries, promoting international understanding, and ensuring a stable global environment conducive to Japan’s interests.


Contact with China and Korea in the early centuries brought profound changes to Japan, including the Chinese writing system, Buddhism, and many artistic forms from the continent.


During Doraemon’s development, Fuji did not express a change in character; he said, “When a manga hero becomes a success, the manga suddenly stops being interesting. So the hero has to be like the stripes on a barber pole; he seems to keep moving upward, but actually he stays in the same place.”


The manga “can be interpreted as a type of book that criticizes, with irony, the omnipotence of science that pretends to solve every problem with its tools,” alluding to the fact that Doraemon’s gadgets often end up making the problems even worse than they initially were, more than anything else. It represents the metaphor of the childish imagination, which always manages to find the most bizarre and original solutions, in a continuous game of transformation of reality.


In 2007, Michelin released their first guide for fine dining in Tokyo, awarding 191 stars in total, or about twice as many as Tokyo’s nearest competitor, Paris. As of 2017, 227 restaurants in Tokyo have been warded (92 in Paris). Twelve establishments were awarded the maximum of 3 stars (Paris has 10), 54 received 2 stars, and 161 earned 1 star.


Few Americans today are surprised at the volatility of real estate markets or at their capacity for quixotic exploitation in sudden “booms.” Indeed, growing rich or at least affluent from the capital gain on a home sale has become a legitimate part of the American dream. But few Americans actually experience an appreciation of double or triple their land values in just a matter of months. Those who do are usually considered as lucky as lottery winners.

But what if it weren’t luck? What if such a spectacular, exponential rise in the values of all land in, say Los Angeles, occurred in only 36 months? What if it were known to have happened as the direct result of a calculated release of hundreds of millions of dollars in speculator funds into that city’s real estate market by all of the nation’s largest banks? What if the Federal Reserve had made those funds available through the banks, just for that purpose, and allowed the banks to require no other collateral than the skyrocketing value of the land itself—and to loan the money at the lowest commercial interest rates in the world?


Americans who ask themselves how the Japanese managed to buy up a quarter of California’s banking market in such a short time, how they effortlessly outbid all comers for the Rockefeller Group or any of dozens of other major and minor U.S. corporations, or how they are so rapidly and successfully transferring manufacturing onto an international base after decades of insisting that such a thing was impossible, will find large elements of the answer in Tokyo’s real estate listings. The creation of massive amounts of paper assets, the collateralization of them through huge volumes of low-interest lending against such assets, or the realization of cash based on the same assets through the volcanic upwelling of share prices on the Tokyo stock market, and the export of the resulting capital through conversion of the yen into vastly cheapened dollars is a process that defines both how big and far-reaching this new Japanese “money machine” is. It also shows how simply and efficiently it works.

The Japanese can now afford to buy whatever they want that is for sale in capital, financial, manufacturing, high-technology, knowledge-intensive, distribution, processing, and services industries anywhere in the world. And they can afford to outbid anyone else who might want it. Like a fully realized version of the apocryphal oil sheik of the 1970s, they now have a virtually endless source of cash flowing right out of the ground at their feet—and encounter no risk or any other discomforting accountabilities in spending it.

Perhaps the greatest surprise of Japan’s money machine, however, and the United States’s greatest vulnerability to it, is the paradox that it is really built on no foundation. Since Japanese land is the nation’s only tradable commodity not subject, directly or indirectly, to the disciplines and interventions of the international market, the land’s value is whatever the Japanese owners and the lenders who finance the trade in it say it is. The higher the prices go, the brighter the economic future for both the owners and their creditors. And the prices are still going up.

Land speculating is, of course, as old a practice in Japan as it is in any capitalist country. But a big inflator of the bubbles in Japan has always been the favorable climate of government attitude: little land regulation; less land-use policy; low tax rates and loophole-ridden tax laws on capital gains from land; and strictly regulated interest rates and artificially mandated credit ratings that have allowed major players, such as trading companies, and minor ones, such as real estate agencies, to raise speculative capital easily at low cost, no matter how high the debt-to-equity ratio on any corporation’s books.


These strong earnings, in turn, began to make it unnecessary for many big Japanese companies to rely on heavy borrowings to finance their continued growth. And the Ministry of Finance began to feel a threat to the considerable measure of informal power it had long held over these companies through credit controls.

To reinforce its influence in the industrial sphere, the Ministry of Finance switched to a policy of encouraging continued corporate borrowing, not on the basis of actual capital needs but on the basis of supporting the banks—which then had no other customer base as strong as the major companies, inside or outside Japan. In other words, for reasons of its own, and to boost domestic demand, the Finance Ministry set a policy of “cheap money” lending to corporate borrowers. And it encouraged the banks to spread their liberal lending activities downward and outward through the economy, to medium- and small-size companies, opening up a second tier of liquidity circulation and another arena for land speculations with borrowed cash. In turn, the companies applied much of this cheap money not to operations but to speculation in the capital market, or zaiteku.


In 1986, when the soaring yen began to put immense pressure on Japanese export prices in overseas markets, the specter of market share loss by Japan’s flagship corporations and even domestic recession loomed frighteningly close. Rather than give up market share, the corporations and their suppliers kept price hikes to a minimum and swallowed consequent losses. At the same time, they scrambled to find new ways to lower their production costs and regain some balance through the diminished yen prices of imported raw materials and component parts. The Finance Ministry also responded admirably: first, it conveniently yielded to foreign pressure to lower national interest rates to the lowest in the developed world; second, it pursued deregulation and domestic stimulation in the ways that flooded the national economy with extra cash. In the previous decade, the Bank of Japan had kept growth in the money supply, broadly defined, to around 8% per year. But from May 1987 to April 1989—for two full years—Japan’s money supply showed a growth rate of 10% or higher on an annual basis, in every month.

The government was thereby setting the stage for borrowed money to finance the domestic demand surge, the production cost reduction, and the absorption of out-and-out losses that would help Japanese companies survive the high yen. Once these companies got through the hard year of 1986, when GNP growth slowed to 2.4%, and into 1987, when it sprang back to 4.3%, once they were adjusted to the high yen, they could switch their capital flows into central Tokyo land—60% of which is owned by corporations—with their now-surplus borrowed cash. This, then, is what helped turn a speculators’ bubble into the genuine vortex of land price acceleration in Tokyo: 10.4% in 1986, 57.5% in 1987, 22.6% in 1988. Residential, industrial, commercial: the increases spread all across the real estate landscape. Corporations suddenly found the asset value of the land on their books going up by multiples. The “average” Tokyo square meter that cost ¥1 million in January 1986 had an appraised value of ¥2.13 million at the end of 1988. And that was just the average: in the central three wards of downtown Tokyo, some prices climbed over 400%.

To corporations, the appeal of these quickly inflating asset values was that banks were eager to lend against the land as collateral at 80% or more of “fair market value.” So corporate credit lines, at interest rates then under 5%, rose in multiples right along with them. The 13 most important Japanese city banks and other big lenders such as insurance companies were transformed into fountainheads of corporate credit that grew along with the speculative value of the land—whether sold or unsold.


Although operating profits were quite good for many of the principal Japanese corporations in 1987 and 1988, a look at the price-to-earnings ratios of the Tokyo Stock Exchange indicates that it wasn’t only the basic business performance of listed companies that was bringing in investors. It was “land money”—which created a kind of double leveraging of the land itself: capital value reflected in land prices and in share prices, the latter realized as cash through the liquidity that land speculating had created. And, of course, the more capital acquired by corporations in the stock market, the more available to them for further nonoperating investment—such as more land. The Japanese had created a sort of “never-ending circle.”


Some U.S. businesspeople outside the banking and financial industries who have watched the trend in U.S. business toward reliance on debt financing may be inclined to welcome these new Japanese creditors. After all, they represent a strong competitive element, one that will help reduce business costs by anchoring the low-interest end of the lending market. But as Japanese businesses absorb dozens of American businesses, large and small, these same observers might well ask themselves how comfortable they would be if a competitor of theirs were acquired by a member company of a Japanese industrial family group, which could then turn to a bank belonging to the same family for preferential loans. In a sharply contested market where even a small difference in interest costs could make all the difference between profits and losses, between those who can afford to compete and those who cannot; or in a recession, when debt management by a cooperative borrower-lender “team” could spell the difference between receivership and survival—in these and other crucial circumstances, preferential credit could make a huge difference in the real terms of competition.


Of course, land prices in Japan have already begun to affect land prices in the United States: the Japanese outbid other contenders for such properties as the Rockefeller Group with its Plaza holdings not only because of their enormous liquidity but also because real estate returns in the United States now average 7% annually, versus 2% annually in the overpriced Japanese market. Japanese land generates capital; foreign land generates income.


When the Japanese buy a company, they often do so not merely to acquire assets and plant. They also acquire market share—something they previously had to struggle to build through their own costly and time-consuming marketing efforts.


Some years ago, Peter Drucker said prophetically that the business future belongs to those enterprises with the best access to capital. Japan is proving him correct. What neither he nor anyone else in American business could foresee is that the Japanese would create their capital advantage by realizing a theory that every capitalist nation knows but no others have yet dared to act on for open advantage: money is only paper, with no intrinsic value other than what buyer and seller agree on.

The real Japanese innovation came, as usual, in linking something old and familiar with something new and opportune: manipulation of the domestic land market and the global deregulation of capital markets. By claiming that their land is worth anything the buyers and sellers of credit claim it is, and by realizing that amount as actual cash, through the wide-open, cheap-money lending policies of the Ministry of Finance (and the securities markets, where billions of dollars of that money is pooled), Japanese corporations are making the theory work for them.

How could it be done on such a breathtaking scale, without so far triggering the ruinous inflation that the laws of free market economics would seem to dictate? Part of the answer, certainly, is Japanese domination of entire industries—the manufacturing machine that continues to generate consumer and industrial products that the entire world both needs and wants. The economic and political system that underlies this manufacturing performance has produced a growth machine that is unparalleled in the world; the Japanese now forecast that by the year 2000, they will have a GNP roughly equivalent to that of the United States.

Another part of the answer is the way in which the Japanese have been able to apply that industrial growth system to the larger workings of the whole economy. So pervasive is the ability of the elite bureaucrats, business leaders, and industrial groupings to maintain informal, extralegal control over economic processes, including the workings of the marketplace, that the conventional term “free market capitalist economy” hardly applies at all. Ultimately, no country or enterprise competing within the framework of a genuinely free market can hope to compete with it either in Japan or abroad. Policymakers in the United States will soon be forced to face the fact that the problems in the relationship with Japan are not essentially of an economic nature, but are much more intractable: they are political problems.

This recognition is the most critical feature for American business and political leaders, most of whom remain captive to the terms of their own economic ideology. The economists’ argument continues to hold sway that the import of capital to the United States is entirely beneficial: it bolsters industries, creates jobs, rejuvenates companies, and generates healthy new cash flows as Japan’s businesses are integrated with those of the United States. Moreover, the argument goes, it is ultimately a vote of confidence by the Japanese that the United States, despite temporary economic difficulties, has the stronger, more powerful economy and the greater future. Undeniably these claims are true; doubtless the Japanese investors do see a promising future in the United States.

But the problem remains: Japanese direct investment capital does not really “migrate.” Quite apart from the vital questions of which country the R&D will be done in, or where components will be produced, the crucial fact is that, once the Japanese acquire an American company, management, not just ownership, shifts to Japanese control. That means that management’s functions and perspectives fit a Japanese, not an American, schematic of industrial and economic plans and goals.