'Will Japan accede to U.S. demands?

Our trade deficit is improving, but tensions between the United States and Japan are at an all-time high. Why is this? I think it's because many Americans believe the Japanese don't play fair. Consider the following examples:

The British own more of America than do the Japanese. But there is a difference: Americans can easily purchase corporate assets in Great Britain, while Americans and other foreigners cannot easily buy corporate assets in Japan. While foreigners own 5% of the corporate assets in the United States and 10% of the corporate assets in Britain and West Germany, only 1% of the corporate assets of Japan are foreign-owned.

Japanese auto companies sell their automobiles in the United States through the network of American auto dealers, a network already place.

Americans and Europeans are generally denied access to Japan's domestic dealership network to sell their cars. This strikes many as unfair.

Japanese make it very difficult for American retail chains such as Toys "R" Us to set up stores in Japan. The Japanese government argues the American approach to retailing would undermine the business of Japan's small shopkeepers - and they are probably right.

But this practice also undermines the Japanese consumer, who is denied choices related to price, quality and variety, thereby limiting Japanese living standards.

The real issue is what role the Japanese government will play in changing the Japanese culture.

In the United States, a cozy relationship or culture, not unlike the small shopkeeper culture in Japan, developed between management of the Big Three automobile companies and organized labor.

This culture had a 30-year history by the time oil prices soared in the mid-1970s. As a result, U.S. automakers had become sloppy in the design and production of automobiles.

Competition from Japanese automakers left American automakers reeling. They had trouble competing. They pleaded for protection from the U.S. government to save their culture. But they got much less than they asked for.

Why? The U.S. government placed a higher premium on preserving choices for American consumers and on maintaining a relatively free system of international trade.

Stockholders of the Big Three suffered because of bad choices by past management. Americans lost jobs, and communities like Flint, Mich., were devastated as shown in the movie Roger and Me, which is only the most recent attack on the arrogance, incompetence, and myopia of the management of U.S. automakers.

The Japanese must now decide how they will respond to the demands of Americans and Europeans to change their culture. Will the Japanese government take action to change aspects of a business culture that depresses the standard of living of the average Japanese? Or will it let these traditional business practices prevail, leading to certain retaliation by the United States and Europe? A lot is at stake.