What President Clinton Should Have Said to the Japanese

by Jacob G. Hornberger

In 1993, President Clinton visited Japan. The following is a model speech that the president could have delivered to the Japanese people:
       I am deeply grateful for the opportunity to visit Japan and to speak to you, the Japanese people, during my first year as president of the United States. I am here not only to fortify friendships between our nations, but also to announce major changes regarding relations between the U.S. and Japan.
       For many years, politicians and bureaucrats have believed that trade is a win-lose situation. We have believed that whenever two people enter into an economic exchange, one of them will win from the exchange and the other will lose. Thus, we have always viewed economic activity as a form of warfare between people.
       But politicians and bureaucrats have been wrong. Trade between individuals is actually a win-win situation for the people entering into the exchange. A person will exchange something he values less for something he values more. For example, suppose a person owns ten apples and another owns ten oranges. By exchanging one apple for one orange, both of them give up something they value less for something they value more.
       Why is this so significant? Because it shows that people’s standards of living can increase through the simple act of trade! In other words, people can improve their own well-being by entering into exchanges with others. And the corollary of this principle is equally important: to the extent that any government interferes with people’s ability to exchange freely with one another, to that extent the state is interfering with people’s pursuit of happiness and their economic well-being.
       Therefore, it is essential that people all over the world have the widest latitude for freely engaging in economic trade.
       But I come before you tonight not simply to speak about economic principles. I also wish to do something much more important and profound. I want to make confessions and apologies this evening on behalf of the United States government—to both you and the American people.
       Many years ago, governments in the United States began forcing our citizens to send their children to state-approved schools where they would learn only the doctrine which we, the governmental officials, wanted them to learn. And much of the indoctrination that the children received was false.
       For example, most Americans honestly believe that they live in a land of “free enterprise.” They believe this because they have been taught to believe it in their state-approved schools. If any of you ever visits our nation, simply ask any American about his “free-enterprise” system, and he will bubble over with enthusiasm as he says, “America is a land where you can enter into any enterprise without regulation or restriction; where you can become phenomenally wealthy by freely selling goods and services to others; where you can travel anywhere without restriction; where you can buy and sell without political interference. America is the land of free enterprise.”
       It is a sad sight. The truth—which more and more Americans are now discovering, despite their many years of govemment-approved schooling—is that America is not a land of free enterprise— and has not been for some sixty years. The truth is that ours is a welfare state and a regulated economy deceptively termed “free enterprise.”
       In our land of “free enterprise,” the state takes about forty percent of people’s income. A large percentage of the money is used to support thousands and thousands of public officials; the rest of the money is given to people who have privileged connections to governmental officials. We require people to seek our permission to do business through licensing and permit requirements. We punish them if they travel to nations whose governments are not friendly to our government. And we do not permit them to trade freely with others.
       And I confess to you and the American people that this way of life—the welfare state and the managed economy is a miserable failure. The welfare state was supposed to end poverty. It did not. Our managed economy was supposed to bring safety and security to the American people. It did not. Taxes continue to rise; regulations continue to increase; the number of governmental officials continues to expand; government spending continues to soar.
       The truth is that our economic system is a disaster.
       Unfortunately, American governmental officials hate the term “responsibility.” None of them has ever done what I am doing tonight—accepting responsibility for what we in the government have done to the American people and their well-being.
       What has been the standard response of U.S. governmental officials to America’s economic woes? To blame you, the Japanese people, for our difficulties. We constantly refer to the so-called “trade imbalance” between the U.S. and Japan. But hardly ever do we do the same with respect to other nations. We have found it easier to foment anger and resentment against Orientals than against Caucasians.
       I confess that you—the Japanese people—are not the cause of our economic difficulties. It was wrong of our governmental officials not to accept responsibility for the failure of our welfare state and managed economy. It was equally wrong of us to appeal to prejudices against Orientals. And it was wrong of us to deceive the American people about the type of economic system under which they lived.
       On behalf of the United States government, I apologize to both you and the American people for the grievous wrongs that we governmental officials have committed.
       Actually, you—the Japanese people—are part of the economic solution for America. But before explaining how you hold a key to our economic problems, please permit me to go back in history about half-a-century.
       During the past fifty years, America’s governmental-approved schoolteachers have taught our citizens that for the United States, World War II began with the Japanese attack on Pearl Harbor. On behalf of my government, I publicly confess to you and to the American people that this is false. The truth is that prior to December 7, 1941, the U.S. government, led by President Franklin D. Roosevelt, engaged in several acts of war against your nation.
       For example, prior to your nation’s attack at Pearl Harbor, American military forces, led by General Claire Chennault, repeatedly attacked Japanese military forces on the mainland of China. American governmental officials maintained that Chennault’s “Flying Tigers” were simply a private force assisting the Chinese to resist your government’s aggression. This was false, and our public officials knowingly lied about it. General Chennault’s forces were actually U.S. government military forces operating under the guise of a private force, and their operations were funded by our government. These attacks by our military forces against those of your nation occurred prior to your government’s attack on Pearl Harbor. And they were expressly authorized by President Roosevelt.
       Moreover, by imposing an embargo against Japan on oil and other essential items, our government engaged in what has always been considered an act of war under international law. And the American government seized and confiscated Japanese assets located in the United States, even though a state of war did not exist between our nations.
       Why did President Roosevelt engage in this course of action? Prior to Pearl Harbor, the American people strongly opposed entry into the European war. And although President Roosevelt himself stated that he stood with the American people on this issue, there is now no doubt that Roosevelt was not telling the truth—that, in fact, he wanted desperately to involve the U.S. in the conflict. But due to the American people’s strong opposition to entering the European conflict, Roosevelt knew that he could never achieve this end unless the Germans attacked the U.S. first. Yet, despite repeated provocations by the United States, the Germans refused to take Roosevelt’s bait.
       The shameful truth about Roosevelt’s actions toward Japan in 1941 is one which our government has never before acknowledged, even though the circumstantial evidence leads irresistibly to but one conclusion: President Roosevelt sought a “back door” to the European war by doing everything he could to provoke your nation into attacking the United States first.
       We must ensure that this type of conduct never happens again. To entrust political leaders with powers to control trade and to confiscate assets during peacetime is much too dangerous. For unscrupulous political leaders are too often tempted to use and abuse such powers. It is a slippery slope to real war when one nation wages economic warfare against another. In the words of Frederic Bastiat, the l9th-century, free-trade leader in France, “When goods are not allowed to cross borders, soldiers will.”
       Therefore, upon my return to Washington, as president of the United States, I am proposing to the United States Congress an amendment to the U.S. Constitution that reads as follows: “Neither the Congress nor the states shall enact any laws respecting the regulation of commerce nor abridging the free exercise there of.”
       This amendment will result in the elimination of such political controls as licensing and permit laws, import and export restrictions, and all economic regulations. By separating the economy and the state, we will embark on the road to peace and prosperity.
       There are those who say, “The U.S. should not free the American people until the Japanese government frees the Japanese people. ” But this is false and fallacious. People have a right to be free, regardless of whether others are free or not. Moreover, even if your government prohibits some of you from buying wheat or any other product from American sellers, it would be irrational for our government to prohibit Americans from buying automobiles, steel, and other products from Japanese sellers.
       As I have indicated, the more trade, the better. We shall unilaterally drop all trade restrictions, not only because it is the way to economic prosperity, but, more important, because people should be free to do what they want with their own money. Perhaps you—the Japanese people—will be able to enlighten your public officials to do the same.

Part II

       At the end of World War II, the United States was the economic leader of the world. Since our geographic territory had not suffered the ravages of war, we led the world in the production of goods and services. A devastated Europe and Japan eagerly accepted American products, not so much because they wanted them but because they needed them. American businessmen believed that their success was predominantly due to their management practices, which they considered “unquestionably superior” to any other.
       Americans became complacent. As a result, they failed to listen to the words of people like W. Edwards Deming and Joseph Juran.
       Most Americans have never heard of these two men. But the Japanese people have. They, along with such notable Japanese men as Genichi Taguchi and Kaoru Ishikawa, are considered by many to be the people primarily responsible for the Japanese revolution in quality that has taken place in the last thirty years. As you know, your emperor has honored Dr. Deming by awarding the Deming Prize to the company that each year demonstrates the highest standards of quality.
       Time prevents me from fully exploring Deming’s philosophy of management. But suffice it to say that, unlike other management advisers, Deming did not offer gimmicks or tricks to ensure high standards of quality. In his book, Out of the Crisis, Deming sets forth an entirely new and revolutionary approach to managements perspective that emphasized an understanding of statistical analysis, the concept of variation, the role of worker creativity and joy in work, the destructiveness of employee ratings, the misplaced reliance on mass inspection (by sorting good from bad) to ensure quality, and the importance of cooperation in the workplace.
       Unfortunately, Americans refused to listen to Deming. But when he came and lectured in Japan after the war on the invitation of General Douglas MacArthur, Japanese businessmen listened. Deming told them that if they adopted his methods rather than those which the world had been using since the Industrial Revolution, they would soon lead the world in the quality of manufactured goods.
       The result has been the Japanese revolution in quality in the manufacture and production of goods and services. Through Deming’s methods, the Japanese discovered that quality and high cost were not necessarily synonymous. In fact, they learned how to improve their operations so that improved quality and lower production costs were possible. At one point, the Japanese could produce, ship, and sell cars in America lower than American manufacturers could produce them. The quality was better and the price was less! Japanese products quickly gained market share. And it all began with two Americans in JapanóW. Edwards Deming and Joseph M. Juran!
       American businessmen first tried to explain away what happened in Japan with such comments as “Their culture is different.” But when Japanese companies successfully maintained the same high standards of quality and lower production costs in their American plants, that argument soon fell by the wayside.
       Then, American businessmen ran to our governmental officials exclaiming:
       “Please protect us from those horrible Japanese competitors who are making better products than we are. We don’t want to change our methods. We want to continue doing things the way we always have. We want Americans (and Japanese!) to be forced to buy our higher-cost goods. Please protect us from those big, bad bullies who are making such high-quality products and dumping them on our markets.”
       And our government responded by enacting protectionist barriers all around the United States. And every year, the barrier has been built higher and higher to ensure that American businesses can continue to sell their higher-cost and sometimes lower-quality goods to their fellow Americans.
       We were wrong to react in this way to the new world of quality that your nation began. As many of you know, Ford, General Motors, IBM, Xerox, Motorola, and hundreds of other firms are now studying and adopting the management principles set forth by Deming, Juran, Taguchi, and Ishikawa. We have a long way to go, but you have shown us the way to ever-improving standards of quality in the production of goods and services. For this, the American people owe Japan and these men a deep debt of gratitude.
       Thus, a key to the future success of American business lies not in prohibiting Americans from purchasing Japan’s high-quality goods and not in forcing Japanese to purchase America’s higher-cost goods. Instead, the future for American business lies in following the lead of Japan in the area of managing for quality.
       But it is necessary to go one major step further.
       As I indicated earlier, America’s welfare state and managed economy have failed miserably in improving the economic well-being of the American people. Unfortunately, many public officials are looking to quality-management principles as a last-gasp effort to save this failed way of life. They want to “reinvent government.” These governmental officials believe that a “more efficient” government is the answer to America’s woes. Bureaucrats in the IRS, Department of Defense, Navy, Air Force, and numerous other agencies are endeavoring to adopt Deming’s philosophy in order to streamline their operations. I confess that I, too, recognized the benefits of Deming’s philosophy and pushed for total quality management for government. But I am afraid that my hopes were misguided and misplaced. Let me explain.
       As the brilliant economist Ludwig von Mises pointed out, in an unhampered market economy, the consumer is king. By his buying and abstention from buying, he guides the businessmen’s decisions as to which goods and services to produce. If the businessman fails to provide a product which consumers desire, the consumers will go elsewhere. Thus, capital is constantly allocated and reallocated in the marketplace according to the demands and wishes of the consumers.
       Dr. Deming affirms the importance of the consumer in his philosophy of management. He says that management must reorient itself to focus constantly on each customer in the production process—not only the ultimate customer but “customers” within the firm, as well.
       Both Mises and Deming emphasize the major guiding principle of the unhampered market economy and the private firm: the element of voluntarism that characterizes the entire process. At no time can the producer force the consumer to purchase his goods or services. He must produce the quality of product that the consumer voluntarily wishes to purchase. Thus, the consumer remains the sovereign. If a firm continually fails to satisfy the consumer, it fails to make a profit and ultimately goes out of business.
       The state operates on entirely different principles. It relies not on voluntarism but on force. Behind every governmental rule, regulation, prohibition, and tax are the state’s constabularies, jails, and fines. What guides the state are not prices in the marketplace—and not profits resulting from consumer satisfaction—but rather strict obedience to the rules and regulations of the state. When dealing with the state, the “consumer” must either obey or be punished.
       Therefore, Deming’s principles of management cannot be used to save America’s welfare state and managed economy. For consumer sovereignty to prevail, the consumer must be free to say “no” without the threat of punishment.
       More fundamentally, the last thing that Americans need are well-oiled, finely tuned governmental bureaucracies more efficiently plundering their fortunes and interfering with their lives.
       There is another important point that needs to be made about America’s welfare state.
       The American people have lost faith and confidence in themselves. They are seared of competition not only from you—the Japanese people—but also from Mexicans, Canadians, Germans, and others from around the world. There is only one way to recapture the strong sense of self-confidence, self-reliance, and self-esteem that were once hallmarks of the American people: to end, not reform, America’s welfare-state way of life.
       The American people have become too dependent on the state for their well-being. And this has meant a tremendous increase in governmental power in the last fifty years. Ironically, however, a strong government has resulted in a weak people. It saddens Hillary and me when we hear my fellow Americans exclaim, “How would we survive without Social Security, welfare, subsidies, food stamps, and grants?” A once-proud people now cringe in fear at the thought of losing their dole.
       Some consider it cruel when the mother bird throws her young out of the nest, but it is not. It is a law of nature—the bird will fly and soar when it must.
       While many will consider this to be cruel, it is high time to throw the American people out of their welfare-state nest. It is time to end, not reform, America’s governmental dole. It is time for the American people to regain the sense of pride and self-confidence that characterized their ancestors.
       Therefore, upon my return to Washington, as president of the United States, I am proposing the following amendment to our Constitution: “Neither the Congress nor the states shall have the power to grant any subsidy, welfare, or other special privilege to anyone, regardless of race, class, creed, or economic status.” I want to throw the American people out of their governmental nest and see them soar as eagles!
       All of my life, I have believed in and supported the socialist notion of the welfare state and the managed economy. Thus, some of you are probably wondering how I have come to these dramatically different views about the role of the state in economic affairs. For this, I shall be eternally grateful to my beautiful wife, Hillary. Every night for the past several months, she has been making me read the works of Frederic Bastiat, Ludwig von Mises, Leonard Read, Friedrich Hayek, Henry Hazlitt, Milton Friedman, Ayn Rand, and many other free-market thinkers. Hillary has shown me the way—the way to freedom for the American people, the way to peace in the world, the way to prosperity and harmony for all.
       Prior to my election, I called for major change. Now it is time to enact it.
       Well, I suppose I have been rather long-winded tonight, which, as many of my political opponents in America will tell you, is nothing new for me. But I believed that my message of friendship and freedom was so important that you would forgive my lengthy address.
       The American people extend their arms in friendship. We have much to learn from you, and perhaps we can be of much assistance to you. Thank you for the courtesy and hospitality that you have shown to Hillary and me. Good night.

Chapter 8
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