Will Japan Inc. Protect Its Own?

I know it is currently fashionable to argue that the Japanese are finished in the global economy. They’ve been blown away by the much more dynamic Chinese economy.

Sorry. It hasn’t been true and it still isn’t true. The Japanese have dominant positions in many key technologies, such as the screens that go into Apple’s smart phones. And they are willing to go to great lengths to maintain those positions as a matter of national strategy, a concept that most American economists think is so very 19th century.

The latest evidence from today’s Wall Street Journal┬árevolves around the fate of Sharp Corp., a somewhat troubled electronics company but one with valuable technologies. Taiwan’s Foxconn has offered to buy it for more than $5 billion, but the Japanese government may be on the brink of closing ranks with other Japanese screen makers to keep Sharp from slipping out of Japanese control. It will be a fascinating case study of whether the Ministry of Economy, Trade and Industry (the old MITI) acting through an entity called the Innovation Network Corp. of Japan will intervene to keep Sharp from falling into the hands of Foxconn.

I’ll bet they do act to keep it under Japanese control because they think it is in their national interest to do so. I wish American policy-makers would come to similar conclusions about U.S. positions in such key industries as rare earths, solar power, semiconductors, nanotechnology and the like. These are not purely business issues, or market issues. They relate to a nation’s economic well-being and security.

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