Seattle Times Sunday, August 19, 1990 –
At Loggerheads — The `Marriage’ Of Japan And The Northwest Pits Environmental Issues Against Tough Economics
By Terry McDermott
HATSUKAI-CHI, Hiroshima Prefecture, Japan – There are here, on and off the brackish water of Hatsukai-chi harbor on the Inland Sea, logs.
There are Douglas fir from the state forests of Washington. There are Sitka spruce from the Alaska Panhandle, western hemlock from the Olympic Peninsula, Port Orford cedar from Oregon, kapok from Papua New Guinea, plantation pine from Chile and New Zealand, Siberian larch and Malaysian lauan.
There are on the dock Burmese mahogany logs so dense they would sink if stored on water, logs that must be given periodic cold baths to prevent mold.
There are logs plucked from forests by helicopter, others hauled by elephant.
There are logs here nearly as far as the eye can see.
Summoning an image to convey the immensity of this mess of wood, Port Director Shiro Watanabe says, “Just like a traffic jam in Tokyo, yes?”
Watanabe is right. The ranks of logs here seem endless. They look as though you could hop atop the first timber, start skipping and not stop until you reached Port Angeles. This log harbor is a bridge, binding Japan to the world’s forests in a relentless commerce whose cargo includes controversy as well as timber.
The debate over the life and future of Pacific Northwest forests is wide-ranging and unresolved. Questions about the amount and type of trees still standing – in economic terms, the supply – can provoke a wide range of answers.
What remains largely uncontested and little examined is the force that drives the debate: the world’s demand for wood.
Nowhere is that demand more apparent or central to the Northwest timber economy than here, 6,000 miles away. Japan has built enormous surpluses – and enmity – with many of its trading partners, particularly the United States. But in wood products, its trade deficit is as lopsided as are its surpluses in, to pick the best-known example, consumer electronics.
Japan imports lumber, veneer and especially whole logs from around the world. Hatsukai-chi harbor is but one of half a dozen such log ports on southern Honshu Island. Last year, Japan imported 6.7 billion board feet of logs. (A board foot is one foot wide by one foot long and one inch thick; an average American house uses about 10,000 board feet.) A fully loaded log ship – each of which carries enough wood to build 400 houses – docked about every five hours. In addition, 1.7 billion board feet of sawed lumber was imported.
Given the criticism that accompanies Japan’s growing surpluses, this barrage of incoming logs could be viewed as a welcome achievement. Yet when Toshizo Kobayashi of the Nichimen Corp., a trading company based in Tokyo, is asked if his company is indeed the nation’s biggest importer of logs, he replies with trepidation.
“Unfortunately, yes,” he says, having lately become aware that in addition to logs there are in the wood trade points of view so different they seem not to belong in the same argument.
Some environmentalists say this is where old forests from around the planet come to die. Here, they say, where 17th century Neo-Confucianists were among the earliest advocates of forest preservation, lies the product of an apparent mad rush to raze any tree that can be reached.
Trade advocates, on the other hand, say the trees are brought here to be reborn, to be resurrected as economic utensils. They say the American logs in the harbor here are a bright spot in an otherwise dismal U.S. trade picture. Some American mill owners and politicians say the sale of raw logs abroad casts a pall across the Northwest economy. They say exporting logs here to build Japanese houses is the same as exporting jobs from the fading mill towns of the Northwest.
The last thing many Japanese business people expected was to be criticized for importing too much. The irony, an unpleasant one so far as Japanese are concerned, is that their now-controversial demand for logs has for decades been whetted by their American suppliers.
While environmentalists have been trying to staunch the flow of timber from the forests, official policy under the past six U.S. presidents has been to encourage wood use wherever they find it and to begin it where they don’t.
Many areas have wood of their own and don’t need anyone else’s. Other areas have exhausted their own supplies but have no money to buy more. And many areas that have never had wood have not developed uses for it.
The wood exporter must find areas that have developed a habit of wood use but no longer have enough wood to satisfy it.
Since the turn of the century, Northwest timber owners have been looking abroad for customers as a hedge against a domestic demand that fluctuated with the whims of federal fiscal policy.
To a substantial degree, the hedge has become the market. One-fourth of the logs shipped to Japan come from Washington state, and more than one-third of the state’s timber harvest was shipped overseas uncut last year. Further, the price of logs that do not actually come to Japan is determined by demand in the export market.
The world’s largest exporter of logs has been married to its largest importer, a match made in heaven, if the definition of heavenly relationships could be stretched to include a couple who communicate mainly through accusations of faithlessness.
The money machine
In this multicultural world there is at least one universal constant: Social scientists speak gobbledygook.
To wit, a recent analysis of the startling increase in real-estate prices in Japan concluded: “If Japan is to achieve true social and economic vitality in the 21st century, it will need to promote more evenly distributed, multipolar national development by halting the unipolar concentration of activity in Tokyo and revitalizing regional economies while at the same time providing Tokyo with an environment befitting its role as an international city.”
The problem, as the authors might have said, is that Koji Hara builds discos. Hara is head of new-product development for A-project Inc., a Japanese entertainment company.
Hara’s job is to measure the public pulse and conceive new nightclubs to match it. In a place where dance halls are inspired by everything from cowboys and Indians to Rastafarians, the range of possibilities is broad. The company already has two dozen discos – most of them in a single 20-block Tokyo district, Roppongi – and Hara is suffering a kind of writer’s block over what theme the next one might take.
Hara has no such difficulty wondering where to put his next club. If you’re a disco-builder, there’s only one place to be: in the “unipolar concentration of activity” that is Tokyo. It’s no different with bankers, bureaucrats or virtually any of the other creators of contemporary Japan:Tokyo is the place to be.
Despite efforts by the government to discourage it, the city and its suburbs have grown astonishingly since World War II. Tokyo itself has a population of 12 million. About 30 million people – one in every four Japanese – live in the metropolitan area. This produces effects far beyond simple overcrowding.
Such symbols of Japan as small cars and portable stereos are obvious products of a compacted society. This is a culture where miniaturization is not just a technological prerogative, but an environmental imperative. In a round-about fashion, Tokyo’s primacy also has played a fundamental role in the creation of corporate Japan’s financial power.
Contrary to the recent impression of a Japanese economic empire awash in an apparently infinite ocean of money, Japan historically has been short of cash.
“Look at the balance sheets of almost any Japanese company,” says an executive with one of Japan’s largest corporations. “Most Japanese companies are heavily indebted. The Japanese economy is still shallow. There is very small equity in most companies.”
The lack of money historically has severely restricted the ability of companies to grow. By concentrating so many people in such a small place, Tokyo’s allure has helped remedy this.
The demand of 30 million people for places to live and work has driven real-estate values to incredible levels.
The comparisons by now have a sort of “Believe It or Not” character to them: The 28 acres of the Imperial Palace in central Tokyo are said to be worth as much as the entire state of Florida, the city of Tokyo as much as the entire United States, Honshu – the main Japanese island – as much as North and South America.
Karel van Wolferen, a Dutch writer, says that in Tokyo “land has taken on a function comparable to that of gold,” except that land is less susceptible to forces beyond Japanese control – that is, the rest of the world. It is, van Wolferen says, a speculative bubble that resists bursting.
In recent years, van Wolferen points out, the increases in the value of land and the other great speculative venue – the stock exchange – have been greater than the entire gross national product of Japan.
“Borrowing against that paper wealth creates a supply of near costless capital,” he says.
This ability to borrow huge amounts at Japan’s historically low interest rates has, at some levels, reversed what had been the chronic scarcity of cash in the Japanese economy. It has created a money machine.
“Now that,” Ed Sullivan says, “that’s a low-grade domestic log, and that’s all it will ever be.”
Sullivan is not trying to demean the tree in question – a perfectly respectable second-growth Douglas fir in the Capital Forest south of Olympia – but simply to define its commercial value.
Sullivan has spent much of the latter half of his 53 years tramping around the state forests of Washington looking at trees. His job isknown by the deceptive title of “timber cruiser.” The title suggests a relaxing Sunday afternoon drive through the park. The actual job is more of a forced march through uncomfortable terrain, as the occasional breaking of bones and the occasional dodging of black bears testifies.
Sullivan’s job is to estimate how much money the state Department of Natural Resources (DNR) might be able to get at auction for any given stand of trees. The DNR manages 2.1 million acres of state timberland, selling the right to cut it in lots of a few dozen to a few hundred acres. Auctions are held monthly at DNR regional offices around the state, and anybody who is able to post a bond is welcome to bid.
Sullivan’s research is used to prepare a prospectus for those timber stands chosen for sale. The prospectus is circulated among potential buyers, who then decide if they are interested. If so, they send their own cruisers out to re-evaluate Sullivan’s work and prepare their bids.
Cruisers look for both quantity and quality of timber. Both vary enormously. Timber is not a fungible commodity, as an ordinary agricultural crop is. That is, any one bushel of wheat out of a particular field is apt to be like any other. Wheat is wheat.
A tree, however, is not a tree. A tree sits too long in the field and is exposed to too many variables of weather, disaster and disease. A lot can happen to a tree in 70 years, most of it bad.
“There must be at least 50 different defects a log can have,” says Donald Flora, a research economist with the U.S. Forest Service.
At the turn of the century, supplies of timber were so enormous that Frederick Weyerhaeuser, a founder of the huge wood-products company that carries his name, was accused of defrauding stockholders by claiming his timber holdings had any financial value whatsoever. Now, each tree is scrutinized to see what it’s worth.
“You can’t see inside the log, but you have to know what’s in there,” says the DNR’s Sullivan. “That’s the game of cruising.”
He inspects about one-fifth of the trees in a stand. Using devices ranging from a tape measure to hand-held radar, he measures the height, diameter and taper of each tree in the sample.
Because ring count is a key price variable, he tries to determine the approximate age of each tree. (A conifer’s age can be estimated by counting its lateral branches. Most conifers branch once a year.)
Sullivan prides himself on his ability to estimate the volume of logs in a sale to within 10 percent of the actual harvest, but no potential buyer will bid without further cruising before the sale.
Even if they agree on the volume of wood that will come out of a sale, each buyer might have a different estimate of its worth, depending on how much it will cost to harvest and how much the harvested logs will bring on the open market.
Buying timber in the current market is no different from buying frozen pork bellies on the Chicago Board of Trade. It’s a gamble.
“You cruise, count it, analyze it, walk it, then pull a bid out of your ass,” said one mill owner at a recent sale. “It depends on the amount of risk you’re willing to take.”
When you buy timber, you’re buying a stand of trees of uncertain content and quality, likely as not in an inaccessible, sometimes inhospitable, place. It might take a year to build the roads needed to get it out. In that time, the market to resell it might collapse. Or it might, as it has in the past two years, soar.
The buyer doesn’t know what he is buying, what he will have to pay for it or what it is worth.
All state auctions once were conducted by oral bids, with the most competitive among them taking more than an hour. Oral bidding is now being phased out in favor of sealed bidding, which state officials think will produce higher revenues.
It’s hard to imagine any change in bidding procedure that would produce the increases the market has delivered to the state trust funds in recent years. The average price of auctioned timber has quadrupled in the past four years, and the cause of the increase is no secret: a free-falling U.S. dollar.
In 1985, when the Reagan administration became concerned over a huge, growing U.S. merchandise trade deficit with Japan, the dollar was worth about 260 yen. U.S. officials, led by Treasury Secretary James Baker, decided the main cause of the deficit was this yen-dollar relationship. The dollar was vastly overvalued, they said, and through a concerted effort with the governments of Japan and Western Europe, they began to drive it down by selling dollars and buying yen on international exchanges.
The argument was simple. If each dollar were worth fewer yen, Japanese products would become more expensive and American consumers would buy fewer of them; conversely, U.S. products would be less expensive and Japanese consumers would buy more of them.
They succeeded beyond their hopes in driving the dollar down. In two years, it lost half of its value, plummeting to 120 yen. But the steep decline had little effect on overall trade between the two countries. Many Japanese producers chose not to pass along their exchange losses to American consumers, and many Japanese consumers decided not to buy U.S. goods regardless of the price.
One thing the cheaper dollar did was cut the cost of American timber in half for Japanese buyers. Those buyers, fueled by the money machine back home, suddenly had more yen, and each yen was worth twice as much as it had been. It was like playing with Monopoly money. Over a period of two years the net effect was to double the price of timber.
The Japanese did not end up being buyers of Northwest timber accidentally. Although forests are disappearing rapidly in many places, much of the world is still covered with trees. For example, the Soviet Union, just across the Sea of Japan, has nearly a third of the world supply of softwood and for decades the Soviets have been desperate for foreign exchange.
But the Japanese were shopping for a specific product. The Northwest is where they found it.
Almost all the Northwest timber exported to Japan is used in construction. This means it must be strong. The Japanese also prefer wood that closely resembles their native woods. This means light-colored, tight-grained woods as free as possible from defects.
Thus the Japanese prefer hemlock, which is nearly white, and Douglas fir, which is not quite the right color – it’s too yellow – but makes some of the best and strongest structural lumber in the world.
In addition, the older the timber, the less likely it is to have faults. As it happens, most of the Northwest’s old-growth timber is owned by either state or federal governments. Most privately owned old growth has already been cut. This combination of circumstances leads Japanese buyers to the state timber lands of Washington, where the world’s largest available supply of old-growth fir and hemlock goes on sale once a month.
There were no Japanese bidders in the auction room at a recent sale in the DNR office at Forks on the Olympic Peninsula. There never are. But, judging from the results of DNR sales over the past 10 years, there were visions of yen dancing in bidders’ heads. Last year, nearly 70 percent of the timber harvested from state lands was exported. That is about twice the portion of exports from privately owned timber, although the total volume is less.
Dick Ford, a bidder for Indian Head Timber, estimated 80 percent of the sale he was interested in would be exported. He had spent the previous three days cruising the sale, a mixture of high-quality fir and hemlock southeast of Port Angeles.
Two minutes after sitting down, he was ready to go home. The first sealed bid was nearly double his, topping his estimate of the sale’s value by more than $300,000. Ford had just wasted a week. He shook his head, absorbing his latest, by now repetitive lesson in international economics.
As the bidding progressed on a total of eight sale parcels, most became contests between timber giant ITT Rayonier and TAT U.S.A., a relatively anonymous Everett company that opened its doors 10 years ago and last year did $140 million in business.
Those left out of the bidding quickly developed into a cheering section, or rather a hissing section, rooting against ITT, which has engendered a sort of company-town antipathy on the Olympic Peninsula.
“As you can tell,” Ford said, “everybody loves ITT.”
When TAT outbid ITT for the next sale, the backbenchers cheered. “Sucked their doors right off,” one said.
TAT and ITT together bought five of the eight parcels at the Forks auction. And ITT was second on two of the remaining three.
Both are big exporters. ITT sells timber, lumber and pulp in almost every market in the world, both domestic and foreign. TAT sells abroad almost everything it buys.
TAT was also active at a DNR sale in Chehalis a day earlier. Gary Taylor, the TAT buyer there, said the company had become more aggressive recently because of confusion about what sort of supplies will be available in the future.
In fact, prices have stayed high over the past year even as demand as flattened. At a time when U.S. mills have complained about diminishing supplies of timber, the supply of logs in Japan is at an all-time high. Buyers there have built stockpiles in anticipation of environmental and export restrictions.
Taylor bought one sale “above market,” he said, simply because TAT is an export company. “We’re in the shipping business,” he said. “If we don’t ship, we don’t make money.”
Toshiro Mitsuyoshi picked a pair of chopsticks from a container in the middle of the table, eyeballed them, held them to his nose and sniffed. “Old-growth spruce,” he said. “Probably from Anacortes.”
If Mitsuyoshi had any qualms about using part of a 200-year-old tree as a disposable eating utensil, they disappeared quickly as he bent to the more immediate issue at hand – a bowl of swiftly cooling noodles, which proved no match for the old spruce. This might be an environmentalist’s worst nightmare come true: a tree centuries in the making meeting its fate over the course of a 30-minute lunch.
But the spruce and Mitsuyoshi, a buyer for Sumitomo Forestry, are an odd coupling. First, Sumitomo, among other things a home-building company, is more likely to send Mitsuyoshi in search of Douglas fir or western hemlock than spruce. Second, no one, not even the Japanese, can afford to pay old-growth prices for throw-away chopsticks. Most Japanese chopsticks are made of much cheaper wood, very little of it American in origin.
That this bit of spruce ended up on a lunch tray in a Tokyo restaurant is an oddity, but it illustrates the breadth of the market for wood in Japan. Many Japanese are fond of saying that theirs can be described as a culture of wood. From toothpicks to the tallest timbers, if a wooden product exists there is a market for it in Japan.
In a country almost completely devoid of minerals, wood was – and is – by far the most abundant natural resource. Japan is one of the most heavily forested countries on earth. More than two-thirds of its area is forested.
Many forests were depleted in World War II, burned – as most of the wood consumed in the world still is – for fuel. After the war, much of the readily accessible wood that remained was cut to replace the 4 million homes destroyed by bombing in the war.
Those forests have been replanted and will mature in the next two decades. There is also an equivalent area of what we would call old-growth forest. In all, domestic timber harvests meet about a third of Japan’s demand.
Logging of any sort is prohibited in many areas, and clear-cut logging on the scale it is practiced in the Northwest is forbidden throughout Japan.
“The forest is the only natural resource Japan has. That’s why we are very protective of it and very fussy,” said Hirokazu Nakajima, manager of North American lumber for C. Itoh, a trading company.
The fussiness is largely economic. Much of the mature Japanese supply is in difficult terrain. Logging it would be expensive in the best of conditions, which these are not.
Japan has a severe labor shortage, especially skilled physical labor. The same impulses that drive one-fourth of the population to live in Tokyo keep young men out of the woods.
Takeshi Fujiwara of the Forestry Agency, the Japanese equivalent of the U.S. Forest Service, said Japan could probably meet most of its own lumber needs if it were forced to do so, but for the time being it is cheaper to import wood than cut it.
“The supply depends on the situation. The trees are in the forest, but if you do not cut them they’re not available,” Fujiwara said. “It depends on the market. If the United States provides cheap logs or lumber, we won’t cut.”
The plot to burn Tokyo
Cheapness is relative.
Northwest timber now sells for triple its price five years ago, but prices for some Japanese timber are three times greater still. Many Americans in the timber industry resent this, and in discussions of it they often move beyond commercial debate onto the treacherous grounds of nationalism. To hear some tell it, this is a renewed onset of the Yellow Peril.
“The Japanese are doing the same thing to this country we did in Vietnam,” says Chuck Manke, an owner of Manke Brothers Lumber in Tacoma. “We did it with napalm. They’re doing it with dollar bills. They’ve taken over. Politics and money or at gunpoint, it doesn’t make any difference. It’s still theirs.”
Manke saws wood for a living. He and his brother, Jim, own two mills, in Tacoma and in Sumner. The Sumner mill was built, with a bit too much foresight, expressly to mill lumber for the Japanese market. The mill opened, or rather, was completed, in 1979, just in time for a worldwide recession that saw interest rates climb to unheard-of levels. Industries that rely on borrowed money to prosper, such as home-building, were crippled.
“If you wanted to pick the worst time in the century, you couldn’t have done better,” Manke says. “The prime went to 21.5. People just quit using lumber.”
The Mankes muddled through the recession, when nobody wanted wood, into the late 1980s, when apparently everybody did.
The Mankes, however, do not own timberlands. In order to saw timber, they first have to buy it, and the price increases of the past five years staggered them again.
They do not bid for state timber. They say they can’t afford it.
“DNR has been a 100 percent tree farm for Japan,” Chuck Manke says. “They own the country. We’re second-class citizens. If there are any crumbs they don’t want, then we get them.”
alent of the U.S. Forest Service, said Japan could probably meet most of its own lumber needs if it were forced to do so, but for the time being it is cheaper to import wood than cut it.
“The supply depends on the situation. The trees are in the forest, but if you do not cut them they’re not available,” Fujiwara said. “It depends on the market. If the United States provides cheap logs or lumber, we won’t cut.”
With some bitterness, he blames the Japanese for this state of affairs. In particular, Manke shares a complaint with, among others, the U.S. Department of Commerce, that the Japanese practice international trade unfairly, promoting exports without end – while selectively restricting imports.
Logs are fine; lumber is not. The Mankes’ Japanese mill, a $10 million investment, lay idle for six years after it was built. Even when the recession ended and the Japanese home-building industry recovered, the Mankes could not break into the market.
“You have to jump through a lot more hoops. You don’t sell them anything. If they want to buy, they buy. If they don’t, you’re a bad salesman. For years they said we wouldn’t cut to their specs. It took us years to disprove that,” Manke said.
American millers such as the Mankes presume that Japanese government policy has been directed at preserving the more than 17,000 mills in Japan. By comparison, the United States, which annually produces five times as much lumber as Japan, has 6,000 mills.
As is obvious from the numbers, many Japanese lumber mills are small family operations. For years, the argument was offered that American mills, which concentrate on production, were unable to produce the quality lumber demanded by Japanese builders. And, in fact, many potential lumber exporters didn’t seem to know what they were doing.
For example, they would ship and expect to be paid for 16-foot lengths of lumber, a size that is never used in Japan. Japanese builders would have to throw away a quarter of the board, a cost few were willing to incur, especially when they could order custom-cut lumber from domestic mills.
These domestic mills have a reputation that approaches myth. That may well deserve it, but in many ways the prototypal mom-and-pop Japanese mill is not in competition with U.S. mills.
According to figures compiled by the Forestry Agency, only small amounts of imported logs are cut by these tiny mills. The Japanese milling industry is essentially two-tiered. The small mills cut domestic logs, and a group of several hundred newer, larger, American-style mills cut American logs.
Still, protecting domestic mills would not be the only instance in which the Japanese government took extraordinary measures to protect a relative handful of jobs. Rice farmers are the best-known example. Importing rice is prohibited in Japan even though the country’s farmers are notoriously inefficient and consumers pay from five to eight times the world price.
The government says the protection is justified for national security purposes: Japan cannot become dependent on outside providers for its staple food. The fact that it is almost completely dependent on outside providers for numerous other vital goods, most notably oil, is ignored.
Arguing for the status quo has become something of a creative art.
In the decades-old rice debate, defenders of the import ban have argued that Japanese rice is unique, that importing rice will poison the population with foreign fertilizers, expose the country to food blackmail and ruin the water supply – by the rather circuitous route of taking land out of agriculture, which will encourage development, which will increase runoff.
Last year, the head of a large building company told an American market researcher he couldn’t buy 4-foot-wide plywood panels rather than the traditional 3-foot widths. “Four-foot widths are too big for Japanese carpenters to hold,” he said.
Lately, the U.S. government has been agitating to ease Japanese building-code restrictions on where and how wood can be used. One change would allow construction of three-story, single-family wooden homes. U.S. negotiators thought they had won this argument five years ago when, after Japanese negotiators agreed to a similar proposal, they declared victory and went home.
“If we won the last round, then why are we back?” asks Don Bonker, a former Washington state congressman active in trade issues. The answer is that while the Japanese did, in fact, agree to a change in the number of stories permitted, no agreement on overall height limits was negotiated. The result would have allowed three-story buildings so long as they were of two-story height.
When the call for three-story buildings was renewed last year, the head of a prominent Japanese architects’ association said this repeated insistence on big wooden buildings was simply a plot by Americans to weaken Japanese defenses against the possibility of future firebombings.
History provides a useful rationale for this argument. Tokyo was burned to the ground after the 1923 earthquake and again during World War II. Japanese building codes, written immediately after the war, reflect this.
“Codes are built by bureaucrats, and our bureaucrats are stronger than your bureaucrats,” says Yugi Noga, a Tokyo architect. “But they would not have the codes if there was no reason for them. . . . Wood burns. Bureaucrats agree: Let’s make a code that restricts wood.
“Your concept of fire-preventive structure is quite different than ours. We’re afraid of fire from the outside. You’re afraid of fire from the inside. We stuccoed the outside to contain fire, but we forgot that wood also rots. The result was worse decay than with bare wood.
“In the postwar era, we needed lots of housing in a short time. We used wet lumber to build it because we did not have time to wait for it to dry. When it did dry, it dried into crooked houses. Fire and deformity dictated the building codes, and the codes have been unchanged for 25 years now.”
In its resistance to change, Japan is not necessarily being willful. The country is like a family that is moving and can only take so many belongings with it. While packing, the family goes through an inventory of its past, rummaging in attics and basements to find what it wants to take. Every once in a while in its conduct with the rest of the world, some member of the Japanese family will pop out of the basement, saying, “Look what I’ve found. We can’t possibly leave without this.” But the movers insist there isn’t any more room in the truck.
If this happens often enough, and it seems to be happening daily in Japan-U.S. trade relations, both sides soon become angry.
“American government pushes `open door, open door.’ For lumber, we already have open door,” says Hajime Fukuda, president of the Tokyo Lumber Terminal.
Sitting where Fukuda sits, in a tiny office in the middle of the world’s largest lumber yard, this is an easy conclusion to reach. His office in an area of the Tokyo docks known as Shin-kiba (which means “new wood”) is surrounded at any one time by 100 million board feet of lumber, all imported.
The terminal’s 2,400-foot wharf can handle simultaneously three 30,000-ton ships.
Scattered through the terminal are products from Plum Creek, Weyerhaeuser, Pacific Lumber and Shipping, Canadian Pacific, Molalla, Mayr Brothers, Manke Brothers and more. Every significant lumber mill on the West Coast is represented.
Fukuda stops to look at a bundle of tongue-and-groove flooring from California.
“I have never seen this. Something new every day,” he says.
The pattern wood-product imports have followed is familiar to Japan-watchers. Unquestionably there were officially sanctioned restrictions on finished lumber imports and thus a preference for uncut logs. Additionally, many U.S. producers were befuddled by the Japanese market.
One long-standing American complaint has been with the Japanese distribution system, which, although it might have one or two extra steps in it, is no more complex that the American system.
Timber essentially follows this path: timber owner to trading company to ship to wholesaler to mill to perhaps one or two more wholesalers to retailer to builder.
Lumber follows this path: timber owner to mill to trading company to ship to wholesaler to one or two more wholesalers to retailer to builder.
What distinguishes the Japanese system from the American are Japan’s seemingly impenetrable bonds between suppliers and customers. Such strong connections are encouraged by numerous aspects of Japanese social organization, but the financial relationships between suppliers and customers make it almost impossible for outside suppliers to intervene.
Almost all business in Japan is done not with cash, as in the United States, but with promissory notes, which give buyers at least five and sometimes up to nine months to pay their suppliers.
The trading company accepts a promissory note from the first wholesaler or mill, and each person down the line accepts a note from the one above him.
The system grew because of the historic cash shortage, especially among small businesses. It stays in place because of the interdependence it breeds, the personal service it guarantees and because it provides security against risk.
No matter what some Americans might think, this system was not devised specifically to keep American products out of the Japanese marketplace – although if it happens to do that, some people here won’t complain too loudly so long as the system also gets products where they need to go.
Quite apart from frustrating Americans, matching wood products to their user is the main goal of the wood trade.
“As long as the distribution channel is generating value, it sticks,” says Bruce Lippke, director of the Center for International Trade in Forest Products at the University of Washington.
According to a variety of observers and participants, in and out of Japan, attempts by U.S. lumber producers to export to Japan amounted to this: Incompetent and often uncomprehending American producers tried to penetrate a hostile market, sometimes with completely new products for which there was no market. They frequently asked for help from their equally uncomprehending government experts.
“We keep insisting they build American-style houses. What are we going to do if they don’t? Shoot `em?” said one person familiar with American efforts. “Japan could drop every trade barrier known to man, and they wouldn’t buy one stick more.”
“American forestry is the original supply-side economics sector,” said Tom Waggenner, a University of Washington economist. “You grow it, harvest it, process it and end up with a pile of stuff sitting at the dock and wondering what to do with it. The industry grew up being locally driven. It had a growing market in the growing domestic economy.”
Many people contrast the U.S. effort with that of the Canadians, who have been more consistent and informed, partly out of necessity.
Leonard Guss, a timber-industry consultant, said Canadians, with a huge supply of wood and a much smaller domestic market, “live to export. For most U.S. companies, exports are a market of desperation. . . . We’ve developed a reputation as a poor, unreliable supplier. And continuity is more important in that market (Japan) than price.”
“The U.S. has difficulty understanding Japan,” said Akira Ishikawa, vice chairman of the Japanese subsidiary of Seaboard Lumber, a Canadian cooperative. “It’s like hail out of a blue sky. It doesn’t make sense to them.”
Another Canadian had a harsher description of the U.S. effort. “Most of these companies are five years away from even being able to read the newspaper,” said Blake Willson, assistant manager of the Tokyo office of the Council of Forest Industries, a British Columbia trade association.
About half of Canada’s wood exports to Japan are finished lumber, and much of the rest is semi-finished. U.S. lumber exports are overwhelmingly weighted toward uncut logs, not lumber.
One difference between Shin-kiba – the Tokyo sawn-lumber port – and the log port at Hatsukai-chi is the presence at Shin-kiba of large amounts of Canadian products. There are virtually no Canadian logs at Hatsukai-chi.
Parts of Shin-kiba look like a wholesale yard for MacMillan Bloedel, a big Canadian producer. The big red “M” that marks McMillan products is everywhere.
Not coincidentally, Canada severely restricts log exports. Why doesn’t the United States do the same?
“Because we’re stupid,” says Robert Poe, director of international trade for the state of Alaska, a major exporter of logs to Japan. Poe and other opponents of log exports see American mill jobs sailing away on every log ship that leaves.
Not everyone agrees.
“Ten years ago you would have said, `Yes, when you export logs, you export mills.’ Now it’s less clear,” says Flora, the Forest Service economist. The new mills capable of producing export-quality lumber “use 1.75 people per million board feet of lumber per year. Exporting uses five people.”
The United States prohibits log exports from federal timberlands and is about to halt exports from state-owned lands. No such restrictions apply to privately owned timber, and none appears likely anytime soon, given the economic stake private timber owners have in the export market.
Change, however, is occurring. The amount of finished lumber being sent to Japan from the Northwest is increasing each year.
The increases have been been nudged along by government-to-government negotiations and threats of U.S. trade sanctions, but the main impetus has been more fundamental and powerful than governments – money.
“All B.C., Washington and Oregon mills are pushing really hard to get to the end user,” Willson said. “And the end user is pushing really hard to get to know us. The large trading companies are moving quickly to try to secure their hold.”
The market for building products in Japan is becoming standardized, one more indication that the country is modernizing. This is not necessarily a welcome change, even for all those who will benefit most from it.
“When demand needs were more complicated, we could not import so much,” says Fukuda, the timber terminal manager. “Now with standardized products, more imports are possible.”
The Mankes, for example, have established a solid business in Japan. Like several other mills in Oregon and Washington that cut to Japanese specifications, they sell everything they cut. Their problem is finding enough timber to cut.
The fight for an export ban has created very odd bedfellows: small mill owners such as the Mankes, and environmentalists. They joined in a marriage of convenience, but hardly anyone expects the union to last the year.
Alan Strothers, an Oregon mill owner and lumber exporter, says that as soon as the log-export ban passed by Congress is signed by President Bush, a campaign to limit the export of any wood products will begin.
The ultimate goal of the environmentalists is preservation of the woods, not the jobs of those who want to cut them, he says.
The overall economic effect of the successive restrictions applied over the past two decades has been to constrict the supply.
“There’s no scarcity of wood at all. There’s a scarcity of license to cut it,” says the UW’s Lippke.
Scarcity has a straightforward effect. As supply compresses, demand lengthens. It’s as if half the ticket windows at a theater were suddenly closed. The number of people in line does not change, but each of the remaining lines has twice as many buyers. Those who want to get to the head of the line might offer to pay more for the tickets. Prices go up. This is good news for those who own timber land and bad news for those who don’t.
Those who don’t own land find themselves being squeezed between the financial power of the Japanese on one side and the political power of the environmental movement on the other.
Old King Concrete
In the culture of wood, concrete is fast becoming king.
Consider: Tadamasa Nishihara, an executive with Mitsui Home, says he, like other builders, is having a hard time finding carpenters. “No girl wants to marry a carpenter,” he says.
Consider again: Last year, 1.6 million homes were built in Japan. Fewer than half were made of wood. Nearly six times as many new homes were built as old ones sold. Why?
“Maybe because the old ones were built out of wood,” said Yasumi Ohgaki, deputy secretary general of the Real Estate Companies Association of Japan. One large builder estimated 80 percent of the 10,000 homes he built last year required that he tear down an old wooden one first.
Tokyo architect Yugi Noga is not quite certain when the culture of wood packed it in. Maybe 100 years ago. Maybe when he was away at college. Whenever it was, by the time Noga went looking for wood, it had disappeared. Or if he found some, there was always less there than met the eye. He took to thinking about it as a sort of representation of wood, a floating image. He called it painted wood.
“The wood that was used was so thin and flimsy. Veneers. I felt like a Japanese house was like a plastic bag with an aluminum top. There was very little wood in it.”
“We are proud of our post-and-beam tradition and our old five-story wooden structures,” Noga says. “Yet you go out into the countryside, and surrounded by forest there’s a school built of concrete. Concrete represents newness.”
Popular culture is powerful. For the same reason you might see Laotian kids who have never heard of Chuck Knox running through the back streets of Vientiane wearing Seattle Seahawks T-shirts, the housing preference of Japanese consumers might as easily be formed by watching “Dallas” re-runs as by any abiding love of exposed wood.
Because of this, discussions of contemporary Japanese housing styles tend to devolve into real-estate patter that quickly ceases to make sense.
For example, “mansions” are one-bedroom apartments, usually made of concrete.
For example, Toyota (yes, that Toyota) makes a house called the Elm. It has no elm in it. Neither are the Aspen, Oak or Cedar models made of aspen, oak or cedar. They’re all made of metal in a factory near Nagoya. The steel frames move down an assembly line like a car. Toyota wants to dominate the steel-house business.
For example, Sumitomo Forestry makes “traditional” Japanese-style homes that look as though they belong in a Redmond subdivision.
For example, Mitsui Home builds American-style homes that look exactly like Sumitomo’s Japanese-style homes.
All of this makes the heated debates about log and lumber exports and the search for premium old-growth timber seem as if everybody is talking about a different country.
In a way they are. While the Japanese and U.S. governments argue about whose wood should be used to build what style of houses, the fastest-growing segments of the housing market are pre-fabricated and manufactured housing.
And the one genuine crisis facing the housing industry in Japan is cost. Real-estate values have tripled since 1985, and the price of new housing is seven to 10 times the average worker’s annual wage. In the United States, the average new house costs about three times the average annual wage.
A 600-square-foot condominium in Tokyo now costs about $400,000.
As prices rise, people move farther and farther away from their work to find affordable housing. The average commute time in Tokyo is now 90 minutes each way. In one recent corporate survey of new employees, the average was two hours. And that is with one of the world’s best rail systems.
Given these facts, Japan could probably import wood from the moon and the cost would be inconsequential compared to the cost of real estate. The typical new Japanese wooden house has about 8,000 board feet of lumber. It is built with North American lumber in what is called traditional Japanese style, but that style might refer only to the building’s structure, not its appearance.
Jiro Futamura, a master carpenter, feels he is lucky if he can build in a new Japanese-style house one small thing that pleases him.
“I know it’s a losing battle, but that’s OK,” he says. “In order to survive, I have to compromise. If there’s one place in any house to make a compromise, to build what I want, then I do it. Even though it’s not visible, I want to do something for my own satisfaction.”
On Futamura’s latest project, he had a hard time finding even the one compromise. The house was a duplex in the exclusive Seijo neighborhood. A mother and father would live upstairs, their daughter and son-in-law down.
The daughter, Yuri Nanjo, had distinct ideas about what her new house would be like. It would, for one thing, have no traditional Japanese tatami rooms and would have no exposed wood.
“It’s very easy to live in such style,” Nanjo said. “In order to have purely Japanese-style takes too much work.”
“Many people prefer Western-style rooms. So we have to change with them,” Futamura said.
Futamura conspired with the mother for his one compromise – a single room upstairs with an exposed cedar ceiling.
“Exposed wood gives comfort,” Futamura says. Perhaps, but Nanjo’s nose wrinkles every time she walks in it. Much of the lumber in the house is American fir and hemlock, some of it milled in the United States, some milled in Japan. They are indistinguishable.
Not just any sawmill
On May 21, Weyerhaeuser, the tree-growing company, became for a moment a tree-buying company. It bought at auction that day, for $1.4 million, 85 acres of second-growth Douglas fir from the Washington Department of Natural Resources.
The state had estimated the value of the timber at $226 per 1,000 board feet. Weyerhaeuser’s man in Chehalis, where the auction was held, contracted to pay almost twice that amount, $421 per thousand, in outlasting four other bidders in a spirited auction.
It was the type of medium-grade timber Weyerhaeuser, in its role as a tree-selling company, has contracted to sell to Yasuyuki Horikawa, owner of a sawmill in Kure, Japan.
Horikawa’s mill, Chugoku Lumber Co., is not just any sawmill. It is, by a considerable margin, the largest mill in Japan. Horikawa cuts 180 million board feet of timber into Japanese-dimension lumber every year. He spends $10 million a month for logs, all of them Weyerhaeuser logs from Washington. Horikawa tries to move each log out of his place within 10 days after the boat dumps it into the harbor.
The mill has the familiar hydraulic symphony of any factory blended with the whine of 70 laser-guided saws. Like any sawmill, the line is a disassembly line, designed to take things apart. The product comes in as a massive log and grows smaller as it proceeds through the plant, guided by an IDEK FA-2 Jr., a programmable computer controller.
Logs in, lumber out. Most of the 700 sizes the mill cuts are beams of one sort or another. About 70 percent of each log ends up as lumber. Twenty percent is chipped and sold to a paper mill. The remaining 10 percent, including bark and sawdust, is pressed into charcoal briquettes. The only wood that escapes the mill without a price tag on it is the dust that falls into workers’ pants cuffs.
Chugoku lumber is sold everywhere throughout Japan, except for the northern island, Hokkaido. Horikawa has a motto: Mass production, mass sales; many products, quick delivery. Not catchy, but accurate and closer in spirit to Hoquiam than to Jiro Futamura’s saw shop in Seta-gayo.
Futamura is not a miller by trade, but a carpenter. But in special cases, with special wood, he buys logs whole and mills them himself. He has kept logs 20 years waiting for the right building to come along.
He also has a motto: To show the wood beautifully.
“Each wood has its own face,” he says. “I have to mind very much which part of which wood should be used and where.”
Futamura is the past. He still owns and occasionally uses hand tools, which are displayed in a case in his office. He says his ambition always was to be the carpenter for his district, tending to his neighbors’ needs.
Indeed, in a five-minute walk Futamura can show you a dozen buildings of his construction. Horikawa, who is about the same age as Futamura and, like him, followed his father into the business, is a more modern craftsman. On his wall is mounted a long chart like those found in many factories. These charts normally graph production. Horikawa’s depicts the yen-dollar exchange rate. Next to it is a photograph of George Weyerhaeuser.
Horikawa is a citizen of the world.
Neither Futamura, the craftsman, nor Horikawa, the producer, is typical of the current state of affairs. They are at the margins, indicators of where Japan has been and where it is going. As is often the case, the melding of a traditional culture and a new, mass culture yields incongruities.
In this case, the old and new are literally joined together. The old style, because the wood was exposed, preferred a certain sort of wood for its appearance. The new style, for no reason other than that it is new, prefers that the house be smooth, clean and modern.
The result? Most of that very expensive, defect-free, old-growth timber ends up being buried beneath drywall in Seta-gayo.
Beautiful drywall, too. Very modern.
US & Them
Baseball And The End Of Life As We Know It
Pacific Magazine Sunday, April 05, 1992
The summer after my younger daughter was born I spent Sunday afternoons at the ballpark. I sat in the left-field bleachers. My daughter, in a basket on the bench seat, slept beside me.
Phil Bradley, the Mariner left fielder, slept in front. Bradley stood, slumped up, if that’s possible, weight all on his left foot, gloved left hand on left hip, a stream of sunflower-seed shells spewing from his mouth to the torn, faded, plastic turf with which King County had defiled the baseball field, all in all a perfect picture of boredom and, had I realized it at the time, the decline of America.
Neither my daughter nor the ballplayer was unduly disturbed by the rare shout echoing through the great, empty space of the Kingdome. Some of the shouts were my own, mainly directed at Bradley, who was the Mariners’ best and simultaneously worst player.
Yer a bum, Bradley! I’d shout.
Sunflower seeds would fly.
Act like you care, I’d holler.
Last year, I sat in far better seats behind first base in beautiful downtown Hiroshima, where the homestanding Fighting Carp were already in trouble in the bottom of the first. The visiting Yomiuri Giants had runners at the corners with one out and the cleanup hitter coming to the plate. The crowd, which had barely had time to slurp a bowl of noodles, was being rallied by a rough-hewn, already drunken cheerleader who made it his personal mission to convince me that America had no monopoly on idiocy, when up to the plate slouched – Could it be? Could it not be? Who else ever walked with such studied disdain for his surroundings? – my ol’ buddy Bradley.
In Hiroshima? Could I travel 8,000 miles and still be faced with the spectacle of Phil Bradley slouching around a baseball field? What was my least favorite ballplayer, possibly of all time, doing here? What, for that matter, was I doing here?
At home in Seattle, the Mariners had awakened from their lifelong lethargy and, led by the wondrous deeds of young Ken Griffey Jr., in whom the baseball gods bubbled, were challenging for the league lead. I was in Japan listening to Japanese tell me they were fed up listening to Americans tell them how to behave. Complaining about American complaints had become so common – and this was months before President Bush vomited on the prime minister – a word, kenbei, meaning contempt for America, had been coined to describe it.
Bradley was not helping the American side of the argument any. He looked to be his same surly self. In the way these things have gone, I’m sure the Japanese thought him lazy.
He is not. He just acts that way. He is instead a bright, stubborn, fiercely independent man who resents authority and shows it in his every molecular twitch. He is, in other words, much like me and many other Americans. This is perhaps why I dislike him.
I want my illusions preserved, my diamond unblemished, my baseball perfect. I resent its imitations of life.
Bradley, you’re still a bum! I hollered.
Dick Williams wants you! I shouted, knowing the enmity between Bradley and this past, autocratic Mariner manager. My voice, flat, rude and foreign, cut through the Japanese night.
Bradley, at the plate, shuddered reflexively and spit seeds.
I interviewed an eminent economist the other day, and he wanted to know: “Is this going to be a serious article or just a Sunday entertainment?”
Well, it’s about baseball, so I guess it must be pretty serious, but we could lighten it up a little. Here’s Fritz Hollings for the entertainment.
Hollings, a U.S. senator from South Carolina who is generally regarded as a serious politician, toured a ball-bearing factory last month and afterward told the workers: “You should draw a mushroom cloud and put underneath it, `Made in America by lazy and illiterate Americans and tested in Japan.’ ”
Hollings said he intended the remark as a joke. Pretty funny, huh?
Bradley took a strike. Bradley always took a strike.
“C’mon, swing the bat,” I yelled.
Bradley spit seeds and took another strike. The Carps’ drunken cheerleader blew a whistle in my ear and boozy breath in my face. He shouted something incomprehensible and motioned at Bradley.
Bradley’s a bum, I said.
Bum? he asked.
Lazy, illiterate, lacks a work ethic, I said. No, I didn’t really say that. Yoshio Sakurauchi, the speaker of the lower house of the Japanese parliament, said it recently, and he was talking about American workers, not baseball players.
“Every so often a Japanese politician says something like this,” said James Nunn, director of Washington state’s office in Tokyo. “Up until now those things were said and not reported. It wouldn’t go outside the room, much less outside the country.”
Now these remarks are not only reported, but people take them seriously. They are amplified, sometimes beyond recognition. It was to this insult that Hollings was retaliating with his atomic-bomb joke.
The relationship between the U.S. and Japan is arguably the most important on the globe. Each is the other’s largest overseas trading partner. Together, the two countries account for a third of the world’s economic activity. Nominally, we’re allies.
So why would a Japanese politician say Americans are lazy? Why would an American politician joke about dropping atomic bombs? Why does Lee Iacocca complain about “the insidious Japanese economic and political power in the United States?” Why do Japanese farmers say U.S. efforts to export rice to Japan are a plot to poison the populace?
Why do we keep saying these things about each other? What’s going on here? What is it with us and them?
When Nintendo responded favorably to a request from local politicians to help buy the Seattle Mariners, why did Major League Baseball’s august leaders act as if they’d been sucker-punched with a 38-ounce Louisville Slugger?
Once upon a time, we Americans had the world to ourselves, or at least the top of it. Indolence, events, accident and the sheer anarchy of the American system, which economists insist on calling market discipline, conspired to bring us back down into the world.
“There’s an underlying attitude that the United States has a special role to play in the world,” says Richard Kirkendall, a professor of American history at the University of Washington. “The United States is a nation that is a city on the hill. It should be an example to the rest of the world.
“There has been the persistent notion that the experiment is being threatened – by the Irish immigrants in the 1850s, the southern Europeans in the 1890s, the communists after World War I, even by the Masons. That element of fear appears over and over again. Here the special situation is that we feel in some ways we are slipping in the world. Some intellectuals think we’re experiencing major decline. The decline is mainly economic, and it is mainly expressed in our relationship with Japan.”
The baseball owners who questioned the Mariner sale to Nintendo, in this interpretation, fall in a long tradition going back to the nativist Know-Nothings of the mid-19th century. There’s a widespread fear now that the United States is descending in the world. The baseball owners are simply trying to save us from falling further.
“I think it is deeper than the recession,” Kirkendall says. “The recession is a motivating force and important one, but I think for some time there’s been a sense that things aren’t right.”
One of the top exports of Denmark is Lego blocks. Danes are good at Legos so you don’t have to make your own and are probably damned glad of it.
There aren’t a lot of trade wars over Legos. There might be over other things.
Think of nations as individuals. How much more productive can a person be because she is able to learn a particular skill, say, welding? What if the welder also had to be a plumber and a carpenter and a farmer?
“We trade because there are huge advantages to specialization,” says Phil Brock, a UW economist. “Nobody doubts that specialization should occur. The debates are over who should make what.”
In classical economic theory, nations specialize in that which they are good at, and they are good at things at which they have some natural advantage. Economists call this a country’s comparative advantage. Aluminum, for example, is made in the Pacific Northwest because electric power – provided by Columbia River dams – is cheap and plentiful. That power is the region’s chief comparative advantage.
Kozo Yamamura, chairman of the Japan studies program at the Henry M. Jackson School of International Studies at the UW, says comparative advantage traditionally has been thought of as the result of some physical endowment. A nation was good at making something because it possessed particular skills or resources.
This might have been true in the era of smokestack industries, but in the modern high-technology era, comparative advantage can be created, Yamamura says. Most countries try to do this to some degree.
Japan, notably, created advantages for itself by protecting fledgling industries from outside competition until they were able to compete. Having built those industries and succeeded as an export economy, Japan has now dismantled many of the barriers that protected them while they grew, and now can claim with some legitimacy to promote free trade.
No one is a stronger believer in free markets than those who dominate them. It was no accident that free-trade theory evolved in Great Britain in the 18th century, when Britain was strong, and no accident that it has been promoted most fervently by the United States after World War II, and no accident still that the Japanese now complain about growing protectionist sentiment.
Absolute free trade exists only as an increasingly vulnerable theoretical model, Yamamura says, but there are degrees of managed trade. As Japan manages less, pressure builds in the United States to manage more. Conflict results, and it centers on the U.S. trade deficit with Japan. The U.S. blames it on Japan. Japan blames it on the U.S.
How serious is that deficit? If the United States did not forbid by law the export of Alaskan oil, the logical market for it would be Japan. Sale of that oil to Japan would all by itself cut the deficit by more than a third. By doing nothing more than changing a single law to reflect market reality, we could eliminate a substantial portion of the deficit.
Would America’s economic standing in the world be any different? No. We would have to import from somewhere else the oil we would then be selling to Japan. Some West Coast refining jobs would move East, but the country’s economic strength or lack thereof would not be affected. For this reason, among others, most economists think the idea of fixating on trade balances between any two countries is distracting at best, intellectually debilitating at worst.
What does matter to many economists, politicians and others is the composition of trade and a country’s total balance of trade with all countries.The total balance of trade matters over time because it measures the difference between how much we spend and how much we produce. If we buy more than we produce, as the United States has done for more than a decade, then we must borrow money to pay for it, which we have done in prodigious amounts.
Looked at this way, the trade deficit is more of a result than a cause, says Brock, the UW economist. Much of our borrowed money has come from Japan, which throughout the 1980s invested huge sums in the United States.
So what, some economists say. They love to save. We love to spend. It’s a match made in heaven. Or, at worst, purgatory.
The composition – what goods and services we buy and sell – matters because it is a reflection of what work we do, of what we are paid for that work, in sum, of how we live. It is the composition of trade people are bothered by when they complain “we don’t make anything anymore.”
U.S. manufacturing jobs have been declining almost since World War II. In 1950, 34 percent of the work force was in manufacturing. In 1990, 17 percent of the work force was in manufacturing. The job losses were caused in part by cheaper labor costs overseas, but also by increasing productivity here at home. While manufacturing jobs declined, manufacturing output increased.
Contrary to what is normally imagined, manufacturing occupies a slightly greater portion of the national economy now than it did 30 years ago. Whatever the statistics, the decline in the actual number of “real jobs” coincided with the relative decline of the U.S. in the world economy.
The Mariner ownership tangle marched headfirst into this mess. Bashing Japan is almost a free shot for politicians; could we really have expected the bunch of car dealers, beer salesmen and real-estate hucksters who own baseball teams to act any better? There is a peculiarity that many people acquire along with great wealth: the notion that since the business of America is business, by excelling at business they’ve excelled at being Americans. And as great Americans, they bear a sort of modern variety of the White Man’s Burden. They must preserve and protect the country.
The common reaction here in the Northwest to the desire of Major League Baseball to protect us from the Japanese was outrage. They just don’t get it, we said. Out here, we have a special relationship with Japan. Are we more enlightened? I doubt it. More desperate? Certainly, but also more accustomed to importing and exporting all kinds of things, including ideas and money. We have made a civic virtue out of our financial necessity. We’ve always been able spenders of other people’s money. The Northwest has been a net importer of capital since European settlement. The money used to come from back East. Now it comes from the Far East. Like everything else in the Northwest, once it gets here it’s green and it spends just fine.
So what’s the problem?
“Foreign investments, wherever they’re from, are usually received well locally,” says Charles Morrison, a specialist in U.S.-Japan relations at the East-West Center in Honolulu. “But the same people who welcome such investment to their area worry about it when it occurs elsewhere. The farther away people are from the benefits, the more they object.
“That normal opposition is augmented by the particular industry – what could be more quintessentially American than a baseball team? – and the more general fear that there is something wrong with America, that we’re selling off our institutions.”
Should we be afraid that the Japanese will come to own us? That they are “buying up America?” I don’t know. We practically begged them to in the mid-’80s. The combination of a devalued dollar, superheated Japanese real estate and stock markets, and low Japanese interest rates practically turned Japan into a money machine. They had it. We needed it. They spent it.
Should we be surprised at that? People here flocked to Frederick & Nelson’s close-out sale to buy much of the same stuff they had been refusing to buy for years, thereby creating the need for the close-out sale in the first place. They thought they saw bargains. They bought. Imagine an entire country at 50 percent off, which is about what the United States was after the dollar lost more than half of its value against the yen in international exchanges.
And if you’re worried about the Japanese having too much money, baseball is a perfect business in which to lose a lot of it.
Herbert Stein, chairman of the council of economic advisers under President Nixon, says we should feel empathy for the Japanese, not envy. “People are worried that the Japanese are buying up America. That’s silly, if for no other reason than that a lot of the investments they have made have not been profitable. A lot of this stuff hasn’t worked out,” Stein says. “They’re the ones who got screwed.”
“There are no nations,” Ned Beatty told Peter Finch in the 1976 movie “Network.” “There are no peoples. There are no Russians. There are no Arabs. There is no Third World. There is no West. There is only one holistic system of systems, one vast and intertwining, interacting multi-variant, multi-national dominion of dollars … There is no America. There is no democracy. We no longer live in a world of nations and ideologies.
“The world is a college of corporations inexorably determined by the inevitable by-laws of business. The world is a business, Mr. Beale. It has been ever since man crawled out of the slime.”
It seems sometimes that the Beatty character had it right.
The forces of commerce and popular culture are indeed bringing us if not together, then at least into a coincidence of desires that political scientist Benjamin Barber recently labeled “McWorld.” The argument is made that our economies and tastes are so intertwined that it is increasingly hard to tell us from them.
Examples of this cross-cultural ferment are everywhere. Across town later that night in Hiroshima, I went into a bar called the Shanghai Renaissance. No one in the place, named for a Chinese city and a European intellectual movement, sitting beside a river that not 50 years earlier boiled over its banks from the heat of an American atomic bomb, no one spoke English, but they played old American movies and new American jazz. “The Wizard of Oz” was playing, soundlessly, on a large-screen television. The bartender substituted a Wynton Marsalis CD for the Harold Arlen movie score, leaving Dorothy and Toto to run rootlessly across the landscape, the low, slow jazz giving a melancholy edge to their anxiety.
Oh, Toto, I thought, we surely aren’t in Kansas anymore. What kind of world is this slouching toward Hiroshima to be born? Like me and Phil Bradley, in this new world we are plagued with company, if not necessarily companionship. We can’t get away from each other. That does not mean we are the same.
Akira Ishikawa, a Japanese lumberman, once told me Americans completely misunderstand Japan. “It’s like hail out of a blue sky,” he said. “It doesn’t make sense.” The same could be said of Japanese understanding of Americans.
In many respects the U.S. and Japan are reverse images of each other. The flaws of one are the merits of the other. Japan emphasizes the group, the U.S. the individual. Their strength is cohesion, ours liberty. They promote production. We promote consumption. Even when we do the same things, we do them differently.
For example, baseball in Japan is a peculiar station-to-station, hedgerow-to-hedgerow struggle, where the cleanup hitter, normally the most powerful batter on the team, is as apt to move runners along by bunting as he is to swing for the fences. It is a strategy that would provoke howls of protest from a typical American manager, who would rather let the hitter swing away in hopes that he might hit the big hit.
We score in bunches. The Japanese are satisfied to put lone runs up one at a time. It is possible – in fact, almost unavoidable – to make too much of this, but this is how Toyota would play baseball. In business terms, think of it as a willingness to sacrifice immediate profits for market share. We want to rack up the big numbers right away. Toyota (or Nissan, Honda, Sony, Matsushita, ad infinitum) would be content to scratch out a run here and a run there until eventually it had amassed an unassailable lead.
Economics is ultimately depressing. That’s why we have philosophy, religion and baseball.
Bradley swung. He bounced a single up the middle, driving in the run. He rounded first and came back to the bag, peering into the stands. It’s nice in these troubled times to have something to cling to, I thought.
Yer a bum! I yelled.