Avoiding Lost Decades: A Modern History (1979-2019)
- Thread starter Electric Monk
- Start date
Thanks for the support
.At this point I'm thinking that the Hong Kong issue gets nastier in the '80s and that the British are forced not to deal with the Chinese. Hong Kong suffers as a result, and China accepts they need a stable Hong Kong regardless of whether or not it's under PRC control.
However they still don't want the British to have it, so Hong Kong (and presumably Macao with it) winds up more or less independent.
Avoiding Lost Decades #2: Boring Economic Detail + Bonus Hints of Things To Come[1]
An Overview of the Last Decade: Free Trade, Keiretsu, and Economic Reform in Japan
©1990 Tokyo University & Tokyo University Economics Department[2]
Japanese Edition: Tokyo University Press, Tokyo: 1990
English Edition: Engine Publishing, London: 1990
Economic Reform
With the Mitsubishi/Dai-Ichi Kangyo Bank Scandal and the subsequent financial and banking reform Japan entered a period of transition.
The Liberal Democratic Party, the ruling government from 1955 to 1980 fell in the spring of 1981 amidst a series of defections and the newly formed opposition coalition, the Democratic Parties of Japan, replaced it for a brief while. Although their reign was short, their laws were far reaching. Their centrepiece bill, which brought about massive banking and financial sector reform, passed before their government collapsed. The DPJ also took over and wrote off the non-preforming loans at the centre of the crisis in an attempt to make the situation pass as fast as possible.
The LDP government that replaced them was unstable, and throughout 1982 sought a coalition partner so that they could pass their reform bills—as they had accepted the public's anger over the issue. By July of 1982 the LDP had managed to get several opposition parties on board and launched their own series of reform packages.
Chief among them was the Post Office privatization, the VAT expansion to 10%, and the political reform act demanded by the LDP's coalition partners as their price for support. The post office privatization was to eliminate a main source of corruption, to reduce the government's size back in line with the 1970s, and to bring a major source of investment dollars into the economy to help with bank's newfound reluctance to lend. The VAT expansion was geared at 1% increases over 5 years and would serve to increase government revenue, and lift consumer demand—the knowledge of forthcoming tax increases, the government believed, would lead people to spend more.
Although direct economic effects from the fall-out of the Bank Scandal and the subsequent reforms mostly manifested in slowed economic growth the underlying reforms were soon to be apparent to the careful observer. The first real signs were seen in the steadily increasing numbers of retail customers at the banks, as the retail customers had long been neglected in favour of corporations.
This was mostly ignored at the time, but did serve to help the banks just after their greatest weakness when the non-preforming loans had been discovered. The easy success and underestimated surge of profitably from fairly mild efforts reaching out to retail customers encouraged them more then regulation or deregulation would, and this trend would continue.
Within several years the banking and financial sectors were more stable, more profitable in real terms, and more independent of the Ministry of Finance then they had ever been—they were well on their way to developing into a healthy and mature financial sector.
The other notable sign was an increase of foreign direct investment in Japan, as the reforms had made it somewhat easier for overseas investors to operate in Japan as part of an attempt to break the insular Ministry of Finance-Bank Sector links that had helped bring about the Bank Scandal.
As the underpinnings strengthened so did the economy. However this was not seen by the government, who focused on the still languishing growth rates. This began the second wave of reform in 1983.
This was known as the Big Bang deregulation. Following on the American and British neoliberal models (and, to be fair, their own earlier reforms) the Liberal Democratic Party introduced a huge reform package. The set of bills provided for a radical tax simplification, major deregulation modelled on the Carter-Reagan example (although differing in important aspects), instituting a mostly independent Bank of Japan which followed a Print Yen policy, and a loosening of general trade barriers.
The LDP staked the 1983 election on this issue, and the result was victory for the LDP—victory defined as winning slightly more seats and a few more votes, but that was enough. With their strengthened political hand, the LDP government moved fast of the reform package.
1984 would see a 5.6% growth[3] rate and a LDP government that had a new reservoir of political capital—although little of 1984's growth rate stemmed from the 1983 reforms. The LDP would save this political capital and concentrate on cleaning up their previous efforts and building upon them. Generally speaking this meant targeting agricultural subsidies (because of the 1982 political reforms the LDP's rural base was far less important than before), concentrating on free trade, and overall economic productivity.
Free Trade
Close ties to the United Kingdom would cost the LDP the election of 1986 over the Hong Kong / Immigration Reform issue, but before and after then the UK and Japan, along with New Zealand, would hold a series of high level talks on the free trade issue.
In 1988 those three countries signed the Liberalized Trade Agreement Phase One (LTA-1) eliminating many trade barriers between the three countries over seven years, providing for industry transition over ten years, and eliminating subsidies over five years. Additionally all three countries would work to harmonize regulations over seven years.
Although technically left-wing governments existed in both New Zealand (the Fourth Labour government) and Japan (the second DPJ coalition government) the free trade treaty was popular among the public. For Japan it meant deeper access to comparatively smaller and non-threatening markets. For New Zealand it meant access to the world's second largest economy. The United Kingdom believed in free trade full stop, and so was happy to sign the deal.
Although LTA-1 was a bold step all three governments were able to muster the political support to pass it. The elimination of corporate subsidies gathered left-wing support, the elimination of tariffs gathered right-wing support, and industry transition money (some corporations also liked the elimination tariffs) got a number of important corporations on board. The division and fragmentation of pro and anti sides was a major factor in the deals passage.
Internationally LTA-1 seriously embarrassed the pro-free trade Americans, at the time in negotiations with the Canadians over the Canadian-American Free Trade Agreement. The result was what the pro-free trade, but non-Conservative Party, Canadian analysts described as "a fair deal for Canada" as President Reagan pushed the deal through faster than originally foreseen, although it wasn't ratified until the Canadians passed it in 1989 after their 1988 Free Trade election.
In what was considered an unprecedented move LTA-1 allowed any other country to join the agreement, providing it agreed to all existing provisions and all countries currently part of LTA-1 agreed to let them enter.
Keiretsu
In the 1980-1985 period the Japanese keiretsu (deeply integrated horizontal and/or vertical corporate alliances with a central bank directing support) were faced with a problem. Financed by easy and cheap credit they had gone global in the late 1970s, cut off from easy and cheap credit they were still global—but without the same level of resources.
The non-keiretsu companies, most famously Sony, had equally large if somewhat different problems but at least for Sony the 1979 introduction and subsequent massive popularity of the Walkman mobile music playing device would essentially render any Japanese economic problems moot.
The early and middle 1980s were one of rebuilding. A typical Japanese corporation in that period made only small and strategic acquisitions overseas, focused on research and development which did not require large amounts of capital, paid a great deal of attention to the Home Islands, and scouted out the best local assistance by market for what they all assumed would be future global expansion.
The Home Island corporate warfare in the 1980-88 period could easily make for a book of their own, and already serves as the centrepiece of a business course at Tokyo University. It was expensive in the short term, especially for investment strapped companies, but the focus on profitability and better serving consumers would hold them well when they exited in 1989-90 and overseas from 1985 onwards. Furthermore their overseas local knowledge build-up (in anticipation of the increasing credit starting in 1984) brought a great deal of non-Japanese business practices into Japan.
The Bank of Japan's Print Yen policy of 1983 coupled with the return of investment dollars made a very good 1984 for Japanese companies as they used new resources to enact both plans in Japan held back for lack of money, and plans overseas stalled for the same reason; additionally the weakening of the yen improved the competitive position of Japanese exports.
From 1984-1988 the Japanese corporations and keiretsu remained in heavy competition in the Home Islands along with the new small businesses that had popped up with people's desire to use their savings instead of losing them to inflation.
This era is marked by increasingly sophisticated Japanese corporations using their expanding overseas operations to finance their own reorganization and sustained warfare back home. Overseas Japanese corporations remained focused upon fairly small scale advances into targeted markets, concerned with future positioning or wanting to bring more knowledge resources to bear on their home market.
By 1988 the corporate struggle in Japan had mostly died down, and the LTA-1 came at the perfect time for the keiretsu. With new access to Britain and New Zealand and a solid base both in Japan and overseas, Japanese corporations were in a nearly ideal position.
1989-1990 saw a parade of New Zealand and British companies bought by the Japanese, along with an influx of foreign companies into Japan (although keiretsu ties meant foreign take-overs remained uncommon). At the same time New Zealand-UK economic ties, long on a downswing, began to go back up.
1990
In 1990 the Japanese economy is doing well. The Print Yen policy of limited inflation has in fact worked quite well and the Yen remains roughly as weak as corporations would prefer. The reform packages have been consolidated over the past decade, and anti-corruption tactics modelled on Hong Kong have drastically reduced the amount of corruption in Japan.
The DPJ government of 1986-89 was content to consolidate reforms, and focus more on corruption, political, and social reform than economic reform. However the DPJ as usual was quite unstable and with the 1989 election the LDP has returned to power.
The LDP seems determined to continue their economic reforms, although immigration has currently been set aside as the public is still adapting to the 1985 Immigration Reform bill and continue to have mixed but strong feelings about it (notably immigrants vote roughly 10-1 in favour of the LDP, which has provided them with a new support base), and so the first major LDP bill regarded tax. Despite substantial overhauls in 1983 working to simplify and reduce the tax code, as well as lowering overall rates, the success of those reforms made the LDP want to go further.
Assuming the LDP can pass their new tax bill Japan will be the first nation in the world with a negative income tax (NIT), providing a guaranteed annual income for all citizens in place of the more conventional social welfare programs.
The LDP has presented the NIT along both neoliberal anti-government lines, and anti-corruption lines: using the success of the post office privatization and the Pension Scandal of 1988 against the opposition DPJ and to reassure the public.
It is of course unknown the outcome of this further tax overhaul, and the 1990s will certainly present new challenges to Japan but the reforms of the 1980s must be looked upon as a generally positive development for Japan.
[1] As before please note the old #2 (along with Teaser #2) has been retconned to never-never land. Hong Kong is still not going Chinese, but the British aren't keeping it. Tentatively I will redo the Hong Kong Problem in Post #4.
[2] I figured I should mention this since I forgot with the first post: as always, note the source. The Tokyo University has a vested interest in making Japan look good. This is not to say they're lying, but rather that they are certainly going to slant things somewhat.
[3] Although ATL Japan matches or beats OTL Japan's GDP growth rate in the 1980s the worldwide perception of Japan as well as the reach of Japanese companies is not remotely comparable.
In OTL the late 1980s would see a Japan with a land value about 50% greater than the land value of the entire world—something like 20 trillion USD. Tokyo alone was roughly equivalent to the land value of the entire United States.
This allowed Japanese companies to spend vast amounts of money on credit, and made the Tokyo Stock Exchange account for 60% of the world's stock market capitalization in 1990.
Hence the commonly held view: "The Cold War is over, the Japanese won".
ITTL that sense will be far more muted, especially since cut-off from credit Japanese corporations will not be buying random pieces of American prestige such as Rockefeller Plaza.
An Overview of the Last Decade: Free Trade, Keiretsu, and Economic Reform in Japan
©1990 Tokyo University & Tokyo University Economics Department[2]
Japanese Edition: Tokyo University Press, Tokyo: 1990
English Edition: Engine Publishing, London: 1990
Economic Reform
With the Mitsubishi/Dai-Ichi Kangyo Bank Scandal and the subsequent financial and banking reform Japan entered a period of transition.
The Liberal Democratic Party, the ruling government from 1955 to 1980 fell in the spring of 1981 amidst a series of defections and the newly formed opposition coalition, the Democratic Parties of Japan, replaced it for a brief while. Although their reign was short, their laws were far reaching. Their centrepiece bill, which brought about massive banking and financial sector reform, passed before their government collapsed. The DPJ also took over and wrote off the non-preforming loans at the centre of the crisis in an attempt to make the situation pass as fast as possible.
The LDP government that replaced them was unstable, and throughout 1982 sought a coalition partner so that they could pass their reform bills—as they had accepted the public's anger over the issue. By July of 1982 the LDP had managed to get several opposition parties on board and launched their own series of reform packages.
Chief among them was the Post Office privatization, the VAT expansion to 10%, and the political reform act demanded by the LDP's coalition partners as their price for support. The post office privatization was to eliminate a main source of corruption, to reduce the government's size back in line with the 1970s, and to bring a major source of investment dollars into the economy to help with bank's newfound reluctance to lend. The VAT expansion was geared at 1% increases over 5 years and would serve to increase government revenue, and lift consumer demand—the knowledge of forthcoming tax increases, the government believed, would lead people to spend more.
Although direct economic effects from the fall-out of the Bank Scandal and the subsequent reforms mostly manifested in slowed economic growth the underlying reforms were soon to be apparent to the careful observer. The first real signs were seen in the steadily increasing numbers of retail customers at the banks, as the retail customers had long been neglected in favour of corporations.
This was mostly ignored at the time, but did serve to help the banks just after their greatest weakness when the non-preforming loans had been discovered. The easy success and underestimated surge of profitably from fairly mild efforts reaching out to retail customers encouraged them more then regulation or deregulation would, and this trend would continue.
Within several years the banking and financial sectors were more stable, more profitable in real terms, and more independent of the Ministry of Finance then they had ever been—they were well on their way to developing into a healthy and mature financial sector.
The other notable sign was an increase of foreign direct investment in Japan, as the reforms had made it somewhat easier for overseas investors to operate in Japan as part of an attempt to break the insular Ministry of Finance-Bank Sector links that had helped bring about the Bank Scandal.
As the underpinnings strengthened so did the economy. However this was not seen by the government, who focused on the still languishing growth rates. This began the second wave of reform in 1983.
This was known as the Big Bang deregulation. Following on the American and British neoliberal models (and, to be fair, their own earlier reforms) the Liberal Democratic Party introduced a huge reform package. The set of bills provided for a radical tax simplification, major deregulation modelled on the Carter-Reagan example (although differing in important aspects), instituting a mostly independent Bank of Japan which followed a Print Yen policy, and a loosening of general trade barriers.
The LDP staked the 1983 election on this issue, and the result was victory for the LDP—victory defined as winning slightly more seats and a few more votes, but that was enough. With their strengthened political hand, the LDP government moved fast of the reform package.
1984 would see a 5.6% growth[3] rate and a LDP government that had a new reservoir of political capital—although little of 1984's growth rate stemmed from the 1983 reforms. The LDP would save this political capital and concentrate on cleaning up their previous efforts and building upon them. Generally speaking this meant targeting agricultural subsidies (because of the 1982 political reforms the LDP's rural base was far less important than before), concentrating on free trade, and overall economic productivity.
Free Trade
Close ties to the United Kingdom would cost the LDP the election of 1986 over the Hong Kong / Immigration Reform issue, but before and after then the UK and Japan, along with New Zealand, would hold a series of high level talks on the free trade issue.
In 1988 those three countries signed the Liberalized Trade Agreement Phase One (LTA-1) eliminating many trade barriers between the three countries over seven years, providing for industry transition over ten years, and eliminating subsidies over five years. Additionally all three countries would work to harmonize regulations over seven years.
Although technically left-wing governments existed in both New Zealand (the Fourth Labour government) and Japan (the second DPJ coalition government) the free trade treaty was popular among the public. For Japan it meant deeper access to comparatively smaller and non-threatening markets. For New Zealand it meant access to the world's second largest economy. The United Kingdom believed in free trade full stop, and so was happy to sign the deal.
Although LTA-1 was a bold step all three governments were able to muster the political support to pass it. The elimination of corporate subsidies gathered left-wing support, the elimination of tariffs gathered right-wing support, and industry transition money (some corporations also liked the elimination tariffs) got a number of important corporations on board. The division and fragmentation of pro and anti sides was a major factor in the deals passage.
Internationally LTA-1 seriously embarrassed the pro-free trade Americans, at the time in negotiations with the Canadians over the Canadian-American Free Trade Agreement. The result was what the pro-free trade, but non-Conservative Party, Canadian analysts described as "a fair deal for Canada" as President Reagan pushed the deal through faster than originally foreseen, although it wasn't ratified until the Canadians passed it in 1989 after their 1988 Free Trade election.
In what was considered an unprecedented move LTA-1 allowed any other country to join the agreement, providing it agreed to all existing provisions and all countries currently part of LTA-1 agreed to let them enter.
Keiretsu
In the 1980-1985 period the Japanese keiretsu (deeply integrated horizontal and/or vertical corporate alliances with a central bank directing support) were faced with a problem. Financed by easy and cheap credit they had gone global in the late 1970s, cut off from easy and cheap credit they were still global—but without the same level of resources.
The non-keiretsu companies, most famously Sony, had equally large if somewhat different problems but at least for Sony the 1979 introduction and subsequent massive popularity of the Walkman mobile music playing device would essentially render any Japanese economic problems moot.
The early and middle 1980s were one of rebuilding. A typical Japanese corporation in that period made only small and strategic acquisitions overseas, focused on research and development which did not require large amounts of capital, paid a great deal of attention to the Home Islands, and scouted out the best local assistance by market for what they all assumed would be future global expansion.
The Home Island corporate warfare in the 1980-88 period could easily make for a book of their own, and already serves as the centrepiece of a business course at Tokyo University. It was expensive in the short term, especially for investment strapped companies, but the focus on profitability and better serving consumers would hold them well when they exited in 1989-90 and overseas from 1985 onwards. Furthermore their overseas local knowledge build-up (in anticipation of the increasing credit starting in 1984) brought a great deal of non-Japanese business practices into Japan.
The Bank of Japan's Print Yen policy of 1983 coupled with the return of investment dollars made a very good 1984 for Japanese companies as they used new resources to enact both plans in Japan held back for lack of money, and plans overseas stalled for the same reason; additionally the weakening of the yen improved the competitive position of Japanese exports.
From 1984-1988 the Japanese corporations and keiretsu remained in heavy competition in the Home Islands along with the new small businesses that had popped up with people's desire to use their savings instead of losing them to inflation.
This era is marked by increasingly sophisticated Japanese corporations using their expanding overseas operations to finance their own reorganization and sustained warfare back home. Overseas Japanese corporations remained focused upon fairly small scale advances into targeted markets, concerned with future positioning or wanting to bring more knowledge resources to bear on their home market.
By 1988 the corporate struggle in Japan had mostly died down, and the LTA-1 came at the perfect time for the keiretsu. With new access to Britain and New Zealand and a solid base both in Japan and overseas, Japanese corporations were in a nearly ideal position.
1989-1990 saw a parade of New Zealand and British companies bought by the Japanese, along with an influx of foreign companies into Japan (although keiretsu ties meant foreign take-overs remained uncommon). At the same time New Zealand-UK economic ties, long on a downswing, began to go back up.
1990
In 1990 the Japanese economy is doing well. The Print Yen policy of limited inflation has in fact worked quite well and the Yen remains roughly as weak as corporations would prefer. The reform packages have been consolidated over the past decade, and anti-corruption tactics modelled on Hong Kong have drastically reduced the amount of corruption in Japan.
The DPJ government of 1986-89 was content to consolidate reforms, and focus more on corruption, political, and social reform than economic reform. However the DPJ as usual was quite unstable and with the 1989 election the LDP has returned to power.
The LDP seems determined to continue their economic reforms, although immigration has currently been set aside as the public is still adapting to the 1985 Immigration Reform bill and continue to have mixed but strong feelings about it (notably immigrants vote roughly 10-1 in favour of the LDP, which has provided them with a new support base), and so the first major LDP bill regarded tax. Despite substantial overhauls in 1983 working to simplify and reduce the tax code, as well as lowering overall rates, the success of those reforms made the LDP want to go further.
Assuming the LDP can pass their new tax bill Japan will be the first nation in the world with a negative income tax (NIT), providing a guaranteed annual income for all citizens in place of the more conventional social welfare programs.
The LDP has presented the NIT along both neoliberal anti-government lines, and anti-corruption lines: using the success of the post office privatization and the Pension Scandal of 1988 against the opposition DPJ and to reassure the public.
It is of course unknown the outcome of this further tax overhaul, and the 1990s will certainly present new challenges to Japan but the reforms of the 1980s must be looked upon as a generally positive development for Japan.
[1] As before please note the old #2 (along with Teaser #2) has been retconned to never-never land. Hong Kong is still not going Chinese, but the British aren't keeping it. Tentatively I will redo the Hong Kong Problem in Post #4.
[2] I figured I should mention this since I forgot with the first post: as always, note the source. The Tokyo University has a vested interest in making Japan look good. This is not to say they're lying, but rather that they are certainly going to slant things somewhat.
[3] Although ATL Japan matches or beats OTL Japan's GDP growth rate in the 1980s the worldwide perception of Japan as well as the reach of Japanese companies is not remotely comparable.
In OTL the late 1980s would see a Japan with a land value about 50% greater than the land value of the entire world—something like 20 trillion USD. Tokyo alone was roughly equivalent to the land value of the entire United States.
This allowed Japanese companies to spend vast amounts of money on credit, and made the Tokyo Stock Exchange account for 60% of the world's stock market capitalization in 1990.
Hence the commonly held view: "The Cold War is over, the Japanese won".
ITTL that sense will be far more muted, especially since cut-off from credit Japanese corporations will not be buying random pieces of American prestige such as Rockefeller Plaza.
Interesting it's New Zealand and Britain being economically intertwined with Japan, and yet Australia isn't. Australia supplies vast amounts of raw materials for Japanese industry. I can imagine Canada, Russia and Australia trying to get into LTA-1 or its successors just to get the ability to get into Japan's massive markets.
It's mostly politics.
Although Australia's Hawke government in the 1980s was very much a reforming government (albeit not to the extent of their counterparts in New Zealand) it consistently had trouble doing so because of their goring of traditional Labor policies.
Note, for example, that New Zealand was able to push through a GST while Australia was not. Roger Douglas, New Zealand's finance minister, retained so much support from the backbench that when (IOTL) the PM kicked him out the backbench was able to force him back in, albeit not as finance minister (in New Zealand's Labour Party the entire caucus can decide, if they wish, who is in and out of the cabinet, but the PM picks where they go).
Actually David Lange's (New Zealand PM) abandonment of reforming policies is considered a major reason for their defeat by the National Party who promptly copied Labour's (neoliberal) reform policy and carried on.
Assuming the ATL Keating wins in 1993 (or earlier, depending on butterflies and ATL Hawke) his OTL policy of engagement with Asia will almost certainly mean joining LTA-1.
And next question - with Japan managing to stay strong and China not reforming as it did in OTL, what does that do to so much of the world's manufacturing which went to China starting in the mid 80s? I can't see it all staying in the home countries.
And my interest in cars means if Britain is now a free trade zone with Japan and NZ, would British cars end up turning up in larger numbers in Japan? Until the early 90s, Japan had very nasty trade barriers to cars from other nations, as the Americans found out in the early 80s. If so, could that (or perhaps a takeover?) save British Leyland or other parts of the British car industry?
And I gotta imagine with Canada going down the free trade route, Mulroney or Chretien (assuming Chretien takes over from Mulroney as in OTL in October 1993) would be chomping at the bit to get into LTA-1.
And my interest in cars means if Britain is now a free trade zone with Japan and NZ, would British cars end up turning up in larger numbers in Japan? Until the early 90s, Japan had very nasty trade barriers to cars from other nations, as the Americans found out in the early 80s. If so, could that (or perhaps a takeover?) save British Leyland or other parts of the British car industry?
And I gotta imagine with Canada going down the free trade route, Mulroney or Chretien (assuming Chretien takes over from Mulroney as in OTL in October 1993) would be chomping at the bit to get into LTA-1.
The USA will keep somewhat more of its manufacturing base, but that's a very relative thing.
Generally speaking China's high savings rate means, like Korea and Japan, that they can finance their own projects as much as needed.
Historically growing nations are able to leverage tariffs, protectionist policy, government intervention "picking favourites", and domestic capital via high saving rates, and so forth to bootstrap themselves up (see the USA pre-WW2, for example); it's only when you're on top that you care about free trade.
So China can do just fine even with marginally less US manufacturing shifting there. They have a high savings rate, and they're copying Japan/Korea/Germany who also did great even when the US manufacturing base was very strong.
Hong Kong's problems will hurt them a little in the middle 80s to early 90s, and a more protectionist US will hurt a little as well. However continuing growth in Japan combined with no crashes in Russia & SEAsia in the late 90s means China certainly pulls even, and then ahead, with OTL in the beginning of the 21st century.
Note too that a less fundamentalist (in its view of capitalism) US will result in no "shock" treatment imposed upon Russia, and the IMF is not as absolute in attitude either. Now countries such as the Baltic region will undergo voluntary shock treatment as they did IOTL to great success, but US forced liberalization will not be as prevalent.
Notably less fear of inflation (because of Japan's Print Yen policy) means that the various Reserve Banks in various countries will be concerned with increasing inflation, but will not react to stop inflation before it happens.
Think of the US in the 90s. The Fed did not apply their usual anti-inflation measures in advance as the economy heated up and so when unemployment dropped below 6% but inflation did not increase (as it was expected to. Normally the Fed would have acted early to "head off" inflation, but they hadn't seen that low a rate of unemployment coming) they were quite surprised. Arguably if the Fed had acted to prevent inflation before it occurred the OTL 90s boom would not even have happened. (Article)
Therefore a side effect of the Print Yen policy of controlled, limited inflation is that low levels of inflation are now tolerated. Zero inflation is no longer accepted as an ideal and thus economies will heat up a little more (better regulation in the US should help prevent the recent couple of boom/bust cycles over the net and housing).
Well, like New Zealand, Britain just became part of the Japanese used car market. Thing is the Japanese are way better at negotiations with the US than the US is with Japan—letting in British cars free and clear is a big stick to say to the Americans "see, we're playing nice… you're not playing nice!" Therefore having a handful of prominent non-Japanese cars on the roads lets them quietly one-up the Americans.
So yeah, there should be more British cars and the Japanese (if they want to) will probably take over the British car industry. What's important to the remnants of British industry is the capital that wasn't around IOTL, and the Japanese corporations having no problem with industry in developed countries. Combine those two and Britain, like Japan, will have something of a manufacturing base.
In fact Japanese economic policy being what it is (regardless of my changes) their continued expansion will serve to counterbalance the Anglo-American consensus on "pure" capitalism. This article may make for interesting reading.
What Japan has done is reform the process (i.e. no corruption) as well as some introduction of Anglo-American economics (freer markets), but not whole hearted copying of them (Russia in the early 90s which didn't exactly work, after all).
Canada will be covered.
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I'd like to echo this.
Electric Monk also seems to be providing both the Tory Party and the British Parliament with an independence of judgement which neither possess; the making of treaties is entirely a (constitutional) preserve of the government, and parliament has traditionally allowed for a remarkably free hand in this area.
As CalBear also points out, it is incredible that Tory backbenchers would suddenly begin campaigning for a referendum in Hong Kong. British policy on Hong Kong had always been paternal. (I.E, undemocratic, and thus of very limited responsiveness to the wishes of the Hong Kong residents.) A referendum would overturn this precedent and open up the very strong possiblity of further extensions/confirmations in the future, with the possibility of mass-scale Hong Kong migration as the eventual end-point. No Tory of any stripe would ever countenance this. A few protests in the New Territories is certainly not going to make them change their mind.
I can buy a serious failure of the negotiations, but at the moment I think they are dealt with in a much too blase fashion to be convincing. The point about the Hong Kong negotiations is this: both sides really wanted the negotiations to work, because if they didn't the future for both of them would be utterly uncertain. Deng wanted his nice shiny South Sea jewel, undamaged and with China's post-Nixon status intact, and Thatcher wanted security and relative freedom for Hong Kong and good trade relations with China, which was predicated on some sort of deal. Something quite significant needs to arise for both sides to feel otherwise, particularly the British.*
A small correction here, though - as EM had the British Nationality Act of 1981 fail, (implausible, but I can just about buy it) this means that the old categorisations are still in force. Hence the Hong Kong residents are merely voting to retain their current (heravily restricted) status in the referendum, ('British subjects') not become British Citizens. So CalBear is not entirely correct in that criticsm.
*Bluster aisde, Britain had come within a hair's breath of being beaten in the Falklands - a conflict, incidentally, in which the American State Department mainly took a line which was neutral at best.
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I'll note that I've already been persuaded to change my mind: the UK is not keeping Hong Kong. Hence the posts covering Hong Kong have been retconned (teaser #1 is still happening, though probably slightly changed).
Oh, I belatedly discover this, as a Hong Konger, let me offer my two cents: Thatcher as a rightwing Westerner, didn’t understand (or give a damn) the meaning of Unequal Treaties toward Chinese, for us those treaties mean national humiliation. No Chinese leader would agree to extend those treaties. Had Thatcher not demanding extension of “Convention for the Extension of Hong Kong Territory”, Union Jack may still flying over Hong Kong today.
OTOH, CCP was pragmatic toward Hong Kong most of the time: they could have taken HK easily anytime after 1949 but they didn’t, because in the middle of Cold War, Hong Kong could serve as a window that opened to the West, in terms of goods, people and information. Officially this policy called “make a long-term plan and make full use” (「長期打算，充份利用」). After Sino-American rapprochement, this window function was becoming a bit less needed, but you can’t take International Relations for granted. In 1982, Chinese economic reform was just four years old. It was understandable for the shaky faith toward China of Hong Kong capitalists and masses.
Therefore, let’s say in 1982, Thatcher listened to some of the Whitehall Sinologists’ advice before head for Beijing. Didn’t demand extension of Unequal Treaty, promise Deng that if China demands return of Hong Kong, British would agree and handover process would be last twenty years. British would not change the political system without the Chinese government consent. Sino-British compromise on Hong Kong was made*. China would formally demand the handover of Hong Kong sometime after mid-90’s, when economic reform started to bear fruit.
*Since the detail of Chinese decision making process was still classified, we don’t know how willing Deng would back down if Thatcher not asked for extension of Unequal Treaty. My guess it would not be completely ASB.
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I have stuff I could put up, but I'm still working on breaking the Japanese anti-immigration consensus. It has to be corporations needing workers/capital, the Yakuza wanting to strengthen criminal ties elsewhere (like, say, Hong Kong), combined with Western-style laws preventing discrimination.
Even then a lot of Japanese are going to freak out but without immigration Japan (better 90s economic growth or not) is screwed in a couple decades so….
At the moment I was leaning to something of a break-down over Hong Kong in the early 80s (perhaps Thatcher, as you say, doesn't demand extension of the Unequal Treaty but equally doesn't just hand HK over) and HK suffers somewhat by the late 80s/early 90s—suffers enough that the Chinese are willing to let HK be as (Taiwan style) as long as the British don't have it.
Thus nobody gets what they want, particularly, and therefore nobody looks too bad in the international community.
Since you seem to be the only Hong Konger around how would the populace of the city treat being like Taiwan? Basically independent, but no seat at the UN.
If you want to make this about Hong Kong then I would suggest you start another thread, I was honestly shocked when I saw it was about Hong Kong on the first post rather than Japan.
The POD you made was originally about Japan, but you made a lot of PODs about Hong Kong, China, and the British and made this a entirely different TL. The changes you suggested at first simply won't affect Hong Kong to make such things occur.
The POD you made was originally about Japan, but you made a lot of PODs about Hong Kong, China, and the British and made this a entirely different TL. The changes you suggested at first simply won't affect Hong Kong to make such things occur.
PRC would not tolerate any form of Hong Kong Independence! Had the Thatcher-Deng talk broke down, PLA would cross the border right away. CCP was extreme paranoid of every British decolonization moves (like took away all Hong Kong treasury back to UK, or gave Hong Kong people democracy before left), so they would gave Britons no time. At first it would look like the Fall of Saigon all over again, but PRC keep their own words, they impose “One Country Two Systems” no political and economic crack down (they still need investments). After initial panic, Hong Kong economy rallied, and boom resumed till Tiananmen Square protests of 1989…
That's improbable at best. The main problem with third-world agriculture is not that the US is subsidizing its products, but that third-world farmers neither have the expertise, nor the infrastructure to properly run a modern agribusiness.
Modern farming today is a capital intensive business that requires a substantial investment in labor and machinery. Third-world farmers have neither access to banks or other available sources of money that allow them to successfully compete with American and European farmers. For example, a small John Deere tractor costs over 12,000 dollars. A full size combine harvester can cost over 300,000 dollars.
Even if the farmers did have access to banks, in many cases they couldn't get a loan as they have no collateral because they don't have the title to the land they are on. (Whether because they are squatters or the countries' legal system is not working).
Another problem is the infrastructure of many third-world countries is not up to the task of shipping food from the farms to the Western World. In order to ship produce, one needs good roads/rail system that can allow refrigerated trucks/trains to ship the produce to a port where it can be sent all over the world. Most third-world countries don't have this kind of infrastructure.
In is telling that the major third-world countries that do export food are mostly more developed third-world countries such as South Africa and Chile that have access to modern banking systems and infrastructure.
One example of the problems third world farmers face is in Zimbabwe. Before Mugabe started his series of "land reforms", Zimbabwe was a net food exporter. After the white farms were seized, the countries' exports collapsed. Why? The new owners of the farms could not get credit from the banks because they didn't hold the title to the land, and much of the infrastructure on the farms was looted. Without credit from the banks, the new owners couldn't buy fertilizer or anything else necessary for modern agribusiness.
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^ You are correct on both those points Kidblast, but it's not that hard to build infrastructure, especially in places like much of Africa where the cost of construction is much lower than the West. Places like Zimbabwe will do really well in that regard, because Zimbabwe inheirited a very solid transport infrastructure from the Rhodesian era.
By the 1990s, even large parts of Africa were starting to get beyond the one-party eras. Kaunda handed power to Chiluba in 1991, Nyerere retired in 1985, Namibia became independent from South Africa in 1990, Apartheid died in 1994, and in 1999 if not for rigging Mugabe would have fallen to Tsvangirai in Zimbabwe. Daniel Arap Moi was in trouble during this decade, and Mobutu fell in 1997. Angola's civil war briefly stopped in 1994, only to flare again a few years later.
I can see when apartheid finally falls that South Africa, Botswana (which has tons of hard currency due to the diamond exports) and Zimbabwe would fuel the building of African infrastructure.
By the 1990s, even large parts of Africa were starting to get beyond the one-party eras. Kaunda handed power to Chiluba in 1991, Nyerere retired in 1985, Namibia became independent from South Africa in 1990, Apartheid died in 1994, and in 1999 if not for rigging Mugabe would have fallen to Tsvangirai in Zimbabwe. Daniel Arap Moi was in trouble during this decade, and Mobutu fell in 1997. Angola's civil war briefly stopped in 1994, only to flare again a few years later.
I can see when apartheid finally falls that South Africa, Botswana (which has tons of hard currency due to the diamond exports) and Zimbabwe would fuel the building of African infrastructure.
Arigato. I'm kinda busy with Democratic President Reagan at the moment but I'm also knee deep in gradually re-arranging the Lost Decades timeline. Also the Hong Kong lobby wore me down
.That's too bad.Arigato. I'm kinda busy with Democratic President Reagan at the moment but I'm also knee deep in gradually re-arranging the Lost Decades timeline. Also the Hong Kong lobby wore me down