Odd Lots - John Ganz on the Era When America Was Consumed by Panic With Corporate Japan

Episode Date: October 10, 2025

These days, there's a non-stop drumbeat of concern that China and its dominant companies will eat America's economic lunch, so to speak. Of course, this isn't the first time in our history that there were worries about a rising Asian industrial power. In the 1980s and early 1990s, there was a lot of concern about the rise of corporate Japan. And that fear was seen all over movies and pop culture, from Die Hard to the Michael Crichton novel Rising Sun. This time there is one big difference: Chinese dominance doesn't permeate our pop culture in the same way. And furthermore, the US has long had military bases in Japan, so that dimension was quite different, too. To understand this period further, we talk to John Ganz, who writes the Unpopular Front newsletter, and is the author of the recent book, When the Clock Broke: Con Men, Conspiracists, and How America Cracked Up in the Early 1990s. We discuss how this fear came about and disappeared, but also how it still influences American politics to this day.Only Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Bloomberg Audio Studios. Podcasts Radio News. Hello and welcome to another episode of the Avlods podcast. I'm Jill Wisenthal. And I'm Tracy Alley. Tracy, here's something I've been thinking about with respect to China and all of the tensions with China, which is that it feels very elite, as in people in D.C. talk about it. People in, obviously, in finance and business talk about it.

It does not strike me that in the broad, and I could be wrong. My judgment could be off. But it does not strike me that in the broad public that there are a lot of people, that it's top of mind for a lot of the public. Weirdly, I think it was probably more top of mind in the past, right? And the hollowing out of America's manufacturing sector. I mean, that argument is kind of what has given rise to a lot of the populist politics that we see nowadays, right? Yeah, that's true. Right. During the China shock, there were a lot of people aware that their fact. or the town is the dependent on these factories were getting hollowed out, et cetera. But, you know, there's so much China, China, China. It's not in the media, right? It's not like, or sorry, it's not in the movies.

And I'm thinking of like Back to the Future 2 was it where the main character's dad lost his job and they had this scene when he was getting laid off by his Japanese boss, et cetera. Oh, you know what my favorite example of this is? Yeah. Diehard. Yeah, of course. Yeah. Best Christmas movie ever.

but also the Nakatomi Corporation. Yeah, right. This was like a whole thing in pop culture. It's just not at all. Maybe that has something to do with the fact that studios still want to, do they still distribute? Or American movies still getting wide distribution? Like, for a while in China. Like, because for a while, this was like a big story.

Oh, are they not going to talk about certain things? This is partially why we have a bunch of superhero movies, by the way. Because they're just Anadon. Because they play in international markets. And they're not going to, like, offend anyone too much. Probably. It just doesn't feel to me from like a, pop culture standpoint that the threats from China, whatever they are, are like getting that much

play. We need a good movie about China developing an AI chat bot that goes rogue and tries to take over the world. I think there was an AI plot in the last mission impossible or one of the recent ones. I haven't seen it. I don't know who developed the technology. Maybe it was China. It could have been. But anyway, like you said, with Die Hard and there were several others. I think Michael Crichton had a book that talked about it. And certainly when I was younger, when I was like 11 or 12 and first became aware of the existence of the world around me. You know, I remember I had a teacher who was like really scoldy about people who drove Japanese cars, for example. And she talked about how anti-American. Yeah, how awful it was that

there were people coming into our high school parking lot or whatever that drove Japanese cars. Destroying the fabric of America by purchasing a Toyota. Yeah. Of course now, you know, by Toyotas are made in the U.S., etc. No one talks like that with respect to Japan. But it is interesting, thinking about like similarities and differences between our relationship with China today and our relationship with Japan in the 80s, late 80s, et cetera, when it seemed like that was going to be the economy that really sort of hollowed out. There's a clear parallel here. There are also some key differences.

I'm sure we'll get into all of that. A land of contradiction. Yes. Similarities in turn of us. Anyway, I'm very excited. We have a guest I've wanted to talk to for a long time. The perfect guest because he recently wrote about this. We're going to be speaking with John Gans.

He is an author and historian. He's publisher of the unpopular front substack, which I am a paid subscriber to him, a big fan. And he's also the author of the recent book, When the Clock Broke, Conmen, Conspiracists, and how America cracked up in the early 1990s. We'll talk a little history. So, John, thank you so much for coming on AdLodz. Thank you so much for having me. I'm a big fan. It's very exciting for me.

Very nice of you to say. Does that seem right to you that, like, you pay attention to pop culture. Yeah. Just today, with the China anxiety, it feels like a D.C. kind of thing more than a general public thing. I think that's true. It does feel sort of an elite project. There's a lot of interest, curiosity about what's going on China and what they do well, both in D.C. among policymakers. And I think also obviously in Silicon Valley. Yeah. A lot of think tanks are studying China, thinking about China. A lot of business people are very interested in China.

But, yeah, I don't know. It's strange because you would think in a. in an age that has a lot of, one might argue, paranoid thinking going on, it doesn't factor that much until a lot of pop culture. I think the movies thing might be a part of that. That wasn't the case. Just the sheer box office exposure. The box office exposure, but I think in the 80s and 90s, there was definitely more cultural product,

which I'm sure will discuss, more cultural products that brought this kind of fear, curiosity, interest, paranoia to the surface. All right. Well, why don't we get into the Japan? panic of the 1980s and where it actually started. And by the way, I was reading the substack that you wrote on this particular topic and I fell into a giant rabbit hole reading of the emerging Japanese super state and coverage of it. So I didn't know the author of one of the first provocative Japan is going to take over the world type books was a guy called Herman Kahn, I think.

And he is the inspiration for Stanley Kubrick's Dr. Strangelove. I didn't know that. Yeah. And if you read some of the coverage of his book that came out in the 1970s, it's really funny because it's just stuff that you would never get away with writing today. The New York Times, New York Times review actually starts out by saying, a bullion to Herman Kahn who boasts that under all these 300 pounds of friendly fat, there lies a lean and sinewy intellect. I don't think you could start a book review by saying the author is fat. Talking about the author's weight. Yeah. No, that's true. Yeah, Herman Cotton is a really strange and interesting character.

He is one of the models for Dr. Strangelove. He wrote a book called On Thermonuclear War, which is probably one of the strangest books you'll ever read. And it's extremely cheerful book about thermonuclear war, basically kind of saying it wouldn't be that bad and saying that, you know, yeah, and I think this is where the term, he may have originated the term mega deaths and saying, you know, yeah, we'll get a little messed up, but actually there's so many people in this country who are so productive. How bad would it really be?

We'll have some mega deaths. Don't worry about it. We'll have a few megadethes, but I don't think, and he thought that the United States shouldn't be so fearful about it. But there's another weird interpretation of the book that this was kind of like some signaling strategy that the United States, because in the book he said,

you can't show that you're afraid to actually pull the trigger because then the other side will push you around. So in a way, the book was some kind of signaling strategy and his game theory mind to be like, hey, man, we're not worried. We're writing books that say, Thermonuclear war is not that big of a deal. Very, very bizarre figure.

And I think some people consider him very sinister, obviously, but a real eccentric. But he was actually worried about Japan. Yeah, I think he was worried about Japan. And he was a little ahead of the curve, actually, because he wrote his book in the, I think it was in the late 1960s. And it came out in the early 1970s. And he was describing Japan and its institutions and predicted that by the year 2000s, that Japan would be the first economy in the world and overtake the United States. This was a little bit before.

Now, the later books make a little more sense. This is really before you start to see the economic problems in the United States that would make this kind of interest. And also before the trade deficit with the United States had really exploded. So he was a kind of visionary, not in that he got it right, but he kind of prefigured a genre of books that would only really hit about a decade or so later. Yeah, Joe, I clip this, but reading some of the book now, it's kind of quaint. But he says his best estimate is his medium scenario.

And the medium scenario is that Japan probably passes the U.S. in per capita income around 1990. Huh. Okay. And probably equals the U.S. in a gross national product by about the year 2000. That's the media. The media. So he's being conservative. But it sounds interesting because it's very easy to say,

this is going to be a big problem once the trade deficit is gigantic. Right? It's like, oh, we're really dependent on we're, you know, up a creek, et cetera. But he seemed to have some intuition that there was something there in Japan that was like, okay, there's something going to be some great out competing in terms of just based on their productivity. Yeah, I think that he observed correctly that Japan had made a miraculous comeback after the war.

They had transformed themselves from being totally destroyed in the world and to be from being kind of a producer of goods that were considered kind of cheap, just. the way we used to think made in China or made in Taiwan, weren't necessarily signs of quality. And then Japan becomes, you know, a place where it manufacturers, items that are still not terribly expensive, but are known for engineering feats and are quite good. And he also gets into some things we might today call Orientalist or centralizing.

But he had these, what he thought were sociological insights about the solidity of Japanese society, of their education system, of the relationships between the state and business. and other writers kind of develop these themes in different directions. Maybe we'll get into this. Peter Navarro's book, Death by China, came out in 2011. He was pretty ahead of the curve in terms of, you know, at 2011, certainly not as much as people are talking about today. But in a way, wasn't the real China shock in the awesome?

Definitely. Yeah, yeah, yeah. That was like the whole WTO. I feel like that was really when it kind of peaked. You mentioned the cultural aspects of this, and it is funny reading, again, some of the coverage where everyone's like, I read the chrysanthemum and the sword, or I read Mishima, and now I've cracked the code of Japanese economic success. But so much of the panic was actually trying to figure out how Japan had done this. Before we get into all those different

interpretations, what's your story of the Japanese economic miracle in the 1980s? You know, I think there's obviously the actual economic facts and the relationship of the United States with Japan. And then there is the discourse about it. I think what happened is you had a situation where you have the beginnings of deindustrialization in the United States. You had a very strong dollar. You had a lot of products that were coming in that were extremely high quality and attractive to American consumers. You also had some policies that are very strange. Caterpillar was a big competitor with Komatsu. They went to the Reagan administration. They brought this economic study to the Reagan administration, and they said, well, we want to

open up Japan's financial markets because the difference in our currencies is causing this problem. Now, this doesn't even make sense in economic theory. What actually happened is Japan is the country with excess savings. So Japanese investments began to flow into the United States. Caterpillar suddenly finds Komatsu with a plant next door to it. So this little scheme to undermine its competitors through currency wizardry didn't work. The Reagan administration was open to it because they were into free trade stuff, so it didn't really break with their ideology, but it was a strange move that backfired.

And then also Japanese investors were used to very meager returns. And the United States had very attractive investments going on at that time. like treasuries because of the Volcker policies had very high returns. So Japanese savers were very interested in them. And Japanese investors also started to look at real assets. Like they started to look at real estate. And the returns on those things were so fantastic compared to the way things were in Japan. Oh yeah. Mitsubishi bought the Rockefeller Center.

They bought the Rockefeller Center. There was talk of Nintendo buying the Seattle Mariners. There was a lot of purchasing. a lot of downtown LA. You mentioned that Nakatomi Tower, like there was all this idea of Japan investing in American real estate and buying quintessentially American properties. And this was kind of upsetting to people. So the trade deficit was obviously upsetting people who actually had a skin in the game of the industries, workers, the businesses, Lee Ayacocca was not very happy about it. He wrote about it and complained about it on TV. But the actual purchasing of American,

like these kind of symbols of Americana made people kind of get more tense about this nationalistic fervor. So yeah, the money was just flowing in. And at that time, with the United States, had a lot of deficit spending. And we were pumping out ships

and military equipment and the interest in Japanese savers and American treasuries just came along at the right time. Paul Songas, who was, I don't know how many your listeners are going to remember him. I do.

Okay. He was kind of a centrist, business-friendly, democratic politician who was a candidate for president, not someone you would expect to kind of like demagogue on populist terms, but he said in a speech to the UAW, the Cold War is over and Japan won. This is obviously a huge exaggeration, but it was more like the Cold War ended in Japan kind of paid for it. So I can understand from the perspective of Japan when they're seeing these things bubble up and anger bubble up in America, They're like, we thought we were competitors a little bit, but. Right.

But not this much. Mostly friendly. Mostly friendly, yeah. What was Trump doing this time? Did he have, where was Trump and all this? He was extremely upset about both the trade deficits with Japan and investment in Japanese. He's been very consistent. He's been extremely consistent.

He published ads in the newspaper. He went on TV and complained about it. He said Japan was ripping us off. And Japan was buying. all these wonderful American things that should belong to us. So that economic nationalism goes way back when. And there might be an argument that his protectionist instincts were really shaped by that encounter with Japan as a potential rival.

So I think that, you know, the Japan panic and Trump kind of being of another age in a certain way. Although, again, some of these things apply well to. But it's like left its fingerprints on American society, hasn't it? Absolutely. Absolutely. So I think that weirdly those unconscious impression. or institutional knowledge or just hang-ups that stick with individuals.

Yeah. Definitely. And, you know, he may just still be thinking of Japan, Japan, Japan. Canadian women are looking for more. More to themselves, their businesses, their elected leaders, and the world are out of them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark.

And in this podcast, we interview Canada's most inspiring women. Entrepreneurs, artists, athletes, politicians, and business. newsmakers, all at different stages of their journey. So if you're looking to connect, then we hope you'll join us. Listen to the Honest Talk podcast on IHeartRadio or wherever you listen to your podcasts. It's interesting because with the China anxiety these days, like the fear is right. Some breakthrough is going to happen with semiconductors or something in China and the American companies would just sort of go out of business, et cetera. But in the anxiety with Japan was like, your boss is going to be Japanese or the name of.

the office building that you go to will be renamed Japanese etc. That's very different. People don't really talk about that we're all going to be working for Chinese international corporations of the future. Right. And if you look at the image of dystopia in the 80s, like in cyberpunk literature or in Blade Runner, it's a lot of Japanese company signage and a city of mixed ethnic makeup that looks very chaotic. It looks a lot like cities in Japan. So yeah, I think people were really thought, and I think it was just kind of common sense. If you got into a, if you took an airplane ride and you got into a conversation with businessman next to you, a guy owned a small business, he had read in magazines, newspapers, books, everyone kind of like

the mid, I'm sorry to use this meme, the midwit take at the time was sort of like Japan is going to take over the United States. Yeah. Okay, so clearly that did not happen. No. And the per capita income of Japan is still a lot lower than the U.S. Walk us through, like, I guess, the bursting of the bubble and what exactly, like, why this vision of Japan as a super state or whatever did not come to pass. You know what's really interesting is that the panic coincided not with the peak of Japanese power, but with about the asset bubble bursting. So you see in 1992 rising Zipak. son, the Michael Crichton book, come out. And that also

He topped ticked it, huh? Yeah. And has anyone read it? I have seen the movie. I have read the book partially when I was doing research for the book for my book. And at the end of the book, in case no one got the very subtle message of the book, he included a bibliography

of books he had written, he had read about Japan that detailed the threat. The book is not subtle. A group of Japanese businessmen are involved in the murder of a very beautiful blonde woman. And the detective is tasked to find this out. And he has a meeting with the senator and the senator, they talk about maybe the possibility of dropping another bomb on Japan. That's another thing to remember is that United States and Japan in living

memory had fought a war. And there was Pearl Harbor, which Americans felt very sensitive about. So what happened was there was a credit-fueled bubble in Japan, and it burst. And it was followed by a bank in crisis, deflation. And then all of a sudden, everything that everyone believed was so wonderful about Japanese capitalism. So in 1982, Charmels Johnson wrote a book called Midi in the Japanese miracle. And this said, okay, well, the reason why they did it is because they had this wonderful industrial policy, which coordinated investment, protected industries, guided firms. And it was kind of a mixture of state intervention and private capitalism.

That was one theory. That was a little different from the theories that said, oh, the Japanese have some special cultural Confucianism or whatever, Shinto Buddhism that was making them do this. And everyone said, oh, well, Japanese firms are insulated from financial markets, right? because they have this close relationship with banks. They don't have to raise funds on capital markets. They have these longstanding relationships so they can do these great long-term development projects,

research and development projects. They're not exposed to the quarterly pressures of American companies, so on and so forth. Then after the bubble crashes, everyone looks at all this stuff. It's like, oh, wait. They say, oh, this was a horrible system of crony capitalism where the government was protecting people and there were bad loans on the books

and if there had been functioning markets and a lot of these things wouldn't happen. So suddenly all of the things that appeared, most of the things, not all of them, but many of the things that appeared really impressive about Japanese capitalism, all of a sudden people discovered what the downsides were.

But this didn't set in in the United States. Japan was, there was an outflow, there was a sudden huge outflow of Japanese funds. They had invested, yeah, I mean, between 1988 to the end of, 1990, Japanese investors invested about $52 billion in the United States from, you know, that includes everything from buying companies to real estate to new factories. And then in the first few months of 1992, that figure had dropped to $2.3 billion. And they made a net investment of $30, almost $31 billion

in securities. And by 1992, they were net sellers of government securities. They took some real baths like this financier Minoru Isutani, and this was one of these things that upset Americans. He bought Pebble Beach. He sold it for a loss of about $350 million. Yeah. So by the early 1990s, the tide was kind of going out, but the upset wasn't. And part of why this happened was the United States still had a close economic relationship, but there was a election going on. and a Japanese election in the United States, and a Japanese politician made a very intemperate remark about the appearance and abilities of American workers.

He said that they were not able to read in many cases, that they were overweight. And this caused a massive rage in the United States and a lot of politicians going into the election year. Obviously, gin this up. We talk about 92 here? This is in 1999. Oh, is this the whole it.

Democrat thing? The Atari Democrats are a little different. They wanted, they were among the people who were really curious about, I think, state industrial policy in Japan. I miss this whole era of American history, by the way, firstly, because I was like eight years old. But secondly, because I was in Japan. We didn't hear a lot about it. Well, you were there as the bubble popped. Yeah. So I never, I have no memories of experiencing this feeling of Japanese supremacy. I I have a lot of memories of feeling like the economy was very downbeat in the sort of early 2000s when I came back and when I was actually a teenager and sort of aware of my surroundings. Yeah. Did you ever get the sense that they felt like it was a missed, it was a lost golden era, a missed opportunity? I mean, I think there was a little bit of nostalgia, certainly in the finance community. You know, people could remember what the deal making days were actually like. But beyond that, I'm not entirely sure.

Got you. This summer, all the bros read Ezra Vogel's Deng Xiaoping biography. But he also wrote, and I think you talk about it, he wrote a Japan book in 1979. Japan is number one Lessons for America, which I think you talk about. Does that book hold up? Was it good? I think that that book is one of the more serious books. I mean, you know, he's a real scholar.

And it was more a real analysis of institutions. It doesn't get into the kind of, there may be a little armchair sociology in there about Japanese cultural morees, but there's definitely much more hard analysis of the relationship between government and business in Japan. Let's talk a little bit more about actually 1992 in the politics of that time. You mentioned Paul Songus. Yeah. He did win a primary somewhere. Didn't he like win New Hampshire or something? Anyway, but more importantly, that was also the year that Ross Perra ran as an independent and then he dropped down and then he got back in the race and he had a pretty good showing. He may have tipped the election to Clinton.

I think there's some debate about that. I know his main focus was NAFTA. But was there a Japan element to his populism? There was no one in politics at that time who was worried about the future of American economy, industry, even our political supremacy in the world that was not fixated or focused or had a comment to say about Japan. And Ross Perra was not an exception. He was both a protectionist. So he thought that the United States' trade policies were leaving us in a bad place with

regards to not only Japan but also at that time, West Germany, German unification had just happened in South Korea. But he also was very curious about the way he believed, he wasn't really much, he was a big capitalist, not much of a free trader. So he was really attracted to the close relationship between business and government in Japan. And he also was very proud of the close-knit nature of his companies, a delegation of Japanese businessmen, I think from Toyota, came to visit electronic data systems, his firm. And they praised them and they said, of all the companies in the United States, you're the most Japanese.

I bet they said that to everyone. Maybe, probably, but he was extremely proud of it. He was like, he said, every worker is a brother. That's the way Japanese companies run, and that's the way I run. So he thought we needed to adopt policies more like Japan between cooperation of business and government. This is something I find so interesting because in the Japan panic at that time, like one of the thoughts was, well, Japan is very bureaucratic, but in a good way. It's very like consensus driven. And we have big groups of people who get together and make a decision that's good for everyone. And then when you fast forward to today and all the angst about China, it's very much like, well, China has an authoritarian system of government and China can decide by a single person what it's

going to do. It's going to build like a huge high speed rail and that's not consensus driven. It's funny how it kind of flipped. Yeah, that is interesting. There wasn't the sense that there was direction or command and there was like a really strong political system behind all this. It was a series of, you know, on the smarter end, really good institute. and great education on the more pulpy, poppy end of cultural essential features that made them

extremely good at this. The way that they presented Japan was like there's no center of power. This is an interlocking Borg-like corporations and businesses are all cooperating in different ways. It wasn't like, oh, there's an authoritarian state of the leader. This leaderless authoritarianism, and there was some kind of fears that were reminiscent maybe. You got to also remember that the Cold War is winding up. The Soviet Union is no longer the primary opponent or rival the United States. So the collectivism of Japan becomes the thing that's set against American free enterprise and rugged individualism. Some people view that.

It's an interesting mix of admiration and envy and also kind of fear and saying, oh, we're not like that as Americans. So it's a little bit different. I mean, it's also different because the United States and Japan were. ostensibly military allies. They were in the same kind of block in the Cold War. They were arguably part of our empire, kind of under our protection. The discourse was that Japan was sneakily kind of getting out from under American hegemony to set up their own. And that doesn't make a whole lot of sense in historical retrospect or even was a possibility. No. China was obviously never had that kind of relationship with the United States. They were always, I mean, they were, we organized

a rapproachment with them, but they were never an ally or even one might say. I think Vassal State is putting it far too strongly, but part of the Western Bocke. This is exactly where I want to go to. Because one obvious difference besides the pop culture and everything else with U.S. China is that today in 2025, there are people who are very worried about war with China. Yeah. If China were to forcibly, were to blockade Taiwan, would D.C. feel impelled to enter a war? Is the Chinese industrial might going to sort of hollow out our capacity to even, like, build weapons at some point because we don't have any efficient factories in the United States? I mean, that is a very, that's very different, right?

Or were there shades of that? There were some very small shades of it. The more hysterical books imagined a shooting war between the United States. in Japan, a Japanese total reindustrialization that included remilitarization. This doesn't make a lot of sense because Japan is very insistent on its pacifism. I mean, that might be changing now. But that fear was really not one of the more realistic ones' projections. So there was a little bit of worry about that.

I think people were fantasizing and imagining Japan as a rival to the United States that would eventually be a military rival. It could be a military rival. But no. So far as I know, there was one book, The Coming War with Japan. Most of the others viewed it as a economic war and a cultural war. But the fantasy of, like, they were going to do, Pat Buchanan had an essay and a book about trade policy where he talked about. They've decided after losing World War II, they're going to take the economic road to build their empire.

So it was more like using war as a metaphor, but there was, I think, fewer worries about, the actual military mind, which makes sense. Canadian women are looking for more. More to themselves, their businesses, their elected leaders, and the world are at them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark. And in this podcast, we interview Canada's most inspiring women.

Entrepreneurs, artists, athletes, politicians, and newsmakers, all at different stages of their journey. So if you're looking to connect, then we hope you'll join us. Listen to the Honest Talk podcast and IHartRadio or wherever you listen to your podcasts. Can I push back on one thing, which is the premise of this entire conversation? Please. No, but the way we started out, we were talking about like the Japan panic really resonated with America. And I guess my question is like, yes, there were books. Yes, there were some characters and movies and things like that.

But did it actually resonate in the political or social sense? Because, you know, I'm looking at a headline right now from. 1992, and it says, harsh views on Japan may help fuel Perrault Perot campaign. Well, Perrault ran unsuccessfully for president, so I would argue they did not, in fact, help him. Well, I would say that he had the most successful third-party candidate. Yeah, okay, that is true. About 20% of the vote, which is significant,

I think about two-thirds of Americans by 1989 believed, believed, I mean, there's reason for this because the Soviet didn't look like it was on its last legs, but believed that Japan was a bigger threat than the Soviet Union. And a lot of politicians went on the stump. Songus tried to Japan bash, as they called it. Pat Buchanan went Japan bashing. Clinton less so. But I would say there was a side of Clinton's campaign and the side of his eventual staffing of his administration that was definitely a lot closer in thinking to the people who are worried, both worried about and admiring of Japan. They went in with the intention of being really hard-nosed about certain trade negotiations. And they also, and this is not, we talk a lot

about industrial policy. There was discussion of industrial policy back then. There was a side of the Clinton administration that looked at Japanese industrial policy and protectionism and said, this looked very interesting. We may be living in a very different world if the bubble doesn't pop in Japan and those policies start to make more sense. So the side of the Clinton administration I mean that that is both interested and wants to take a tougher lie in Japan, it kind of becomes a moot point as Japanese economy kind of collapses and fades away. So it was a really pivotal moment. And yeah, I think that it's such a strange thing that it was everybody was fixated on it. It was such common sense. Politicians ran on it, arguably demagogued on it. And then it's kind of a

historical curiosity. Can I ask one more question? Of course. Which I don't know if you'll have the answer to this, but I've always wondered about it. Why was there not as much hand-wringing over Korea, say? Because on the face of it, this is a country that also very rapidly developed economically, also had similar relationships with the U.S., U.S. military presence and some U.S. investment and things like that.

but it all seemed to be directed at Japan rather than Korea. I think that that is because of the United States' history with Japan and the war, which had it in our imagination. I think also Japan at that time was a kind of cultural hegemon in East Asia and the way that maybe South Korea is now in terms of their exports of pop culture and video games and art and music and so on and so forth. I think that's a big part of it. I think also there's a great book by an author Drew McKivitt called Consuming Japan. I think Japan in a way was a lot of Americans for, and he argues that Japan away was a lot of Americans first contact with globalization. And it was both very interesting, but also a little scary, an alien. And I think perhaps China, the rise of China, the rise of South Korea, it doesn't

look so weird anymore because we went through the experience of Japan. And also because the experience of Japan kind of turned into a nothing. So perhaps some of the cultural memory of that or the familiarity we have with other cultures from Japan, I don't think we Americans are so used to are more cosmopolitan than I would say that we are at the beginning of the 80s. Japan throughout all of this, I mean, it was cool, right? Like Sony Walkman were always cool in the United States. People look at the Chinese EVs and they're very impressive. I don't know if any of them are like cool.

We don't really have Chinese branded other than Lububu's actually Which I think is like the first time there's a specific Yeah Chinese made capital B brand that sort of I was gonna say like We joked about doing a Lubu episode before But like I think we actually should Because this is probably China's like biggest cultural export

Brand thing but like Japan is just so cool They created a lot of really inexpensive But extremely interesting and fun devices I miss my Game Boy, I got to say. I miss my mini-displayer, and it wasn't even that useful. It was just really neat. Nintendo, right. Nintendo, Sega.

The design was terrific. I think one thing that Japan, and this was also American businesses, were really curious about how Japan did it. And they have all these wonderful craft traditions. And all these wonderful craft traditions are not left behind. They're incorporated into industrial production. Detail-oriented. Detail-oriented engineering, a lot of pay-ed.

attention to design and aesthetics. So that, I think, was a big reason why a lot of those products were really nicely designed. I think it's a sad thing in a way. I think there's a little bit of China of people starting to think Chinese cars are cool. Japanese cars were always like, that's reliable and well built, but they weren't like, they were kind of like, it's a little boring. Okay. To own a Japanese car.

Japanese electronics, I think, were always like, this is really neat. I think it was not necessarily maybe. Lexus was the exception, right? But Toyota, Honda, I think these were, oh, it's very practical, practical choice. I think there's a little bit of Chinese car culture starting that's like, oh, yeah, they're really making some cool looking stuff over there now. And also there is a beginning, you know, you see lots of TikToks and reels and so on and so forth of Japanese, I'm sorry, Chinese cities.

So I think there's a beginning of, I don't know what I call it China chic, but definitely like, wow, amazing things are happening in China. So I think there's a little bit of that. I am not a young person anymore. And I think there's also just like, you know, Apple is so dominant in consumer electronics and you don't need that many devices anymore. So the fact is we don't need CD players. We don't need walkmen.

We don't need many disks. We don't need all these different things. So there was this kind of wonderful market that had all these different gadgets in it. And I think that that fascinated people. And your phone or your computer does all of that now. I find that to be, I mean, this is just a factor totally of aging and nostalgia. But as we were just saying, I find that to be a little sad. And I thought those devices were actually better in certain ways.

Joe, I just remember the car my mom had in Tokyo in the early 1990s. What was it? It was called My Fair Lady. Wait, what? It was manufactured by Nissan. And it was actually a really cool looking car. but it had a terrible name. So I don't know if it would be considered cool or not.

They often switch names, I think, when they came to the United States, they would have consultants tell them that branding would sound strange to America. The Nissan Fair Lady Z? I think so. It's so sick. It's a really nice looking car. It was some sort of sports car from whatever. It's a citron almost.

Yeah, they look cooler than I would associate with a typical. Yeah, I thought it was going to be some kind of like minivan, like suburban. Yeah. Yeah, wow. Yeah, it's very cool. That should have extremely look cool looking car. Yeah. Yeah, it was.

It just had a very strange name. I always remember that. I remember like staring at the steering wheel because I think it was like printed on it. Anyway, back to the topic at hand. So there are clearly parallels between the Japan panic and a lot of the fear around China at the moment. On the other hand, there do seem to be a lot of big differences. Number one, China is not a tiny island with a lack of natural resources. and farmable land and things like that. It has a much bigger population.

Walk us through where you see the biggest areas, I guess, of similarity and difference. I mean, exports were a big part of the growth of both. There's obviously a strong state in both. In one case, it's more this vaunted Japanese bureaucracy, which then turned out not to be so great. And the other side, it's the Communist Party and state banks. Big trade surplus is a big part of it. But there are a big difference. I mean, China's a lot. bigger has a way bigger population. I think its political system, as you're saying, it can kind of make things happen and prevent things from happening, make really radical intrusions in the financial system. It doesn't have infinite power in that regard. I think I've heard you guys

discuss that on, but I think they have definitely a little more political economic firepower than Japan has. And I think part of that is, you know, the strength of the Communist Party is an institution and the size of the population. It is interesting to think, like here in 2025, we could have a conversation. You know what? China is really successful because it coordinates its banks with its manufacturers. They have this very intense ideological grooming such that executives are major. They believe in the Chinese Communist National Project. They're willing to sacrifice returns for the country.

They're willing to sacrifice returns and all these things. And in theory, and I don't know what's going to happen, but in theory, it's, two years, we could go back and say, oh, they had all these corrupt relationships between the companies and the banks. Crony capitalism. It was all this crony capitalism, et cetera. It is hard to know in real time what factors are real in success, because I do find when I read stories about the degree to which the CEO of Huawei deeply believes in the CCP and

the sort of nationalist agenda, like, yeah, wow, that's very compelling. I can see how there's this alignment. But then, you know, something good. happened a few years later, you're like, oh, that was really silly how they like, you know, right? It's hard to know in real time, isn't it? Yeah, I think that's absolutely true. I don't think, you know, we should be complacent. Sure. But I think it's an interesting lesson of the history here is just things can go from being

commonsensical, the biggest threat. Everybody knows that they're going to win. Everybody knows that they have a better system. And then a few years later, everyone was like, what were we thinking? Why did we think that? And we could, they had so many internal problems that were just out of this. And that's kind of the same way with financial bubbles bursting. I guess you could talk about these as also as like political bubbles,

is that everyone's like, oh, wow, look at this big combine, this big system that's kind of humming along. And then things are going on behind the scenes that are like, oh, there's an intrinsic flaw that's making its way to the surface. And then it kind of manifests itself. So George Soros gave a great speech one time making this exact point, that there is a similarity between what he would call financial bubbles and like political bubbles, where you believe in a system, and then something emerges that sort of irrevocably shakes your confidence in this system. So I find that analogy very compelling. Yeah.

But Japan didn't cease to exist. Yeah. It's still one of the richest, it's thriving, peaceful, prosperous country. It's not a terrible place to live. No. Yeah. It's not like it went back to the Stone Age. So I think that that's also just very growth mindset.

But it still, I think, has an extremely low rate of unemployment, relatively healthy population, good education. not a terrible place to live. Just on this point, though, why didn't Japan get into the sort of software side of technology, as much as it did on the sort of hardware side in the 80s and 90s? You know, I think that that is a question. I don't exactly know the answer for, but that's often given as the big mistake that they made, right?

So Japanese companies made an investment decision at just the wrong time that hardware, and I think it was partially because they were always just really good at developing hardware, and they had developed a lot of institutional knowledge about making devices and improving devices, improving hardware. And they were like, look, this is what we're good at. I also think that there is a certain, not to get into too many cultural explanation,

but there is a certain conservatism in Japan about tools, about, about devices, and things that are seen to work aren't quickly gotten rid of. The Japanese government just had to kind of wage an internal jihad to get people to get its own bureaucracy to stop using floppy disks. Japanese companies still often use fax machines. As Tracy knows. I know. I used to, part of my job used to be monitoring a fax machine for press releases. And most of them that came in were from Japan.

And this was like the mid-2000s. Yeah. And I think that there's that sense that some things, some ways of doing things, some processes, some technologies are good, and there's not any real reason to replace them. And obviously, like, when productivity is your number one goal, that's not necessarily, again, it may make, in some way, I find it very charming. And I find it also, one theory I've read is that the reason why unemployment is very low is because somebody has to be there to get those faxes, and they're not that Japanese

These companies are not that keen to adopt software that might replace a worker. So there's a certain kind of pro-social attitude and not doing these upgrades. But yeah, the transition to the software age was one of those places where Japan is thought to have made a wrong term. Yeah, New Jersey, they still don't let you pump your own gas, right? We have our own cultural dimension. New Jersey famously socially oriented. That's right. John Gans, author of the unpopular front substack and the recent book When the Clock Brope.

Thank you so much for coming on to odd laws. I'm thrilled that we made this happen. Yeah. Thank you. Tracy, that was a lot of fun. I do think that Japanese stuff seemed really cool back then. Yeah. In a way, again, maybe we should talk more soon about the rise of China, the brand,

and whether it will break through. Yeah. Let's just do the Labubo. Yeah, we'll do it. Just give in. It's inevitable. Someone told me that if you go to the, um, The Running Shoe subreddit, there's a lot more mentions of, I think there's, to Anta is like the Nike of Japan, that you see more mentions of them on like, I tried to build a scraper of brand mentions over time. I couldn't get it done on Reddit.

So I do think we should talk about that. But, you know, that's a whole aspect of Walkman, Nintendo. Those were cool brands the whole time. You know what's interesting about Nike and China is that there was a big pushback domestically against Nike product. because of rising nationalism in China and the idea that maybe Nike had made some missteps that like offended policy makers or people there. But no, overall, like having this conversation from 2025, given what we know about Japan today, the whole thing seems like, wow, that's, you know, it seems very surreal.

It seems very quaint. It feels very quaint. Like this idea that we were really worried that a relatively small island was going to take over the world. That we had a base on, right? More than one base, just to be clear. Multiple bases on that we were as military related, that there was that much anxiety. It's sort of interesting chapter in our history.

I do think it's also interesting, again, to think about how much a lot of the strengths and weaknesses have flipped in perception, the idea that bureaucracy and consensus decision-making was once seen as this competitive advantage, and now it's totally the opposite. I mean, in every context, right? You say, oh, one of the great things about the U.S., we have all these great checks and balances, et cetera.

And then suddenly we, like, can't build anything or get any laws passed. Oh, one of the big problems with the U.S. is there's so many veto points and you can't get anything done. It's just whatever the mood is at the time, the same set of conditions will either be get the blame or the credit. It's just a giant pendulum swinging back and forth, markets and politics. That's right. All right. Shall we leave it there? Let's leave it there.

This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway. And I'm Joe Wisenthall. You can follow me at the stalwart. Follow John Gantz. He's at Lionel underscore trolling. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashobin, and Kail Brooks at Kail Brooks. For more Oddlots content, go to Bloomberg.com slash Oddlots. We have the daily newsletter and all of our episodes. And you can chat about all of these topics 24-7 in our Discord.

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