Self-Made America, Group-Think Japan

More Like Us: Making America Great Again, by James Fallows, Boston: Houghton Mifflin, 1989, 245 pages, $18.95

For several years James Fallows has been the best thing about The Atlantic. His articles on economic change and on immigration were among the best journalistic pieces available on those topics, and his recent dispatches from Asia have been fascinating. Now he has combined all those reports into a provocative book that seeks to explain and revive America's success by contrasting this country with Japan.

"America's strength is the opposite [of Japan's]," he writes. "It opens its doors and brings the world's disorder in. It tolerates social change that would tear most other societies apart. This openness encourages Americans to adapt as individuals rather than as a group."

Fallows offers an enlightening and entertaining discussion of what Joseph Schumpeter called "creative destruction." While both the left and the right look for ways to slow down economic and social change, Fallows writes, "What capitalism really means is change. Its essence is that nothing stands still.… Capitalist change is the enemy of order and tradition not simply because it never stops but also because its direction is impossible to predict."

The book is full of fascinating facts and anecdotes that flesh out the theory. In the three centuries since the Industrial Revolution, two-thirds of the jobs existing at the beginning of each century have been "destroyed" during that century—but three times as many people have been employed by the century's end. In the 1950s IBM thought the world market for computers would be about 10 machines, and Xerox made about the same prediction for copiers. At the turn of the century, enlightened opinion warned that American forests were about to disappear, but more of the United States is forested now than a century ago. In the 1960s distinguished professors told congressional committees that Americans already had everything they could want, so what were we going to do for a living?

Fallows says that unlike citizens of most countries, Americans like to "reinvent" themselves when they're dissatisfied, moving to a new city or state, changing careers, and so on. As illustrations he offers a blue-collar mid-westerner, who left a failed marriage and a failing industry to move to Texas, and a family of Vietnamese immigrants, who represent the classic immigrant story. They started at $2.10 an hour, saved two-thirds of their pay, and ended up owning several homes and businesses in a few years.

He also offers the instructive lesson of William F. Buckley, Jr., who "has basically the same lineage as, say, Lyndon Johnson," both of them descended from rural Texas politicians. But "Buckley made himself sound as if he were a 10th-generation Old Etonian. In a sense, he is the classic American, since he has completely invented a new identity for himself."

Fallows's policy proposals, designed to "make America more like us,…to allow more people to believe that they can control their fate," are pretty good for a neoliberal. (Of course, neoliberal writers are always better than neoliberal politicians, who turn out to have voting records indistinguishable from those of paleoliberals.) Like George Gilder and Joel Kotkin, he seeks public policies that strengthen the open, fluid, dynamic nature of our society.

Drawing largely on S. David Young's The Rule of Experts, he challenges the whole notion of occupational licensing, which protects some competitors and keeps others out. Licensing is often overlooked by free-market economists, who tend to concentrate their fire on entitlement programs. But licensing misallocates the skills of the most talented and productive people in society—from doctors and lawyers to skilled crafts workers such as plumbers and electricians-and thus probably has a severe impact on economic growth. Fallows focuses on the way licensing emphasizes credentials over competence and locks people into career choices early.

For similar reasons, he's highly critical of I.Q. tests, which have frequently been part of government—especially military—efforts to channel people into "appropriate" niches. Fallows calls this an alien "Confucian" element in "an America culture that is based on the radically non-Confucian promise of constant, unstructured change." He cites a great deal of evidence on the poor predictive value of I.Q. and "aptitude" tests, (notably the Scholastic Aptitude Test).

Nevertheless, in a mobile society of 240 million people, college admissions officers and employers need some way to select qualified applicants, and aptitude tests do seem to be the best choice in many circumstances. Standardized tests have been a way for outsiders, particularly Jews a generation or two ago and Asians these days, to demonstrate their competence. Indeed, Fallows seems to have forgotten that as a middle-class boy from Southern California he got into Harvard "by scoring well on standardized tests that let me measure up against people from more impressive-seeming schools."

Fallows has a healthy view of the value of immigration in keeping our society open and constantly changing: "A disproportionate share of the ambitious people of the world are fighting for a chance to use their ambitions in the United States." He also wants to open up America by shaking up the education bureaucracy: instituting a voucher plan and giving principals the authority to choose qualified teachers regardless of their credentials. No other approach is likely to bring about quality education in the inner city, and better urban schools are vitally needed to give poor children a chance at escaping the ghetto.

Fortunately, Fallows relegates to a footnote his view that "the strongest argument for an America industrial policy is that since we are destined to spend the money anyway, we may as well do so with a plan in mind." This point, uncontroversial as it might seem to some, directly contradicts his arguments about "the American talent for disorder" and the failure of experts to predict the future with any degree of accuracy.

The more controversial part of Fallows's analysis is his view of Japan. He begins by arguing that "a society that is true to its own culture will usually have a healthy economy. It will have found the right way to elicit its people's best efforts." Since culture differs from country to country, so must economic institutions. Creative destruction works for us, but a far more ordered system works for Japan, which "has two cultural advantages America can't match: a concept of racial unity and a tradition of effort for its own sake."

The Japanese, he says, are a very insular society. They routinely talk about what "we Japanese" think. Their standard slogan during World War II was "one hundred million with one heart." This sense of unity both excludes other people—it is difficult if not impossible for non-Japanese to become citizens of Japan even after several generations—and gives the Japanese a sense of pulling together, of working hard because they're all on the same team.

In addition, the Western concept of the economic person—that workers and consumers make their decisions on the basis of individual economic gain—doesn't work in Japan, where "much of the reward is in the effort itself." What does this mean for economic policy? In Japan, "the welfare of its consumers has consistently taken second place to a different goal: preserving every person's place in the productive system.…Japan has consistently protected its farmers, unions, small shops, big corporations—at the expense of all the Japanese consumers, who must pay exorbitant prices for everything they buy." This has made Japan a formidable world economic power while leaving the Japanese standard of living well below American and European levels—and most Japanese don't mind.

This is, to put it mildly, a thought-provoking and controversial thesis. Fallows claims that three groups of people typically minimize the importance of national culture: Marxists; free-market thinkers, who believe that people anywhere respond to economic incentives; and Americans in general, whose culture is so open "as to foster the belief that 'culture' itself may not matter at all." As a member of two of those groups, I certainly have my doubts. I would not deny that culture, broadly defined, has an influence on economic growth, in regard to both what kinds of economic institutions a society will have and how people will respond to those institutions. But I am skeptical that a whole nation will work hard—and efficiently and creatively—just to produce national pride and a trade surplus.

Fallows's view of the Japanese is sharply criticized by other Western experts. He says that Japan channels people early in life to the best universities, the best jobs, and so on; "the second chance is not a cherished Japanese ideal." But critics point out that the founders of Sony, Honda, and Matsushita, among others, were not graduates of the best colleges or even of any college. Critics also argue that although the Japanese economy may be rigged against consumers, that fact reflects the wishes of a ruling class, not the whole society. A younger generation is likely to challenge the system in the near future. Such a popular rebellion may indeed be touched off by the Recruit scandal, which disclosed corruption among top government officials and business leaders.

For those of us who have spent little or no time in Japan, it is difficult to adjudicate this argument. For us Japan may remain, as Winston Churchill said about Russia, a riddle wrapped in a mystery inside an enigma.

Whatever the merits of Fallows's view of Japan, his understanding of America is a healthy rebuttal to those who would try to turn us into a corporate state to match their notion of Japan Inc. Whether or not they are really unlike us, we would do well to be more like us.

David Boaz is vice president of the Cato Institute in Washington, D.C.