Government and Business: How Close Should They Be?

[Cynthia Stults]

One thing that struck me during both the readings and the lecture was that of the Japanese government's relationship with Japanese businesses. During WWII, both the U.S. and Japan had much more governmental involvement with business, in order to better support the war effort. However, the U.S. changed that relationship pretty soon after the war ended, but Japan continued, and even strengthened the governmental influence and involvement with businesses. The government determined which industries they wanted/needed to be successful (electronics, construction, automobiles)and gave them an unfair advantage. The Japanese government gave lots of capital to its banks, who then lent out that money to preferred companies and industries, even if they weren't creditworthy. This strategy definitely helped Japan become a major exporter to the United States and an economic powerhouse, but these practices could not be sustained and then they experienced the "bubble economy" and as we experienced, bubbles always burst and Japan has only started to again grow economically. I suspect that those raging capitalists would argue that this makes the case for the government to stay out of business. What do you all think?