ABSTRACT
As the United States suffered a stock market plunge in 2000-2002, and then an outbreak of corporate scandals in 2002, the "resistance forces" in Japan seized upon these travails to provide grist for their anti-reform mill. This chapter offers three responses. First, America will not suffer anything close to Japan’s “lost decade.” On the contrary, its growth rate during the coming decade will most likely be 3 percent or more. Second, nothing in the misdeeds of some US firms suggests that Japan would be better off with more inside directors, less shareholder power, and even less aggressive accounting than it has now. Third, there are clearly areas where the United States went overboard in its infatuation with the “magic of the marketplace.” There were also insufficient safeguards for employees as America moved to the “defined benefit” plans known as 401 Ks. There is no reason Japan cannot simultaneously institute reform and avoid such mistakes.
