ABSTRACT
I Love You, You’re Perfect, Now Change is the title of a long-running offBroadway musical in New York City that chronicles the course of love and marriage. One could forgive Japanese visitors if they surmised from the title that the show was actually about the changing perception of Japan in Europe and North America. In the 1980s, the Japanese economy registered strong income growth; the yen soared in value; high domestic savings rates allowed massive investments overseas; soaring equity and land values commanded daily media attention; and Japanese economic institutions and business practices were lavished with praise (and sometimes vilified) by the Western media. North American and European firms and governments studied the Japanese experience closely to see what aspects of Japanese business practices and institutions they could adopt to improve their own performances. In the 1990s, the love affair with Japanese institutions was shaken when Japan’s economic bubble burst. Land and stock market prices began a precipitous fall in 1990 that only leveled off in the 2003-05 period; real income growth was low and volatile for over a decade (1991-2003); deflation in consumer prices from 1995 raised anxiety among foreign and domestic observers that the economy was on the verge of collapse; and massive losses on overseas investments, e.g. in Hawaii and New York City, sullied Japan’s image as an economic superpower with a uniquely long vision in making investments. Calls of Now change! began to resound both inside and outside of Japan after 1995. Yet within just a few years the academic and media chorus began to repeat a new refrain: Why doesn’t Japan change? Why doesn’t Japan reform its unique economic and political institutions, remolding them around the successful models observed in Great Britain and the United States?
