“Why?”

“The decline of American business is starting to disturb even Congress. We’ve lost too many basic industries to Japan—steel and shipbuilding in the sixties, television and computer chips in the seventies, machine tools in the eighties. One day somebody wakes up and realizes these industries are vital for American defense. We’ve lost the ability to make components essential to our national security. We’re entirely dependent on Japan to supply them. So Congress starts to worry. But I hear the sale is going through, anyway. Why? Do you guys have something to do with the sale?”

“In a sense,” Connor said.

“Lucky you,” Ron said, puffing on his cigar. “If you’re involved in a sale to the Japanese, it’s like striking oil. Everybody gets rich. You two are looking at some pretty big gifts, I imagine.”

Connor nodded. “Very big.”

“I’m sure,” Ron said. “They’ll take care of you: buy you a house or a car, get you cheap financing, something like that.”

I said, “Why would they do that?”

Ron laughed. “Why would they eat sushi? It’s the way they conduct business.”

Connor said, “But isn’t MicroCon a small sale?”

“Yeah, pretty small. The company’s worth a hundred million. Akai’s buying it for a hundred and fifty. On top of that, they probably have another twenty million in incentives to the current corporate officers, maybe ten million in legal, ten million in consultant fees spread around Washington, and ten million in miscellaneous gifts for people like you. So call it two hundred million, in total.”

I said, “Two hundred million for a hundred-million company? Why are they paying more than it’s worth?”

“They’re not,” Ron said. “As far as they’re concerned, they’re getting a bargain.”

“Why”

“Because,” Ron said, “if you own the machines that are used to make something, like computer chips, you own the downstream industries that depend on those machines. MicroCon will give them control over the American computer industry. And as usual, we’re allowing it to happen. Just the way we lost our television industry, and our machine-tool industry.”

“What happened to the TV industry?” I said.

He glanced at his watch. “After World War II, America was the world’s leading manufacturer of televisions. Twenty-seven American companies like Zenith, RCA, GE, and Emerson had a solid technological lead over foreign manufacturers. American companies were successful around the world, except in Japan. They couldn’t penetrate the closed Japanese market. They were told if they wanted to sell in Japan, they had to license their technology to Japanese companies. And they did, reluctantly, under pressure from the American government, which wanted to keep Japan as a friendly ally against Russia. Okay?”

“Okay…”

“Now, licensing is a bad idea. It means Japan gets our technology for their own use, and we lose Japan as an export market. Pretty soon Japan begins to make cheap black-and-white TVs and exports them to America—something we can’t do in Japan, right? By 1972, sixty percent of American black-and-white sales are imports. By 1976, one hundred percent are imports. We’ve lost the black-and-white market. American workers don’t make those sets any more. Those jobs are gone from America.

“We say it doesn’t matter: our companies have moved on to color. But the Japanese government starts an intensive program to develop a color-television industry. Once again, Japan licenses American technology, refines it in their protected markets, and floods us with exports. Once again, exports drive out American companies. Exactly the same story. By 1980 only three American companies still make color TVs. By 1987, there’s only one, Zenith.”

“But Japanese sets were better and cheaper,” I said.

“They may have been better,” Ron said, “but they were only cheaper because they were sold below production cost, to wipe out American competitors. That’s called dumping. It’s illegal under both American and international law.”

“Then why didn’t we stop it?”

“Good question. Especially since dumping was only one of many illegal Japanese marketing techniques. They also fixed prices: they had something called the Tenth-Day Group. Japanese managers met every ten days in a Tokyo hotel to set prices in America. We protested, but the meetings continued. They also pushed distribution of their products by collusive arrangements. The Japanese allegedly paid millions in kickbacks to American distributors like Sears. They engaged in massive customs fraud. And they destroyed the American industry, which could not compete.

“Of course, our companies protested, and sued for relief—there were dozens of cases of dumping, fraud, and antitrust brought against Japanese companies in federal court. Dumping cases are usually resolved within a year. But our government provided no help—and the Japanese are skilled foot-draggers. They paid American lobbyists millions to plead their case. By the time the suits came to trial twelve years later, the battle was over in the marketplace. And of course all during this time, American companies could never fight back in Japan. They couldn’t even get a foot in the door in Japan.”

“You’re saying the Japanese took over the television industry illegally?”

Ron shrugged. “They couldn’t have done it without our help,” he said. “Our government was coddling Japan, which they saw as a tiny emerging country. And American industry was perceived as not needing government help. There’s always been a strain of antibusiness sentiment in America. But our government never seemed to realize, it’s just not the same here. When Sony develops the Walkman, we don’t say, ‘Nice product. Now you have to license it to GE and sell it through an American company.’ If they seek distribution, we don’t tell them, ‘I’m sorry, but American stores all have preexisting arrangements with American suppliers. You’ll have to distribute through an American company here.’ If they seek patents, we don’t say, ‘Patents take eight years to be awarded, during which time your application will be publicly available so that our companies can read what you’ve invented and copy it free of charge, so that by the time we issue a patent our companies will already have their own version of your technology.’

“We don’t do any of those things. Japan does all of them. Their markets are closed. Our markets are wide open. It’s not a level playing field. In fact, it’s not a playing field at all. It’s a one-way street.

“And by now we have a defeatist business climate in this country. American companies got their asses handed to them in black-and-white television. They got their asses handed to them in color television. The U.S. government refused to help our companies fight illegal Japanese trade practices. So when Ampex invented the VCR, they didn’t even try to make a commercial product. They just licensed the technology to Japan and moved on. And pretty soon you find that American companies don’t do research. Why develop new technology if your own government is so hostile to your efforts that you won’t be able to bring it to market?”

“But isn’t American business weak and badly managed?”

“That’s the standard line,” Ron said. “As promoted by the Japanese and their American spokesmen. It’s only with a few episodes that people ever glimpsed how outrageous the Japanese really were. Like the Houdaille case. You know that one? Houdaille was a machine-tool company that claimed its patents and licenses were being violated by companies in Japan. A federal judge sent Houdaille’s lawyer to Japan to gather evidence. But the Japanese refused to issue him a visa.”

“You’re kidding.”

“What do they care?” Ron said. “They know we’ll never retaliate. When the Houdaille case came before the Reagan administration, it did nothing. So Houdaille got out of machine tools. Because nobody can compete against dumped products—that’s the whole point of doing it.”