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November 12, 1977 - Image 4

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Michigan Daily, 1977-11-12

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Eage 4-Saturday, November 12, 1977-The Michigan Daily
Eighty-Eight Years of Editorial Freedom
420 Maynard St., Ann Arbor, MI 48109
Vol:LXXXVIII, No57
News Phone: 764-0552,
Edited and managed by students at the University of Michigan

11

Japan 's exports threaten ties

By DAN OBERDORFER -
When Japan's ambassador to
the U.S., Fumihiko Togo, ad-
dressed several audiences on
campus last week, his message
was clear; escalating economic
tension in U.S.-Japanese rela-
tions is becoming a problem the
Japanese wish would go away.
The Japanese are not alone in
their displeasure over the current
status of trade relations between
our two countries. American tele-
vision, steel, motorcycle, micro-
wave oven, and CB radio manu-

THE PAST several years have
seen the American balance of
payments worsen. It is estimated
that this year's debt will reach
the $30 billion mark.
To the American business com-
munity, a trade deficit means
American consumers are spen-
ding their incomes on foreign
goods, in this case Japanese. The
leakage of funds from the domes-
tic economy cuts into the profits
of companies which compete with
the importers. As their products
are bought less, production is
curtailed. Domestic unemploy-

Merrill Lynch is tou bullish

M ERRILL LYNCH, the nation's
largest stock broker, was ac-
fused by the Securities and Exchange
4,ommission (SEC) Thursday of fraud-
itlently pushing stock on its clients
without adequately investigating the
stock's potential.
Ironically - or maybe not so ironi-
ally - Merrill Lynch is the same firm
yho encouraged Ann Arbor City Ac-
4ountant Marc Levin to enter into spec-
ulative investments of taxpayer's mon-
ey. To make a long story short, the city
jpst barely avoided losing $1.4 million;
Levin has been fired; and Merrill Lyn-
ch, supposedly in a show of good faith,
fired the broker with whom Levin
dealt.
We see now that Ann Arbor is not
the only one to have been victimized by
the Merrill Lynch Corporation.
While the city certainly was not
faultless in the whole affair, revela-
tions about questionable business prac-
tjces do give one pause in assessing
1lame. Clearly, one cannot say that be-
cause a firm is accused of doing some-
thing ten years ago they automatically
Fightingto a
HE TRAGIC series of events along
, the border between Israel and Leb-
anon only serve to remind us that the
troubles between those two nations will
liot solve themselves - nor will they
- isappear if we turn our heads.
Over a period of three days, three
sraeli civilians and at least 100 Leban-
*se civilians fell victims to attack and
*etaliation maneuvers. No matter
vhich side this country supports - or
iny other country supports - one can
aot condone the activities of either the
alestinian guerrillas or Israel.
eath _innocent' citizens are not
ustified by any political school of
hought. Murder is murder.
For the entire length of time Israel
has been a legitimate state, murder
has only begotten murder; attack has
nly drawn retaliation. The pattern
appears ,by now to almost be under-
stood by all sides as a natural law.
erhaps this is the only law which has
orked to decrease the incidence of
iolence in the Middle East.
1 It may be a fact that one side will
esitate before launching an attack on
he other, for fear that the extent of the
ther's retaliation will be too great a
rice to pay. Inevitably, however, the
apse between violent outbursts is
ade up for in the size and severity of
ater attacks and counter-attacks.
a As long as the grotesque exchange
bf slaughter continues, one side will
always have some vengeance for
nother.

are guilty in another scandal in
another state ten years later.
However, investments are very
complicated maneuvers. That is why
we have investment firms. When one
goes to a firm such as Merrill Lynch -
regardless of whether they represent
themself with $1,000, or a city with mil-
lions in taxpayer's money - one
should have a right to expect to be
dealt with honestly and in the best of.
faith. Merrill Lynch now has dark
shadows being cast on its reputation
for ethical dealings.
Moral ethics are something that
have been lacking in much of "big
business" for sometime now. For the
most part, however, businesses are
dealing with money which they have
themselves earned. An investment
firm deals with other people's money,
and therefore higher ethical standards
are expected from them. Merrill Lyn-
ch is not meeting those standards, if
the SEC charges are any indication.
Merrill Lynch is bullish, alright -
but on themselves, more than anything
else.
Geneva peace
The only thing one seems able to do
from overseas is urge that the Israelis
and the Arabs recapture their senses
and prevent a new cycle of bloodbaths
from occurring.
Aside from the innocent lives which
would be lost, a new flare-up between
the two sides might threaten the
delicate advances which have been
made toward convening a Geneva
peace conference. Egyptian President
Anwar Sadat said only this week that
he would go directly to the Israeli
parliament, if necessary, to get a new
peace conference underway. Sadat at
the same time urged leaders of other
Arab countries to set aside
"procedural" difficulties associated
with the Geneva meeting and work
toward getting the sides together at a
common table.
Israeli Prime Minister Menahem
Begin yesterday added that Israelis
are willing to seek not only peaceful,
but cooperative relations with Egypt in
the future. It is true that these are only
the words of politicians, nevertheless,
they are good words. A new conflict in
the Middle East at this time would set
those words back ten years.
The events of this week prove that
just waiting for peace is unrealistic;
Israelis and Arabs cannot resolve their
differences on their own. Geneva is the
only plausible way toward a per-
manent peace. If this week's senseless
loss of lives prompts Middle East coun-
tries to convene in Geneva any sooner,
then the victims did not die in vain.
1 i

less

'If world economic problems per-
sist, the world is going to look for a
scapegoat and Japan is a likely tar-
get.' - U. S. Deputy Secretary,
of State Bob Oakley

tured goods by the Japanese
would swing her imports toward
a level more consistent with the
rest of the world.
"Japan is a big market for
things, but the toughest thing for
them to do is to open their mar-
kets to imports," Oakley said.
From the Japanese standpoint,
opening her markets to unempe-
ded trade may harm many of her
weaker industries. Meat prices,
for example, are kept at an arti-
ficially high level so Japanese
cattle raisers can remain in busi-
ness. Land is so scarce in Japan
that open competition in the meat
market would bring about the de-
mise of disadvantaged Japanese
cattlers.
ANOTHER METHOD for
stimulating imports is to
stimulate the economy. In
theory, as the economy is stimu-
lated and consumers make more
purchases, many of *the extra
purchases will be for imported
goods. This is the road the Japa-
nese government chose earlier
this fall.
Instead of cutting into trade
surpluses as the government ex-
pected, the policy may have con-
tributed to skyrocketing surplus-
es. It is estimated that their trade
surplus of $16 billion will grow
four or five times this year.
Oakley feels that "if the world
economic problems persist, the
world is going to look for a scape-

But, the Japanese have been
wrongfully blamed for being a
source of our steel industries
woes.
Recently, the Japanese gov-
ernment has compared the 1930s
to the current threats of import
restrictions being laid to her
products. During the 30s, western
nations closed their markets to
Japanese textiles, sometimes
with rapist intent. These restric-
tions- helped precipitate the Pa-
cific War. It is interesting to note
that the Japanese see the current
situation through some of the
same light.
JAPAN IS dependent on the
U.S. for a number of things. Not
only is trade between us a boon to
her economy, but she must count
on us to preserve the precarious
power balances in Asia. If politi-
cal shifts in Asia were to prohibit
free trade, Japan's economy
might falter.
Although essential elements
exist for creating a fieldable mili-
tary of her own, Japan has none
at the presentsbecause of post-
war agreements. American troop
withdrawals from Vietnam, and
lately from Korea, have added to
Japan's uncertainty about
America's commitment to her.
While Japan continues to be de-
pendent on the U.S. both militari-
ly and economically, she must
realize how firmly our govern-
ment is committed to propping up

facturers recently charged the
Japanese with selling their coun-
terpart products under cost, or
"dumping."
THE DEPARTMENT of State,
also, is showing signs of greater
concern for the issue. Very inten-
sive discussions are being con-
ducted by U.S. and Japanese of-
ficials over the problem of
growing payments imbalances
between our two nations, accor-
ding to remarks made earlier in
the week by Deputy Secretary of
State for East Asian Affairs Bob
Oakley.
In a nutshell, the problem is
this. The American side is hard-
ening its opposition against sub-
sidizing Japanese trade surplus-
es as long as American continues
to incur large deficits. The Japa-
nese side is worried the Ameri-
cans, might stand up to their
word.
Since their surrender at the end
of W.W. II, Japan has looked to-
ward the U.S. as a market that
can be utilized whenever neces-
sary. Trade volumes have
skyrocketed over the years. Last
year, Japanese exports worth
roughly $15.7 billion reached the
U.S., nearly one-fourth of their
total exports.
TRADE BETWEEN us is more
volumnous than that between any
two other nations in the world.
"The United States has long been
Japan's best .customer in the
world," Togo said in one of his
speeches here Nov. 4. Ill feelings
have developed because the two
nation's trade positions are not
reciprocal. Japan is far from
America's best customer.
The U.S. acts as a developing
nation in her trade dealings with
respect to Japan. Our exports to
her are made up of mostly raw
materials and agricultural prod-
ucts, not the finished, manufac-
tured goods that characterize
trade between developed nations.
We export soy beans and logs, not
soy bean oil and lumber.
It is our manufacturing indus-
tries which compete with the
Japanese products for the Ameri-
can consumer's dollar, and it is
these industries which are feeling
the crunch. These manufacturers
have taken the lead in fighting
against so-called Japan Inc.

ment results.
For example, Japanese exports
of TV sets jumped from $1.1
million to $2.9 million last year.
As a result, eight out of ten Amer-
ican television manufacturers op-
erated in the red and workers
were laid off.
LATER IN THE year, volun-
tary quotas for TV sets were
agreed upon by U.S. and
Japanese negotiators. The
Japanese were not happy with
the agreement but aquiesced to
preserve profitable trade rela-
tions in other spheres.
"There was nothing sinister
about that import surge," Togo
told a standing-room-only crowd
at Lane Hall. "It was fair compe-
tition and American consumers
clearly benefited."
And he hid a good point. Japa-
nese products persistently under-
sell American products.
BUT, IF THE Japanese are
angry over American threats of
trade restrictions, they must only
look at their own policies to see
an exact parallel. A Ford Pinto,
which sells in America for rough-
ly $3,300 will sell in Japan for
several times that price.
"The Japanese feel penalized
for success," said Deputy Secre-
tary of State Oakley. "But it's
partly that their restrictions
have helped create this imbal-
ance. The problem for ,Japan
could become serious, and. that's.
what we are trying to head off
with the negotiations," he said.
Any international economics
textbook will tell you that the
Japanese balance of payments
surpluses can be corrected
through either of two routes - in-
creasing the flow of funds leaving
the country or decreasing that
coming in. If the Japanese are
unwilling to reduce exports, as all
indications point to, trade restric-
tions must be removed to allow
for substantial increases in im-
ports.
AS IT IS now, 80 per cent of
Japan's imports are of raw mate-
rials and agricultural products.
In contrast, the United States and
Great Britain's imports are com-
posed on only about 50 per cent
unfinished products. An easing of
trade restrictions on manufac-

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goat and Japan is a likely tar-
get."
THIS MAY have already be-
gun. The current crisis over U.S.
imports of steel has been linked
to trade with Japan. American
steel producers have floundered
as demand for their product
drops and they become less and
less competitive.
Steel imports have doubled in
the past year, although Japanese
steel imports are at virtually the,
same level they were a year ago.
European increases in imports
were responsible for the change..

our own faltering industries -
not hers.
Deputy Secretary of State Oak-
ley fears that U.S. restrictions on
the importation of some products
from Japan "could come up
soon."
. Japan should voluntarily
reduce her trade surpluses before
other countries enforce trade
restrictions upon her goods with,
out her approval.

Dan Oberdorfer is a
staff writer who spent
years in Japan.

Daily
three

Letters to

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propaganda
To The Daily:
The interesting letter signed
"Clericals for a Democratic
Union" (Nov. 2) covers many
points. I wish to discuss only
one: the allegation that Amer-
ican faculties conduct capital-
istic propaganda.
Now, if there is anything I
know well it is genus Professor
Americanus. Not only was I one
of that bunch for many years,
but I have known- hundreds'
personally, in some fourteen
institutions, and known of.
many others by their works.
And I would say that the chief
thing they have in common is
that they have very little in
common.
Some are Republicans, some
Democrats, some Socialists.
Some read the New York
Times, some the New Republic,
some nothing but the Proceed-
ings of the Pneumoneurogas-
tronomical Association. Some
Jews, somecatholics, some
Protestants, some agnostics.

of the party line of the moment
get into trouble. But in this
country there are many ortho-
doxies. Does American history
(Civil War Period) mean the
same thing in Mississippi and
Massachusetts? Is orthodox
biology in Dayton, Tennessee,
orthodox biology in Columbia?
Take the case of Professor
Sumner of Yale. I have never
known of a more capitalistic
economist than he; he pushed
laissez-faire to the extreme
point of Herbert Spencer. Yet
he was in continual hot water,
because his orthodox capital-
ism of that time (the McKinley
period) was protectionist. I
think things are abit more
complex and diversified than is
generally assumed.
- Preston Slosson
[professor emeritus]
marching band
To The Daily:
This letter concerns a cam-
pus organization which is over

people is the University of
Michigan Marching Band.
Do you have any idea what
those people have to go through
to make a successful half-time
show? Do you people realize
what type of effort they put
into those twenty minute shows
which are recognized by other
bands as some of the best
examples of Marching and
Musical performance in the
entire U.S.? Do you have any
idea of what those people do
before each game in terms of
getting the fans up for it?
The band is Super-Great! Let
us sing the praises of those fine
up-upstanding people under the
direction of the finest conduct-
or in the state! Hurrah for the
band and all the wonderful
things they do!
-Joseph Gembala
idealism
To The Daily:
In Julie Rovner's editorial
Sunay heepressed her dis-

)ailyI
are eliminated someone will real-
ize why they were necessary in
the first place; the minority
group students weren't properly
prepared for college by the public
schools in this country.
Quotas were set up to correct
wrongs commited in the past; but
the quotas have been in effect for
years now, why are students still
being sent off to college with an
inadequate education? Is the
proper solution to simply let un-
dereducated people into a school
to fill a quota? Is that giving
everybody an equal chance?
I can't believe it's proper to try
and correct an example of insti-
tutional racism with another
layer of institutional racism.
Millions of "liberal" voices are
shouting against Bakke, but how
many people are working to elim-
inate the need for quotas? The
school system in Detroit is a fine
example (and lets not be coy,
there are a lot ofj minority studen-
ts in Detroit). There's a millage
in front of the voters right now;
the only way the school board can
hope to get it through is to threat-

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