The Japanese Must Clean Their Own House

The dark practices that have come to light in Japan are not seen by most Japanese as "corruption." They are institutionalized into the fabric of Japanese society. That doesn't mean there are no victims. Obvious ones include consumers and small investors in Japan and competitors overseas. Recently, more and more Japanese have come to believe that their entire business system is being handicapped by the negative impression outside Japan.

With the increasing internationalization of Japanese business and finance, traditional ways are clashing with the culture of the West. Some embarrassed Japanese even concede that in the eyes of the West, Japanese norms are seen as the remnants of the samurai past.

Although anathema to our Western notions of ethics and fairness, corruption Japanese-style seems to strengthen the system. By compensating their major clients, for example, Japan's Big Four securities firms bolstered the long-term relationships and safety net that create a cozy environment for big business. What would be branded as conflict of interest in America--such as retired bureaucrats joining corporations and ubiquitous gift-giving--helps lubricate the personal relationships so key to the workings of Japanese society.

No one in the West should be lecturing the Japanese on how to order their own society. Lately, scandals seem to have become part of the American way of life: insider trading, junk bonds, the S&L debacle, the list runs on. The amount of money, illegality, and venality involved is at least as large as anything seen in Japan. But both cultures have to come to grips with the abuses in their systems if modern trading arrangements are to work effectively.

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