Beware the Rising Asian Colossus...

The future was crystal clear 30 years ago

One of the most important stories of the year is one that has received remarkably little attention.

“The security environment around Japan is becoming severe,” the Japanese Ministry of Defence recently stated to explain why it is requesting another large budget increase to accelerate a host of priority military programs, including next-generation fighter jets. The Liberal Democrats, who hold power, have said they want to double Japanese military spending over five years.

We all know what the danger is. Some concern comes from North Korean craziness. But the real challenge is China, which has rapidly scaled up its military, is threatening to invade Taiwan, and seems hell-bent on becoming the dominant economic and military power in Asia.

Now, if you are, like your correspondent, of a certain age, and interested in how people think about the future, this is funny stuff. Darkly funny, that is.

Cast your mind back 30 years. It’s 1992.

The future is clear.

On American op-ed pages, TV pundit shows, and popular culture. In the halls of power of every Western nation. Around boardroom tables of multinational corporations. In the elite conferences where the wise and the powerful jet in to speak deep thoughts and be seen speaking deep thoughts.

Everywhere, people know that the future will be dominated by a rising colossus in Asia and an inevitable clash with Western powers.

Following is a passage from Future Babble, a 2010 book written by a clever and perspicacious fellow I’m quite fond of.

“We are definitely at war with Japan,” says the American hero of Rising Sun, Michael Crichton’s 1992 suspense novel. Americans may not know it; they may even deny it. But the war rages on because, to the Japanese, business is war by other means. And Japan is rolling from victory to victory. “Sooner or later, Americans must come to grips with the fact that Japan has become the leading industrial nation in the world,” Crichton writes in an afterword. “The Japanese have the longest lifespan. They have the highest employment, the highest literacy, the smallest gap between rich and poor. Their manufactured goods have the highest quality. They have the best food. The fact is that a country the size of Montana, with half our population, will soon have an economy equal to ours.”

More op-ed than potboiler – not many thrillers come with bibliographies – Rising Sun was the culmination of a long line of American jeremiads about the danger in the East. Japan “threatens our way of life and ultimately our freedoms as much as past dangers from Nazi Germany and the Soviet Union,” wrote Robert Zielinski and Nigel Holloway in the 1991 book Unequal Equities. A year earlier, in Agents of Influence, Pat Choate warned that Japan had achieved “effective political domination over the United States.” In 1988, the former American trade representative Clyde Prestowitz worried that the United States and Japan were “trading places,” as the title of his book put it. “The power of the United States and the quality of American life is diminishing in every respect,” Prestowitz wrote.

In 1992, Robert Reich – economist and future Secretary of Labor – put together a list of all the books he could find in this alarming sub-genre. It came to a total of thirty-five, all with titles like The Coming War With Japan, The Silent War, and Trade Wars.

Most of the “war” talk was metaphorical. Some wasn’t. The Coming War With Japan was about … the coming war with Japan. Written by then-political scientist George Friedman, it foresaw Japan forming a regional bloc to control natural resources. America would try to stop it. The result would be a rematch of the Second World War. Or at least a long, bitter Cold War. The Coming War With Japan was a major hit in the United States. It was a blockbuster in Japan.

Put it all together and the trend lines revealed the future – the Japanese economy would pass the American and the victors of the Second World War would be defeated in the economic war. “November, 2004,” begins the bleak opening chapter of Daniel Burstein’s Yen!, a 1988 best-seller. “America, battered by astronomical debts and reeling from prolonged economic decline, is gripped by a new and grave economic crisis.” Japanese banks hold America’s debt. Japanese corporations have bought out American corporations and assets. Japanese manufacturers look on American workers as cheap overseas labour. And then things get really bad. By the finish of Burstein’s dramatic opening, the United States is feeble and ragged while Japan is no longer “simply the richest country in the word.” It is the strongest.

Less excitable thinkers didn’t see Japan’s rise in quite such martial terms but they did agree that Japan was a giant rapidly becoming a titan. In the 1990 book Millennium, Jacques Attali, the former adviser to French president François Mitterrand, described an early twenty-first century in which both the Soviet Union and the United States ceased to be superpowers, leaving Japan contending with Europe for the economic leadership of the world. Moscow would fall into orbit around Brussels, Attali predicted. Washington D.C. would revolve around Tokyo. Lester Thurow sketched a similar vision in his influential best-seller Head to Head, published in 1992. The recent collapse of the Soviet Union meant the coming years would see a global economic war between Japan, Europe, and the United States, wrote Thurow, a famous economist and former dean of the MIT Sloan School of Management. Thurow examined each of the “three relatively equal contenders” like a punter at the races. “If one looks at the last 20 years, Japan would have to be considered the betting favourite to win the economic honours of owning the 21st century,” Thurow wrote. But Europe was also expanding smartly, and Thurow decided it had the edge. “Future historians will record that the 21st century belonged to the House of Europa!” And the United States? It’s the weakest of the three, Thurow wrote. Americans should learn to speak Japanese or German

A few years into the 1990s, the broad outline of the first half of the 21st century was the same everywhere. The Soviet Union, gone. Japan a giant on its way to becoming a colossus. Europe and America still potent forces. How this Great Game would play out was debatable — most observers put their money on Japan — but who the players were was not. Japan was the leading contender, followed by the United States and Europe. Period. Everyone knew that. In Washington and Brussels and Tokyo. In Davos and corporate headquarters world-wide. Everyone agreed.

And everyone was wrong. I’m not going to repeat what happened. I’ll just say that practically from the start — Japan fell into a deep slump in the early 1990s — the conventional wisdom was truly, utterly, bafflingly wrong. And not only about Japan.

Look in the indexes of most of these books under “C” for China and you find nothing. Not a single entry. There are a few exceptions, however. In Jacques Attali’s book, he does mention China (and India) but he explicitly says China (and India) will remain poor and backward.

Lester Thurow did even worse. In Head to Head, he never mentioned India, and China was dismissed in two short pages. “While China will always be important politically and militarily,” Thurow wrote, “it will not have a big impact on the world economy in the first half of the 21st century. . . .”

We are now almost half-way into the first half of the 21st century and Japan is bulking up its military as fast as it can … not to fight the United States but to meet the rising threat from a country that was routinely unmentioned when wise men and women peered into the future 30 years ago.

Now that is funny. Darkly funny, but still.

Here’s something else that’s funny.

You know that political scientist who wrote The Coming War With Japan? George Friedman left academia. He founded and ran Stratfor, which bills itself as “the world’s leading geopolitical intelligence platform.” That’s hyperbole but Stratfor did become a major provider of geopolitical insight and prognostication to global corporations.

In 2010, Friedman published The Next One Hundred Years, which purports to forecast the geopolitical future of the entire world. Over the next century. It was a New York Times bestseller.

He followed that a year later with The Next Decade. It, too, was a New York Times bestseller.

Then, in 2020, he published The Storm Before The Calm, in which he claimed to have discovered cycles in American history which allowed him to predict, as the subtitle of his book put it, ““America’s discord, the crisis of the 2020s, and the triumph beyond.”

In addition to selling lots of books, Friedman has long been a favourite on the influential and lucrative international speakers circuit.

I think we can say conclusively that making a name for himself by publishing a scary book about war between the United States and Japan was a good career move for George Friedman.

That may seem a little odd to you. After all, publishing a highly confident prediction of a world-changing event that does not happen — a prediction that is, in fact, pretty close to the opposite of what happened — would seem to suggest the author is possessed of oracular powers that are somewhat less than Delphic. Surely, you may think, being dramatically wrong would harm one’s career prospects in the international punditry business.

I would direct you back to the words of that clever fellow who wrote Future Babble.

This is another huge reason we notice hits but ignore misses: If a prediction about a subject hits, that subject will probably be in the news and people will be talking about it, but if the prediction misses, the subject is likely yesterday’s news and nobody will be talking about it.

A mere decade after The Coming War With Japan was published, the supposed threat of Japanese power had faded for the simple reason that the threat had faded — and been replaced by round-the-clock obsession with Jihadi terrorism, war in Afghanistan, and the imminent invasion of Iraq. In fact, Japan had long since vanished from popular mind. No one was talking about it! There were no bestsellers about Japan. No TV pundits yammering about Japan. No Hollywood movies about Japan.

So The Coming War With Japan was hardly an albatross around George Friedman’s neck. To publishers, it was only proof he could write books that sell. To others, it was a long-forgotten book about a long-forgotten subject no one cared about. It meant nothing. It mattered not at all.

This is why, as the author of Future Babble concluded, pundits have enormous incentives to make big, bold, dramatic forecasts. The upside if a bet pays off is huge. The downside is negligible, particularly if the forecast has no sharp end-date at which time it can clearly and conclusively be judged, so that it can just slowly fade from memory.

Heads, I win. Tails, you forget we had a bet.

There’s not much risk for experts who make predictions.

Of course that guy hasn’t sold as many books as George Friedman, and he has never been invited to Davos. So what does he know?