Page 215 - The Drucker Lectures

196 [ The Drucker Lectures

Ito-Yokado and Daiei and so on. Mom and pop are still in there,
but the shop is being run by centralized computers, and, believe
me, they are way ahead of even Wal-Mart in terms of turnover,
in terms of supplies, in terms of controls, in terms even of prices,
if you look at the enormous tax burden.
So twice it worked. I don’t think it can work now. But I’ve
been wrong before.
The main reason I don’t think it can work today is that in the
past, these developments went on within the framework of a rap-
idly expanding economy. But the main reason why I’m skeptical
is demographics. The Japanese working population grew very fast
in the ’60s and early ’70s, and now it is beginning to go down. As
you all know, Japan was the youngest of the developed countries
not so long ago. By the year 2000, it will be the oldest. And it has
a birthrate totally inadequate to replace the population.
And this not only means that you don’t have an expanding
economy. It will also have an increasing burden for retirement
finance, and that is incompatible with the low interest rate of Ja-
pan, which is the basic reason for the Japanese regulation of its fi-
nancial market. The Japanese were very clear about it. Don’t ever
make the mistake of thinking that they’re stupid. Don’t make
the mistake of thinking that they don’t know what goes on. I
don’t know any other country in which very able people spend
as much time thinking through why they are doing what they
are doing. The Japanese ministries I worked with and the Bank
of Japan—these are very able and thoughtful people. And they
knew that they had a very expensive and very inefficient financial
system, and that the moment they made the slightest opening to
any foreigners, the foreigners would take over as they have taken
over foreign exchange. But the main overriding consideration of
the system was to provide Japanese industry with costless capital,
with interest rates of zero. It became a vehicle to provide Japanese
business with interest-free money, which it has done beautifully.