Page 216 - The Drucker Lectures

Deregulation and the Japanese Economy [ 197

Now, with that huge increasing population that needs retire-
ment provisions, the next need may be interest rates that enable
middle-aged people to build up their retirement portfolios. And
that is incompatible with the existing financial system, which is
designed to pay no interest and to have people save so that indus-
try can reap. And that pressure, I think, may force deregulation.
If you look at the Japanese figures, they are rather frighten-
ing. Their Social Security system was geared to a growing popu-
lation of young people. And it has to be changed to a growing
population of old people and a shrinking population of young
people. And that, I think, is the real pressure. And it is incom-
patible with the way the system is organized.
But let me also say, don’t rule out the possibility that the Jap-
anese will be right again, and by postponing and postponing
millimeter by millimeter, it will take care of itself. I think the
pressure is too great, but as I said, I’ve been wrong before.
And if deregulation does happen, don’t be too happy. Because
to understand Japan, please accept that no Japanese in his right
senses begins with economics. That is an American fallacy. And
I am one of those people who believes that nothing would do
more for American society than to close all law schools and all
economics departments for 20 years. And in case you have any
doubts, I have a law degree and am considered an economist. No.
Japanese begin with society because the society is so fragile.
And deregulation has economic benefits but social dangers.
You know, my father was the chairman of a big bank. The gov-
ernment [in Austria] put him there in 1923. It was kitty-corner
across from my school, and so after school I went over and did
my homework in his office, and we went home together for din-
ner. And that bank was the first of the big pre–World War II
banks to go belly-up because it was the least efficient one. It
was famous for its inefficiency. And every time I go through
a Japanese bank I see my father’s 1923 bank. The only differ-