by Akio Morita
I was called upon to make a speech at every stop. The point I tried to make everywhere was that we are working to increase world trade and to decrease the trade imbalance between Japan and America in a practical way. By producing products in America, I said, direct exports from Japan will decrease and jobs will be created in America. This would mean that more taxes will be paid, and so I felt this was something that should be welcomed as a benefit for all of us.
“Our committee has as its goal the promotion of investment,” I said in Oregon. “It would be too much for each company to go to America and investigate these possibilities, so we decided to summarize what we found out and report to our member companies. Therefore, I ask you to give us lots of information. Among the information I need to know is what you intended with the application of the unitary tax.” The tax, I said very plainly, is considered an unfair tax.
Oregon governor Victor Atiyeh turned to me and said, “I agree with your feeling about the unitary tax. I will support what you say, so please pursue your efforts to seek its abolition.” He said the Oregon law would definitely be amended. But I said to him, “Your word alone that it will be stopped will not be enough, because I realize you have a legislature to contend with. I cannot report back as the leader of this group that the governor of Oregon asked us to please trust him when he says this tax will be discontinued.” Perhaps I underestimated the Oregonian politician, but as it turned out, the unitary tax in Oregon was repealed very soon after our visit.
We had many successes, and today the major holdout for the tax is still California. They started it and so they still have a lot of pride to swallow. And former governor Brown is still convinced that the tax is right and proper. He says he believes big corporations do not want the tax because they do not want to tell the truth about their business. It is simpler than that: they just don’t think the tax is fair and do not want to pay money based on an unfair calculation of their profits for the privilege of creating employment and stimulating the business environment in foreign states. California’s current governor, George Deukmejian, has said that in the long-range view the unitary tax is not a good thing for California. But the tax has not been repealed as of this writing.
In some states, like Massachusetts, the law was on the books but never enforced, and the Keidanren group that went there did not push for its elimination. I guess I would have done so; I always push to the limit, to make sure there is no ambiguity. You never know how politics or public sentiment can change. In America, I learned long ago, you have to have things written down and signed.
Near the end of our mission, while we were visiting New Jersey and Missouri, I left my group and flew to Washington with a Keidanren mission colleague. We went to the White House, where we spoke with Vice President George Bush and were invited to see the president. We had our pictures taken with him, and then he asked us to sit down. I began to tell him about Keidanren and our investment mission and how Japanese businessmen had decided to take the initiative in balancing trade and he said, “You people are concerned about the unitary tax, aren’t you?”
I said, “Yes, that’s right, Mr. President,” and I explained how the problem was resolved in one state. I had brought along a copy of a pledge that had been signed in Indiana. “This is how it turned out,” I said. I knew that in Indiana the governor and lieutenant governor and many other officials were Republicans, so I said, “These are very good people,” and we got a laugh out of it. Then I said, “The same thing will someday happen in California,” which is Mr. Reagan’s home state, but he remained silent.
We had seen Secretary of State George Shultz, an old friend, in the hallway and he invited the whole group to visit him in his office. Again the unitary tax came up. “We all understand that the unitary tax causes problems for you,” Shultz said, “so go to a state where there is none.”
I said, “That’s a good idea, but it wouldn’t help my company, George, because when we went into California it was at a time when they didn’t enforce this tax. In Florida the year after we went in they started it. If a state passes a law after we’re established, there is nothing we can do. We don’t know what will happen next.”
“Akio,” he said with a smile, “my advice is, when you build a factory next time, put wheels under it. Install ‘unitary wheels.’ ”
Back in Japan, everybody at Keidanren was amazed with our success on the unitary tax problem, and I think we made a contribution to increased investment in the United States by making the climate there more hospitable. At the same time, it is becoming easier for foreign firms to invest, manufacture, and do business in Japan. This is as it should be. More Japanese companies are moving into the U.S. and Europe, but there still seems to be an uneasy feeling abroad about the future, and the threat of protectionism still hangs over our heads; it seems to be the first refuge of anyone with a trade grievance.
In these days of change and international communication, we must learn to talk sensibly and frankly to each other. We must try harder to understand the facts about our trading relationships, neither ignoring our conflicts nor allowing them to become too quickly politicized.
Because a war over trade is unthinkable today, every nation must face changes that will require difficult decisions. Japan is now going through a painful period of adjustment as we work toward redirecting our economy away from its traditional heavy reliance on exports. Other nations have experienced their own economic problems and will no doubt experience more. We are going to have to learn to share the pain if the world’s economic system is to adjust to new realities and become more equitable.
The world economic system has slipped out of our control; increasingly, our economies are at the mercy of financial opportunists. Entire companies have become objects of exchange for the money traders, and great, old businesses are eating up their own assets in pursuit of quick profits. Some nations are crushed under debt burdens they cannot hope to liquidate. And as some industrialists invest in the money trading game instead of the future, the ability of some countries to produce their industrial necessities is diminishing rapidly. None of this activity is helping to create the better, more stable world we say we want.
It is time to get together as a world community to remedy the situation. It has been more than forty years since the war, more than four decades since the International Monetary Fund met at Bretton Woods and helped to set the free world on the economic road we have traveled so successfully for so long. We now have to create an up-to-date system for our own survival. Heads of government and heads of state, supported by the private sector, must take this upon themselves. Revising the system will require great political and moral courage.
I believe there is a bright future ahead for mankind, and that future holds exciting technological advances that will enrich the lives of everybody on the planet. Only by expanding world trade and stimulating more production can we take advantage of the possibilities that lie before us. We in the free world can do great things. We proved it in Japan by changing the image of the words “Made in Japan” from something shoddy to something fine. But for a single nation or a few nations to have accomplished this is not enough. My vision of the future is of an exciting world of superior goods and services, where every nation’s stamp of origin is a symbol of quality, and where all are competing for the consumers’ hard-earned money at fair prices that reflect appropriate rates of exchange. I believe such a world is within our grasp. The challenge is great; success depends only on the strength of our will.
