Japan vs. US economy
The primary purpose of the economic activity is to benefit consumer while maximizing wealth creation; while the distribution of that wealth is of secondary importance.1. U.S economy is approaching Neoclassical model in which individuals are assumed to maximize their own private interest, and business enterprise are expected to maximize profits which result in a powerful proconsumption bias and insensitivity to the social welfare impact of economic activities. - market are competitive and competition should be promoted through antitrust and other policies. - almost any economic activity is permitted - economy is open to the outside world 2. US economy also considered as a system of managerial capitalism. The economy was transformed from a proprietary capitalism to one dominated by large oligopolistic corporations. 1. Authority over the economy is alienated among the executive, legislative and judicial branches of the federal government and between the federal government and the fifty states for example the responsibility of financial system is shared by the Treasury, the federal reserve and several other powerful and independent federal agencies which strongly affected by actions of the leg . . .
The responsibility of macroeconomic policy, has been divided. This objective has been developed from Japanese experience as a late developer and also from its strong sense of economy and political vulnerability, as well as people’s overwhelming belief in their uniqueness, in the superiority of their culture, and in their manifest destiny to become a great power. Whereas political conservative reject any strong role for the state in the economy, political liberals are fearful that private business interest will capture government program in order to ‘feather their own nest’, which consequently will produce political stalemate. This practice of self-regulation and self-policing by business and other private institution is intended to provide social stability and ensure fairness. In addition, the fifty states contest the authority of the federal government over economic policy and implement important policies of their own. Industrial policy – deliberate efforts of a government to guide and shape the overall structure of the economy. There has been a concerted effort by the Japanese state to guide the evolution and functioning of their economy in order to pursue these sociopolitical objective. Government has support and protect private firm through import protection (the formation of Keiretsu). The role of the federal government at the level of microeconomic policy is to regulate the economy, provision of public goods, and elimination of market failure. Japan has actively promoted sector specific policies throughout the economy because they believe that some industry are more important than others for the overall economy. fully encourage domestic competition to improve the firm’s efficiency.
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