WINNERS AND^483
and equipment were exempted from duty.^16 (Later on [1960s], the
General Agreement on Tariffs and Trade would forbid some of these
discriminatory practices. No use; the Japanese stayed ahead of all
efforts to level the playing field. Every economist knows that there's
more than one way to skin an international bureaucrat.)
This time, the home industry, led by Toyota and Nissan, did catch
fire. In 1950, Japan made 32,000 vehicles—about one and a half
days of American manufacture. At that point the Korean War
brought a rush of orders and gave the automobile industry an
impulse that it never lost, the more so as the American occupation
ended in 1952, leaving Japan free to pursue its own industrial
destiny. This was that of a major exporter, not only because bigger
sales meant lower unit costs and higher profits, but because greater
productive capacity enhanced the power of the nation. Defeat—the first
ever suffered by Japan—had left a bitter taste. The Japanese knew
they had lost the war not because the Americans were better or
braver fighters, but because of America's industrial output.
By 1960, car output stood at 482,000 units, 39,000 of them
exported, about 8 percent. A decade later, Japan made an
astounding 5.3 million cars, of which 1.1 million sold abroad. By
1974, Japan had replaced West Germany as the world's largest
exporter of automobiles. By 1980, it was shipping some 6 million
vehicles, 54 percent of total output, and had passed the United
States as the biggest carmaker in the world.^17 What's more, other
things equal, these Japanese cars were not winning market share by
lower prices. Japanese cars actually cost more, often more than
sticker price, while American cars typically sold for less than list. Why
so? Because Japanese cars had fewer defects and stood up better to
wear, hence sold higher on the used-car market.
These growth rates of 30 and 40 percent a year in the face of
immensely rich and firmly entrenched competitors will be studied in
the future as a lesson in energy, ingenuity, and enterprise. Henry
Ford must have been spinning in his grave.
Americans, looking for explanations (excuses), pointed to Japanese
state subventions and protectionism. They helped; but they did not
make the industry. That was the work of the people who made the
cars—the labor force, the engineers, the entrepreneurs. Also of the
ineptness of American car makers, who had been going from
triumph to triumph, who equated their enterprises with their
country, who thought the American consumer owed them a living,
and who paid themselves salaries and bonuses that bore litde relation