Leaders Discuss Japanese Economy

More than 100 policy makers, academics and bankers from the U.S. and Japan met at a seaside conference center in Chatham, Mass., last weekend to discuss revamping Japan's ailing financial system.

Organized by the Program on International Finance Systems at Harvard Law School, the conference included keynotes by U.S. Deputy Treasury Secretary Lawrence Summers and Eisuke Sakakibara, Japan's vice minister of finance for international affairs.

Japanese and U.S. representatives also discussed the Asian financial crisis and ways to work collaboratively to build a solid financial global market-place.

Only a few days before the conference, Japan's Prime Minister Ryutaro Hashimoto stepped down because of his failure to right Japan's flagging economy, adding urgency to the conference's mission, said organizer Hal Scott, Nomura professor of international financial systems at the Law School.

"I think the fact that Hashimoto lost the election turned out to make the conference even more relevant," Scott said. Planning for the conference began about 18 months ago.

The mood of the conference was congenial and collaborative, each country learning something from the other, Scott said.

"Both countries have a common interest in settling this," Scott said. "It was not confrontation. It was let's work together to solve these problems."

The general consensus was that Japan must deregulate its financial system, pay off bank debt and rethink its macroeconomic policy, Scott said.

"The economy got so complex there that the only thing that could make it work was the invisible hand," Scott said.

Reaching such an agreement was made easier because the conference brought together representatives who were important, but not so powerful that discussions couldn't be detailed, Scottsaid.

"If it had gotten into [a higher level] itwould have made the conference much moredifficult," Scott said.

As part of the collaborative effort, theconference tried to create friendships between theparticipants, Scott said.

Attendees slept in small shingled cottages andjoined together for a New England style clam bakeon Saturday night, said Robin Radin, associatedirector for Asia in the Program for InternationalFinancial Systems.

Participants were also united becausemany--from both the U.S. and Japanesedelegation--had attended schools at Harvard.

Koji Tsuruoka, a Japanese diplomat and aconference organizer, graduated from the LawSchool in 1978.

Additionally, Yuji Tsushima, a member of theJapan's House of Representatives, said his fatherwas the first Japanese graduate of the HarvardMedical School, Radin said.

Overall, organizers said the conference was asuccess. "It was lively and warm and the qualityof the dialogue was very high," Radin said

"If it had gotten into [a higher level] itwould have made the conference much moredifficult," Scott said.

As part of the collaborative effort, theconference tried to create friendships between theparticipants, Scott said.

Attendees slept in small shingled cottages andjoined together for a New England style clam bakeon Saturday night, said Robin Radin, associatedirector for Asia in the Program for InternationalFinancial Systems.

Participants were also united becausemany--from both the U.S. and Japanesedelegation--had attended schools at Harvard.

Koji Tsuruoka, a Japanese diplomat and aconference organizer, graduated from the LawSchool in 1978.

Additionally, Yuji Tsushima, a member of theJapan's House of Representatives, said his fatherwas the first Japanese graduate of the HarvardMedical School, Radin said.

Overall, organizers said the conference was asuccess. "It was lively and warm and the qualityof the dialogue was very high," Radin said