For McDonald’s, Japan turned out to be a big success. The first McDonald’s in Japan opened in 1971, and after a year and a half Japan had nineteen more of them. A decade later, the biggest food purveyor in Japan was McDonald’s (followed by another U.S. giant, Kentucky Fried Chicken). McDonald’s stores were known to every Japanese. It’s said that when a little Japanese girl went to America and saw a pair of golden arches, she told her mother, “Look, they have Makudonardo here too!”
On a winter day in 1990, thirty thousand Muscovites lined up for the opening of the first McDonald’s in Russia. China saw its first McDonald’s that same year. A few years later, more than half of all McDonald’s were outside the United States. And all the stores around the world were globally entwined. New Zealand cheese was flown to stores in South America. Beef went from Uruguay to Malaysia. Packaging went from Malaysia throughout Asia. Australian beef went to Japan. Russian pies went to Germany in return for packaging and soaps. American potato slices went to Hong Kong and Japan. Mexican sesame seeds went everywhere. In every store, in every place, McDonald’s system was the same. As a British franchise operator said, “If you come in and challenge the system you won’t last very long, because the system is the system is the system.”
By the year 2000, the firm that started as a hot dog stand was big beyond belief. Around the world, its stores served fifty million people every day. They had sold 150 billion hamburgers. It’s true, however, that the company’s success had also bred competitors. Early in 2003, McDonald’s revealed its first quarterly loss since the company became a publicly traded business.
IT WAS BIGGER, yes, but McDonald’s stood for countless U.S. firms that prospered in the latter 1900s, making use of global markets and technology. America, which held one-twentieth of the people in the world, made about a fifth of the gross world product. Of the world’s ten largest corporations, in 2002 American firms were numbers 1, 2, 3, 5, 6, and 9.
But many other countries also boomed. By the start of the 2000s, countries that made up only one-sixth of the world’s people produced four-fifths of its goods and services. One such country was Japan, where, as we saw, McDonald’s first expanded overseas. The story of Japan’s successes in the postwar decades takes your breath away.
In earlier chapters we related how the Japanese built up their empire and their industries and then lost the former and much of the latter in World War II. After that, the Japanese were spent and dazed. Their cities had been gutted and their factories destroyed. To put things back together took about five years.
But then they flew. In the 1950s their economy grew about a tenth each year. They focused first on heavy goods, with the slogan “heavy, thick, long, big.” By 1970, the Japanese, who had no iron ore, no oil, and little coal, were the world’s third largest makers of steel and cars. Their shipyards turned out half of the world’s merchant ships, and they could make a huge oil tanker in less than a year. Then they added lighter techno-industries, such as watches, cameras, and television sets. “Heavy, thick, long, big” were not forgotten, but the slogan now was “light, thin, short, small.”
In 1970 Japan’s gross national product reached about $200 billion. It overtook and passed the GNP of West (non-Communist) Germany, formerly the third largest in the world. Only Russia’s GNP, about $350 billion, and the U.S. GNP, about a trillion, were bigger at the time, and Japan would soon surpass the Russians. The country was a marvel. People everywhere were asking how the Japanese had worked such wonders, and a Harvard scholar wrote a book he called Japan As Number One.
Japan’s success was partly due to nimble minds. The Japanese were quick to station robots on assembly lines, they cut their use of oil (which they imported) by a quarter, and they copied U.S. quality-control techniques. Japan had once been known for shoddy goods, but now the country turned out well-made products they could sell in quantity abroad.
It also helped that Japanese were dedicated workers, and schooled enough to cope with new techniques: robotics, sophisticated electronics, and computers. They were loyal to the companies they worked for, which often promised that their jobs would last throughout their lifetimes. Devotion to the firm was intertwined with love of country. Workers at Matsushita Electrical Company sang this anthem:
For the building of a new Japan
Let’s put our mind and strength together,
Doing our best to promote production,
Sending our goods to the peoples of the world,
Endlessly and continuously,
Like water gushing from a fountain.
Grow, industry, grow, grow, grow.
Harmony and sincerity.
Matsushita Electrical.2
2Time, February 23, 1962.
When McDonald’s opened in Japan, the American CEO was much impressed with how his Japanese employees worked. “[U.S.] grill men don’t give a damn about the system…. But in Japan, you tell a grill man once how to lay the patties, and he puts them there every time. I’ve been looking for that one hundred percent compliance for thirty years.”
After 1985, Japan defied the laws of gravity and economics. The prices both of land and stocks began to soar. On paper, land around the imperial palace now was worth as much as the whole American state of California. On paper, certain companies were worth more than the GNP of many nations. On paper, the Japanese were now the richest people in the world.
But it turned out that this iridescent moment was a bubble. In early 1990 a Japanese business journal warned, “The economy is in the twilight and dusk is at hand.” The price of land declined a third, and stock prices plummeted by three-fifths. Soon Japan was in a bad recession. The jobs supposed to last a lifetime, formerly the country’s boast, admired throughout the world, evaporated. Many Japanese felt swindled. Was this their prize for so much work? Had their age of gold become an age of lead before they could enjoy it?
By 2003, the Japanese economy had been lying on its bottom for a dozen years. We won’t examine here what caused this fall or why the country stagnated. Japan is in this chapter not to make a point about a setback, but to illustrate the way, in modern times, technology and grit can make a people rich. Japan is still a wealthy country, whose gross domestic product per head is bigger than that of any other country except tiny Bermuda and tiny Luxembourg. Japan is full of able people, and in early 2004 it looked as if it might be coming back.
WHAT WE NOW would like to know is this: did the bulk of humans, in an age of economic globalism, move toward decent homes and fuller meals or homelessness and hunger?
The World Bank, a United Nations agency that sponsors economic growth, provides a rough and ready answer. Each year it publishes the worth of all the goods and services each country makes, divided by the number of its people. It thus provides rough estimates of incomes everywhere. It also tells by what percent these incomes rose or fell.
This is what the bank reported on average incomes in the final third of the 1900s. Incomes in the “low income” countries, such as India and China, rose by 3.7 percent. (But these were averages; some areas of these countries did well, while others didn’t.) In middle and upper income countries incomes rose by roughly 2 percent. So it’s clear that most people in the world were doing well. An income rising 2 percent a year will double in about a third of a century. An income that rises almost twice as fast, as in India and China, will double a great deal faster. In 2003 the editor of The Economist magazine maintained that “huge chunks of the world’s population have been climbing out of poverty.”3
3Bill Emmot, The Economist, vol. 367, no. 8,330, p. 5.
As our incomes rose, we were eating more. “Caloric intakes,” almost everywhere, rose at least a quarter. In “developing” countries they rose by almost 40 percent.
Although things got better there were some catches. One was that while the share of all incomes enjoyed by people in the richest countries grew a lot, this apparently happened at the expense of others. (We say apparently because there are different ways of measuring
inequality.) Back in 1960, if you compared the fifth of the world’s population who lived in the richest countries with the fifth who lived in the poorest countries, the incomes of the former were already a hefty thirty times as big as the incomes of the latter. A generation later, in 1995, the incomes of the former were eighty-two times as big. A gap that had been great was now immense.
At the beginning of the 2000s, the assets of the three richest people in the world totaled more than the gross domestic product of the fifty least developed nations. In areas of southern Asia, the Middle East, South America, and Africa, many people glimpsed the good life only on the foreign programs on their television sets, if they owned them. They could gaze at far-off, well-fed people driving shiny cars and housed in spacious homes. They were like the hungry child in fairy tales, with its nose pressed against the bakery window.
What should one call these poorer lands? They once were known as “backward”; then (to be gentler) as “undeveloped”; later still (and even gentler) as “less developed.” Since most were near to or south of the equator, they were sometimes called the “South.”
The “less developed” countries, those that failed to prosper, often were the badly governed ones. A study published in the year 2000 ranked the nations of the world according to the quality of their governance. Those who did the ranking looked at things like schools and roads, tax and labor market policies, and political environments. Not surprisingly it turned out that the ten countries that were governed best were also rich, while the ten worst ruled were all “less developed” and poor.
ACCORDING TO THE World Bank figures, one whole region was a big exception to the general rise in incomes. This was Africa below the Sahara. By the end of the 1900s, most of sub-Saharan Africa had drifted backward. For several decades, incomes had declined each year on average by 0.3 percent.
A good example of the region’s problems, and its failure to defeat them, was Nigeria, the country with by far the largest population. If the outline of Africa looks something like a snub-nosed pistol, pointing west, then Nigeria is where you would put the trigger. To explain the country’s problems, we must begin 150 years ago, when “Nigeria” did not exist. Independent tribes and kingdoms filled this stretch of western central Africa. In the north was semidesert grassland; in the south were steamy mangrove swamps and forests. Before malaria pills came into use, the muggy coastland on the Bight (or bay) of Benin was notoriously deadly. A jingle warned: “Beware, beware, the Bight of Benin, Where one comes out though forty go in.”
The tribes and kingdoms often fought each other, so it took a foreign conqueror to join them in a none-too-happy union. This happened in those decades in the 1800s when (as seen in chapter 15) the richer countries of the world were grabbing giant chunks of Africa and Asia.
In 1861 the British captured Lagos, an island off the coast. Later they worked east along the coast, to the region where the Niger River forms a delta just before it reaches the Atlantic. Here the farmers lived by selling palm oil, which was used for making soap and candles. A British official sailed along the delta coast aboard a ship called Flirt. He anchored at the steamy little ports, raised the British flag, and handed presents to the chiefs. He persuaded them to agree to treaties that joined them in a British “protectorate.”
But Britain used these pacts as if they were an owner’s deed, and a deed not merely to the delta but to all the land that later would become Nigeria. They wanted not merely palm oil, they declared, but the joy of bringing peace and order. Armed with cannons and machine guns, British troops and Africans (hired to conquer other Africans) battled inland, blasting holes in city walls made out of mud, knocking down the cowhide gates of villages, and spraying bullets at defenders. To conquer everything took many years. As late as 1925, a British officer wrote home: “I shall of course go on walloping them until they surrender. It’s rather a piteous sight watching a village being knocked to pieces and I wish there was some other way.”
Although the British governed conscientiously, they didn’t try to make Nigeria prosper. After all, one doesn’t build an empire to make one’s colonies rich; the British wanted tin and palm oil for themselves. Why help Nigeria compete with Britain in the global market?
But Nigeria wouldn’t be a colony forever. When World War II was over, as we know, European nations glumly freed their colonies. Britain freed Nigeria, which in 1960 became an independent nation. It looked as if the Nigerians would prosper, since they seemed to be prepared to rule themselves. The machinery of government was all in place. Though poor, Nigerians had higher incomes than, for instance, Indians, to whom the British had also granted independence. The farmers raised sufficient food to feed the country, and geologists had recently found gas and oil reserves.
After several years, however, self-government became a tragic failure. Soldiers killed the head of state and dumped his body in a ditch. A general seized power, and six months later other officers flogged and killed him. Another general took over, and crushed a mutiny, but that was followed by a civil war that took a million lives. The army later drove the general out of office. And so it went for decade after decade. Except for one short interlude of civil rule, eight generals in turn held power. Most of them began by promising a quick return to civil rule, but then reneged. Others threw them out of power.
Despite the turmoil, the economy at first did well. Farmers kept the country going, and manufactures prospered too; from 1965 to 1980 they rose each year. But oil (no longer palm oil, but petroleum) became the leading export.
And then, bonanza! Suddenly the oil trade boomed. This is why: Nigeria belonged to OPEC, the Organization of Petroleum Exporting Countries, and in 1973 OPEC raised the price of oil. (We’ll have more to say on this below.) Then it raised the price again, again, again, again, and again. By 1980, the price of oil had risen tenfold.
Despite the political bedlam, the oil-boom times were good. The government’s income multiplied by thirty-four in just a decade, and Nigeria declared that now it had so big an income that it couldn’t spend it all. It spent some money wisely on mega-projects, such as major highways, universities, and a badly needed capital city. But it did too little for the country’s other basic needs, such as elementary schools, country roads, and clinics.
Meanwhile, the rich and mighty stole colossal sums of public money. When one of the generals took charge, he appointed a commission to probe the doings of his predecessor. It found that $12 billion were unaccounted for. (After writing his report, the commission chairman fled the country, fearing vengeance.) But the reforming general proved equally corrupt. After this man’s death (or murder), investigators searched the thirty-seven houses of a friend of his who ran the central bank. In them they discovered many millions, in various currencies, apparently withdrawn for the late general’s use. Under pressure, the dead man’s family disgorged astounding sums of money. Authorities asked his security chief to account for more than a billion dollars.
Those in power looted public funds, took pay for contracts that they never carried out, and put their families and friends in public jobs. (The number of public servants tripled.) When necessary they burned the buildings that housed documents that proved their corruption. It’s said that the wealthy purchased golden bathtubs, and made Nigeria the world’s biggest importer of champagne.
While the boom in oil made fortunes for the few, it did the millions much more harm than good. It distorted the economy, hurting industries and farming. Ordinary people’s incomes rose slower and slower. Farmers flocked to cities, seeking work and finding only poverty and squalor.
But the worst was yet to come. In the early 1980s the oil-producing nations (OPEC) lost control of prices, and throughout the world oil prices dropped. Nigeria’s revenues from oil declined from $25 billion in 1980 to $5 billion in 1986. This drop in revenues worsened a situation that was already bad.
Nigeria’s ruling class — corrupt, inept, now short of cash — could not provide relief for all the country’s hungry
people. When they revised the nation’s constitution in 1989, they shrank the role of government. They struck out a description of Nigeria as a “welfare state” and clauses saying that Nigerians had a right to health care and education. They cut the budgets of the universities to the point that they lacked not just computers, but chalk. The World Bank reported, “For the most part, students no longer learn, faculty no longer teach, and research…is largely nonexistent.” Hospitals ran out of basic drugs and bandages, and declined first to the role of clinics and then morgues.
Average annual income in Nigeria shrank by more than half, from $670 to $300. Now a country rich in oil was actually short of fuel. It once had fed itself but now imported sugar, rice, and wheat. It even purchased palm oil. The costs of housing, medicines, and schools were far beyond the reach of most.
The Human Story Page 41