LESTER THUROW
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invented the video tape recorder , they were not a big enough
corporation
to
take the initial losses involved in introducing the
product. They went around
to
all the major American corporations,
were turned down everywhere, and Sony picked it up. We seem to be
getting into the British situation, where we do a lot of the good
inventing, and then are not successful in bringing our inventions
into the market.
ROBERT NOZICK: Why don't the large investors who are interested in
long term yields act as a corrective to this problem?
LESTER THUROW: My answer to that is one of the reasons
I
have
advocated eliminating antitrust laws.
In
other countries business can
lurn to the banks for long term investments. German business is
assured of long run stability by its banks. When a bank gives a
company a big loan, a member of the bank gets a seat on that
company's board of directors. The bank becomes part of the com–
pany's management and follows its money. That kind of close
linkage between a financial institution and an industry is illegal in
the United States . You could put a banker on your board of directors,
but it would have to be a banker who is not loaning you money.
Another problem with American business is disinvestment-the
process of getting out of dying industries.
If
I
were to rate countries
on a continuum,
I
would rate the Japanese as the best at getting out
of dying industries, we're in the middle; the Europeans are the worst.
The Japanese are very good at getting out of dying industries. The
government and the companies get together and negotiate a close–
down. Of course that would be illegal here, under our antitrust laws .
Two years ago, when we were adopting trigger pricing, to keep our
most obsolete steel mills open, the Japanese negotiated a 10 percent
closedown of their steel industry. They closed a mill newer than the
newest mill in Great Britain. We use government to protect dying
industry, they use government to force dying industry out of busi–
ness. They got in
and
out of textiles before we got out.
And the Japanese are surpassing us in starting new industries,
too. Everybody would agree that semiconductors are a leading
industry in the United States. That industry is now shifting from a
low capital intensity technology to a high capital intensity technol–
ogy. The traditional American way to do that is to borrow twenty to
thirty percent of the money, and finance the rest out of retained
earnings. That way, you make a slow shift from one technology to
another. The Japanese have announced one of their famous better
ideas: they 're going to lend that industry ten billion dollars before it
