TIME: Almanac 1993/TIME Almanac 1993.iso/time/100190/1001620.000

Text File | 1992-08-28 | 9.2 KB | 190 lines

                                                                                ETHICS, Page 106

Is Washington in Japan's Pocket?


A controversial new book challenges the way former top officials
lobby for foreign interests, but fails to plumb the dilemma
of patriotism in a global economy

By WALTER SHAPIRO


    Washington is a city of midlife compromises. Bright-eyed
young men and women flock to the capital, as they have since
the New Deal, not because they want to make money but because
they want to act on their political beliefs. They enter
government; they master a specialty; they amass a Rolodex. Then
maybe their party loses power or they find themselves lusting
after a BMW on a bureaucrat's salary. Suddenly the former
idealists are in the private sector, bartering what they
learned in government in their new roles as lawyers, lobbyists,
public relations consultants or (to use an old-fashioned term)
influence peddlers.

    Washington writer Pat Choate, 49, until recently a policy
analyst for the $7 billion conglomerate TRW, knows this world
well. "What I'm doing," he says, "is questioning people's
motivations. And that's something that isn't done in this
town."

    Choate's latest book, Agents of Influence (Knopf; $22.95),
an impassioned, sometimes shrill, but always well-documented
expose of Japan's lobbying muscle in Washington, will not be
published for two weeks. But already the bearded and earnest
economist is becoming the most divisive figure in Washington
since Robert Bork. For Choate, in his book, identifies dozens
of former top U.S. officials and politicians (such as Elliot
Richardson, Stuart Eizenstat and Charles Manatt) whose firms
represent Japanese clients, and he raises serious questions
about the ethics of that practice.

    The book's thesis is stark: "The manipulation of America's
political and economic system by Japanese and other foreign
interests has reached the point that it threatens our national
sovereignty." What distinguishes Choate from other recent
critics of Japan is that he is, at the core, a moralist; to
him, the avidity with which former government officials are
willing to work for foreign interests symbolizes the erosion of
America's "civic virtue." His is a critique of the familiar,
entirely legal, Washington revolving door, recast in patriotic
terms.

    Choate has paid a personal price for his apostasy. In August
he was fired after, he says, TRW chairman Joseph Gorman told
him, "We fear the Japanese will feel that this book represents
TRW's positions and it will jeopardize our business." True,
there are compensations: Japanese rights to Choate's book sold
for $310,000.

    A lengthy extract in the Harvard Business Review prompted
a fusillade from fervent free-traders. New Republic columnist
(and TIME contributor)  Michael Kinsley broadly hinted that
Choate, despite his denials, was engaging in "McCarthyism" with
"his easy accusations of disloyalty, his imagery of infection
of the body politic, his woozy mixture of falsehoods,
half-truths and exaggerations." Hobart Rowen, a Washington Post
columnist, called Choate's theories "pure poppycock."

    Choate's defenders are equally combative. In a forthcoming
letter to the Harvard Business Review, Chrysler chairman Lee
Iacocca argues, "If an American CIA agent quit one day and went
to work for a foreign intelligence service the next, we'd call
it treason. But when American trade officials . . . defect in
droves to the Japanese, we don't even bat an eye."

    Choate will begin his book tour this week by testifying
before the Senate Commerce Committee about Japanese influence
in the U.S. But before the book itself disappears in a tidal
wave of controversy, it is important to sort out what Agents
of Influence actually proves and what remains disturbing
supposition.

    Choate's strength is his painstaking documentation of the
$100 million-a-year  Japanese political juggernaut in the
nation's capital. Japanese interests currently retain almost
as many Washington lobbying, public relations and law firms as
those of Canada, Britain and the Netherlands combined. Since
1973 one-third of all former top officials in the Office of the
U.S. Trade Representative have registered as foreign agents,
mostly for Japanese companies. The pattern is repeated among
refugees from federal agencies like the International Trade
Commission. Even trade negotiator Carla Hills and her two top
deputies represented Japanese clients before they joined the
Bush Administration.

    But what effect has this phalanx of expensive lawyers,
lobbyists and former public officials had on U.S. trade policy?
Even if they have tilted the balance of policy decisions, is
this automatically inappropriate -- especially since the
Japanese are often allied with domestic free-traders?

    The book recounts a wide variety of trade disputes -- from
the inequitable pricing of imported TV sets in the 1970s to the
jury-rigging of tariff duties on light trucks in 1989 -- in
which Japanese interests prevailed against domestic
manufacturers. Choate keeps a running scorecard on the paid
lobbyists and tries valiantly to follow the paper trail, but
in the end he he fails to develop a compelling theory of
causation. He can only speculate that in effect money talks in
Washington. Part of his problem is that Japan has natural
allies within the government. As Choate himself asserts, the
Treasury Department has historically been committed to free
trade, and the State Department has been willing for
geopolitical reasons to go to extremes to keep Japan happy.
Lobbyists, in short, may be superfluous when the Japanese
automatically have half the Cabinet on their side.

    Indisputably, because of their economic success, the
Japanese can afford to be the high rollers of Washington
lobbying. But this does not necessarily mean -- as Choate
implies -- that Washington lobbying is responsible for Japanese
prosperity.

    That is why Agents of Influence is on firmer ground when it
highlights the corrosive effect that this Japanese money has
had on the political culture of Washington. "The revolving door
is creating a cadre of officials whose views on trade matters
have been shaped largely by their advocacy on behalf of Japan,"
Choate writes. He also correctly intuits that some U.S.
officials go out of their way to ingratiate themselves with
Japanese companies in hopes of future reward. If Ronald Reagan
could be rented with a $2 million speaking fee in Japan,
obscure Commerce Department deputies are not immune to
temptation.

    But Choate might have depicted the motivations of his agents
of influence more artfully if he had been willing to confront
them face to face. "I couldn't write this book from
interviews," he says. "I could only do it from documents. If
I didn't have it in writing, with their signature on it, I
didn't put it in." What Choate missed with his dogged but
reclusive methodology were not facts, but nuggets of insight
into self-justifications common in Washington.

    Choate never talked to Harald Malmgren, a top trade official
with the Nixon and Ford administrations, whom the book
describes as the trailblazer in working for the Japanese. In
1977 Malmgren received a $300,000 payment from Japanese TV
manufacturers for helping them avoid crippling import duties
for selling their sets below the cost of production. This
dumping case, Choate argues, hastened the death of the American
electronics industry. Malmgren now calls his fee "a reasonable
salary for my time but not what I would have gotten had I gone
into investment banking." Malmgren has no regrets; he argues
that domestic TV manufacturers were already imperiled by other
Japanese rivals, who had built American plants. "Had we lost,"
he says, "those Japanese companies probably would have just
creamed their U.S. competition faster."

    Agents of Influence is a brave and provocative book, but
there is a danger that the battles it will spark will be fought
on the wrong terrain. The central issue should not be Japan
bashing or any overheated conspiracy theory about why American
companies are losing their market share. Even Choate's outrage
over the ease with which former U.S. trade officials switch
allegiances in the private sector is part of the larger
struggle over revolving-door ethics in Washington. Rather, the
fascinating question that Agents of Influence raises but does
not answer is, What are the demands of patriotism in a world
where global economic rivalry has replaced the cold war?

    Is it ethical, say, for an American to work on behalf of
Canadian companies but not Japanese ones? Or is any country
acceptable as long as it practices democracy? Then what about
Saudi Arabia? Or new Persian Gulf allies like Syria? The moral
answer is, as it always has been, that patriotism does matter,
that American jobs matter, and that the economic as well as
political future of the nation matters. Americans who work to
advance the causes of foreign governments or corporations have
an obligation to be wary that their activities do not harm the
national interest. A global economy is no excuse for continuing
to tolerate a laissez-faire ethical climate in which all of
Washington is available to the highest bidder.