The Good Occupation

Abstract

Many Americans picture the Allied (i.e., U.S.) Occupation of Japan (1945-52) as the quintessentially good occupation: elaborately planned in advance, idealistically administered until derailed by anti-Communist ideologues in its later years, it laid the foundation for Japan's post-War democracy and prosperity. In fact, the Americans - especially those Americans celebrated as most "idealist" - did not plan a Japanese recovery, and for the first several years did not work for one. Instead, they mostly just planned retribution: whom to hang, and which firms to shutter. Economic issues they entrusted to Japanese bureaucrats, and those bureaucrats merely manipulated the controls they had used to disastrous effect during the War. Coming from a New Deal background in Washington, the Americans enthusiastically urged them on.

Although the Japanese economy did grow, it did not grow because of the Occupation. It grew in spite of it. In early 1949, Japanese voters overwhelmingly rejected the political parties offering economic controls. In their stead, they elected center-right politicians offering a non-interventionist platform. These politicians then dismantled the controls, and (despite strong opposition from New Deal bureaucrats in the Occupation) imposed a largely non-interventionist framework. As a result of that choice - and not as result of anything the Occupation did - the Japanese economy grew.

JEL Classification: K23, L44, L52, N45, P2