Jared M. Diamond

The Japanese are fanatics for fresh food. A container of milk in a US supermarket bears one date: the expiration date. In Japan a milk container bears three dates: the date the milk was manufactured, the date it arrived at the supermarket, and the expiration date. Milk production in Japan always starts at one minute past midnight, so that the milk that goes to market in the morning is today's milk. If the milk were produced at 11:59 p.m., the date on the container would have to indicate that the milk was made yesterday, and no Japanese person would buy it.

As a result, Japanese food-processing companies enjoy local monopolies. A milk producer in northern Japan cannot compete in southern Japan because transporting milk there would take several days. These local monopolies are reinforced by the Japanese government, which obstructs the import of foreign processed food by imposing a ten-day quarantine, among other restrictions. So the Japanese food-processing companies are not exposed to domestic or foreign competition, and they don't learn the best methods in the international trade for producing food. Partly as a result, food prices in Japan are very high: beef costs $200 a pound; chicken costs $25 a pound.

Some other Japanese industries are very different: the steel. metal, car, car parts, and electronics industries in Japan have higher productivities than their US counterparts. But the Japanese soap, beer, and computer industries, like the Japanese food-processing industry, are not exposed to competition, do not apply the best practices, and thus have lower productivities than the corresponding industries in the United States.