Japanese car makers were able dramatically to expand their share of the US car market in the seventies and eighties. This was partly the result of their own efforts and partly fortuitous. This paper examines why the US car makers of this period were vulnerable and how the Japanese were able to exploit their own technical and organisational strengths. An understanding of this key period in the history of Detroit's 'Big Three' indicates why some two decades later the US companies found themselves on the brink of corporate ruin.

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Policy by assertion is an all too common temptation amongst economic analysts. Plausible stories substitute for closely developed economic theory backed by convincing empirical evidence. In the case of Japan, an extended period of deflation attracted numerous proposed policy responses. Structural explanations, typified by those relating to corporate governance, appear to be uncontroversial. On closer examination however, the causative mechanisms and actual evidence turn out to be seriously lacking. Instead, a collection of individually desirable objectives are bundled together to present an appearance, rather than a reality, of cause and effect. The result is a set of obvious solutions, but the associated policies remain largely dependent on assertion for their authority.

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