Can Japan catch up with the United States in information technology? The mere suggestion sounds preposterous, given the current climate of American triumphalism and Japanese gloom. Yet we should recall that not too long ago the U.S. and Japan were both declaring Japan's victory in the high-technology supremacy. We know what happened next: The U.S. mounted a comeback — not just a minor reversal of fortune, but a stunning resurgence that ushered in the IT era. Could Japan possibly turn the tables once again?

The Japanese government appears to believe that it could — at least if we are to believe the IT Strategy Council's December 2000 report. The council boldly aimed to achieve global leadership in the IT sector by 2005. Yes, that's global leadership, as in knocking the U.S. out of first place. The council's scheme sounds especially outmoded because it puts the government at the helm. The government would provide the leadership, make the key investments, and coordinate private-sector activity. It sounds almost like Japanese industrial policy all over again. But we know that a government can't launch an IT revolution. The U.S. leads the world because the government stepped aside and left entrepreneurs to rule in the free market.

Well, not exactly. Researchers at the Berkeley Roundtable on the International Economy have demonstrated how the U.S. government laid the foundation for America's IT boom. The government established the research base that led to the commercial Internet — but that was just the beginning. Very early on the government provided a launch market for the electronics sector through defense spending, and funded basic research.