Reclaim Your Brain

Think Entrepreneurs Like Hank Rearden Don’t Exist? Honda Motor Company’s Founder Proves That They Do.

A common criticism I hear of Ayn Rand’s Atlas Shrugged is, “Yeah, it’s great fiction. But life is not like that. In real life, businessmen don’t have integrity like Hank Rearden’s.”

Guess again, Mr. Critic.

The last time you saw a non-evil Japanese businessman portrayed in any motion picture — whether the movie was filmed in America, Japan, or some other place — did he ever say anything like this?

First, each individual should work for himself — that’s important. People will not sacrifice themselves for the company. They come to work at the company to enjoy themselves. That feeling would lead to innovation. The most important thing for me, is me [boldface added].

Would you believe that those words were spoken by a real-life Japanese inventor-engineer-industrialist?

His name is Soichiro Honda, the founder of Honda Motor Co., Ltd. Every time you see a car with “Honda” on it, think of the sort of man who made it possible.

The archetypal Japanese businessman is supposed to be a collectivist who thinks that, when necessary, he must sacrifice his own happiness for the sake of the corporation he works for. And he must restrain his own emotions for the sake of “social respectability.” At least, that’s what I’ve heard.

I showed the above quotation to several people. One, an American who had lived in Japan for several years, said, “It’s shocking that a prominent Japanese businessman would say that!” Someone else chimed in, “Maybe he was already old when he said that. In Japan, old people can get with saying what young men cannot.” Incidentally, I first learned of this quotation from Edwin A. Locke’s excellent book The Prime Movers: Traits of the Great Wealth Creators.

One would expect the CEO of a major Japanese corporation to utter the usual altruist platitudes. Tachi Kiuchi, the managing director of Mitsubishi, is an expert at that. Here is a sample:

Conventional wisdom is that the highest mission of a corporation is to maximize profits. Maximize return to shareholders. [Ha! If that were the conventional wisdom, the world would be a less stupid place. --S.H.] . . .

That is a myth. It has never been true. . . . …profits are not an end. They are a means to an end. The economic bottom line only exists to feed the social bottom line.

My philosophy is this: We don’t run our companies to earn profits. We earn profits to run our companies. . . .

What I learned from the rainforest is easy to understand. . . . Consume less, and be more. It is the only way. . . .

Only together can we make the world whole.

Yawn. As if those cliches weren’t spoken by the CEO of almost every big corporation, U.S.-based or Japan-based.

Soichiro Honda expresses thoughts that are much more original and stimulating. His pro-selfishness quotation comes from this Monday, January 27, 1987 New York Times article, which also provides these gems from him (the last one is my favorite):

* “Government officials should always act to protect the public interest. But they tend to become an obstacle when you try to do something new.”

* “Generally speaking, people work harder and are more innovative if working voluntarily…”

* “‘I think it’s very important to be sensitive to seemingly trivial psychological matters.”

* “I have some ideas. But I always find out that younger people have done them already. Young people are wonderful — I just can’t beat them. They’ve learned from our experience, and then they add their own ideas. Many older people talk about ‘kids these days.’ I have never used that expression.”

From what I have read of Honda, he was always a very strange man. He was not only a rebel and an eccentric by Japanese standards, but even by American ones. He began as an uneducated tinkerer who worked on motorcycles on his own. A life-long autodidact, he taught himself most of what he needed to know about mechanics. When he came to recognize certain important gaps in his knowledge, he went to engineering school — not because anyone else expected it of him, but merely to solve the specific problems that were plaguing his business.

It is often assumed that someone as innovative and independent as Howard Roark could never have existed in Japan. It is true that Japan has too much social conformity and cultural collectivism (actually, even the most individualistic countries have too much collectivism). However, it is entirely inconceivable that post-World-War-II Japan could have become such an innovative economic powerhouse if its private sector didn’t tolerate a certain level of Roarkian originality and innovation in business. Akio Morita and Masaru Ibuka of Sony did not live their private lives with the same independence as Roark, but they did show such independence in their professional lives. They found a technology invented in the United States called “video-tape recording” (partially invented by Ray Dolby of Dolby Stereo fame), and noticed that no one in the USA utilized it because it was too expensive. Ibuka — an engineer and inventor himself — put his best engineers on the project and developed a new cost-feasible model of this invention.

Even from the time of the Meiji Restoration to its pinnacle of power during World War Two, Japan existed in what we would consider “Third World subsistence poverty.” Were it not for some exercises in Roarkian independence from 1945 onward in the scientific, engineering, and industrial sectors, Japan would not be the wealthy powerhouse that it is today. It is therefore fitting that Ayn Rand once told a Japanese architect who liked The Fountainhead that “philosophical ideas hold true for all people everywhere and…there will always be men who will respond to a philosophical truth in every country on earth” (letter to Y. Ashihari, February 26, 1951, in Letters of Ayn Rand, ed. Michael S. Berliner, [New York, NY: Plume, 1997], p. 493).

Insofar as they conform to Tachi Kiuchi’s conventional platitudes, Japanese companies flounder. Inasmuch as they adopt Honda’s constructive attitude, Japanese companies open up many grand opportunities for themselves.

When I read Honda’s words and about his life, he is definitely not as philosophically sophisticated as Roark was at the climax of The Fountainhead. Perhaps he can be called “The Roger Enright of Japan.” I would say that maybe he was as wise as Hank Rearden was in the first fifth of Atlas Shrugged.

Honda even faced a situation similar to something out of Atlas.

In the 1950s, MITI — Japan’s Ministry of International Trade & Technology — was under the misapprehension that Japanese industry would not be able to compete against U.S. industry unless it was managed by the State. It sought to create a government-regulated automobile cartel that allowed no more than three companies to export their cars to the United States. Much like the Railroad Unification Plan and Steel Unification Plan of Atlas, this was the original Auto Unification Plan, anticipating Barack Obama’s reign by decades.

As one website tells the story,

This was at a time when the powerful Ministry of Trade and Industy (MITI) was trying to unite several small companies into a third large one to compete with Toyota and Nissan. MITI and the Department of Transportation tried to discourage Honda from adding to the number of companies, but he persisted. He won MITI’s permission by coming out with a low-priced small sportscar, the S 500, which was different from anything produced by the other companies. He followed it up with other sports models. His company was still very small, producing only three thousand cars in 1966 — half of what Toyota was turning out in a week.

This is how Honda himself saw it in his own translated words:

I deluged him [the MITI bureaucrat] with complaints, because I couldn’t understand it at all. To hell with the Specified Industry Promotion Law! I had the right to manufacture automobiles, and they couldn’t enforce a law that would allow only the existing manufacturers to build them while preventing us from doing the same. We were free to do exactly what we wanted. Besides, no one could say for certain that those in power would remain there forever. Look at history. Eventually, a new power would always arise. I shouted at him angrily, saying that if MITI wanted us to merge (form a joint venture with another company), then they should buy our shares and propose it at our shareholders’ meeting. After all, we were a public company [he means a privately owned company that is publicly traded on the stock market]. The government couldn’t tell me what to do.

As always, the government certainly did tell him what to do! Fortunately, however, Honda triumphed:

The basic MITI policy regarding Japan’s car industry was compiled into the Temporary Measures Bill for the Promotion of Specified Industries in March 1963, and was submitted to the 43rd Session of the National Diet. However, the session was adjourned in July without a resolution. The bill was resubmitted to the 46th session starting in January 1964, but did not pass. The bill was eventually abandoned without anyone really knowing its ultimate destiny.

Justice prevailed, which is why the economy did as well. Can you imagine how much worse off Japan, the USA, the world, and common decency would have been had that law been passed?

Honda was an independent freethinker who peaceably lived according to his own rational judgment, and stood up to a State threatening to throttle it. If Japan, the USA, and anywhere else had more people like that, we would be in a much better situation.

The more I learn about Soichiro Honda, the more I like him.

Even his initials are good.

As an engineer, Honda mostly preferred to handle the research & development side of his business. He left the bookkeeping and accounting to a capable, no-nonsense gentleman named Takeo Fujisawa, who has been described as a “loner.” In this PDF, Fujisawa is quoted saying,

“President”…isn’t a rank expressing greatness in a person. When some people become president, however, they start strutting about like they’re field marshal. President is the most hazardous occupation known to man.

He was talking about the presidents of big corporations. But, these days, I think those words more accurately apply to Presidents of whole countries, even those in the First World.

So, yes, Mr. Critic, you can find qualities like Hank Rearden’s in the entrepreneurs who lead the freer nations’ economies. If you can’t find them, you might want to consider searching with greater concentration and scrutiny.

Honda: Motorcycle mechanic and tinkerer turned auto mogul