Hi Blog. For a Summer Tangent, here’s a good summary of Japan’s Amakudari system, and its effects on politics and prospects for reform. The Economist has come a long way from when I first read it back in the Eighties, when it basically assumed that Japan’s postwar economic miracle was due to theoretical economic efficiencies (as opposed to a closed captive domestic market and sweetheart-deal overseas trade access). Now they have people here on the ground (well, one that I’ve met, and I found him knowledgeable and impressive) who aren’t blinkered by mere Adam-Smithism and clearly know their way around. Good. Have a read. It’s short and sweet. Arudou Debito in Sapporo
Japan’s overpowerful bureaucrats
Summertime, and the living is easy
Politicians fail to end cosy ties between pen-pushers and business
Aug 5th 2010 | TOKYO
A SWATHE of high-ranking bureaucrats from Japan’s biggest ministries began in new posts on July 30th, doled out as part of an annual summer rite. A gaggle of even more senior ones were asked to retire—and immediately won cushy, lucrative jobs at quasi-public agencies and private foundations. Some were even sent to companies in industries they had previously regulated.
The practice is called amakudari (meaning “descent from heaven”). It has long reflected unhealthily close relations between bureaucrats and business, distorting the work of civil servants on the look out for a plum job, and burdening firms with the deadweight of ex-pen pushers serving as “senior advisers”. At its worst, it lets civil servants enrich themselves, pay back vested interests and resist economic reform. One reason why Japan’s banking crisis in the 1990s took so long to fix was because former senior staff from the finance ministry and Bank of Japan had moved to the banks that needed fixing. They pressed their former deputies to bail them out on soft terms, and then failed to carry out much-needed surgery.
For decades politicians of all stripes have vowed to end amakudari. True to form, the new Democratic Party of Japan (DPJ) came to power promising change, but so far has done little, though there is talk of shutting a few quangos—such as a farm-road-planning group linked to the agriculture ministry. In theory this could mean big changes: around 100 “public corporations” are attached to ministries and another 6,500 semipublic associations exist. Together, such firms enjoy an annual budget estimated as large as ¥3.4 trillion (around $40 billion).
But few expect action soon. The rationale for amakudari is that, given Japan’s strictly hierarchical society, getting old civil servants out of the way is the only means of letting younger ones rise. Companies comply because they rely on cosy official contacts to prosper: a board director at a big Japanese firm concedes that its heavenly arrivals help to ease interactions with regulators.
Kicking this unhealthy habit, therefore, requires broad, sharp changes to much of how Japanese culture, politics and business works. Don’t expect to see that done by next summer.