Japan's Premier Focuses on Deregulation Hosokawa Sees Erasing Rules - from Haircuts to Trade Barriers - a Key to Staying Competitive

Article excerpt

JUST a few weeks ago, bureaucrats in Japan would have made sure that a schoolboy's hair was cropped to within an inch of his scalp. Some teachers even chased after shaggy students with electric razors.

But a month-old reformist government, intent on trimming the formidable power of national bureaucrats, has decided to ease off the hair rule.

The government hopes to do the same with thousands of other rules that entrenched civil servants have used to regulate Japanese society and to create an economic system that repels many foreign firms.

"The bureaucracy is a tight-knit power, but Prime Minister {Morihiro} Hosokawa is determined to overrule any resistance," says Syusei Tanaka, his special assistant.

The haircut issue was thrust on the new government by a group of protesting teenagers in Osaka. Education Minister Ryoko Akamatsu had to overrule the ministry's implacable bureaucrats. She said that she shivered every time she saw students with close-cropped hair, a legacy of Japan's militarist past.

But the drive for such deregulation is coming from more than schoolboys.

The impetus for reforms lies with big business, the United States, and Mr. Hosokawa himself, who heads a seven-party ruling coalition. After helping to oust the long-ruling Liberal Democratic Party, Hosokawa is trying to reverse centuries of control by bureaucrats, whose prestige has been unquestioned by many average Japanese.

"He is so enthusiastic that he takes up the telephone himself to direct operations," Mr. Tanaka says. "He needs to be like a samurai to fight the bureaucrats. Since he is descended from an old warlord family, he knows how to do it. In fact, this effort is almost like a war."

A certain urgency is behind Hosokawa's drive for Reagan-style deregulation. At the end of September, he will meet President Clinton and hopes to present him with a package of economic measures to open Japanese markets, boost the economy, reduce the trade imbalance, and reorient Japan toward consumers rather than producers. Deregulation is his centerpiece.

"We will not delay carrying out those deregulation proposals which can be implemented in the short term," Hosokawa said on a government television program.

The US and Japan on Sept. 19 will begin their first round of economic "framework" talks, aimed mainly at opening up such protected industries as insurance.

Japan's economy is in the doldrums, after the implementation of three stimulus packages, and Hosokawa sees deregulation as one of the few tools left to boost business. …