Unlocking the Bureaucrat's Kingdom: Deregulation and the Japanese Economy

Unlocking the Bureaucrat's Kingdom: Deregulation and the Japanese Economy

Unlocking the Bureaucrat's Kingdom: Deregulation and the Japanese Economy

Unlocking the Bureaucrat's Kingdom: Deregulation and the Japanese Economy

Synopsis

Japan today is caught up in chronic economic crisis, its financial system wracked by record-breaking bankruptcies and its companies hobbled by bad balance sheets, overproduction, and weak consumer demand. In turn, Japan's faltering fortunes have sent shock waves across Asia, triggering the collapse of economies in South Korea, Thailand, and other Asian countries that followed its model for rapid growth and development. While a growing chorus of Japanese politicians, business leaders, and economic analysts blame the current troubles on the misguided policies of Japan's Ministry of Finance, the root of Japan's malaise lies more fundamentally in the contradictory relationship that first made it an economic powerhouse: the combination of businesses that aggressively compete for profits in the best tradition of free enterprise with a government bureaucracy that controls the economy with a heavy thicket of regulation and guidance. And so far, despite ringing declarations of reform, the entrenched bureaucracy shows little willingness -- or ability -- to make the significant reforms that Japan (and its Asian economic disciples) needs to recover. In this book, a cross-section of Japanese, American, and European journalists and authorities in the business, political, and economic sectors examine the problems caused by over-regulation, and offer solutions for reshaping the Japanese marketplace. In Part One, former Japanese Prime Minister Yasuhiro Nakasone, Vice Minister of Finance Eisuke Sakakibara, and some of America's and Japan's leading experts on the Japanese economy map out the long road to regulatory reform. They analyze the postwar origins of today's bureaucracy, current attitudes towardregulation among politicians and the public, and the changes in both policymaking and mind set that must occur to achieve true reform. Part Two focuses on the effects of over-regulation, using illuminating case studies involv

Excerpt

Throughout my tenure as ambassador to Japan (1989-93) I was obliged to spend much of my time wrestling with bilateral trade problems between Washington and Tokyo. the most vexing and intractable barriers to Japan's market seemed frequently to be embedded in a regulatory system that was extensive, opaque, and often arbitrary--particularly for new entrants to the market. the Bush administration's Structural Impediments Initiative (SII) negotiations were directed toward removing or modifying a number of these regulatory barriers to trade.

Recognizing that requests for change had little prospect of success if they bore a "made in U.S.A." label, we shopped around for reforms proposed by thoughtful and knowledgeable Japanese. We had no difficulty assembling a wide range of recommendations from the Maekawa Commission, the Administrative Reform Council, and various academicians. Some of their proposals were designed to foster greater competition by lowering market entry barriers, some to enhance the clout of the Fair Trade Commission, some to make keiretsu networks more transparent and less exclusive, and some to lower prices and expand the choices available to Japanese consumers. in making the case for these proposals the U.S. Embassy consistently underlined the potential benefits of reform to the Japanese people. This perhaps accounts for the fact that despite a delicate and difficult negotiation, the results were generally applauded by the Japanese press--and even a few politicians. Some of the practical results were laudable, for example, amendment of the Large Retail Store Law. But the bargaining left a sour aftertaste on the Japanese side, and following President Clinton's election in 1992, Washington adopted a different approach to trade negotiations with Tokyo.

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