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Japan’s many roads to ruin

by Colin P.A. Jones

While there are many roads to democracy and prosperity, in Japan it is roads that may take the country in a different direction. In their latest book on construction in Japan, “Doro o do suru ka” (“What to do about the roads?”), lawyer Takayoshi Igarashi and journalist Akio Ogawa paint a bleak picture of how the “road tribes” — the impenetrable scrum of bureaucrats, politicians and industry that benefit from an ever-expanding program of road construction — are literally paving the road to national ruin.

Road policy received a great deal of attention in early 2008 with the so-called “gasoline Diet.” Having lost control of the Upper House, the Liberal Democratic Party-New Komeito ruling coalition was unable to have the Diet rubber-stamp the renewal of a “temporary” gasoline tax set to expire in March of that year. Ultimately, they were able to use their majority in the Lower House to renew that tax through a legislative override, but not before it expired briefly (resulting in a period during which the price of gasoline dropped by about ¥25 a liter) and generated widespread debate about this seemingly innocuous source of government revenue.

The real issue in this debate was not so much whether the gasoline tax should be renewed, but whether the revenues should go into the general tax coffers and applied to much-needed social programs and education, areas where Japan lags behind most developed countries in public spending. This battle was lost, and the tax remains earmarked for road repairs and the construction of unneeded expressways, not to mention the occasional massage chair for public road company employees.

The problem has its roots in Japan’s last experience with ruin: its defeat in World War II and occupation by the allies. The American military authorities who ran Japan had a number of agendas. One was countering the resurgence of a central fascist government through enhancing regional autonomy. Another was restoring the roads and other transportation infrastructure that had been the target of allied bombing campaigns. Roads that might have a military purpose were no longer to be owned by the central government.

In 1948, the Americans ordered the Japanese government to produce a five-year plan for building and repairing roads. Five-year (or longer-term) road plans have been a feature of Japanese politics ever since, and each one has been more grandiose than the last. The plans have been accompanied by an expanding array of special taxes on fuel and automobiles, as well as a bewildering regime of laws on road construction. Somewhere along the line, these laws made it possible for road-building plans to be approved by the Cabinet, or in some cases by the minister of construction (now the minister of land, infrastructure, transport and tourism) acting alone, without Diet approval. In essence, the road bureaucrats can build whatever roads they want unchecked by democratic oversight. The 12th five-year plan (1998-2002) cost ¥78 trillion, recession notwithstanding. The mammoth plan that superseded it in 2003 even dispensed with timelines and published cost projections, focusing instead on projected “outcomes” such as reducing traffic jams by 10 percent. Thus the tax (together with loads of public debt) has given the bureaucrats what has become quite literally a blank check to spend on roads and, by extension, political influence and cushy retirement jobs.

The results have been a disaster. Certainly, Japan has a lot of roads: four to five times the number of any other Group of Seven country when measured by kilometers of road to usable land. The trouble is, a lot of these roads are in places where they are not needed. The country has an impressive network of toll roads that will never be profitable. It has expressways that connect industrial parks to ports and airports that industries do not want to use, and monumental bridges that suck people and money out of rural towns rather than reviving them. Yet despite decades worth of road and other infrastructure projects, projects that people actually need remain undone: In 2007 the government identified 110,000 km of roads where there was a high risk of accidents because, for example, children used them to walk to school (including 40,000 km of streets lacking separated sidewalks!). Adding sidewalks to streets used by small children simply doesn’t fit the agenda of the road tribes as well as a four-lane expressway to nowhere does.

The cost of all this has also been disastrous. Thanks in part to road-building costs 10 to 30 times higher than in other countries, Japan has the most expensive toll roads in the world, some of the highest vehicle acquisition costs, and a national debt almost double the country’s GDP, the servicing of which consumes about a quarter of the annual budget. Japan’s four principal road corporations stagger under an additional ¥40 trillion in debt that is guaranteed by the government.

Ironically, ballooning debt has been one of the means by which central authorities have secured a stranglehold over local governments, negating American efforts to expand regional autonomy. Since the roads no longer belong exclusively to the national government, when the road bureaucrats mandate the construction of a new expressway, the regional and local governments which “benefit” from it must shoulder part of the expense. Combined with a generous regime of subsidies that encourage local authorities to build more pointless infrastructure for almost no money down, a never-ending cycle of construction spending has rendered many local governments insolvent, and thus completely beholden to the central government for funding just to keep going.

For example, in its 2008 budget Fukuoka Prefecture had ¥58.7 billion available for road construction from the gasoline tax and other sources. However, it needed ¥50.9 billion just to service its existing debt. Yet with just ¥7.8 billion remaining, it had a road construction budget of ¥103.7 billion, funded mostly by more debt or subsidies from the national government (effectively more debt). Small wonder, then, that despite the continuation of the gasoline tax being opposed by a great majority of the population, the ruling coalition was able to summon an impressive body of local politicians to insist upon its renewal. Without it they could barely pay their existing debts, let alone incur new ones.

Efforts to remedy the situation have repeatedly failed. The road bureaucrats are adept at frustrating anyone who seeks to take away their pie. Freeways are recharacterized to fit the best legal and funding regime, resulting in anomalies such as the “toll-free toll road.” Demands that new road projects only proceed after a cost-benefit analysis is conducted are duly met with studies showing that all planned roads are beneficial. Such studies may include publicized future road-use projections that contradict the government’s own projections regarding Japan’s shrinking and aging population. They also use fanciful assumptions such as that all of the country’s 50 million privately-owned cars will be used by a driver and one passenger, both of whom earn ¥300,000 a month, and that each hour saved by shorter drive times is worth ¥2,200-2,700 to each of them. The value of this time saved is in turn derived from an assumption that the drivers could use it to rent their cars out at commercial rates (though doing so would actually be illegal).

The planned privatization of the road corporations also seems unlikely to change things. Despite recommendations to the contrary by a committee picked by former Prime Minister Junichiro Koizumi, the “privatized” corporations will apparently continue to build money-losing roads using debt guaranteed by the government. Tolls from money-losing expressways will continue to be pooled with those of profitable routes, disguising the fact that some of them cost more than three times more to run than they generate in revenue.

Nonetheless, the authors make a number of proposals for reform, including “real” privatization of the road corporations, increased activity by the media and citizens’ groups (which have successfully fought some road and other projects), and the ever-elusive elimination of amakudari, which encourages road bureaucrats to shovel public largess on construction companies and quasi-public entities on the understanding that they will be rewarded with plum jobs after retirement.

If there was one complaint to be made about book, it is that it barely touches on the issue that underlies U.S. President Barack Obama’s current grandiose plans for infrastructure spending: jobs. Certainly Igarashi and Ogawa present government arguments for roads even if only for the purpose of showing them to be empty, yet none of these arguments involve the jobs that road projects presumably create across the country. Perhaps this was an omission on the part of the authors, or perhaps jobs are simply one more incidental side effect of an endless series of road projects, like blocked traffic and increased concrete production. Keynesian economics aside, perhaps Japan’s road tribes do not care about jobs any more than they do about children walking to school on a sidewalk.

Colin P.A. Jones is a professor at Doshisha University Law School in Kyoto. Send comments to community@japantimes.co.jp