Alex Kerr loves Japan as much as anyone, but he knows much more about it than most. With the publication April 25 of "Inu to Oni" (Kodansha) -- a translation of his book "Dogs and Demons" (Hill and Wang, 2001) -- Japanese, too, will be able to share his insight. As it says on the cover of "Dogs and Demons," the book offers "tales from the dark side of Japan's well-known modern accomplishments."

Kerr was born in 1952 in Bethesda, Md., and first came to Japan aged 14 when his naval officer father was posted to Yokohama. Since then he has lived in this country on and off for more than 30 years, though even his years away have been spent cultivating his passion for Japan and Asia. After taking a BA in Japanese Studies at Yale, he spent a year at Keio, then went to Oxford on a Rhodes Scholarship, to take a degree in Chinese Studies.

Kerr's career has ranged from teaching traditional Japanese arts to investment banking. He is an articulate speaker, quick to laugh, and a keen scholar whose book "Lost Japan," written in Japanese, won the 1994 Shincho Gakugei Literature Prize for the best work of nonfiction published in Japan. He is the first foreigner to win the prestigious award.

Below are excerpts from a recent interview about the "dogs and demons" plaguing Japan.

Why did you first write the book in English?

The book is aimed at an international audience, because the writing about Japan is so skewed that I think people needed a dose of reality. In many ways Japan has been viewed as a Utopia by Japan experts, but there is a snake in that Garden of Eden and no one had really written about it.

What is "the snake?"

There are structures that have frozen in place since the 1950s, and systems on autopilot leading to a society that is in deep trouble. What's wrong with the banks is exactly what's wrong with the environment. The same thing is wrong with the movie industry and with education and medicine. They are all linked, but people don't usually connect them.

Why did you write the book?

It's a follow-up to my first book, "Lost Japan," in which I talk about the decline of the environment, old cities and so on. While writing that book a part of me questioned my own feelings. You go past a concreted hillside and you think, "This is wrong," but the question I kept asking myself was, "Am I just some sort of Luddite? Isn't this progress?" I couldn't shake that doubt from my mind, so I set out to research it.

This book took five years, because as I got into it I discovered that my feeling was on the right track, that these things were not inevitable, they were not economically necessary.

What is your thesis?

One of my biggest themes, and one of the themes that has deeply troubled American academics, because it's a shocking idea, is that Japan is a case of failed modernization. When people think of Japan, they think "modernization," and many of the things taking place in Japan have this surface look. But my argument is that Japan's rigid, frozen structures diverge so far from the modern world, externally and internally, that they're no longer modern. Systems are actually from 1950, not from 2000. This means that Japan does not know how to design a museum or manage it, doesn't know how to design or manage a hospital, and doesn't know how to design or manage a hotel, all of which are important modern technologies.

You mentioned that you have upset foreign scholars.

[Some scholars] have spent 40 years telling us that Japan is the very ideal of modernization. I recently had a radio debate with Ezra Vogel [Harvard professor and author of 1979's "Japan as Number One"], in which I mentioned that Japan has concreted 60 percent of its coastline. He jumped in to say, "Don't you see, that was due to a great success, because Japan chose to put its factories and steel mills by its seashore." Well, yes, that might account for one-tenth of 1 percent of the coastline, but how does he account for the rest of it? But the fact that there was an emotional need to justify [development] is the key element here, and I think it's sad. In many respects, Japanology in America has been left behind in a kind of nostalgia.

Have any of your conclusions changed since the English version came out last year?

Alas, no. In fact, as I was translating, I set aside time to incorporate all the latest changes since [Prime Minister Junichiro] Koizumi had been elected and Japan was going to reform, but to my amazement there was very little, surprisingly little, to change.

This proves your point, doesn't it?

Tragically so. One of the biggest questions of the book is, "Can Japan change?"

What are your primary concerns for Japan's environment?

In particular, of course, the construction state and the runaway government-subsidized construction projects that have wreaked untold damage on mountains, rivers, streams, lakes, wetlands, everywhere -- and it goes on at a heightened pace. That is the reality of modern Japan, and the numbers are staggering.

To give you an example, in America about 8 percent of the national budget goes on construction, while in Japan it's 40 percent. The percentage of the workforce in America involved in construction is below 1 percent, in Japan it was 12 and now it's closer to 14 percent; it actually grew in the '90s. The amount of concrete laid per square meter in Japan is 30 times the amount in America, and the volume is almost exactly the same. So we're talking about a country the size of California laying the same amount of concrete [as the entire U.S.]. Multiply America's strip malls and urban sprawl by 30 to get a sense of what's going on in Japan.

A fascinating aspect of this is that it wasn't required by the economy. [Construction] has actually driven the nation into debt, colossal debt, the world's highest. It has damaged the economy because all those millions of people wearing hardhats are millions of people who weren't recycled into new industries, and that's one reason Japan is suffering a high unemployment rate.

Any other concerns?

Another area that concerns me is the destruction of old cities and cultural heritage sites, such as villages and old towns.

Can you identify any particular structural problems?

The biggest one is the bureaucracy. The bureaucracy works in secrecy and is more or less unaccountable to the public and to elected representatives. This is the reason Japan's systems froze and never changed, because for bureaucrats everywhere inertia is their golden rule. They'll do next year what they did this year. The difference is that in other countries the political process goads them, changes things, and forces new systems. In Japan, that doesn't happen.

One important aspect of this is that bureaucrats profit from the activities under their jurisdiction. For example, policemen's benefits associations own the companies that make the cards used in pachinko parlors. Transportation Ministry bureaucrats own stock in the companies that build and manage the rest stops and highways. The River Bureau bureaucrats, through amakudari, staff the directorates of the companies that manage the dams. This happens in every ministry.

Wouldn't they claim this is beneficial because it prevents conflict?

That's the classic justification for it. And of course that's the justification for working in secrecy, that an elite bureaucracy has the public good in mind and does away with raucous public debate. I show pretty conclusively in the book, as I go through field after field, that this has led to dysfunction, confusion and colossal mismanagement all the way down the line.

What potential solutions do you see?

One thing I am very careful about in the book is not to recommend anything, because if you pick up any book about Japan by a foreigner, or Time magazine or the Economist, they all say, "Japan must . . ." "Japan should . . ." There is all this table-thumping telling the Japanese what to do, so nowhere in my book do I tell Japan what to do.

If I were to offer any solutions, one would be to do away with this endemic system whereby bureaucrats profit from the activities that they control. That's the single biggest difference between Japan's bureaucracy and Western democracies.

The second thing I would recommend is that information in every field, in finance, in corporate balance sheets, and in the government, be more widely disseminated and more transparent. One of the reasons these systems have been able to sustain themselves is because everything is done in secrecy, and fudging, and even falsifying information has been acceptable. This is one of the reasons Japan is technologically behind, because if you don't know where the toxic wastes are, then you don't develop technologies to deal with them. If you don't know what a healthy balance sheet is, then you don't develop the financial technologies for analyzing balance sheets and figuring out where to invest your money. So lack of reliable information is a huge issue.

If you could suggest one new law for Japan what would it be?

Don't touch it unless you've got a really good reason to, unless you can prove that it's necessary. I say this because an astonishingly high proportion of all runaway development, civil engineering, and landfilling is truly unnecessary.

Is there hope for Japan?

Japan is not some sort of monolithic entity. You are dealing with an entrenched bureaucracy and a complacent majority, but there are millions, maybe tens of millions, of deeply dissatisfied and unhappy people, and millions of very savvy people, people who understand what's wrong and are dying to do something about it. In a way, this book is a gift to them. These people, in fact my sources, are already writing in Japanese and thinking about these things.

So that's the hope, that there is a strong body of public opinion that is already there and building, that understands these issues.