Commentary / World

Real reform is just beginning

by Heizo Takenaka

The central government will be reorganized Jan. 6, 2001 with the number of ministries and agencies to be cut almost in half to 13 from the present 22. The shakeup is based on a program worked out with great difficulty by the Adminis trative Reform Council, an ad hoc panel created under the Hashimoto administration (Jan. 1996 – July 1998).

In this connection, I want to make two important points. The first is that policy initiatives must be taken under the sound and creative leadership of the Prime Minister’s Office (the Cabinet Office). The other is that preparations for a second reorganization, including creation of a “communications and information ministry,” should start immediately after Jan. 6.

For decades Japan’s policymaking process has been described in terms of “kanryo shudo” (bureaucratic leadership). During the Cold War, during which the nation’s political world was ideologically polarized between the Liberal Democratic Party and the Japanese Socialist Party, there was a tacit role-sharing agreement between politicians and bureaucrats.

Under the perennial LDP regime, politicians concentrated on maintaining political stability while bureaucrats took charge of policymaking. With Japan’s economy then playing catch-up — a game everybody understood — economic policy did not demand sophisticated political judgment. So the “division of labor” between politicians and bureaucrats worked fairly well.

Given, however, that Japan is a representative democracy, politicians should play a much larger role. In fact, with economic-policy issues becoming more complex, politicians must increasingly engage in the policymaking process.

There is the rub: While bureaucratic leadership has its flaws, such as entrenched sectionalism and slow action, political leadership has its own problems — free spending and other dubious measures designed to win elections.

The important thing is to provide creative political leadership while addressing these problems. More specifically, the Cabinet Office — which will replace the Prime Minister’s Office — should take the lead in making policy decisions.

The highlight of the forthcoming reorganization is that it will create a policymaking mechanism centered on the Cabinet Office through a strengthening of the prime minister’s policy functions. In addition to the establishment of the Cabinet Office, the Cabinet Secretariat will be supported by 15 political appointees.

Furthermore, a council of economic and fiscal advisers will be created under the Cabinet Office to discuss key items on the national agenda, including outlines of the budget. The council is expected to include four private members. During the transition, the prime minister must develop a clear idea of how to make the most of the new system.

The scheduled reorganization is a Herculean project for the government offices in Kasumigaseki. The immediate task is achieving a smooth transition to the new system. That won’t be easy, and it may be premature to propose a further shakeup at this stage. Yet I dare say the government should start preparing for the next phase of reorganization as soon as the first phase is completed.

This is because a key policy priority — promoting communications and information policy efficiently in line with the IT (information technology) revolution — is missing from the current project.

Since the second half of the 1990s, nations have been developing a new administrative system for electronic communications to meet the historic challenge of the IT revolution. This system is designed to provide a multisided administration by creating divisions with three different functions.

The first function is formulating and implementing unified policies concerning electronic communications. The second is regulation and oversight. And the third is establishing a system for monitoring the process of price formation. The first function should be performed by something like an information and communications ministry; the second by an organization similar to the U.S. Federal Communications Commission; and the third by the Fair Trade Commission.

In Japan’s case, the first and second roles are assumed by the Ministry of Posts and Telecommunications. The third role is performed by the FTC, which is independent but weak. Of the 29 members of the Organization for Economic Cooperation and Development, the Paris-based club of developed nations, only four, including Japan, do not perform these three functions independently, according to an OECD report.

The larger problem with Japan is that, beginning Jan. 6, the MPT and the FTC will come under the jurisdiction of one ministry, the Ministry of Public Management. Thus Japan will be the only nation in the world to have all three functions under one umbrella.

In light of the critical importance of the IT strategy, the new government machinery is out of step with reality. That is why the government should begin preparing for a further reorganization immediately after Jan. 6. The current round of bureaucratic reform provides only a platform for further change.