At the dawn of a new century, the Japanese seem to be looking to the future with more worry than hope. The realities of contemporary Japan are grim. The nation seems to have lost its way. The social and economic systems that raised it to unprecedented levels of prosperity are falling apart at the seams.
Scrapping or reshaping those systems will require determination and courage; we will have to endure a lot of pain and a lot of friction in the years ahead. But there is no other choice if we are to rebuild our nation. The task falls as much on the present generation as it does on those of the future.
Japan ascended throughout most of the half-century that followed defeat in World War II, and claimed its place as the world’s second-largest economy. Protected under the U.S. nuclear umbrella, the nation needed only to seek economic prosperity. It reindustrialized itself rapidly under a powerful triumvirate that combined the worlds of politics, bureaucracy and business — the three marched together in lock-step, forging a system that foreigners dubbed “Japanese socialism.”
But the streak of postwar successes came to a grinding halt when the land and stock bubble burst at the start of the 1990s. During the deep and prolonged slump that followed — the worst since the war’s end — the systems and practices that sustained the nation began to unravel.
Politics went into turmoil after the monolithic governing structure of the Liberal Democratic Party — a Cold-War regime that lasted nearly four decades — collapsed suddenly in 1993. Since then, Japan has had a rapid succession of prime ministers as political parties, large and small, met and parted in pursuit of power. In the past seven years, six coalition administrations have come into being. Public confidence in politics has reached its nadir.
Determined to stay in power, coalition parties, particularly the LDP, promoted the politics of pork by parceling out free-spending projects. Politicians with close ties to interest groups and government bureaucrats had their way. Structural reform was delayed and ignored as political parties recoiled from change.
But beneath the thick layer of the status quo, grassroots moves toward reform have been growing. In gubernatorial elections in Nagano and Tochigi prefectures, candidates with no party backing defeated rivals that had support across party lines. Clearly, voters were disaffected with party politics. Parties, particularly established ones, proved unable to win the hearts and minds of voters in an age of diversifying values.
Change is also needed in the world of bureaucracy. In spite of a sweeping government reorganization that starts later this week, the powers held by bureaucrats seem essentially unchanged. The turf-conscious bureaucratic mentality is alive and well. A spate of scandals in government offices, such as finance, health and agriculture, is proof that bureaucrats, too, have become alienated from the public interest.
Lax corporate management also reflects a lack of will to change. Private banks are still saddled with large amounts of bad loans despite massive amounts of public aid. Debt-heavy clients like general constructors are demanding debt waivers as if by right. Coverups in big-name companies point to the need for a more open corporate culture.
These and other maladies are eating away at the systems that made Japan an economic success. The erosion must be stopped before it is too late. A drive to build new systems must begin with the same fervor that created the old ones.
The road ahead is bumpy. One major roadblock is the mountainous public debt, which is expected to hit 670 trillion yen (including debts owed by local governments) at the end of fiscal 2001. The staggering debt load is by far the largest among industrialized nations, and threatens to undermine international investor confidence in Japan. It also risks distorting the money flow and raising interest rates. Inflation is a real possibility.
Looking further ahead, the falling birthrate and the rising longevity will turn the nation into a “gray” society, with those 65 and older making up one-quarter of the population in 2015. The labor force is already shrinking. In 2007 the entire population is expected to start declining. All this will affect pensions and medical insurance. An increase in the public’s social security burden is unavoidable. Yet the nation is marking time at the start of the new century.
The irony is that our very affluence is the source of our resistance to change. People fear a loss of security. But we must take the plunge if we are to avoid slow-motion national debilitation. This year must mark the beginning of bold, steady and real reform.
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