The Council on Economic and Fiscal Policy, an advisory panel to the Cabinet Office, is the highlight of the Jan. 6 government reorganization. The high-powered council, which includes private advisers, cuts across ministerial lines. It represents part of a comprehensive attempt to shift the policymaking initiative to politicians and away from bureaucrats. If the attempt succeeds, it will have a great impact not only on the central bureaucracy but also on national politics.
The council, chaired by Prime Minister Yoshiro Mori, is to discuss basic fiscal and economic policies, including government budget guidelines. It consists of six political members, Bank of Japan Governor Masaru Hayami, and four private members. The five Cabinet ministers on the panel are: Yasuo Fukuda, chief Cabinet secretary; Taro Aso, minister in charge of economic and fiscal policy; Toranosuke Katayama, minister of public management, home affairs, posts and telecommunications; Kiichi Miyazawa, finance minister; and Takeo Hiranuma, economy, trade and industry minister. The private advisers comprise two business leaders, including Hiroshi Okuda, chairman of Toyota Motor Corp., and two academics.
The lineup suggests a determination to break the bureaucrats’ hold on public administration and steer the economy without the meddling of mandarins, which accords with the central objective of the government shakeup: to put politicians in the driver’s seat. It remains to be seen, however, whether the council will actually function in this fashion.
The answer depends on two questions. One is: Will the council be able to make good use of the wisdom and experience of the private advisers and draw up effective plans of action? The other question is: Will the Cabinet members be able to stop acting as spokesmen for bureaucrats who tend to put ministerial interests before everything?
The six political members, including the prime minister, hold the key. But their mettle will be severely tested. At the same time, the four private members have an indispensable role to play, for their creative ideas and practical experience are essential to breaking down the walls of bureaucratic thinking. The immediate question is how much attention will be paid to them by the political members.
The experience of past government panels shows that good ideas from private members are often politely rejected as “not realistic.” If the same thing happens on the new council, it will end up being just another addition to the long list of lackluster panels. Progress will be slow at best, and reform will remain a distant dream. The council’s mission — identifying and solving problems, with politicians taking the lead with the help of private experts — will fail.
The problems are many and formidable. They include cutting the mountainous public debt, an issue that must be addressed in the context of the falling birthrate and the aging population, striking a better balance between costs (social security, taxes, etc.) and benefits; pushing structural reform of the economy; and making Japan a less expensive place to live.
In discussions on these and other problems, the private members need to speak up, too, making full use of their managerial and intellectual resources. If they just take potshots from the sidelines, as so often happens on other panels, the council itself will lose its raison d’etre. This time, however, there is good reason to believe that will not happen.
The presence of all four members is already being felt. At the inaugural meeting on Jan. 6, they effectively dominated the talks, expressing their hopes and views and making various requests of the government. As a result, financial and currency issues have been included on the agenda, with Gov. Hayami’s approval. The central bank need not fear the forum. Rather, it should use the panel as a place to explain or press its views.
To the bureaucrats, however, the council may be a nuisance. So far they have stayed close behind the prime minister and Cabinet ministers, always ready to provide them with tips and cues. They are known for their knack of sorting out complex and difficult issues in ways that serve the interests of their ministries and agencies, and they are very likely to test their skill at influencing debates at the council.
Elite bureaucrats are proud, with good reason, that they played a vital role in Japan’s postwar recovery and reconstruction and that the nation’s present eminent status as the world’s second-largest economy is in no small measure the result of their hard work. But it is also true that times have changed dramatically. The time is long past when bureaucrats were expected to think and act primarily in the interest of their ministries and agencies.
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