 |
 |
|
||||
          
JAPAN:
|
ASIA | March 30, 1998 VOL. 151 NO. 12 |
|---|---|---|
Rotting from the Inside The tragic flaws of Japan's Finance Ministry are uncovered by a journalist who assails the once mighty institution By DONALD MACINTYRE Tokyo  he bureaucrats at japan's finance Ministry may spend too much time golfing with executives at the banks they oversee, but nobody can accuse them of not working hard. The ministry operates its own bus service after midnight for staff members who miss the last subway, and some offices even have stacks of blankets for anyone who stays the night. During the four months it takes to draw up the national budget, the ministry's Budget Bureau puts in 18-hour days, seven days a week. The men-there are few women-finally get a break in January, which is said to account for a surge in Budget Bureau babies in October and November.
Such is the world described by Australian journalist Peter Hartcher in his timely new book The Ministry: How Japan's Most Powerful Institution Endangers World Markets (Harvard Business School Press; 310 pages). Hartcher, who lived in Japan in the go-go 1980s and again in the early '90s as the economy tanked, finds little to praise about Japan's hard-working "ministry of ministries," which was recently disgraced by the arrests of four of its bureaucrats on bribery charges-the latest in a series of ministry embarrassments. The book is an unflattering account of how this self-appointed guardian of the nation has used and abused its vast authority to advance its own interests. The Finance Ministry, writes Hartcher, "is a political, economic, and intellectual force without parallel in the developed world." Yet surprisingly little has been published about it outside Japan. Although Hartcher finished writing before the recent arrests, the book is an excellent primer on how the ministry's excessive influence on the economy has bred corruption and mismanagement. Crafted with a journalist's eye for anecdote, The Ministry manages to breathe life into what is, after all, a book about bureaucrats. It also makes it clear that these are no ordinary pencil pushers. Indoctrination into the Finance Ministry culture starts early, Hartcher writes-new recruits are told that the ministry's origins date from at least 678 A.D., when the imperial court included a treasure-store, or okura. The ministry's name in Japanese is Okurasho, literally the "great storehouse ministry." In the postwar years, its bureaucrats became the high priests of the economy, molding Japan into a dirigiste financial superpower in defiance of America's model of rough-and-tumble capitalism. Lords of the budget, they justified their power as a bulwark against pork-barrel politicking and rival ministries' depredations. For added clout, the ministry attempts-with frequent success-to marry off its young bureaucrats into heavyweight political families. The mystique of the devoted public servant began to wear thin in the '80s, however, when the ministry let land and stock prices skyrocket in a huge speculative bubble. In the '90s, the ministry fiddled as the economy languished and the country's banks floundered in a sea of debt. The public might have forgiven sheer incompetence. But evidence was piling up that the ministry was too cozy with the banks and brokerages it is supposed to regulate. It let big securities houses reimburse fat-cat customers for trading losses, leaving small investors twisting in the wind. It looked the other way while housing loan companies racked up massive debts, which eventually had to be mopped up with taxpayers' money. "In a few short years," Hartcher writes, "the ministry had stripped Japan of its economic immortality and grubbied its own priestly vestments." The economic slump had little impact on the Finance Ministry's own fortunes. A steady stream of officials continued to retire into well-paid jobs at the companies they had spent their careers regulating. In fact, the mess in the banking industry opened up new opportunities, since the ministry will typically place one of its officials in a troubled bank to help it get back on its feet. Perhaps Hartcher's most damning charge is that the ministry has fought to preserve the status quo-and its own perks-despite overwhelming evidence that reform is overdue. Under attack from the press and taxpayers, the ministry has given up some ground, but managed to avoid ceding any real power. The book is less successful in making the case that the ministry poses a danger to world markets. Hartcher cites its threat of a "capital strike" against the U.S.: senior official Eisuke Sakakibara, known as "Mr. Yen" for his influence on foreign exchange markets, hinted to the U.S. Treasury that Japan's troubled banks might have to liquidate some $200 billion in U.S. bond holdings, a move that could have driven U.S. interest rates through the roof. With the yen then at a muscular 80 to the dollar, Washington realized Japan's economy was in trouble and ultimately agreed in 1995 to help weaken the yen. Yet even if Sakakibara's threat had been carried out, economists argue whether it would have put much of a dent in the vibrant U.S. economy. Ironically, that brinksmanship was too successful: today the yen is at 130 and Japan's economy is worsening by the day. Sadly, the real victims of the ministry's arrogance are the Japanese people . Photographs by KYODO NEWS
|
||
time-webmaster@pathfinder.com |
||