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Sunday, June 30, 2002

Tollgate mentality in Japan


Straddling the Keiyo Expressway linking Tokyo and Chiba is the Funabashi tollgate. A long row of booths collects a 200 yen toll from most drivers. Perennial jams at the tollgate have long caused frustration to me and others heading toward Chiba. People late for planes at Narita suffer even more.

Yet the tollgate is quite unnecessary. If that paltry 200 yen yen has to be collected, it could be done so far more easily at exit booths farther down the highway. The hundreds of toll collectors employed 24 hours a day seven days a week to man the Funabashi booths could be reduced 90 percent.

I once tried to point all this out in a Japanese magazine. The only reaction I got was a delegation of five ex-Transport Ministry officials from the Japan Highways Public Corp. sent to tell me I was wrong. None of these gentlemen seemed to know much about actual conditions along the expressway. But they all insisted there was no alternative to the Funabashi operation. They then gave me a lot of free highway tickets, presumably to keep me happy and silent in the future.

In short, and like most other car drivers in Japan, I have little love for the Highways Corp. The lack of consideration for users is appalling. Anyone who uses the toll roads can see the waste in overbuilding and repair work. Lucrative contracts for maintenance and expressway facilities go to "family" companies employing more of those ex-Transport Ministry officials. Conservative politicians get large kickbacks for helping friends get highway construction contracts. Prime Minister Junichiro Koizumi's desire to privatize the organization and end bureaucratic waste, inefficiency and corruption is welcome.

But Koizumi and his supporters also say privatization will help economic recovery by freezing spending on wasteful new highways. They do not tell us how cutting spending and, therefore, demand can help an economy already suffering badly from lack of demand. Worse, they do not even seem to realize that, unlike many other areas of government spending -- such as welfare, or sending the Japanese navy all the way to the Indian Ocean, for example -- investment in expressways does at least provide some direct return to the nation in the form of toll income. If indirect benefits -- regional development, lower transport costs, reduction in traffic jams -- are included, the return can be huge.

In many Western nations, expressways are entirely government funded and toll-free since the indirect benefits to the nation are seen as a more than an adequate return. Even privatization-happy, Thatcherite Britain accepts that these external economies mean the government should build and control the expressways.

Japan gets the same or even more external economies thanks to high economic density. It also gets a very high level of direct return thanks to very high toll charges. Yet for some curious reason, the indirect benefits from new expressways are ignored. New construction is opposed as uneconomic.

Nor is it just expressways. Many years ago on a committee set up by Shintaro Ishihara, then the transport minister, I discovered that in opposing the building of new shinkansen (bullet train) lines the former Ministry of Finance had made no effort to calculate what was called "development effects" -- the economic stimulus such lines gave to the regions through which they passed. The ministry only looked at the direct revenue flow from ticket sales.

Even the Tohoku Shinkansen was once opposed on the grounds that direct revenues would be inadequate. Today that line covers all its costs with ticket revenue. The enormous benefit to the entire Tohoku economy is pure bonus.

With the new Inland Sea bridges and the Tokyo Bay Aqua Line, the indirect benefits to the economies of Shikoku and Chiba Prefecture, respectively, are similarly ignored. As a result, tolls have been set prohibitively high since the government insists that toll revenues should be enough to cover repayment of capital costs plus abnormally high interest costs. When low traffic volumes make this impossible, the critics weigh in with yet another denunciation of waste in government public works spending.

On the Honshu-Shikoku Bridge Authority advisory committee I once had the chance to ask whether officials realized that the very high bridge tolls were counterproductive since they both reduced traffic and slowed developments at either end that would boost traffic. I was told bluntly that the rules laid down by the Finance Ministry could not be changed.

Public indignation has since forced some reduction in bridge tolls, but not enough to boost traffic greatly.

The never-ending jams on Tokyo's narrow, two-lane expressways today are a legacy of the same backward thinking. Wider expressways were vetoed by the Ministry since at the time they promised only added expenses and no extra income. Today it is clear that if they were wider, tolls alone would have covered their cost.

The Nobel Prize winning Japanese nuclear scientist, Hideki Yukawa, once said the Japanese mind was incapable of abstract thinking, that it could only focus on the immediate and the concrete. He was right; transport economics as a science hardly exists in Japan.

Japan's current priority should be economic recovery. Instead of wasting time and political capital on forcing through privatizations -- some of marginal or even negative benefit -- Koizumi and his supporters should aim much more at removing the many demand-restricting regulations helping to strangle this economy. Results would be far quicker, and far more beneficial.

Gregory Clark is honorary president of Tama University and a longtime resident of Japan. He has served on more than 40 government and semiofficial committees dealing with a range of economic and social problems in Japan.


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