Home > Opinion
  print button email button

Monday, March 6, 2006

A 'livable' society has rules


Takafumi Horie, the former Livedoor president arrested in January on charges of breaking securities laws, was one of the last men to "pay the price" for the excesses of Japan's bubble economy (1987-90). I cannot help but feel a certain amount of sympathy for him, for there are still many others who have yet to pay the price.

Industriousness, diligence, earnestness, sincerity -- some of Japan's traditional virtues -- were thrown to the wind during the stock and property bubble, which burst in 1991, and the "lost decade" that followed.

How times have changed. Project X, NHK's popular documentary, comes to mind. Early in the series, engineers from a technical high school are shown devoting themselves to developing new products, sparing little time even to eat and sleep. Presumably they expected no monetary rewards for their efforts and contributions. What motivated them was intellectual curiosity and the joy of challenging new technologies.

During the bubble, there were shrewd people who clinched land deals with just a few phone calls, making a killing overnight. The media reported on their activities in a favorable light. Horie, now 33, spent his late teens in that high-flying period. Perhaps many of his generation won't buy the argument that you should make money by the sweat of your brow, or that you should be willing to work for the good of society or other people.

They seem to forget that it is such "honesty" that made Japan rich in the first place.

It seems to me that the ideological basis of Prime Minister Junichiro Koizumi's administration, which came to office in April 2001 under the slogan of "structural reform," is market fundamentalism -- the belief that the market is almighty.

Market-fundamentalist reform is meant to create a free, transparent and fair market. As such, it represents a "necessary transition" to the ultimate goal: construction of a "livable" society for everyone. In other words, it is considered merely a means to an end.

I do not deny the importance of building a society where people are truly rewarded for their hard work. The question is what "hard work" really means. Engineers profiled in Project X worked hard in the true sense of the word, but what Horie and his ilk did was far from that, and hardly a genuine demonstration of ability.

I don't believe in "financial wizards." The world of finance is a casino-like capitalist society where fortune and chance set the pace. It is a world where genuine hard work is rarely rewarded.

I hope the Livedoor case provides an opportunity for Japan to understand why it is important to save itself from the pit of casino capitalism.

The Koizumi administration continues to call for "public-to-private" reform. The question is: What is the role of the public sector? My long-standing position is that its primary role should be "surveillance administration."

In the early 1990s, the Securities and Exchange Surveillance Commission was created as an affiliate of the Finance Ministry (then called Okurasho). I criticized the move, likening it to "giving a truncheon to a thief." At the time, the existence of the so-called convoy system -- which allowed the ministry to control the financial services industry -- was already tacitly accepted. So it was meaningless for the ministry to be seen as serving as the financial watchdog.

Another thing to remember is that the idea of bureaucratic initiative -- which implies "wise government over the foolish masses" -- is dead. Yet the opposite of that -- private-sector initiative ("wise private enterprises under a foolish government") -- is also a misconception.

What is necessary is to draw clear-cut lines between what the government should and should not do. There is much the government should do. Given the budgetary limitations, though, it should set priorities, taking costs vs. benefits into account. In other words, the government must play its role wisely.

Leaving everything to the market is not the way to create a "livable" society. The task of administration is to establish explicit market rules and ensure compliance with them. Any watchdog body must be separated from ruling parties and interest groups such as economic organizations. It now appears that this position, which I have maintained for the past decade and more, is becoming a reality.

Takamitsu Sawa, professor of economics at Kyoto University, is the director of the university's Institute of Economic Research.


Back to Top

About us |  Work for us |  Contact us |  Privacy policy |  Link policy |  Registration FAQ
Advertise in japantimes.co.jp.
This site has been optimized for modern browsers. Please make sure that Javascript is enabled in your browser's preferences.
The Japan Times Ltd. All rights reserved.