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The break-up and privatization policy of the Japan National Railways, 1980—87: A case study of Japanese public policy-making structure and process. (Volumes I and II)
Choi, Eunbong, Ph.D.
The Ohio State University, 1991
UMI 300 N. Zeeb Rd. Ann Arbor, MI 48106
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The Break-up and Privatization Policy of
The Japan National Railways, 1980-87:
A Case Study of Japanese Public Policy-making
Structure and Process
Volume I
Dissertation
Presented in Partial Fulfillment of the Requirements for
the Degree Doctor of Philosophy in the Graduate
School of the Ohio State University
By
Eunbong Choi, B.A., M.A.
*****
The Ohio State University
1991
Dissertation Committee Approved by
Bradley M. Richardson (Chair)
William Liddle ÿ ^LA, ^ Advisor Richard Gunther Department of Political Science To my Husband, Sons, Philip and Samuel, and Parents
ii ACKNOWLEDGMENTS
The author would like to express her deepest gratitude to her graduate advisor, Professor Bradley M. Richardson, for his close guidance and supervision of this entire work.
The author also appreciates the thorough review of this manuscript and comments by her graduate studies committee members. Professors Richard Gunther and William Liddle.
Special gratitude is extended to Professor Duk Kyu Jin at
Ewha Women's Univeristy for his encouragement. The author also thanks those who favorably responded to the interview requests and helped her successfully carry out her research in Japan. Without their generous cooperation and valuable suggestions, this study would not be complete.
Several people supported the author in other valuable ways, as well. Among them, the author particularly wishes to thank Tetsudaro Kuramitsu and Hiro Kim for their Japanese assistance, and Tobi Taylor for her skillful editing of the final draft. Finally, the author would like to express her deepest thanks to her family, who have provided her unfailing support for years.
iii VITA
December 30, 1958...... Born - Seoul, Korea
1981...... B. A. Department of Political Science, Ewha Women's University, Seoul, Korea
1983...... M.A., Department of Political Science, Ewha Women's University
1981-1983...... Graduate Teaching Associate, Department of Political Science, Ewha Women's University
1988...... M.A., Department of Political Science, The Ohio State University
1984-1989...... Graduate Teaching Associate, Department of Political Science, The Ohio State University
Fields of Study
Major Field: Political Science
Studies In Comparative Politics (Politics In Democratic System, Politics of the Developing World: Professors B. M. Richardson, R. W. Liddle, and R. Gunther) and Political Theory (Traditional Political Theory, Normative and Critical Theory: Professor John Champlln)
iv TABLE OF CONTENTS
PAGE
ACKNOWLEDGEMENTS...... iii
VITA...... iv
LIST OF TABLES...... viii
LIST OF FIGURES...... ix
GLOSSARY OF TERMS...... x
CHAPTER I. INTRODUCTION: THE SCOPE AND METHOD OF THE STUDY
1. The Research Problem...... 4 2. Review of the Literature...... 10 2. 1. Theoriesof the Japanese Political Process. 10 2. 1. 1. The Elitist Model '...... 10 2.1.2. Departing from the Elitist Model..... 13 2.1.3. The Bureaucracy-Dominant Model...... 14 2.1.4. The Corporatist Versus Pluralist Approaches...... 19 2. 1. 5. A Mixed Nature...... 31 2. 2. Publications on the JNR Reform...... 36 3. The Research Design...... 40 3. 1. Research Purposes...... 40 3. 2. The Conceptual Frameworks of the Study.... 45 3. 2. 1. The Institutional Perspective...... 45 3.2.2. The Political-Actor Perspective...... 49 3. 3. The Formation of the Study...... 53 4. Research Methods and Data...... 55 4. 1. The Use of Library Resources...... 56 4. 2. The In-Depth Interview Method...... 58
CHAPTER II. ENVIRONMENT
1. Intr iuction...... 61 2. Eccromic Condition...,...... 62 2. 1. Worsening National Finance...... 62 2.2. Deficit-Financing Budget...... 64 2.3. The 2 Ks' Deficit...... 67 2.3.1. Rice Economy...... 68 2.3.2. Welfare Policy...... 73 3. Mid-Term Political Concerns...... 82 3. 1. Direction of Change...... 82 3. 1. 1. Trend to the Small Government...... 82 3.1.2. Stagnation of Pluralist Politics...... 85 3. 1. 3. Positive Government...... 86 3.1.4. Conservative Critics...... 87 3.2. New Thought...... SO 3.3. Administrative Reform History In Japan.... 95 3.3.1. The Administrative Management Agency (The Management and Coordination Agency) 97 3.3.2. Work Porce Control...... 100 3.3.3. The First Provisional Commission of Administrative Reform...... 102 3.3.4. Why Not Successful...... 105 3. 4. Measure of Tax Increases...... 109 3. 4. 1. A Political Taboo...... 109 3.4.2. Tax Structure...... 113 3.4.3. Tax Policy...... 115 3.5. Administrative-Financial Reform In the 1980s...... 118 3. 5. 1. Toward a New Direction...... 119 3. 5. 2. Political Approach...... 122 3. 5. 3. Political Spotlight on the JNR...... 126 3.5.4. Public Campaign...... 130 4. Long-Term Political Structure...... 133 4. 1. Mirror on Political Leadership...... 134 4. 1. 1. Cooperative Leadership...... 134 4.1.2. Changes Under the Nakasone Premiership...... 139 4. 1. 3. The Belief System of Nakasone...... 142 4.1.4. The 1986 System...... 147 4.1.5. The Upshot of the 1986 System...... 151 4.1.6. What Did Nakasone Do?...... 154 4. 2. The LDP In Policy-Making...... 155 4.2.1. Party's Leading Posts...... 157 4.2.2. Policy Affairs Research Council...... 160 4. 2. 3. Zoku Politics...... 166 4. 2. 4. Factions...... 183 4.3. Bureaucratic Tradition...... 195 4. 3. 1. The Question of Relative Power...... 196 4.3.2. Dual Structure of Administration...... 199 4. 3. 3. Public Advisory Bodies...... 205 4.3.4. Public Advisory Bodies In the JNR Affairs...... 210 4.3.5. Function of the Informal Meeting...... 211 4. 4. Business Influence In Politics...... 216 5. Conclusion...... 221
vl CHAPTER III. THE JNR AS A MULTI-FACETED PROBLEM: DESCRIPTIVE OBSERVATION
1. Introduction...... 224 2. Background of the JNR Sectlonallzing Privatization Policy...... 225 3. Scope of Problem...... 227 3. 1. Financial Crisis...... 228 3. 2. Erosion of Monopoly...... 232 3. 2. 1. Local Railway Operation...... 232 3. 2. 2. Freight Operation...... 235 3. 3. Unstable Labor-Management Relations...... 238 3.3.1. Labor Relation Law...... 239 3.3.2. Various Labor Unions in the JNR.. 241 3.3.3. Interrelations of Labor Unions in the JNR...... 243 3. 3. 4. Mistaken Labor Policies...... 246 4. Context of Problem...... 249 4. 1. Overall Organizations of Railways...... 249 4. 2. Institutional Arrangements ofthe JNR 252 4.2.1. General Characteristics of Japanese Public Corporation System...... 252 4.2.2. Structural Obstacles in the JNR System 256 4.3. Political Interference...... 260 4.3.1. Political Lines (Seijisen)...... 261 4.3.2. The JNR Family...... 267 4. 4. Impacts of Government Policy...... 271 4.4.1. Age Composition in the JNR Personnel Structure...... 271 4.4.2. Government Financing Policy for the JNR 273 5. Products of Previous Plans...... 275 5. 1. Considering Reconstruction...... 275 5. 2. Failed Efforts for Reform...... 278 6. Conclusion...... 282
vii LIST OF TABLE
TABLE PAGE
1.1. Perspectives on the Post-War Japanese Political Process...... 35
1.2. The Significance of Policy Issue: The Extent of Politicization...... 52
2.1. Economic Conditions of Japan Before and After "the Oil Crisis" of 1973...... '...... 64
2.2. Ratio of Dependency on Bonds...... 65
2.3. Major Issues in Japanese Politics and LDP Policy Responses...... 104
2.4. Japanese Prime Ministers in the Post-War Era.. 140
2.5. The List of Unyuzoku LDP Dietmembers (As of 1985)...... 174
2.6. Two Leading Unyuzoku Dietmembers' Career: Kato Mutsuki and Mitsuzuka Hiroshi...... 181
2.7. LDP Factional Strength in the House of Representatives and House of Councillors (As of February 1990)...... 195
3.1. The Shift of Number of the JNR Personnel (1945-1981)...... 247
3. 2. An Outline of Railways of Five Countries (As of 1979)...... 251
3.3. Financial Control by the Government on Main Groups of Public Enterprise in Japan 254
3.4. JNR Equipment Investment Budget and Participating Companies (billion yen) (1982).. 268
3. 5. Balance Sheets and Government Subsidies for Railway Industry in Four Countries (billion yen) (1980)...... 274
viii LIST OF FIGURES
FIGURES PAGE
2. 1. The Japanese Legislative Process...... 163
2.2. Liberal Democratic Party: Factional Lineage (1956-1987)...... 186
2. 3. A Double Faced Administrative System Relating to the JNR Reform Policy-Making 203
3. 1. Financial Performance of the JNR (1949-1985)...... 226
3. 2. Overall Balance of the JNR (billion yen) (1985)...... 229
3. 3. Balance Sheet of the JNR (billion yen) (1985)...... 231
3.4. Railways Income of the JNR (billion yen) ( 1 9 8 5 ...... 234
3. 5. Income of Passenger/Freight Operation of the JNR (billion yen) (1985)...... 237
3. 6. The Public Corporation System and Its Problems...... 258
3.7. The JNR Reform Plans and Accomplishment...... 278
Ix GLOSSARY OF TERMS
AMA Administrative Management Agency. amakudarl "Descent from Heaven"; the practice of employing retired senior government servants as responsible positions in the public or private sector. chosakal Advisory committee; investigatory committee.
Diet National Diet; Japan's Parliament.
Dome! Japan Confederation of Labor.
Doro National Railway Locomotive Engineers Union.
DSP Democratic Socialist Party. gaikaku dantai Auxiliary organ(s); extra-departmental organization(s) attached to a ministry of a central government commonly organized as a foundation and partially staffed by active- duty government officials (Not a tokushu hoJin). hakuchu A situation of near parity of Diet seats between the LDP and the opposition parties.
Jishiro Japanese Self-Governing Labor Union.
JNR Japan National Railways.
JNR RSC Japan National Railways Restructuring Supervisory Council.
JRCC Japan Railway Construction Corporation (kodan type).
JTU Nikkyojo; Japan Teachers' Union.
JTS(PC) Japan Tobacco and Salt (Public Corporation).
Keidanren Federation of Economic Organization.
X kodan Public unit; Wholly or partially government- owned corporation(s) charged with investing large-scale social overhead capital (usually public works). koko Public finance corporation; wholly government-owned, policy-oriented finance corporation(s). Accounts submitted to the Diet.
Kokuro National Railway Labor Union.
Komeito Clean Government Party; political offshoot of the "Soka Gakkai."
Kosha Public corporation; wholly government-owned public corporation(s) with the strongest public character of all tokushu hojin. Normally engaged in monopoly business. Budgets subject to Diet approval. kokuzoku ron; A term referring to betraying or kokuzoku mono dishonorable behavior to the country. kyutei naka Coup d'etat within the Court. no kakumei
LDP Liberal Democratic Party.
Lockheed Scandals first revealed to the US Congress scandals in 1976 concerning alleged bribed to Tanaka Kakuei and others in order to promote Japanese purchase of Lockheed aircraft.
MAFF Ministry of Agriculture, Forestry and Fisheries.
Harusei Undo Productivity Increase Movement.
MITI Ministry of International Trade and Industry.
MOF Ministry of Finance.
MOT Ministry of Transportation.
Nemawashi Informal consultation.
Nissho Japan Chamber of Commerce and Industry (Nihon Shoko Kaigisho).
xi NLC New Liberal Club.
NTT(PC) National Telephone and Telegraph (Public Corporation). oyakata hi No matter what happens, the national no maru treasury will loot the bills.
PARC Policy Affairs Research Council (of LDP).
PCAR Provisional Council of Administrative Reform/ Rincho (Rinji Gyosei Chosakai).
SCAP Supreme Commander of Allied Powers (often used as blanket term for the Occupation Authorities).
■hingikai Deliberation council advisory organs (advisory commissions), created by law and composed in part of civilians, to consult with and advise the ministries of the central government.
Shinkanaen New Trunk Line; so-called bullet train for its shape and speed; a high-speed passenger railroad system operated by the JNR.
Sohyo General Council of Japanese Trade Unions.
Tetsuro Railway Industry Labor Union. tokushu hojin Special legal entity; term used by the central government for public corporation(s) and mixed public-private enterprise(s ), as distinguished from privately owned business firm(s). unyuzoku Policy specialists of LDP Dietmembers in the transportation issue area. zaikai Financial world; a collective term to refer to influential sections and leaders of big business and finance.
Zenshiro National Railways Construction Labor Union. zoku Tribes of LDP Diet members, specializing in a particular issue area.
xii CHAPTER I
INTRODUCTION: THE SCOPE AND METHOD OF THE STUDY
After years of Intense debate, on April 1, 1987, the 38- year-old public corporation system, the Japan National
Railways (JNR), was reformed.* In Its place has appeared the new Japan Railways (JR) system, a result of the break-up and privatization plan.* The JNR/JR transformation has raised
*. The Japan National Railway (JNR) was to be Independent from the Ministry of Transportation (MOT) and established as a public corporation In 1949. The JNR had been one of several eminent public corporations and a representative example of state-run enterprise after Its establishment In 1949. The JNR, with 432,200 employees an of April, 1975, was supplied with 100% of Its fixed capital by the government under the control of the MOT, and allowed to have direct access to the Financial Investment Loan Program (FILP). In the meantime. It provided post-retlrement positions for ex-bureaucrats and financial sources for the government regardless of its serious deficit problem.
*. Privatization means. In a strict sense, the permanent transferring of services or goods production activities previously carried out by public service bureaucracies to private firms or to other forms of non- public organization, such as voluntary groups. The two key elements of privatization most relevant to public enterprises are denationalization (the move from public to private sectors) and liberalization (the exposure of the enterprise to greater competition). However, tension has emerged between the above two factors. This study uses the term privatization In a broad sense. Including both processes. This subject will be specifically discussed In later chapters. 2 several significant points concerning Japanese politics and economy.
The shift from the JNR to the JR resulted from the decreasing importance of the railways in the transportation structure of Japan relative to the increasing importance of cars, airplanes, and ships since the late 1960s. The JNR was no longer thought of an Indispensable means of transport and, as a result, it gradually lost the monopoly it had enjoyed in Japanese transportation history. In addition to this, the JNR, as a big public corporation, became notorious for its continuously snowballing deficits and long-term indebtedness.' Eventually, it became clear that nothing short of a total restructuring would be sufficient to tackle the JNR problems.
For these and other reasons, by the beginning of the
1980s, the government began considering various reform plans for the JNR, and the decision to breakup (i.e., sectionalize) and privatize the JNR was finally passed in
'. The JNR was as of 1963 chalking up a daily debt of some 5 billion yen, and its cumulative deficit would soon have hit the 20 trillion yen mark. Under such circumstances, reconstruction of the JNR could never be achieved through half-measures. Therefore, reconstruction of the JNR was considered a key component in the administrative reform and the cure of the government's financial ills. See Kato Hiroshi, "The End of the Line for the JNR, " Japan Echo. Vol.IX, No.3 (1982), pp.74-82; and "Midstage in the Administrative Reform Process, " Japan Echo. vol.X, No. 2 (1983), pp.24-29. 3 the National Diet at the end of 1986.* The process that led to this decision was long and arduous, leading to an historic event in the Japanese transportation field. In recognizing its meaning in Japanese politics and economy, this study investigates the JNR reform policy-making process, which took place over a period of 7 years, from
1980 to 1987. By analyzing this specific case, this study reveals some of the changes occurring in the policy-making processes in Japan; specifically, it discusses those concepts relating to how the Japanese government works.
The study is organized as follows:
1> It reviews existing approaches to the Japanese
public policy-making process by focusing on their
arguments and discussions. Based on this examination,
this study develops a conceptual framework for a
research design.
2) Using an institutional perspective, it examines the
environment in which the JNR sectionalizing
privatization policy was made. The environmental
factors include economic concerns, mid-term political
considerations, and long-term political structures.
3) It explores the factual aspects of the JNR system.
*. The JNR had set up several reform plans by itself before its privatization. However, not one of them was carried out. The reasons for failure were various. The trials of the reconstruction efforts by the JNR are discussed in Chapter III. 4
Including its financial situation, management problems,
and previous reform plans.
4) It conducts a two-tiered analysis of JNR
privatization policy-making, which includes:
a> an explanatory analysis of the policy-making
process with a political-actor perspective;
b) a procedural analysis of the movement of policy
debate and formation processes using a chronological
approach.
5) It takes a comprehensive look at the JNR break-up
and privatization decision-making process, relating
it to the conceptual framework set up earlier.
Each segment of the above organization is contained in a chapter of the dissertation. Above all, traditional and contemporary approaches to Japanese public policy-making process are examined, and a research design is developed.
1. THE RESEARCH PROBLEM
In the study of the Japanese political process, a number of studies have flourished, including model building and case studies. Even though each study represents a distinctive perspective on Japanese political process, the approaches they employ are not always mutually exclusive.
They often share certain tendencies--desirable or undesirable--in their understanding of the politics of 5
Japan.
One undesirable tendency is a simplified view of the existing institutions of the government, which considers decision-making confined within an organization. As a result, this static and unilateral perspective ignores the reciprocal relationships and dynamics among multiple actors.
Another undesirable tendency is to pay more attention to the function of policies under scrutiny and what outcomes the policies bring about than to comprehend the very policy making process.
Considering these problematic points, this study attempts to examine policy-making with a non-static perspective, centering on the following key questions as to the JNR reform policy-making.
First, the study begins with the assumption that policy-making takes place in a specific setting that has some structure in regard to the usual channels of contact and inter-group power relationships. There are important structural parameters to Japanese politics, which are universal and affect all policy processes, even though they may not always be affected the same way. To be specific, this environment consists of the following: the hegemony of the conservative ruling party (LDP), intra-LDP policy organs and processes, LDP factions and policy specialists (zoku), the bureaucratic dominance or primacy, the re-employment of bureaucrats in politics and business (amakudari), the 6 bureaucratic clienteliam, direct representation of groups within public advisory committees, the business Influence In politics, and opposition party-labor union links. Thus, the first task of this study Is to specify these parameters and then draw conclusions about the effects of this structure, where relevant.
Second, policy In one area may also be related to policy In another area. This relationship Implies that debts or credits from external processes may be relevant to or
Influence costs and benefits In the process discussed. In the same manner, the central tenants of the latest administrative reform* were particularly consonant with the
JNR reconstruction policy. The last Administrative Reform was Initially attempted under the slogan, "Financial
Reconstruction Without A Tax Increase” to cope with the large budget deficits caused by the spending policies of the
1970s. The logic behind the slogan was to redirect the government structure toward a cheap and small systematic one as In other Western governments.
* T.J Pempel deals with the context, agenda, process and consequences of administrative reform efforts conducted from the Occupation era to the Fukuda Cabinet period (as of 1977). See T.J.Pempel, Policy and Politics In Japan Creative Conservatism. (Philadelphia: Temple University Press, 1982), pp.255-295. Kumon Shumpel mainly focuses on the track of the latest administrative reform, for which the Administrative Management Agency and the PCAR (Rincho) were responsible. See "Japan Faces Its Future: The Polltlcal-Economlcs of Administrative Reform," Journal of Japanese Studies. 10:1 (1984), pp.143-166. For details of the 1980s' administrative reform, see also James Elliot, "The 1981 Administrative Reform In Japan,” Aslan Survey. 23:6 (1983), pp.765-779. 7
However, the trend in the other Western developed welfare states to cope with huge government deficits was to make the entitlements of welfare expenditures the political scapegoats for the financial crisis. In contrast, the
Japanese policy choice was to take the uniform guidelines of cuts in public finances in an indiscriminating and sweeping manner. Thus, this study searches for the overall background of administrative reform as akey environmental policy setting for the JNR reform by asking the following questions. Why did the Japanese government choose this total-scale approach to solve a problems similar to those of other countries? How was this government policy line related to the JNR reform debate?
In the meantime, policy-making has not only static elements, such as these environment factors, but also dynamic elements, including actors, time, and stage. Thus, the third task of the study is to identify multiple participants and their interactions in the JNR sectionalizing privatization policy decision. It is crucial, though difficult, to illuminate the key actors, because only by employing this method, one is able to deal with the question of "Who participates and who wins?" Political actors discuss issues of specific interests, policy commitments, or ideologies (or all three), as well as specific political resources. a
Regarding the JNR reform, how did the politicians, including both the LDP and the opposition, behave? What role did the National Diet play? How did business actors behave?
Did ministry bureaucrats have omnipotent power, as is usually assumed in other cases, to lead politicians and businessmen? What were the reactions of labor unions, especially the National Railway Workers Labour Union
Policy-making is an interactive process in which the actors endeavor to build winning coalitions through negotiations and mutual adjustments of positions following some kind of cost-benefit rationale. With this consideration in mind, this study also explores the "policy distance" between different actors to determine how coalitions evolved, how long conflict was, how intense it was, whether it was stalemated or not, and how much gains outweighed costs and vice versa.
Fourth, because the JNR sectionalizing privatization decision took a certain amount of time until its implementation, this study examines stages of the process, i.e., the evolution of the issue and the continuance or discontinuance of the policy formation. Specific stages of a process may have different scenarios in terms of participation, the substance of disagreement, the intensity 9 and scope of conflict, and Influence of actors. Thus, this study analyzes how and why, in specific scenarios of the JNR reform dispute case, different stages developed. Why did the government eventually choose the policy decision to sectional!ze and privatize the JNR among various alternatives at that particular time? By considering these things, this dissertation conducts a serial explanation of the issue's movement and the shift of the policy-making process.
Finally, this study wants to analytically connect these findings to broader conceptual questions. How does this particular case help to broaden our knowledge about Japanese national public policy-making? What sort of implications does this case study have for the patterns of the actors' interrelationships, influence, and representation? This study, thus, intends to draw conclusions about the importance of this particular arena and its component stages as a setting for different modal processes of policy-making.
This analytical question will be posed last following the examination of other research questions.
In general, the focus of this dissertation is to pose these questions about the JNR sectionalizing privatization policy-making case. Although the scope of the dissertation is confined to the political reality in which the JNR reform issue had been discussed, the above questions can be set within the broader theoretical framework of post-war 10
Japanese politics.
2. REVIEW OF THE LITERATURE
A contextually rich analysis for the JNR case can only be conducted when the overall features of the different theoretical perspectives and their boundaries are considered. In other words, the Inquiries summarized above can be dealt with best within a broader explanatory framework. Thus, It Is necessary to review It first.
In the study of Japanese political process and Its related fields, a number of approaches have been developed to Investigate the Japanese public policy-making process. A central question of Japanese politics Is the degree to which the different models posed by these various approaches actually fit political reality. Even though the boundaries of approaches often overlap, each approach presents particular views on the Japanese political process.
2. 1. Theories of the Japanese Political Process
2.1.1. The Elitist Model
The most conventional approach to the Japanese political process Is the elitist model, which Is based on the concept of a tripartite power elite composed of leaders of the ruling Liberal Democratic Party (LDP), senior 11 bureaucrats, and big businessmen. According to Fukul, the
elitist model of Japanese policy-making Is based on three
basic propositions: first, the major groups composing the
elite triumvirate are united, normally. If not always, both
In purpose and action; second, they control, some. If not
all, decision-making on major policy Issues; third.
Individuals and groups beyond this elite alliance are regularly excluded from decision-making processes Involving
Important policy issues.*
The proponents of the elitist model are not only found
In Japanese scholars and journalists, but even seen In one of the most popular English-language textbooks on post-war
Japanese politics, written by Robert A. Scalaplno and
Jonnosuke Masuml.? Nathaniel Thayer also holds this perspective, stating that "the businessmen have Influence over the politicians, the politicians control the bureaucracy, and the bureaucrats keep the businessmen in
*. Fukui Haruhiro, "Review of the Literature," in T.J.Pempel,ed. , Policy-Making in Contemporary Japan (1977), pp.22-59. Even earlier, Fukui already drew an elitist picture of Japanese politics In a slightly modified fashion. See his Party In Power: The Japanese Liberal Democrats and Policymaking (Berkeley and Los Angeles: University of California Press, 1970); and "Economic Planning In Postwar Japan: A Case Study In Policy Making," Aslan Survey. 12 (1972), pp. 327-48.
^. Robert. A. Scalaplno and Matsul Junnosuke, Parties and Politics In Contemporary Japan (Berkeley and Los Angeles: University of California Press, 1962). 12 line. It is a natural system of checks and balances."• This view indeed reoresents an orthodoxy among Japanese social scientists in general and political scientists in particular.•
The elitist explanation had a broad audience and supporters for a certain period of time. Those who basically subscribe to the power-elite view of Japanese policy-making all seem to agree with the notion that the three elite groups are united in intention and activities. However, there is less agreement on which is the more powerful. The theories of elites tend to simply assume that the elites are the policy-makers, proclaiming dominance with a few cooperating elites in politics, without further explanation.
•. Nathaniel B. Thayer, How the Conservative Rule in Japan. (Princeton, N.J.: Princeton University Press, 1969), p. 70.
*. Another classical English-language exposition of the unified elite model of Japanese politics is in Yanaga Chitoshi, Big Business and Japanese Politics (New Haven: Yale University Press, I960). In Japanese-language literature, some of the seminal works stressing this elitist argument include Nagai Yonosuke, "Atsuryoku Seiji no Nihonteki Kozo" (The Japanese Patterns of Pressure-Group Politics), in Nihon no Seiji Kakkai hen, Nihon no Atsurvoku Dantai (Pressure Groups in Japan) (Tokyo: Iwanami Shoten, 1960), pp.18-19; ShinoharaHajime and Nagai Yonosuke hen, Gendai Nihon Seiiiaaku Nvumon (An Introduction to Contemporary Political Science) (Tokyo: Yuhikaku, 1965); Misawa Shigeo, "Seisaku Kettei Katei no Gaikan" (An Outline of the Policy-making Process in Japan), in Nihon Seiji Gakkai hen, Gendai Nihon to Seito; Hoshu Godo lao (Parties and Bureaucracy in Contemporary Japan Since the Conservative Merger) (Tokyo: Iwanami Shoten, 1967), pp. 5-33; and Suzuki Yukio, Keizai Kanrvo: Shin Sanavo Kokka no Purodusa (The Economic Bureaucrats: Producers of a New Industrial State) (Tokyo: Nihon Keizai Shimbun Sha, 1969). 13
They then obscure Investigation of structure and patterns of power, and levels of decision-making In the whole government process. Because of these limitations, It seems reasonable not to blindly employ the oversimplified elitist model.
2.1.2. Departing from the Elitist Model
The simple-minded elitist approach of the 1960s became sophisticated by the 1970s. Several case studies find that policy-making consists of multiple participants In a certain process,‘® and all outcomes often Involve complex coalitions between multiple actors motivated by different Interests.•‘
This research shows that none of the elitist propositions Is entirely correct.
New research has allowed Inquiries Into which was the more Influential among those In the elite coalition, and
Into their external linkage to the groups and Individuals outside the closed elite circle. For some students, the sallency and Importance of the governing party are often
*®. On this subject, Lowl explains that patterns of participation are Influenced by thestakes of particular policy-making arenas. According to him,the elite dominate some kinds of declslon-maklng, broad groups are active In others, and narrow Interests are accommodated In still In third. He therefore subscribes to the perspective that processes are the appropriate focus of policy-making research. In which the presence of multiple actors Is postulated. See Theodore Lowl, "American Business, Public Policy, Case Studies, and Political Theory, " World Politics. 16 (1964), pp. 677-715.
* ‘ . Bradley M. Richardson and Scott C. Flanagan, Politics In Japan (Boston and Toronto: Little, Brown and Company, 1984), p. 241. 14 emphasized. Meanwhile, many see the bureaucracy itself as prominent. In addition, the role of big business has been emphasized with equal or even greater vehemence by some writers. Departing from the simplistic elitist view, this sort of disagreement has contributed to broadening the scope of argument, including the bureaucracy-dominant approach, institutionalism, and the debate between corporatist and pluralist perspectives.
2.1.3. The Bureaucracy-Dominant Model
The second orthodox view is the bureaucracy-dominant approach, which is an offshoot from an elitist view. It sees the bureaucracy as the most conspicuous among the tripartite power, including the political party, the bureaucracy, and big business. It perceives the pre-war period and the post war period as consistent, i.e., that even after World War
II, Japanese bureaucracy has been sustained and reinforced.
Tsuji Kiyoaki, a former PCAR member and a distinguished scholar, has played a leading role in the bureaucracy- dominant school,‘• and finds the reason for this persistence of the bureaucracy in the unique historical development of
Japanese bureaucracy as follows.
B.C.Koh, Japan's Administrative Elite. (Berkeley: University of California Press, 1989), p.204. Also see, Tsuji Kiyoaki, "Public Administration in Japan: An Overview, " in Tsuji Kiyoaki, ed. , Public Administration in Japan. (Tokyo: University of Tokyo Press, 1984), pp.3-12. 15
In the post-war era, an indirect control policy of the
American-inspired political system relied on the existing
bureaucracy. The policy was due in part to the fact that a
new alternative political power was not ready to take the
place of the pre-war bureaucracy. Indeed, the political
parties were unable to take policy initiatives. In addition, the importance of the private sector's functions was completely neglected.
Given this situation, the Japanese bureaucratic structure was consolidated through active participation by
Diet members with a former bureaucratic background in politics. Moreover, the Japanese people deeply believed in the effectiveness and neutrality of bureaucracy compared to that of their political institutions. The Japanese bureaucracy has been conceived as an elite group with the skill of rational policy-making since the Meiji-Restoration.
As time passed, the myth of bureaucratic supremacy was fortified by the wide belief that Japan's unprecedented economic achievement was attained by the industrial policies of Japanese bureaucracy.
A representative analysis of the modern Japanese political economy with the bureaucracy-dominant perspective was done in the Western hemisphere by C. Johnson, a leading
American scholar of Japanese bureaucracy. His approach can be referred to as a technocracy--economic bureaucracy-- dominant model, because it positively evaluates the role of 16 economic technocrats during the economic development era. ‘ *
Johnson also suggests a useful characterization of Japan as a "capitalist developmental state," which allows Important
Insights into Japanese policy-making in a comparative perspective.** According to his theme, the state bore specific responsibilities for Industrial development and rational economic security during the period from the mld-
1920s until the mid-1970s (after the first oil crisis), with a turning point In 1945.*" In this sense, Johnson's investigation fits well into a model of historical- institutional explanation of the transition to a high-growth era.
Johnson argues that the Japanese bureaucracy has enjoyed monolithic power over governmental policies because it makes most major decisions, drafts virtually all legislation, controls the national budget, and brings all sources of innovation for main policies into the system.
According to him, even though the Japanese political system
Is Influenced by Interest groups and a political atmosphere, the Japanese bureaucracy has unified influential power in political and governmental processes. He claims that.
*•. Chalmers Johnson, MITT and the Japanese Miracle; The Growth of Industrial Policy. 1925-1975. (Stanford, California: Stanford University Press, 1982).
* * . Ibid. , p. 17.
*». Ibid., pp. 17-18. 17 disregarding the bureaucratic dimension, any political scientist or political reformer is likely to misconceive the true capabilities and limitations of the Japanese government.'* All in all, the center of his assertion is that Japanese national economic development was achieved by the rational policy choices of economic elite bureaucrats with the spirit of planning for the nation.
However, although C. Johnson's model appears to be an effective explanatory tool for analysis of a certain period of time, it can hardly be seen to have a general applicability to the Japanese political economy because of the following three shortcomings.
First, it does not sufficiently consider side effects and spin-offs from the high economic growth, while concentrating on the positive side of the roles of the economic bureaucracy. There is no room left for detailed exploration of the other correlates of the Japanese development state, which may have counter-impacts on the bureaucracy. He does not take into account the fact that those influences outside the bureaucracy would change the mode and substance of policy decision. Second, assuming economic development as the highest national priority of post-war Japan, he seems to takf national economic
Chalmers Johnson, "Japan: Who Governs? An Essay on Official Bureaucracy," The Journal of Japanese Studies. 2:1 (Autumn 1975), pp.1-28. 18 activities as a starting point as well as a final destination in Japanese politics and government. Missing is the fact that other political and social fluctuations can have input on the pre-eminent position of institutional bureaucracy in the policy-making process. Third, for its limited range of time covered, the aftereffects of economic development are not appropriately reflected. Therefore, regretfully, it does not provide tools for understanding the timing of policy change or how specific structural changes influence the evolution of politics over time.
In the same vein, Muramatsu and Krauss present a critical observation of the above orthodox views, i.e., the elitist and bureaucracy-dominant approaches, pointing out their weak aspects, which are outlined below.'?
First, the two groups of elite--politicians and bureaucrats--cannot be treated as the same category. In terms of occupation background, educational levels, and regional origin, bureaucrats show more elitistic tendencies than politicians. Second, the influence of bureaucrats has been reduced relative to the increase of politicians' power.
Even bureaucrats recognize that political parties and the
National Diet play significant roles. Thus, the functions of bureaucrats are often defined as being related to the
'^. Muramatsu Michio and Ellis S. Krauss, "Bureaucrats and Politicians in Policymaking: The Case of Japan," American Political Science Review. 78:1 (March 1984), pp. 126-46. 19
processes of policy formation by politicians. The policy
priorities and role consciousness of bureaucrats are also
influenced by the way politicians (and interest groups)
respond to them. Third, multiple interest groups, including
the business community, independently have impacts on both
the bureaucracy and politics. However, the business society
should not be treated as a unified force. Fourth, intra-
bureaucratic differences in the recognition of their roles
and policies have been apparent in the two levels; the
ministerial level (between top officers, such as vice-
minister and bureau chiefs, and middle officers, such as
department heads and managers) and the inter-ministerial
level.
In short, Muramatsu and Krauss assert that both the
tripartite power-elite perspective and the monolithic bureaucracy-dominant approach are not appropriate any more
in analyzing the government and political process of contemporary Japan.
2.1.4. The Corporatist versus Pluralist Approaches
In recent years, many researchers have suggested new perspectives for escaping from orthodox approaches and providing better analyses of Japanese political processes. A distinctive feature of this development is the debate between corporatist and pluralist approaches. 20
Japan le often seen as a country with strong corporatist (statist/societal> features. Some observers assert that the nature of Japanese policy-making process is reflected properly in the terms "Japan incorporated, • or
"corporatism without labor."** However, others have seen evidence of pluralist patterns of contacts among interest groups and political and governmental actors in public policy-making arenas. This view depicts Japan as a close example of the classical pluralism.*®
In the meantime, students dissatisfied with the above- mentioned perspectives have investigated Japan in terms of such notions as "structural corporatism,"** "functional
**. The notion of "Japan Incorporated" is presented in many studies for and by U.S. businessmen. Typical is Eugene Kaplan, Japan; The Government-Business Relationship - Guide for the American Businessmen. (Wahsington, D.C.: U.S. Government Printing Office, 1972). See also Herman Kahn, The Emerging Japanese Superstate: Challenge and Response. (Englewood Cliffs, N.J.: Prentice-Hall, 1970), Chapter 4. For a useful review, see Gerald L.Curtis, "Big Business and Political Influence," in Ezra F. Vogel ed., Modern Japanese Organization and Decision-making. (Berkeley and Los Angeles: University of California Press, 1975), pp.33-70.
*•. T.J.Pempel and Tsunekawa Keiichi, "Corporatism Without Labor?: The Japanese Anomaly, " in P. C. Schmitter and G.Lembruch, eds., Trends Toward Corporatist Intermediation. (Beverly Hills and London: Sage Publication, 1979), pp.231- 270.
*®. Yung Ho Park, Bureaucrats and Ministers in Contemporary Japanese Government. (Berkeley, California: The Institute of East Asian Studies, 1986).
**. Chalmers Johnson, "Japan: Who Governs? An Essay on Official Bureaucracy," (1975) and MITI and the Japanese Miracle: The Growth of Industrial Policy. 1925-1975 (1982); and T.J. Pempel, "The Bureaucratization of Policymaking in 21 corporatism, • "limited pluralism,"*’ "patterned pluralism,"** "bureaucracy-led mass-inclusionary pluralism,"*® "canalized pluralism,"** compartmentalized competition,"*’ and "referent pluralism."** All in all, many academic enterprises in analyzing Japanese politics are
Postwar Japan," American Journal of Political Science. 18:4 (1974), pp.647-64.
* * Shimada Haruo, "Japan's Postwar Industrial Growth and Labour-Management Relations," in Industrial Relations Research Association, Proceedings of the Thirty-Fifth Annual Meeting. (New York, 1982).
Fukui Haruhiro, "Economic Planning in Postwar Japan," (1972); and Bradley M. Richardson and Scott Franagan, Politics in Japan. (Boston and Toronto: Little, Brown and Company, 1984).
**. Muramatsu Michioand Ellis S.Krauss, "The Conservative Policy Line and the Development of Patterned Pluralism," in Yamamura Kozo and Yasuba Yasukichi, ed., Political Economy of Japan: Domestic Transformation (Vol.1), (Stanford, California: Stanford University Press, 1987), pp.516-554.
“®. Inoguchi Takashi, Gendai Nihon no Seiii Keizai no Kozo: Seifu to Shijo (Contemporary Japanese Political Economy: Government and Market), (Tpkyo: Toyo Keizai Shimposha, 1983).
•*. Sato Seizaburo and Matsuzaki Tetsuhisa, "Jiminto Chochoki Seiken no Kaibo (Autopsy on the Super-Long Term Reign of the LDP)," Chuo Koron (November 1984), pp.66-100.
Murakami Yasusuke, "The Age of New Middle Mass Politics: The Case of Japan," Journal of Japanese Studies. 8:1, (1982), pp. 29-72, which is translated from "Shin Chukan Taishu Seiji no Jidai, " Chuo Koron (December 1980), pp.202- 229. See also his article "The Japanese Model of Political Economy, " in Yamamura Kozo and Yasuba Yasukichi, eds. , The Political Economy of Japan: Domestic Transformation (Vol.1), (1987), pp.33-90.
* * Kabashima Ikuo and Jeffrey Broadband, "Referent Pluralism: Mass Media and Politics in Japan," Journal of Japanese Studies. 12 (Summer 1986), pp.335-41. 22 conducted around the competing perspectives of corporatism and pluralism, in spite of the variations on specific points of the issue.
To make the point clear, one must first determine the kinds of interest group activities that might be expected under corporatism and those that would prevail under pluralist forms of interest group-government relations.
According to most versions of the corporatist
(inclusionary/exclusionary) pattern of interest group politics, one of its prominent features is a set of statutory institutions to accommodate direct contact between government officials and representatives of authorized interest groups. These contacts are formed in the corporatist chambers, or commissions with interest representatives and government officials sitting regularly to consider policy matters. Direct bargaining over policy between the government and a cartel of organized interests by means of these bodies guarantees the obligatory involvement of interest groups in the decision-making process.••
For a short summary of the two patterns, see Frank L. Wilson, "French Interest Group Politics: Pluralist or Meocorporatist?, " American Political Science Review. 77:4 (1983), pp. 895-910. For references to them, see also Muramatsu Michio and E.S.Krauss, "The Conservative Policy Line and the Development of Patterned Pluralism," in Political Economy of Japan; Domestic Transformation (Vol.1) (1987), pp.646-647 (notes); and D. Okimoto, "Political Inclusivity: The Domestic Structure of Trade," in Inoguchi Takashi and Daniel I. Okimoto eds., Political Economy of Japan: The Changing International Context (Vol.2), 23
As Lehmbruch mentions, corporatism involves the intimate mutual penetration of state, bureaucracies, and large interest organizations.*® In fact, both government and interest group leaders are closely and constantly collaborating. Moreover, interest groups are often charged with implementing policy decisions. In doing so, they encourage further influence over policy. They encouraged, simultaneously, the acquiescence of group members to the policies adopted through elite accommodation. *‘
On the other hand, under pluralism, the relations between interest groups and government officials are less frequently (or not all) statutory. Rather than being directly involved in the decision-making process itself, interest groups act or influence policy matters from outside the institutional framework of government. Thus, utilizing informal and personal contacts through personal networks and parliamentary lobbying, using partisan channels, and mobilizing public support become important to the interest groups because there are no institutionalized routes for
(Stanford, California: Stanford University Press, 1987), pp.531-532 (notes).
*®. G. Lehmbruch, "Consociational Democracy, Class Conflict and the New Corporatism" and "Liberal Corporatism and Party Government," in P.C.Schmitter and G. Lehmbruch, eds.. Trends Toward Corporatist Intermediation. (London: Sage Publication, 1979).
*‘. Ibid. 24 group access to policy-making.**
With the advent of corporatist theory in the early
1970s, most pluralist critics drew upon the view that corporatism was really a kind of pluralism and no more than a variant of pluralism. They often cited corporatism as one extreme of a pluralist continuum, specifying a situation in which interest groups are formalized and share substantially in formulating and administering government policy.
According to this perspective, corporatism is nothing but a developed version or a variant pluralism, such as
"institutionalized pluralism" or "quasi-pluralism."**
In contrast, drawing a boundary, the corporatist writers place corporatist theory outside the notion of pluralism, criticizing the following methods and theoretical premises of pluralism: methodological individualism, the
**. Frank L.Wilson, "French Interest Group Politics: Pluralist or Meocorporatist?," APSR. 77:4 (1983), pp.895- 910; and Bradley M. Richardson, "Interest Articulation and Aggregation," in Politics in Japan (1984), Chapter 8.
**. The representative adherents of this argument are as follows. R. Martin, "Pluralism and the New Corporatism," Political Studies. 31 (Part 1) (1988); G. Jordan, Corporatism; The Unity and Utility of the Concept? (Glasgow: Strathclyde Papers on Government and Politics, No.13, University of Strathclyde, 1983); G. Jordan, "Pluralistic Corporatism and Corporatist Pluralism," Scandinavian Political Studies. 7 (1984), pp.37-51; and G. Jordan, "Group Approaches to the Study of Politics, " in G. Drewry and D. Englefield, eds., Information Sources in Politics and Political Science. (London: Butterworths, 1984); and G. Almond, "Corporatism, Pluralism and Professional Memory," World Politics. 35 (1983), pp.245-60. Most of the above references are recited from Peter Williamson, Corporatism in Perspective. (London: Sage Publication, 1989). For details of the argument, see ibid., pp.60-63. 25 formation of interest groups, the acceptance of a neutral state, and the treatment of power confined to observable behavior within the political system. In such a way, corporatism presents an alternative to pluralism, adopting different theoretical perspectives. In short, corporatists view organized interests in a society from the societal, organizational, and individual levels.
In Japanese politics, corporatism states that private interests are closely tied to government centers of power, such as the LDP, central executive elites, and the bureaucratic ministries. Thereby, they gain special treatment, while also possibly being vulnerable to control and manipulation by these power centers. Regarding Japanese economic success, the corporatist school sees strong controls being imposed on interest groups by Japan's economic ministries, especially the Ministry of
International Trade and Industry (MITI), and a dependent state between interest groups and the ministries and administrative bureaucracy. ’ ♦ Therefore, it claims interest groups' intimacy and interdependence with the ruling power, and vulnerability to governmental control, as well as
Some works by Chalmers Johnson also give examples of close government and group ties that represent some definitions of corporatism. See Chalmers Johnson, "MITI and Japanese International Economic Policy," in Robert A. Scalapino, ed. , The Foreign Policy of Modern Japan. (Berkeley: University of California Press, 1977); and his MITI and the Japanese Miracle; The Growth of Industrial Policv. 1925-75 (1982). 26 favored access to certain groups.*® In this sense, corporatism is similar to the bureaucracy-dominant model of influence and institutionalism.**
For instance, the perspective "corporatism without labor"** explains close relationships between Japan's ministries, the governing party (LDP) leaders, and big interest groups (including business and agriculture). This closed circle has inhibited competition and the assertion of interests by labor unions, which are denied the access granted to other groups. Although this view has its intrinsic limitations,** it parsimoniously points out the
*®. With a similar view, H.Shimada analyzes the process of wage increases in Japan, indicating the development of organized interests as a functional corporatist system. Under this system, organized actors are willing to make efforts to formulate and to share cooperative strategies for the attainment of a common goal. This system smoothly realizes a flexible adjustment of wage change. See Shimada Haruo, "Wage Determination and Information Sharing: An Alternative Approach to Incomes Policy?", The Journal of Industrial Relations. 25:2 (1983), pp.177-200.
**. For an overview of the institutional approach, see Peter P. Cheng, "Japanese Interest Group Politics: An Institutional Framework," Asian Survey. 30:3 (March 1990), pp. 251-265.
**. T.J.Pempel and Tsunekawa Keiichi, "Corporatism Without Labor?: The Japanese Anomaly," in P.Schmitter and G. Lembruch, eds., Trends Toward Corporatist Intermediation (Beverly Hills and London: Sage Publication, 1979), pp.231- 270.
* * One of the shortcomings of this perspective is its short-sighted predictability. It does not cover the sudden emergence of major welfare programs benefiting laborers during the 1970s, and the rise of a pragmatic economic unionism engaged in steady intensifying contact with the ruling conservative camp in the 1980s. In addition, it does 27
persistent policy bias against labor and the labor sector's
traditionally precarious role in Japanese policy-making.
Indeed, despite the continuous consideration of high wages
of the government, the labor sector in Japan has been
frequently excluded from the corporate circle in policy
making.
By contrast, a pluralist view of Japan claims the
existence of a more open and independent relationship
between private interests and core political actors,
presenting more flexible patterns of coalition formation and
competition.*’ This view suggests a model of shared and
equal influence between bureaucrats and politicians.*® It
further suggested that party superiority, including
politicians, parties, and the Diet, is more appropriate in
not give due attention to the grassroots bias of Japanese party politics in policy innovation, or the frequent role of crisis. See Kent E. Calder, Crisis and Compensation; Public Policv and Political Stability in Japan. 1949-1986. (Princeton, N.J. : Princeton University Press, 1988), pp. 10- 12.
*’. A review article on the researches of pluralism in contemporary Japan is provided by Gary D. Allison, "Politics in Contemporary Japan: Pluralist Scholarship in the Conservative Era- A Review Article," Journal of Asian Studies. 48:2 (May 1989), pp.324-32. In this article, with overall comments, he refers to eight prominent worksby Japanese scholars with a perspective on pluralistic qualities.
* ®. See Inoguchi Takashi, Gendai Nihon no Sei ji Keizai no Kozo: Seifu to Shinfo (1983). 28 analyzing Japanese policy-making.**
With this view, Muramatsu and Krauss develop an insightful term "Patterned Pluralism. " The concept has an analytical utility for the understanding of routine distributive policy-making, which was conducted by the government in response to the power of interests from the people in the 1970s. In spite of several drawbacks*", this
**. By testing the view of convergence of two elite groups, such as bureaucrats and politicians, Muramatsu Michio and Ellis S. Krauss convincingly present surprising findings on the increasing power of politicians given the usual bureaucracy-dominant model of Japanese policy-making. See Muramatsu and Krauss, "Bureaucrats and Politicians in Policymaking; The Case of Japan," APSR. 78:1 (March 1984), pp.126-46. Krauss presents a similar theme even earlier in "Japanese Parties and Parliament; Changing Leadership Roles and Role Conflict, " in Terry Edward MacDougall, ed., (1982) Political Leadership in Contemporary Japan. (Ann Arbor: Michigan University Press, Michigan Papers in Japanese Studies, No. 1, 1982), pp. 93-114.
**. Because of its far-reaching emphasis on the structure of interest sectoral relationships, the patterned pluralism perspective cannot adequately address broad, complex, cross-issue tradeoffs, which occur under unique historical circumstances. An example is the recent government financial retrenchment policy. The PCAR adopted a total-scale control approach, rather than a selective prioritizing approach. It intended not to make entitlements of certain areas the major target of a conservative attack. Nevertheless, the policy inevitably encounters the interests of many established pressure groups. One instance is the stagnation of rice price increases, which seemed to defy a conservative interest group pressure (particularly from farmers in this case), which was accompanied with budgetary curtailment in the early 1980s' administrative reform. Therefore, the term is useful in examining the trend of the 1970s and the reason long-term administrative reform was undertaken instead of short-term financial recovery measures. However, it is not sufficient for illuminating why administrative reform was developed the way it was, and more specifically, why it was launched by depending heavily upon the third entity, the PCAR. This subject will be discussed again in Chapter II. 29 term has attracted great attention from students of Japanese politics.
In the same manner, many recent case studies show evidence for the presence of open, assertive, and vital
interest processes. They describe the proliferation of interest groups, and substantial differences of opinion between Interest groups and the government on significant policy matters in Japan. For instance, a study of dramatic struggles over farm prices demonstrates pluralistic interest group politics.♦' Another example of pluralism is the resistance by automobile, steel, and computer corporations to MITI's pressures to cooperate in mergers or other kinds of bureaucratic desires in the 1980s.'* Besides these pluralist examples, the factions, as intraparty groups, represent an important, perhaps the most persistent, form of dissension within the LDP.^“ The prevalence of intra- bureaucratic conflicts also supports the pluralist perspective, proving that Japanese bureaucracy is by no
See Muramatsu and Krauss, "The Conservative Policy Line and the Development of Patterned Pluralism," (1987), p.547; and Calder, Crisis and Compensation (1988), pp.9-11.
*'. Michael W. Donnelly, "Setting the Price of Rice: A Study in Political Decisionmaking, " in T.J.Pempel, ed. , Policv Making in Contemporary Japan (1977), pp.143-200.
♦ *. David Friedman, The Misunderstood Miracle: Politics and Economic Decentralization in Japan. (Ithaca: Cornell University Press, 1988).
*". Hans Baerwald, Party Politics in Japan. (Boston : Allen & Unwin, 1986). 30 means monolithic.** Not surprisingly, many students make an effort to claim that the business community becomes pluralistic, as well.*’
All these cross-sectoral variations and temporal shifts support a somewhat pluralist argument. The general form emerging from this pluralist perspective is characterized by confrontation, fluidity, complexity, and variability. It provides an antidote to the persistent corporatist view of
Japanese politics. However, many corporatist theorists still argue for the characteristics of simplicity, non confrontation, and constancy in Japanese politics, regardless of this pluralistic evidence.
Neverthless, in truth, both factions admit that
Japanese pluralism and corporatism are different from the pure types assumed in the study of Western countries.
**. Because of low profile, lack of publicity, and various types, it is not easy to assess bureaucratic policy processes. Nevertheless, some of case studies in Pempel, ed., Policymaking in Contemporary Japan (1977) may provide sufficient information on this subject.
*’. In 1965, Lockwood already noticed the change of big business from a monolithic group to a cluster of diverse interests. See W.Lockwood, "Japan's 'New Capitalism'," in The State and Economic Enterprise in Japan; Essays in the Political Economy of Growth. (Princeton: Princeton University Press, 1965). G. L.Curtis also examines the business community along with the changes of the nation's economy and society. He points out that since 1955, the influence of Zaibatsu (business community) has been downgraded and become increasingly pluralistic. See O.L.Curtis,"Big Business and Political Influence," in E.F.Vogel, ed., Modern Japanese Organization and Decisionmaking. (1975), pp.33-70. 31
Japanese corporatists emphasize the importance of the role of bureaucracy or the state. However, they do not reject the inclusion or exclusion of certain social forces and mass interests in policy formation processes. In the same manner, the pluralist approach argues for the applicability of pluralism, as a general phenomenon of political systems, to
Japanese politics. However, it, does not deny the prominence of bureaucratic institutional tradition. Therefore, both groups frequently put certain modifying words in front of corporatism or pluralism to explain Japanese political processes.
2.1.5. A Mixed Nature
When looking at Japan or at other countries, one need not expect to find only one pattern. It is probable that the activities of multiple actors vary according to the issue and the nature of the government and the groups. Even within the same decision-making process, different stages sometimes mingle with different policy-making patterns in its development. Participants' interrelationships often present corporatist characteristics while the patterns of their behavior in interest aggregation and articulation show pluralist or complex characteristics. The same association may be a pluralist interest representative in one respect and a corporatist interest intermediary in the other.
Evidently, neither corporatism or pluralism should be 32 regarded as some all-prevailing phenomenon, but instead both are found various arenas and through time. This observation points out the danger of claiming that a polity completely contains either pluralist or corporatist characteristics.
Considerable research backs up this recognition of the mixed nature of pluralism and corporatism, confirming that, in practice, both pluralism and corporatism are frequently found side by side or in some combination.*' Emphasizing the reality of the pluralist-corporatist mixture, many studies insightfully blend complex pluralist and corporatist elements with differences over issues, sectors, and levels of interest aggregation.
For the purpose of anaysis, corporatism and pluralism are presented as essentially ideal-typical models exclusive from each other. In order to define terms, it may be preferable to see concepts as polar opposites with logically consistent properties. However, the real world is almost
*'. Interesting elaborations of the mixed incidence of corporatism and pluralism are C. Crouch, "Pluralism and the New Corporatism: A Rejoinder," Political Studies 31 (1983), pp.452-60; and C.Crouch, "Corporatism in Industrial Relations: A Formal Model," in W.Grant, ed., The Political Economy of Corporatism. (London: Macmillan, 1985); W. Streeck, "Between Pluralism and Corporatism: German Business Associations and the State," Journal of Public Policv. 3 (1983) (part 3); A. Cawson and P. Saunders, "Corporatism, Competitive Politics and Class Struggles," in R. King, ed., Capital and Politics. (London: Routledge & Kagan Paul, 1983); and P. Saunders, "Corporatism and Urban Service Provision," in W. Grant, ed., The Political Economy of Corporation. (London: Macmillan, 1985). All these references are recited from Peter Williamson, Corporatism in Perspective. (London: Sage, 1989), pp.49-74. 33 always located somewhere in between. Either corporatism or pluralism is clearly not something a polity has or does not have. Corporatist or pluralist patterns vary in their extent over issue areas, countries, and time.** Substantial and wide-ranging empirical evidence demonstrates the weakness of straightforwardly identifying and distinguishing between pluralist and corporatist characteristics.
Getting back to Japan's case, indeed, when only the relationship between business and government is examined, various patterns, rather than a single one, can be observed according to different areas of economic policy-making.*®
Additionally, cases in different time periods actually show contradictory evidence of key actors' behavioral patterns. A pluralistic picture on the structure and process of Japanese policy-making is more often revealed by new cases than by old ones. Considering this, it can be mentioned that there have been several turning points, which had led to different
**. See P. C. Schmitter, "Reflections on Where the Theory of Neo-corporatism Has Gone and Where the Praxis of Neo-corporatism May be Going," in G. Lehmbruch and P.C. Schmitter, Patterns in Corporatist Policymaking. (Beverly Hills, California: Sage, 1982), pp. 264-265. In order to make this simple developmental view of corporatism more sophisticated, Gerhard Lehmbruch ranks polities according to a cumulative scale of corporatist concentration. Several Western countries fall into the weak and medium bands in his scale. See G. Lehmbruch, "Introduction: Neo-corporatism in Comparative Perspective," in Ibid., pp.16-25.
*®. Bradley M. Richardson, "Policy-Making in Japan," in B. Richardson and S. Flanagan, Politics in Japan. (Boston and Toronto: Little, Brown and Company, 1984), pp. 329-378 (Chapter 9). 34 patterns of policy processes, such as World War II, the
Occupation Rule, and, more recently, the two oil crises (see
Table 1.1).
In the same manner, if we look at Japanese politics throughout the post-war era, political conservatism has been ensured by the ruling LDP in an effort for political dominance and political stability. However, under the changing environment, the political approaches, political leadership styles, patterns of political participation,®* strategies in policy-making arenas, and even the LDP's structure have been changed, modified, and redefined. Many studies with different perspectives capture these temporal variations of political process patterns in the post-war era
( see Table 1.1).
Thus, because corporatism and pluralism are empirically not so far apart, it is reasonable to express "more corporatist" and/or "less pluralist" for a case or issue arrangement. At the same time, the nature of the combination still helps to analytically determine where a particular policy-making case fits on the scale between these ideal types.
® * . Soo Young Auh systematically reviewed changing policy preferences of citizens and their reflection on the patterns of political participation in the post-war Japanese politics. See Soo Young Auh, "Political Participation and Policy Preference in Japan," in J.C.Campbell Parties. Candidates, and Voters in Japan; Six Quantitative Studies. (Ann Arbor: Center for Japanese Studies, The University of Michigan, 1981), pp.63-100. 35
Table 1.1. Perspectives on the Post-war Japanese Political Process.
Viewer 1945 1955 1965 1975
1963 1973 Inoguchi T. bureaucratism.../.coexistence/increasing of B and P power of P
C.Johnson economic technocrats...... /influence dominance of politics
Miyake I. enlightenment. . . . /interest. . ../.mass democracy democracy democracy
Murakami Y. 1953. initiative of...... /initiative bureaucrats of politicians
Muramatsu M. predominance of. . . . /predominance of. . bureaucrats politicians
Nakamura A. bureaucratic...... /LDP...... initiative initiative
Otake H. late 1960s..liberal system of.... enterprise
B.Richardson structural...... /limited . . . corporatism pluralism
Sato S. late 1960s..LDP-bureaucracy complex (canalized) pluralism
Sinohara H. 1981.. corporatism bipolar multiple Yamaguchi S. ideology.... /interest...... /1982 ? dispute politics note: B (bureaucrats); P (politicians). Source: Compiled from various materials written by the above authors, and Doi, Hayagawa and Yamaguchi, "Gendai Nihon ni Okeru Seijigatei e no Apurochi: Daini Rincho to Kokutetsu Mondai," Hondal Hooaku. No.136, (September 1985), pp.177-248, is also consulted. 36
Specifically, as seen in Table 1.1, since the 1970s, some people have argued the decreasing control of ministries, such as MITI, because of the changing national issues from merely economic to multiple concerns (i.e., environment and quality of life). Given this change, business actors, and in particular, industries, have become more vocal than before, while the intervening power of government has been evidently reduced. At the same time, some local governments have shown progressive and independent behavior. The elected representatives in the
Diet have also become more active and influential since the
1970s. In addition to these general changes, various momentous points through time are also found in distinctive policy-making cases.
2.2. Publications on the JNR Reform
The debate over different approaches is basically based on power concepts: who decides, who controls, who has influence, who governs? These questions can be asked at many levels of abstraction, but the numerous problems associated with the concept of power can be lessened by making such questions as concrete as possible. In this vein, the findings and conclusions of specific case studies may suggest whether one needs to recognize the above perspectives as competing or complementary in a particular political arena. 37
Because of the significance of the case study, many researchers have used the case study method in various fields of Japanese political processes.** This is specifically true in the case of the JNR sectionalizing privatization policy-making process. This study shares the same purpose. For this dissertation, then, it is necessary to review the existing studies on the JNR subject before inaugurating an independent investigation.
At the time of discussion about the JNR's break-up and privatization policy, the plan was acknowledged as the most drastic organizational reform in Japanese railroad history, which has been traced back over 100 years. Thus, when the
JNR reform became a national concern, various materials
**. Representative examples of the case study on Japanese political process published in the 1970s and the 1980s are Fukui Haruhiro, Party in Power; The Japanese Liberal Democrats and Policy Making (Berkeley: University of California Press, 1970); J. Campbell, Contemporary Japanese Budget Politics (New York: Columbia University Press, 1977); Miyamoto Kenichi, ed. , Daitoshi to Konbinato Osaka (Big City and Industrial Complex Osaka) (Tokyo: Chikuma Shobo, 1977); T. J.Pempel, ed. , Policymaking in Contemporary Japan. (Ithaca: Cornell University Press, 1977); Otake Hideo, Gendai Nihon no Sei1i Kenrvoku Keizai Kenrvoku (Modern Japanese Political Power and Economic Power) (Tokyo: Sanichi Shobo, 1979); C.Johnson, MITI and the Japanese Miracle: The Growth of Industrial Policy. 1925-1975 (Stanford, California: Stanford University Press, 1982); Otake Hideo, Nihon no Boei to Kokunai Seiji (Japanese Defense and Domestic Politics) (Sanichi Shobo, 1983); Kusano Atsushi, Nichibei Grange Koosvoo (Citrus Trade Between Japan and U.S.) (Nihon Keizai Shinbunsha, 1983); Nakamura Akira and Takeshita Yuzuru, eds., Nihon no Seisaku Katei (Japanese Policy Process) (Tokyo: Azuma Shuppansa, 1984); Otake Hideo, ed., Nihon Seiji no Sooten (Disputable Points in Japanese Politics) (Sanichi Shobo, 1984); and Kusano Atsushi, Kokutetsu Kaikaku (The Reform of JNR) (Tokyo: Chuokoronsha, 1989). 38 about the issue were published. In general, the books dealing with the subject can be classified into five groups, as will be seen below. It should be noted that this reference list of books does not purport to be exhaustive.
The first group treats the JNR reform from a perspective of transportation economics rather than discussing its feasibility as a public policy.®* In the second group, many authors take opposing views to both break-up and privatization, following certain JNR labor unions' positions or for other reasons.®* Some authors favor
® * This economic perspective includes Hirai Takeo, Kokutetsu Kaitai Jenva (The Day Before the JNR Was Dismantled) (Akishobo, 1986); Shioda Michio, Kokutetsu Saiken Saiao noSentaku - Kokutetsu Minei Bunkatsu no Tadashii Yomikata (The Last Chance for the JNR Reform: An Accurate Way to Understand JNR Break-up and Privatization) (Tokyo: Nihon Bungeisha, 1986); Miura Mitsuo, Kokutetsu Kaikaku: Keizai to Seikatsu wa Do o Kawaruka? (JNR Reform: Do the Economy and Daily Life Change?) (Tokyo: Kyoikusha, 1986); Okaseki Masao, Ganbare Kokutetsu - Sabisushin wa Rosen to Tomoni (Hardworking JNR -Split of Service with Railways) (Tokyo: Huzida, 1986); and Sasaki Hiroko, Shvuchvakueki no Nai Reru - Haishi Rokaru Sen wa Ima (Railways Without Destination - How about the Curtailed Local Lines Now?) (Tokyo: Soryusha, 1986).
® Critical views on the policy are shown in Akahata Kokutetsu Mondai Shuzaihan, Kiro ni Tatsu Kokutetsu (Kokutetsu at the Crossroads) (Tokyo: Shin Nihon Shuppansha, 1985); Yoshitomo Rozyu, Yurusumaii Koiutetsu Bunkatsu Minei (The JNR Sectionalizing Privatization is Unpermittable) (Tokyo: Shimin Shuppansha, 1985); Manabe Shigeki, Kokutetsu Kaitai - Kokutetsu vo Doko e Iku? (Abolition of the JNR- Where To Go, the JNR?) (Kodansha, 1985), Hibino Shigeki, Kootsuken no Shiso (A Theory of the Right of Movement) (Tokyo: Kodansha, 1985); Matsuo Sadayuki, Kokutetsu aa Kieta1 ? Hi. (The Day of the Curtailment of the JNR!?) (Tokyo: Nihon Keizai Shinbunsha, 1986); Sato Tatsuya, Kokutetsu Mineika no Giwaku - Hvaku Cho Yen Shisan no Kenkvu (The Mystery of JNR - A Study of its Property of 100 Trillion Yen) (Tokyo: Daisan Shokan, 1986); Kamata Satoshi, 39 only break-up, whereas other favor privatization. The third category consists of the books that support the sectionalizing privatization. They are mainly written by persons with relationships to the Second Provisional
Commission of Administrative Reform and the JNR
Reconstruction Supervisory Council.®® The fourth type of study focuses on the power struggle that occurred in the debate and realization processes of the JNR reform policy.®*
Kokutetsu Shobun (Disposal of the JNR) (Tsuge Shobo, 1986); Hirai Toshio hencho, Kokutetsu Kaitai no Kiki (Crisis of the JNR Collapse) (Tokyo: Shin Nihon Shuppansha, 1986); Nakano Hiroshi, Doro Chiba - Ore Tachi wa Tetsuro no Ikiru (Chiba Branch of Doro - We All Live With Railways) (Tokyo: Shakai Hyoronsha, 1986); Kiriyama Shu, Kokutetsu o Korosuna- Kokutetsu Rodosha wa Hakken Suru (Is the JNR Dead" Talks With JNR Laborers) (Tokyo: Togasha, 1986); Maruyama Noboru, Kokutetsu Mineika Jankoku Monoaatari (Privatization of the JNR: A Cruel Story) (Tokyo: Eru Shuppansha, 1986); and Kato Hitoshi, Kokutetsu Hokai (Collapse of the JNR) (Tokyo; Kodansha, 1986).
® ® Publications supporting the privatization policy are Mitsuzuka Hiroshi, Kokutetsu o Saiken Suru Hoho wa Kore Shika Nai (About the Only Way to Reform JNR) (Tokyo: Seijikobo Senta, 1984); Kokutetsu Kokumin Kaiki hen, Kokutetsu Hutatsu no Daizai - Sono Shinlvo wa Bunkatsu Mineika Kara (The Two Biggest Sins of the JNR - Its Reincarnation via the Sectionalizing Privatization Plan) (Tokyo: Keiseisha, 1986); Takano Kunihiko, Kokutetsu Minei Bunkatsu e no Chosen - 2001 nen ni Iki Nokoru Tameni (Challenge to the JNR Sectionalizing Privatization - To Survive in 2001) (Tokyo: Daiamondo Sha, 1986); Sakaikeizai Kokumin Kaigi Hensha, Bunkatsu Mineika wa Naze Hitsuvoka; Kokutetsu Kaikaku no Kakushin o Saouru (Why is It Necessary to Sectionalize and Privatize the JNR?: Analyzing the Core of the JNR Reform) (Tokyo: Shakai Keizai Kokumin Kaigi, 1986); and Mitsuzuka Hiroshi, Saraba Kokuvu Tetsudo Yuganda Reruwa Naosarebanaranu (Unprofitable Railways Cannot Help being Curtailed) (Tokyo: Bungei Shunju Sha, 1986).
® *. Ono Mitsumoto, Kokutetsu o Utta Kanrvotachi (Bureaucrats Who Sold Out the JNR) (Tokyo: Zenponsha, 1986) and Isahaya Tadayoshi, Kvodai Kiovo JR: Giwaku to Tatakai no 40
Another approach is analyzing and evaluating the JNR reform policy-making process in a relatively objective manner using a political historical perspective. However, such an analytical study for academic purposes is preeminentely scarce. It is surprising that, so far, the study by Kusano
Atsushi is the only example in this category.
All in all, such an observation of the literature on the JNR is one of motivating factors leading to this study of scholarly examination on the JNR reform policy process and structure. In the next section, the purposes of this study will be further clarified.
3. THE RESEARCH DESIGN
3.1. Research Purposes
Despite all the above mentioned scholarly efforts on theoretical questions and some empirical case studies of the
Japanese public policy-making process, much research is still needed for the progress of the Japanese public policy making studies.
Analysts of public policy with only generalizing purposes often fail to get a dynamic sense of why policy output takes the form it does. That is because they fail to
Kosu (JR as a Giant Corporation: The Structure of Suspicion and Battle) (Tokyo: Otsuki Shoten, 1968) are included in this category. 41 explore specific calculations of profit and loss, which determine real organizations' relationships with the outside
in the real world. Thus, parsimonious general analyses by themselves, due perhaps inevitably to their sweeping levels of generality, provide few tools for understanding the timing of policy change or how specific structural changes influence the evolution of politics over time. The Japanese setting obviously shows the strong organizational consciousness of institutions and the sharp fluctuations in their relative positions. In this circumstance, micro-types of analyses such as a case study are particularly important.® ?
Meanwhile, with the lack of a comprehensive typology of policy issues and representative policy-making patterns, it is impossible to choose a particular case for investigation from which a large number of generalizations may be extracted about Japanese policy-making.=' Nevertheless, some cases are appealing for their unusual visibility and controversiality in society. These cases may be called
® . Giovanni Satori succinctly points out the problems of system-level generalizations: definition, fitting specific cases into broad categories, and seeking to explain too much through a single, broad definition. According to him, middle-level hypotheses help to avoid the weaknesses of system-level approaches. See Giovanni Satori, "Concept Misinformation in Comparative Politics," American Political Science Review. 64 (December 1970), pp.1033-1053.
Fukui Haruhiro, "Review of the Literature, " in T.J.Pempel, Policymaking in Contemporary Japan (1977), pp.22-59. 42 critical cases, which are regarded, both by the decision makers and by observers, as significant to Japanese politics in the long run. In addition, these cases can be the grounds from which a number of important, interesting, and explicit propositions about the general patterns of Japanese national public policy-making are generated.
The JNR sectionalizing privatization policy-making process is equal to the aforementioned significant case in terms of its meaning in the Japanese political history.
Indeed, the JNR reform policy-making case attracts much attention from many political analysts of Japan. It provides an excellent source for understanding, and a reasonable testing ground for, the structure and process of Japanese politics.
However, because of the scarcity of analytical studies, the JNR reform issue has not yet been explained appropriately. Thus, an explanatory study on the nature and evolution of the JNR sectionalizing privatization policy making is needed for an understanding of the issue. This dissertation sets as its purpose conducting of a case study on the JNR reform policy-making, focusing on the process and structure of its policy dispute and formation.
Meanwhile, a problem of the case study method lies in the fact that social scientists like to study issues or disputes that are regarded as important. They are, however, not necessarily typical or a representation of the process 43 of politics and government. The political influence of different groups varies by Issue and over time. Nonetheless, a case study only picks up one or a few instances so as to present a possibly distorted model. This study is also a carefully chosen case analysis with broader Implications for theory. Thus, to some extent, this study undoubtedly shares the above limitations of a case study.
In order to compensate for this weakness of the case study method, a number of cases of conflict and Influence between groups have to be examined. It is desirable to be an analysis with a series of interpretive case studies using theory to better one's understanding of the Japanese political system and process. Evidently, a broad cross- sectoral approach with a comparative perspective®® may improve generalizability, because there Is no single policy decision-making process In Japan, as In other countries. The characteristics of the issue to be explored in a case study simply determine how decisions are reached under certain circumstances. Therefore, a comparative study of various cases can encourage one to present models of policy-making.
These decisional models provide a working, typology for an effective comparison of Individual studies of policy-making
®*. For the details of purposes and methods of comparative analyses, see Arend Lijphart, "Comparative Politics and the Comparative Method," American Political Science Review. 65:3 (September 1971), pp.682-93. 44 covering variations in arenas and through time.** By doing so, the idiosyncratic qualities of case studies can be overcome. This study is a first step toward that direction.
Most policy-making studies operate at two different levels of analysis. One focuses on the interactions of the state and society, while the other concentrates on intrastate behaviors.* * The primary concern of the first level of analysis is with the state's efforts to enforce certain forms of social compliance, or social groups' efforts to influence state and governmental behaviors. In constrast, the other level of analysis concerns with intragovernmental behaviors.
Focusing on state-society interactions is to examine the reactions of one to the stimuli of the other. This study is also about a selected policy-making case at the state- society interaction level. However, it does not mean to use a simple dichotomy between state and society. Instead, personal interactions and intra-elite relationships are assumed to be crucial parts of the study. In addition, this study does not deny that significant activities occurred at both the state-society level and the intrastate level, depending upon the situation.
**. See T.J.Pempel, "Conclusion," in Policymaking in Contemporary Japan (1977), pp.308-324.
* ‘ . T.J.Pempel, Policymaking in Contemporary Japan (1977), pp. 315-316. 45
3.2. The Conceptual Framework of the Study
A lesson from the previous review of various approaches
is that the two prominent perspectives (corporatism and
pluralism) are interrelated in reality. This duality
indicates the importance of simultaneous consideration of
multiple political actors' behavior (pluralist focus), and
the organizational and societal environment in which they
work (corporatist focus).
Given such an understanding, this study lends an
explanatory focus to the interlocking factors leading to the
policy output. By doing so, this study examines how the
issue involved was structured, and how the resulting
policies were made. It primarily searches for the
institutional and structural factors influencing and
circumscribing the policy-making discussed. It then
investigates the overall process of, and political actors
in, the policy-making under consideration. For these
purposes, this study is based on a conceptual framework with
the following two perspectives: an institutional perspective
and a political-actor perspective.
3.2.1. The Institutional Perspective
Researchers have often argued that unless the peculiarity of the Japanese institutional (i.e.,
bureaucratic) setting is recognized, all micro-level 46
analyses are not valuable. For example, even though JNR
deficit problems led to a fiscal crisis, they are not the
only reason for privatization. Other environmental factors
led the people concerned to review the relative merits of
the public corporation system against those of privately
owned organizations. This suggests that one should not
overemphasize micro-level impacts only, such as economic
considerations themselves, calculated simply in financial
cost-benefit terms.
In Japan, the utility of the market, including the
private sector's initiative, is not reviewed, in most cases,
by the market's own functional advantage itself. Instead, it
is examined, first of all, in terms of the perception of
national interest as well as other organizational and political considerations. Therefore, it is clear that organizational correlates of political and social systems
are important.
Needless to say, a policy process study should consider the significance of various actors' complex interactions.
However, it is a danger to assume that policy-making is produced by only the sum of social forces' influences.
Configurations of political institutions and environmental conditions, which are constructed by functional organizations of politics and economics, need to be examined 47 just as carefully.**
Of course, political institutions do not necessarily determine policy content or timing in a specific way.
However, the institutional structure of politics is a facilitating factor for the way the government responds to an agenda issue. For instance, the greater a government's control over the bureaucracy and legislature, the greater its capacity to put an issue on the agenda and to enact a policy. In contrast, the bureaucracy can play a strong role if it works as a process operator and structure determinant in a certain environment. In this circumstance, the dominance of bureaucratic agencies becomes a major characteristic of politics and the government. Thus, key policy decisions are produced automatically by the bureaucratic standard of operating processes in one organization, or through stable and routine interactions among organizations.
**. In a study of Japanese political economy, Okimoto stresses the indispensability of institutional arrangement for the implementation of industrial policy. According to him, an amorphous network of formal and informal intermediate organizations is geared to the effective operation of Japanese industrial policy. Thi^ institutional setting includes political institutions, organizations of labor forces, financial institutions, business associations, advisory councils, public corporations, policy research councils of the political parties, and informal study groups. D. Okimoto, "Regime Characteristics of Japanese Industrial Society, " in Hugh Partick, ed. , Japan's High Technology Industries. (Seattle: University of Washington Press, 1986), pp. 40-1. 48
In this regard, it is necessary to find out the general
institutional and organizational atmosphere under which the
particular policy was reviewed, delivered, and formulated.
In JNR reform policy-making, an environmental background
includes the ruling party (LDP)'s conservative hegemony and
pervasive bureaucratic organizations. It also consists of
the perpetual creation of public advisory councils and
commissions. For the JNR reform agenda, these organs were the Second Provisional Commission of Administrative Reform
(PCAR), the Fourth Subcommittee of the PCAR, and the JNR
Reconstruction Supervisory Council. They were set up beyond
the existing administrative boundary, but their roles were crucial. They provided the reformist force with the basis
for an initiative to undertake studies of special problems on the issue and to report on the findings. In addition, these public advisory bodies were significant in the sense
that a series of legislation was created by their efforts.
Then the legislation set up a boundary within which the
specifics of JNR reform policy were discussed, polished, and
implemented.
At the same time, the government's reaction to outside
influence was also important. External impacts influenced
the government to reconsider its existing organizational
circumstances. Specifically, following external impacts,
such as the oil crises, and the emergency of Reaganomics and
Thatcherism, the Japanese government modified its policy 49 orientation. Because of this change, it created a new reform policy line and extra institutions.‘' Thus, in order to analyze the process and structure of the JNR sectionalizing privatization policy-making, this study considers the existing institutional arrangement and organizational structure as the basic environmental parameter in the conceptual framework. Another component of this study's
framework depends on a political-actor perspective.
3.2.2. The Political-Actor Perspective
In most Japanese political processes, conflicts come to exist among actors pursuing different interests with different powers and resources. Thus, many political processes demonstrate complexity and plurality. The conglomeration and interrelationships of these conflict
interests are determined by the shifts of political operational factors, which are outlined as below.
First, multiple participants' ideologies are at a
partisan level. Second, their policy commitments are at an
electoral level. Third, their political preference and
Kato Hiroshi and Sando Yoichi indicate that the administrative reform of the Western countries influenced the Japanese government policy. The main theme of these countries' reform was creation of a small government along with deregulation of government control, and privatization. Reaganomics and Thatcherism valued an effective government more than a good (or big) government. See Kato Hiroshi and Sando Yoichi, Kokutetsu. Denden. Senbai; Zaisei no Koozu. (1983). 50 interests are in the domain of interest politics. Policy making consists of actors who participate to discuss issues with one of those factors (or all three), and specific political capacity with mobilizable resources. Fourth, however, among multiple participants, policy elites are the most crucial in initiating policy change and implementation* * .
These political operational factors determine the nature of the participants' network and their interests' movement. They have significant impacts on the procedural patterns of potential and real confrontations of political actors. They also influence the actual coalition behavior and conflict management practices of the various actors.
Further, they eventually shape the public policy-making patterns, influencing the political system's characteristics.
In the meantime, procedural characteristics of policy making are determined by the political significance of the
**. In order to define the aspects of intra-elite processes in policy-making, J.Campbell introduced the term "subgovernments" to Japanese studies. Subgovernments are groupings of agencies, legislators, and interest groups specializing in a given policy area. They share a common interest in excluding outsiders from decisions, and protecting or increasing the flow of resources to their area. See John C. Campbell, Contemporary Japanese Budget Politics (New York: Columbia University Press, 1977); and "Policy Conflict and Its Resolution Within the Governmental System, " in Ellis Krauss et al. , eds., Conflict in Japan (Honolulu: University of Hawaii Press, 1984), pp.294-334. 51 policy issue under scrutiny, which is linked to the degree of politicization.*® Two separate factors, such as the
impact (i.e., cost) of a policy, and the timing of policy making, influence this relationship (see Table 1.2). These elements interact with each other in determining the degree of issue at stake and the politicization of participants. On the one hand, the greater the impact (or the amount of cost) that a certain policy carries out, the higher the degree of its issue is at stake. On the other hand, if a particular issue approaches pertinent timing, the degree of actors' political consideration increases proportionally. Table 1.2 clarifies this relationship.
In Table 1.2, each unit (1 through 4) represents different decisional arenas. They differ in the degrees of the issue's importance, politicization of actors, and their participation patterns. In short, the importance of an issue is determined by its impact (i.e., cost) and timing, and determines the extent of politicization and the patterns of
*®. This theme of politicization is developed based on the analyses by Lowi and Campbell, who develop a similar argument. Specifically, T. Lowi addresses the relatiship between the patterns of interests participation and the stake of an policy decision. J. Campbell's scheme is to juxtapose the timing of when an issue emerged and its impact. The argument of this section (The Political-Actor Perspective) largely reflects these two scholars' theoretical themes. See Theodore Lowi, "American Business, Public Policy, Case Studies, and Political Theory, " World Politics. 16 (1964), pp.677-715; and "Four Systems of Policy, Politics and Choice," Public Administration Review. 32 (1972), pp.298-310. Also see John C. Campbell, "The Old People Boom and Japanese Policy Making," Journal of Japanese Studies. 5:2 (1979), pp. 321-358. 52 participants' activities in an arena.
Table 1.2. The Significance of Policy Issue: The Extent of Politicization.
Timing pertinent not pertinent impact i.e., cost )
high 1 2
low 3 4
In other words, various findings of temporal differences in policy-making patterns help to specify the forms of interactions between private interests and the government in Japan. Different stakes in varying policy issues in different areas lead to different commitment patterns of participants, varying with the intensity of their concern. This argument indicates that the types of political strategies and the resultant patterns of policy making are shaped by the combination of the time dimension and participants' acknowledgement of the issue (and thereby.
**. For an excellent example of the arena argument in Japanese studies, see John C. Campbell, "The Old People Boom and Japanese Policy Making," Journal of Japanese Studies. 5:2 (1979), pp.321-358. 53 their range of Involvement).
Based on such a scheme, the JNR sectionalizing privatization policy-making process can be presumed to move from column 3 to column 1 in terms of the recognition of impact, and from row 2 to row 1 in terms of timing (see
Table 1.2). As the JNR break-up and privatization policy approached a final decision, the significance of the issue was acknowledged as the greatest, and the extent of politicization also increased to its highest point. The analysis of the JNR case in this study is an effort to test this assumption.
In summary, the conceptual framework of this study is based on the findings of the literature review, which examined many studies' deficiencies (i.e., their one sidedness). With two perspectives--an institutional perspective and a political-actor perspective--in the conceptual framework, this study intends to comprehend at the same time the duality, both static and dynamic, of institutional and individual factors.
3.3. The Formation of the Study
Besides the chapters containing the introduction and the conclusion, this study contains four major chapters. The next chapter covers important structural parameters of
Japanese politics, which are fairly pervasive and have 54 impacts on almost all policy processes. It also examines the general characteristics and the content of administrative reform, which has been conducted since the early 1980s and provides a platform for the development of the JNR reform debate.
A factual examination of the JNR system follows it in
Chapter III. For a background understanding of the policy under consideration, this chapter conducts a descriptive analysis on the JNR's financial situation and management.
In short. Chapters II and III focus on static elements of the policy under consideration.
The two chapters following them illuminate dynamic elements of t he policy-making. They utilize bi-dimensional analyses of the JNR sectionalizing privatization policy making process, looking at the political actors and then the policy process. Chapter IV concentrates on illuminating the configuration of key political and social participants. In
Chapter V, the policy process is examined through a chronological approach, reviewing the issue's development.
This chapter looks at the stages of the policy-making involved in terms of the changing recognition of the issue at stake, the shift of the participants' coalition formation and confrontation, and the arrangement and creation of various public advisory organs.
These two chapters depend primarily on materials available from library research. However, the main materials 55 are provided by 27 interviews held in Japan with JNR-related persons during the period from June to July, 1990. (For details of the interviewing process, see Appendices B, C, and D. ) A major purpose of the interviews was to get fresh information and the inside story on the activities of participants in the policy-making process.
The concluding chapter attempts to provide a comprehensive understanding by synthesizing the analyses of the previous chapters. Based on the conceptual framework outlined in the introductory chapter, the conclusion tries to analytically fit together the findings about the structure and process of the policy dispute. It then looks at the mode of interactions, representation, and influence of actors. By doing this, the conclusion aims to present the meaning and implications of the JNR sectionalizing privatization policy-making process in the contemporary politics and government of Japan.
4. RESEARCH METHODS AND DATA
The major methods utilized in this study are the library research and the in-depth interview. Because this dissertation intends to be a particular policy-making case study, interviews play a crucial part, and provide occasional quotations to enliven a discussion or to illustrate a point. 56
Even though the elite interviewing is one of key methods in this research, it does not provide a complete answer. It has been recognized that interviews pose considerable practical, methodological, and analytical difficulties. For this reason, the elite interview method has to be used in combination with other methods of inquiry.
Thus, this dissertation simultaneously depends on a good amount of materials from libraries for appropriate factual data and some discussions.
4.1. The Use of Library Resources
First of all, to effectively search for library resources on the subject, this study chronologically traced the political process of the JNR reform policy debate. It examined available materials, and organized them following a chronological summary*’. This brief review became a meaningful guideline for the library research, because the
JNR reform policy discussion and formation processes were not linear but were instead extremely complicated, including the rise and fall of various actors' power and perspectives.
In order to understand the details of the process, this study searched for government monographic materials.
A detailed chronological summary of the JNR reform policy-making is provided in Appendix A. 57
officially recorded behavioral patterns of legislators,
written sources from the institutions concerned, and
articles in newspapers and magazines. In addition, the
library research examined government statistical records on
the JNR for various basic figures. They include revenue, an
income (loss) statement, division profitability, investment
patterns, labor productivity, operating expenses, and labor costs of railways. In the policy dispute process, different participants interpreted these statistical data in different ways to support their own arguments for the direction of JNR reform.
However, because the JNR privatization policy-making was done quite recently, secondary written materials and analytical studies from academic fields are not substantial in terms of amount and quality. In this regard, interview materials sometimes provided the substance of the discussion, with relatively little supplementary sources of writing. Thus, information from interviews supplements this research with government documents and other written sources. In this sense, interviews conducted with present and former Japanese officials and JNR-related persons provide important sources. 58
4.2. The In-depth Interview Method
In addition to library research, this dissertation used the in-depth interview method. Interviews were conducted with the persons who participated in or influenced on the JNR reform policy-making directly or indirectly. The interviewing is a way of gaining insights into the intra elite relationship as well as into the substance and process of the policy formulation and implementation by means of creating new source materials for various investigations on the subject.'" In order to understand the extent to which elite participants were part of a network that stretched across different institutions and levels, interview questions were particularly concerned with their interactions.
Thus, interviews focused on collecting accounts of the same events, processes, and policy developments from a variety of viewpoints. Knowledge of the differences and similarities between them, as well as between them and the author, could be useful for not only gaining Insights into the structure and ideology of a policy community**, but also
*". George Moyser and Margaret Wagstaffe, Research Methods for Elite Studies. (London, Allen & Unwin, 1987).
**. In a general term, a policy community indicates the direct involvement of a network of persons and groups in central and local government and elsewhere in policy making and implementation process for policies in substantive fields. The concept of a policy community, therefore, denies the conventional distinction between the government machine 59 for understanding the general environment of the policy.
The key actors that arose during the 7 years of the JNR reform policy formulation process are as follows: the Second
Provisional Commission of Administrative Reform (PCAR or
Rincho), the Second Special Subcommittee and the Fourth
Subcommittee of the PCAR, the JNR Reconstruction Supervisory
Council, the former Prime Minister, Suzuki, the former
Minister of Administrative Management Agency and Prime
Minister, Nakasono, the unyuzoku in the JNR Reconstruction
Subcommittee (Mitsuzuka Subcommittee) under the JNR
Problems' Investigation Committee of the LDP PARC's
Transportation Affairs Section, the Japan National Railways, and opposite political parties, the JNR labor unions, scholars concerned with the JNR affairs, public opinion, and the mass media.
Several persons were chosen from each of the above participating groups for interviews. Because the selection process was not extremely strict, the result was not proportionately representative. In terms of the interview structure, an unstructured or semi-structured interview format was used because this study proposes to learn how differently participants saw the policy-making process and output, and how they subjectively evaluated the circumstances under which the process and output emerged. To and outside pressure groups. In short, a policy community means a somewhat larger group than a subgovernment mentioned previously. 50 a certain degree, the respondents had different priorities and stances on the issue. Therefore, it was desirable to allow them to set the agenda and terms of discussion. The results of the interviews are used elsewhere in this study.
Details of the interview process and questionnaires are given in Appendices B, C, and D. CHAPTER II
ENVIRONMENT
1. INTRODUCTION
For the sake of a balanced understanding of policy making, the previous chapter emphasized on the Importance of both static Institutional arrangements and dynamic operation of participants. This chapter Is concerned with the former component--the environment In which political actors participate regarding the policy Issued. In the JNR reform policy-making, key environmental factors Include short-term economic conditions, mid-term political concerns, and long term political and bureaucratic structure.
All of these environmental aspects are Interrelated.
Under the conservative ruling party and bureaucratic structure, worsening national finances throughout the 1970s led the Japanese government to launch administrative reform
In the 1960s. In this context, the government set up the JNR break-up and privatization policy. Thus, this environment should be understood as the background of the JNR reform policy-making. Each section of this chapter deals with these environmental contents one by one.
61 62
2. ECONOMIC CONDITIONS
2.1. Worsening National Finance
Japan as a backward country at time of the Meiji
Restoration of 1868, from which modernization was started, singlemindedly devoted itself to catching up with the advanced Western countries. The government adapted interventionist policies to overcome the weaknesses as a late comer, and justified them with the premises of protecting and guiding industries. After the Second World
War, the same thought of "catching up" was again applied to the government's exercise of powers in the rebuilding the nation's war-shattered industries. The government intervened heavily in the economy to bring about economic reconstruction, and it was indeed successful. This government role in turn led to interventionist and protectionist policies for rehabilitation of industries. As a result, a closely intertwined government/business relationship, often negatively expressed as "Japan Inc.," was set up. Following this development, administrative machinery was expanded, and the volume of government finance had increased fast.
If the growing scale of government coincided with a balance between expenditures and revenues, there would have been no serious problem. However, government finance 63 expanded at the cost of a growing budget deficit. At the same time, basically inefficient administrative machinery
grew larger and became increasingly unwieldy. Moreover, two events occurred that negatively affected the already deteriorating government finance structure. First, the recession that followed in the wake of the 1973 oil crisis led the already loosely balanced finance to be triggering.
As seen in Table 2.1, the economic growth rate consequently bounced back. And in order to pull the economy out of the recession and to stimulate demand even further, the government refrained from increasing taxes and increased outlays of public works dramatically.
Second, the government began implementing in the early
1970s a policy to raise the standard of the social security system to the level of other advanced countries. From 1975 onward, social security expenditures increased, while economic growth was sluggish. As a result, the government financial condition rapidly worsened. 64
Tmbi* 2.1. Economic Condition# of Jmpmn Before and After "The Oil Crlsle” of 1973.
Year GNP (real) % of change in Rate of growth % of change government expenditure of national bond issued
1969 12. 1 16. 5 14. 7 1970 8. 3 16.4 16. 5 1971 5.3 16.8 29.6 1972 9. 7 24.8 38. 4 1973 5. 3 23.9 26. 8 5-year 8. 1 20. 1 25.2 average
1974 0. 2 29. 2 26.6 1975 3. 6 9. 2 50. 3 1976 5. 1 17. 3 45. 2 1977 5. 3 18.8 43. 0 1978 5. 1 17. 3 33. 0 5 year 3. 8 18. 4 39. 6 average
Source: Kelzai Klkaku Cho (Economic Planning Agency), ed. , Kelzai Yoran Goivu Nananen Ban (Economic Conditions at a Glance) (Tokyo: Okurasho Ineatsu Kyoku, 1962), pp.2-3; Requoted from Ronald J. Hrebenar, The Japanese Party System (1986), p.273.
2.2. Deficit-Financing Budget
In the fiscal year 1974, the degree of dependence of the general account budget on government bond issues was
12.6 % of revenues. The percentage jumped to 29.9 % in 1976 and continued to grow to reach at a peak of 39.6 % in 1979.
As seen in Table 2.2, it was one-third of the total revenue in the fiscal year 1979 budget. To make matters worse, 12% of the budget was paid for debt service. 65
Table 2.2. Ratio of Dependency on Bonde.
Financial A. (%) B. (%) Ratio of year bond reminder Initial Settle Initial Settle to GNP (%)
1974 12.6 11. 3 7. 9 1975 9.4 26. 3 13. 9 9. 9 1976 29.9 29. 9 19. 3 18. 7 13.0 1977 29. 7 34. 0 17.8 21. 6 16. 9 1978 32.0 32. 8 18. 4 18. 6 20.6 1979 39. 6 35. 4 27. 1 22. 4 25. 3 1980 33. 5 32. 7 22. 0 20. 9 29. 3 1981 26.2 27. 4 14. 4 15. 3 32. 3 1982 21.0 30.2 9. 5 18. 9 36. 1 1983 26.5 27. 1 16. 6 16.6 39. 2
A. Ratio of dependency on bond inclusive =
Amount of issue of bonds inclusive
Amount of expenditure of general account
B. Ratio of dependency on deficit bonds =
Amount of issue of deficit bonds
Amount of working expenses in general accounts
Source: Compiled from the Ministry of Finance's data. Financial Statistics of Japan (Tokyo: Ministry of Finance)
Because of this situation, in 1980 the Ministry of
Finance warned that Japanese public finance had became an emergency situation, with one-third of the total revenue met with money raised by national bonds. In order to avoid inflation and maintain both stability of livelihood and economic development, it become absolutely necessary to 66 overcome the habit of depending upon bonds.' As a result, the HOF made an effort to restrict the growth of public spending. Depending upon conventional methods of expenditure control, the HOF set up a schedule by which deficit bond
Issuance would be reduced gradually and terminated by 1985.
The Provisional Commission of Administrative Reform (PCAR)'s enumeration of several measures for expenditure cuts were actually fashioning after these MOF's reform plans.
The deficit In the national finance has been a serious problem since the administration of the late Prime Minister
Ohlra Masayoshi, when their amount outstanding on government bonds reached 43 trillion yen. Approximately 40% of public finance relied on borrowings In the form of government bonds. It was the same as If a household had a 300,000 yen salary, but spent 500,000 yen a month. At the end of fiscal
1980, government bond Issues amounted to become 70.7 trillion yen (about 63 billion dollars), 2.6 times that fiscal year's tax revenues 27.1 trillion yen. Further, they expected government bond Issues to amount to 82 trillion yen by the end of fiscal 1981 (April 1981 - March 1982).
Comparatively, the amount of Japan's bond Issue of 1980 far exceeded the total of 47 billion dollars for Britain,
France, Italy, the United States, and West Germany together.
Not surprisingly. In June of 1983 the national debt passed
‘. Ministry of Finance, Encvclooedia of Public Expenditure (Salshutsu Hyakka), (1980). 67 the 100 trillion yen mark, and according to a Finance
Ministry projection, by April 1984 It would reach 110 trillion yen. This would bring Japan's ratio of outstanding long term government liabilities to GNP to a high 45%, a level matched, among the advanced countries, only by
Britain. By comparison, the ratio was 29% of that of the
United States (1982), 17% of that of West Germany (1981), and 5% of that of France (1983).
2.3. The 3 Ks' Deficit
The government Indebtedness had not appear quite so acutely In the pre oll-crlsls era. In those years, enjoying a high rate of economic growth, the government had the ability to finance Increased public expenditure without confronting major difficulties. Entering a new period of recession, however, the financial situation worsened sharply as a result of the still strong demands for subsidies, social welfare, and defense expenditures. Among others, the
3 Ks' deficits particularly needed balanced reform efforts.
The 3 Ks are the rice subsidy scheme (kome), the Japan
National Railways (JNR: kokutetsu) and the national health service (kokumln kenkohoken). The 3 Ks' problems had been treated as the pronominal causes of national deficits. They were deeply rooted In government policies. Including subsidy distribution. They were also Intertwined with Interest 68 groups' demands. Of the three, the JNR problem is the focus of this study and will be discussed in detail in later chapters. To show specifically how the 3 Ks influence the shaky government financial structure, the following sections focus on the food control system and the national insurance system.
2. 3. 1. Rice Economy"
Among many decisive policy issues in Japan, rice policies have caused substantial conflict over values or claims to power and resources. Recently, the most visible struggle involved a collision of views concerning the purpose and functioning of the food-control system (shokuryo kanri seido) because of an unprecedented abundance of rice.
The issue before the 1960s had been all the time allocated to government control for protecting consumers at the expense of producers. However, since the 1960s, rice farmers
*. With a policy making process approach, studies on the political economy of rice and the agricultural policy process are conducted by M.W. Donnelly and A. Geroge. For a basic understanding of the issue discussed, consult the following analyses. M.W. Donnelly, "Setting the Price of Rice: A Study in Political Decisionmaking,” in T.J. Pempel, ed., Policy Making in Contemporary Japan. (Ithaca, New York: Cornell University Press, 1977), pp.143-200; Donnelly, "The Future of Japanese Agriculture," Pacific Affairs. Vol.53, no.4 (Winter 1980-81), pp. 708-716; and Aurelia George, "The Japanese Farm Lobby and Agricultural Policy-Making," Pacific Affairs. 54:3 (Fall 1984), pp.409-30. For additional commentary, see Kent E. Calder, "Agricultural Policy: The Wax and Wane of Rural Bias," in his Crisis and Compensation: Public Policy and Political Stability in Japan. 1949-1986 (Princeton, New Jersey: Princeton University Press, 1988), chapter 5, pp. 231-273. 69 and agricultural cooperatives have been supported by means of subsidies, administrative privileges. Income security, social welfare, and other economic controls.
In a period of agricultural surplus and rapid
Industrial growth, the government provided with farmers a stable source of Income by controlling high producer prices.
However, many critics raised the Issues of the
Inappropriateness of government Interference In the rice economy. With a decline In demand and surplus production, critics argued that a Indirectly controlled market would work better than an Interference system of government control. On the other hand, farm groups and their political allies opposed any Introduction of competition prompted by an unregulated market. To modify the political market (price fixing) In the direction of economic competition, state officials made their efforts In various levels, but the
Issues of the rice economy have remained a priority on the political agenda.
The Japanese government has been Intervening In the process of setting rice prices throughout the last 50 years. Including the pre-war depression. World War II period. Military Occupation, post-war recovery period, and high Industrial growth era. With variations of government rice policies In different periods, continuity Is found In both political and administrative practice. This Is reflected In the discrepancy between the producer prices and 70 the sales prices to distributors. Specifically, according to the food control law set up in the post-war Constitution, producer prices need to be set at a level that insures the production of rice with consideration to costs of production, other commodity prices, and general economic conditions. And the selling price to distributors is to be set at a level that stabilizes general household expenditures, with consideration to costs of living, other commodity prices, and general economic conditions.* Besides the provisions of the formal law, in order to provide clear direction in reaching a politically viable price decision, the government developed institutional arrangements for issuing durable bonds since the establishment of the LDP.
In a brief review of the rice policy, rice producer prices doubled in the period of 1960-1968 in Japan. In 1969 and 1970, they were temporary frozen, but doubled again in the following seven years. Since 1970, producer prices have exceeded the selling prices to distributors and consumer rice prices. They eventually rose more rapidly than the agricultural parity index and the Bank of Japan whole sale price index. In spite of the controlling measures of the government, producers' prices have not matched the national index in manufacturing. However, they are apparently too high in the production surplus condition. For the sake of
'. Michael Donnelly, "The Future of Japanese Agriculture," Pacific Affairs. 53:4 (Winter 1980-81), pp.708-716. 71 balancing the agrarian sector and the manufacturing sector,
In 1977 the government absorbed about a 5,500 yen loss on every 60 kilos of rice It purchased from cultivators. The total losses, related to rice control and the budget for diversion of paddy fields together, reached 863.9 billion yen, which was 33% of the total budget for the Ministry of
Agriculture, Forests, and Fisheries. At the end of 1970s, agricultural subsidies comprised about 60% of the HAFF's annual budget, which was distributed throughout the rural areas.
There Is one group, the business community, that has exhorted the government to restore market rationality In the rice business through the post-war era. However, the nature of the ongoing relationship between the ruling party and the country side has maintained the long-time Institutionalized conservative agricultural policies. The business sector supports the government's spendlng-cut policy, but has been increasingly critical of Its agricultural policies. In the early 1980s, farming families should have been granted subsidies of over 10 billion dollars. The proportion In the fiscal 1981 budget of such subsidies amounts to a total of
1.5 trillion dollars for 600,000 specialized and 900,000 seml-speclallzed farm houses. However, the business community contends that these supports are too much. It also claims that the government's policy to maintain high prices for such agricultural products as wheat, sugar and silk has 72 weakened the International competitiveness of the Japanese processed food and silk textile industries.
Publicly, the LDP seemed to decide on general cooperation in its attempt to follow the policy of a small government and a strong Japan. However, many LDP Dietmen feared that, though a cut in agricultural subsidies would help to recover the nation's financial health, it may also force them out of power. The heavy electoral dependence on farm sector has been one of fundamental assets of the LDP dominance, and the party is under constant pressure from farm groups. By giving liberal grants and subsidies, the LDP could maintain a solid foundation in rural areas. Indeed, the LDP is supported by 55% to 60% of rural voters, as compared with 20% to 30% of all urban voters.
An argument has emerged recently, however, that the interrelationship between the LDP and rural electorates in
Japan has been weakened. Although it is quite convincing in some ways, the situation is far from indicating that the LDP could freely set up agrarian policies. It still pay due attention to the farmers' support in election times and to their reactions to other related agricultural policies launched by the government.* Because of mutual interests.
♦. In many studies (Stockwin, 1982; Tsurutani, 1977; Benjamin and Ori, 1981), it was indicated that Japan moved from an economic system in which roughly half its population was initially engaged in agriculture and fishing in the 1950s to a period of commercial and industrial growth in an extraordinarily rapid phase in the 1960s. Then, it entered a post-industrial, information age, high technology society 73 and despite the doubts and critics on the government agricultural subsidy system and the food control system, any politically effective measure could not be taken.
Eventually, in the early 1980s, administrative reform focused on the heavy burden of agricultural subsidies on the national budget. In order to correct them, the government tried to effect appropriate measures by redirecting government agrarian policies.
2.3.2. Welfare Policy”
Increasing the portion of social security spending also brought critical reactions. In 1973, the Japanese government said that the year would be "Year One of the Welfare Era"
(Fukushi gannen). The purpose was to achieve final levels of welfare provision at least equal to those in the other industrialized Western countries. Indeed, the achievement in
with over 50 % of its working population engaged in the service sector. Definitely, present Japan is not the same as it was in the past. However, it has been agreed that, despite of this socio-economic change, the LDP has continued to dominate the political system.
Commentary extracted from Martin Collick, "Social Policy: Pressures and Responses," in J.A.A.Stockwin, Dynamic and Immobilist Politics in Japan (Oxford: Macmillan Press, 1988) pp.205-236; Kent E. Calder, Crisis and Compensation: Public Policy and Political Stability in Japan. 1949-1986 (Princeton, New Jersey: Princeton University Press, 1988), Chapter 8, "Welfare Policy: Strategic Benevolence," pp.349- 375; and Randals Johns, "The Economic Implications of Japan's Aging Population," Asian Survey. Vol.XXVIII, no.9, (September 1988), pp 958-969. 7 4 the years 1973 and 1974 was quite visible.* One even claimed later in the 1970s that Japan vas now a "Welfare
Superpower," which had not only equalled but actually outstripped other developed industrial nations. ^ Eventually, massive change occurred in the pension scheme. While the national pension benefit was raised proportionately, the employees pension almost doubled, being equal to about 45% of the average employee's income. In addition, equally significant change occurred with the introduction of indexation, which brought about a level of compensation that pension recipients could live on. Due to political pressure, from 1974 on all pensions were to be raised annually to keep pace with inflation. Politically, benefits had to increase annually, even through the Consumer Price Index had risen by less than 50% over the previous 12 months'.
A further change was introduced in the field of medical care. Under the National Health Insurance System of 1973, the proportion of a dependent's medical expenses defrayed by insurance was increased to 70% from the previous 50%, and an annual ceiling was placed on the amount that a patient would
Host statistical figures appeared in this section come from Aaina and Social Expenditure in the Maior Industrial Countries. 1980-2025 (Washington: International Monetary Fund, 1986).
. Nakagawa Yasuhiro, "Japan: The Welfare Superpower," Journal of Japanese Studies. 5:1 (Winter 1979), pp.5-52.
". Martin Collick, "Social Policy: Pressure and Responses," In J. A.A. Stockwin, ed., Dynamic and Immobilist Politics in Japan (1988), p.215. 75
pay.
Another innovation was the Introduction of free medical
care for the aged.* Free medical care for the aged was first
introduced by the progressive Minobe administration in
metropolitan Tokyo in 1969. The experiment of the Tokyo
local government became so popular that the central
government could do nothing but to bring in a similar
system. Until 1972, it had spread to almost all prefectures
and was nationally implemented in 1973. This measure was a
typical example of so-called "pre-empty welfare" (sokidori
fukushi) initiated by local governments in concert with an
underprepared central government. In the following decade,
because of the impact of the increasing financial burden,
successive governments were to regret its introduction.
Incidentally, just when Japan's welfare state was on the
point of achieving levels of provision at least equal to
most of industrially advanced countries, the economic
situation changed dramatically due to the first oil shock in
1973. It seems ironic that, when the government had
committed itself to the extensive as well as the expensive
changes for increasing welfare, rapid economic growth had to
come to an end. When more adequate social provision was
needed, economic crisis took place. In fact, Japan's gross
*. This issue is treated in some detail in John C. Campbell, "The Old People Boom and Japanese Policy Making," Journal of Japanese Studies. Vol.5, no. 2 (Summer 1979), pp.321- 35. ^ 76 national product experienced a negative growth In fiscal
1974 because the welfare system required more financial support.
Needless to say, the fall In the rate of economic growth put Increased burdens on the social security system.
During the period of rapid economic growth, the levels of unemployment and the number of people receiving public assistance were kept at fairly low levels. However, In 1975, the number of registered unemployed rose to 1. 1 million, over twice as many as the 500,000 In the early 1960s, with signs that It would continue to rise. In 1985, unemployment stood at about 1.5 million. Though low by any International comparison. It was 3 times the level of the economic boom years*®.
The problems of the social security system by no means resulted only from the decreasing rate of economic growth.
Another Issue addressed the change of the age structure In the society, the rapid aging of the country's population.
Changes In both birth rate and life expectancy were factors leading to the development of an aging society. A key
Indication of an aging society Is a relatively smaller population of people at a productive age (approximately between the ages of 15 and 65) who will have to support an
Increasing number of dependent people (aged 65 or over). The dependent age group accounted for only 5% of the population
Ibid., pp. 216-217. 7 7
in 1980. However, it is estimated that the number of the
dependent people will have reached over 14% by the year
2000, and nearly 19% by the year 2020. In the middle of
1970s, seven productive-aged people supported one dependent
person, but by the year 2000, this ratio will have increased
to just over 4:1, and by the year 2015, 3:1. The ratio expected is expected to remain until the middle of the twenty-first century* *.
Eventually, government finance deteriorated due to the
increasing burden of the social security system, the dramatic fall in the rate of economic growth, and the double figure inflation which accompanied it. The government had begun to rely increasingly on bonds to finance its budget deficit. Concern arose that the cumulative bond issue would put the government's overall economic policy in jeopardy, since the bonds were becoming increasingly more difficult for the financial markets to absorb without an increase in interest rates. Burdens on the system were inescapably growing quite rapidly, but the resources were not yet available. An obvious alternative was to raise the relatively low level of Japan's corporate and personal taxes. However, this option was regarded as politically impossible since the government's backers in the business community did not support it.
* *. Paul S. Kim, Japan's Civil Service System: Its Structure. Personnel. and Politics (Westport, Connecticut: Greenwood Press, 1988), pp.51-64. 78
From 1975 on, Increasingly insistent demands came from business circles and the political Right to end discriminate spending on welfare and to call for a proper balance between benefits and contributions. The course chosen was the cutting of public expenditure. The campaign for administrative reform, which has been regarded as the instrument of revolutionary change in Japanese politics and society, began as nothing more than an effort to meet these requests aptly through cost-cutting measures.
The PCAR pressed for launching a drastic change of the welfare system as a whole. In particular, Doko Toahio, the chairman of the PCAR, made public pronouncements for the need for reform of the system.** The PCAR's initial report, issued in July, 1981, reflected an entirely negative attitude toward social security. Its tone was amplified by such terms as "the respect for the habit of individual responsibility" and "the encouragement of self-reliance and self-help." Welfare provision was to be restricted to those genuinely in need of relief. In presenting it, Doko made no secret of his irritation at the government reluctance to take vital steps.
The report called for the unification of the various
**. Doko Toshio's views on the administrative reform as well as the health insurance system appear in Doko Toshio, "Konomama Ittara Nihon wa Hasanda (If We Go On Like This, Japan Will Be Bankrupt.)," Gendai (July 1981) pp.88-94. It is translated, in an abridged form, as "My View on Reform," Japan Echo. Vol.8, no.3 (1981) pp.29-34. 79
pension's schemes into a single system, and virtually
demanded concrete, long-term proposals from the government
by the end of 1983.* * The report was immediately accepted,
and the LDP agreed in principle to a complete
reorganization, to be completed by 1995. However, the
welfare lobby and the political Left condemned the report as
a return to nineteenth century views of social security. The
Ministry of Health and Welfare was really panicked since it
had apparently not anticipated quite such a vehement
denunciation of the reform.
In fact, the course of political argument on the future
of the social security system has depicted exactly a
straightforward struggle between the LDP and business
interests on the one hand, and the opposition parties and
labor forces on the other. While the former group insist on
a search for proper balance, the latter supports the
persistent development of the social security system. With
regard to the Japanese welfare policy during the time period
between 1973 and 1985, when the social security system, as
one of the 3 Ks, was undergoing the hot debate relating to
the prevailing administrative reform, two interesting but
seemingly contradictory observations can be drawn.
The first is that the struggles over social policy
during that period seem to follow a sort of pendulum swing.
‘*. The text of the report appear in Asahi Shimbun. July 11, 1981, being titled, Dainiji Rinji Gyosei Chosakai, "Dai Ichiji Toshin," (First Report) (July 1981). 80
It can be expressed "as part of a somewhat long drawn-out
reverse course, away from the welfare ideology of the post
war years and toward a re-establishment of the values which
held sway until the end of the Second World War."'*
Although social security is now accepted as an integral part
of Japanese life in general, the events of 1980s provide
disturbing evidence of progress. Given the circumstances of
financial stringency since late 1970s, the state provision
of social welfare had been trimmed back from the improved,
though still modest, levels attained previously. Evidently,
the rhetoric of the early 1980s, following administrative
reform, bears strong resemblance to that of the century-old
ideology of business elites. Therefore, interestingly
enough, traditional values and attitudes have been
persistent in both the structure and the process of policy
making in this area.
The second covers a somewhat broader aspect of the
whole administrative reform exercise. Although there has
been unanimous support in the business community, to which
the LDP is virtually regarded as totally subservient, the
reform process has not proceeded as smoothly as expected. In other words, the governing party, the LDP, has not been able to put through reforms with the speed that the PCAR committees have demanded, even though the overall effects of
'*. Martin Collick, "Social Policy: Pressures and Responses," (1988), p. 232. 81 the administrative reform popularly Indicate success.
It Implies that the diversity of Interests within the
LDP, the Opposition within the Diet and the Involvement of a variety of other actors, have combined to produce a very complex scenario. In fact, the Instability of the coalition of factions within the LDP renders the government highly sensitive to pressures from Diet members, who are In turn aware of shifts In opinion on the parts of their constituents. This pressure is particularly heavy within the
Diet because of the frequently held elections. The diversity of ministerial attitude on policy also marks policy controversy highly complex. For Instance, In social policy fields, the relationships of the Ministry of Health and
Welfare, which receives a larger share of the budget and has greater Influence, with Interest groups are different from those of other ministries concerning various policies. In the postwar controversy over the shape of the Japanese welfare state, the responsible ministry often adopts those policies related most closely to the political Left, which has a welfare orientation. Thus, Ironically, It often serves as a powerful force working against the central government's hostile pressures.
An example of this relationship Is found In the closeness between the ministry and the Special Security .
System Commission that has consistently exerted Its
Independence from the government In forming Its opinions. 82
Because it is an exceptional case compared to its counterparts in the fields of economic and financial policy, its independent attitude and intimate relationship with the ministry are notable. Therefore, under the continuing dominance of the LDP in Japanese politics, and because of a variety of influences on the decision making process, it is very often similar to countries where an alternation of parties in power is the norm. Thus, the prospectus for the social security system in Japan is that the accomplishments of the past years will unlikely be disrupted as long as economic prosperity and a relatively free and democratic political system continue.
Given the financial burden from the expansion of social security system and other 3 Ks' deficit, either of two paths could be taken: increasing taxes or making major cuts in expenditures merely to tide the country over throughout the following years. Japanese government's choice was the latter.
3. MID-TERM POLITICAL CONCERNS
3. 1. DIRECTION OF CHANGE
3. 1.1. Trend to the Small Government
In the 1980s most advanced industrial countries have fallen prey to the twin evils of "stagflation." One is 83
sluggish economic growth; the other Is splrallng prices. The
conservative administrations of Margaret Thatcher in Britain
and Ronald Reagan In the United States have made efforts to
reduce government spending and revitalize their market
economies. As a result, there Is a common undercurrent of
thought that the role of government In public affairs needs
major reconsideration. If the nation Is to deal effectively with problems confronting It now and In the future, such as growing Internationalization, an aging population, and an
Increasing reliance on Information, some argue that administrative reform Is necessary.
Considering this situation, economists have begun a critical reappraisal of Keynesian theory that Is reflected on the political level by the economic policies adopted previously. In The End of Lalssez-falre. John Maynard Keynes
(1883-1946) argued that the theory of natural harmony of
Interest, the basic premise of the free market economy theory, no longer fit the changing circumstance of the modern world. That was about a century and a half after the publication of Adam Smith (17237-1790)'s Wealth of Nations
(1776), which Is often cited as the economists' bible, supporting the market economy system. In 1936, a decade after his above mentioned book appeared, Keynes elaborated his perspective Into a fully developed economic theory.* =
‘*. His most Important work. The General Theory of Employment. Interest and Money (1935-36), adyocated a remedy for economic recession based on a government-sponsored 84
After ell, Franklin D. Roosevelt's New Deal was launched based on Keynesian economic theory. In fact, the postwar era, the most industrially advanced countries developed stimulative fiscal and monetary policies as well as welfare policies following Keynesian idea. The consequences of Keynesian economic were increasing government intervention in economic activities, expansion of the government finance scale, and an inevitable growth of tax burden on people.
Despite the various contributions of Keynesian policies, political systems rooted in them have developed many problems. Buchanan and Wagner, in their book Democracy in Deficit; The Political Leoacv of Lord Kevnes (1978), argue that the representative system of democracy, in which politicians are concerned with satisfying the demands of voters, has a major shortcoming. Politicians are always concerned with voter satisfaction and tend to promote increase of public expenditure. According to them, Keynesian financial policies adopted in the past in such political systems have not in fact always been based on the logic of
Keynes' theoretical formulations. They conclude that in order to solve these problems, the government should
policy of full employment. In this work, his revolutionary economic theories (Keynesian economics) on the causes of prolonged unemployment are thoroughly discussed. The New Encyclopedia Britanica (1988), Vol.6. pp.823-825, and Collier's Encyclopedia (1987), Vol.14. pp.59-61. 85 restructure Itself to be smaller. ' * Milton Friedman also claims that Keynesian policies need to be modified along the change of the world economy. * Recent public policies of
President Reagan in the United States and Prime Minister
Thatcher in the United Kingdom were based upon this perspective. In order to solve the spin-offs from the expansion policy, the industrially advanced countries switched their policy direction to aiming at reducing the scale of government.
3.1.2. Stagnation of Pluralist Politics
Under the Keynsian economic and government finance policies, bonds are issued to initiate public investment or create Jobs at the time of recession. They are then recalled when the economy peaks. In reality, however, the bonds issued could not stop the public investment nor cut off subsidies used to stimulate the economy. This happened because subsidies to a specific area or industry were often used by the existing political system in forming a voting organization to elect certain politicians, and once the politicians became Diet members, they protected those subsidies in the legislature. As a result, the Keynesian
* *. James M. Buchanan, John Burton, and Richard E. Wagner, The Consequences of Mr. Kevnes. (London: Institute of Economic Affairs, 1978).
* ^. Milton Friedamn, Free to Choose: A Personal Statement. (New York: Harcourt Brace Jovanovich, 1980). 8 6 economic theory has, as occasion, been adopted In political affairs to positively expand the sphere of political sector.
Consequently, the prime place of politics, the National
Diet, has been criticized for losing sight of Its ultimate purpose and for being transformed Into a place for the members to exploit, or pork-barrel, as much as they could.
Thus, this problem of representative democracy revolving around government subsidies surfaced not just In Western countries, but In Japan, too. It can be expressed as
"stagnation of pluralistic politics."'" Muramatsu explained this phenomenon with the term "positive government school,"'* and the political trends of the 1970s are well captured by these terms.
3.1.3. Positive Government
The posltlve-government school advocates a multidimensional political process centered on the legislature while condoning government Intervention In society. Posltlve-government thinking sees the people as the starting point of policy formulations. It differs from the bureaucracy-first perspective, which puts the state foremost, being justified by the high economic growth.
S. Beer, "Political Overload and Federalism," Policy. No.10 (Fall 1977); Recited from Sato and Matsuzakl, Jlmlnto Selken (1986), p.100.
Muramatsu Mlchlo, " Administrative Reform In a Pluralist Political System," Japan Echo. 10:3 (1983), pp.30- 39. 87
Because of its pro-popular orientation, the positive
government has gained the approval of liberals. After it has
incorporated welfare-state ideology applying Keynesian tools
to adjust the business cycle and building up a stock of public goods, the positive-government school eventually brings leftist political forces within its fold, too.
Whatever the rhetoric, it thus becomes "a philosophy of administration with no real opponents."**
While upholding the principle of individual responsibility, the positive-government school at the same time affirms that the state should exercise control over certain affairs affecting the lives of citizens and the management of society. It is synonymous with the welfare state in the field of social security and other welfare measures. In the political realm, it is dependent on the firm establishment of universal suffrage and operates by means of democratic procedures. Its evident result is a ever-increasing political realm in society. Tendencies toward the positive government had been a general global trend in the 1970s and before.
3.1.4. Conservative Critics
At first, the positive-government philosophy itself received no significant opposition. However, as the
* *. Muramatsu Michio, "Administrative Reform in a Pluralist Political System," (1983), p.32. 68 environment in which key political actors operated changed in the 1970s, the accepted social norms under which they controlled individuals also changed. Thus, many doubts about the growing scale of government began to be heard during the
1970s. Co-written by Samuel P.Huntington, Michel Crozier, and Watanuki Joji, The Crisis of Democracy (1975) was one convincing presentation of some of the problems that accompanied the positive government.**
Huntington discusses the major problems of governability in the United States and posits the thesis that the advancement of democracy necessarily undermines authority in all forms, including that of the government and the family.•• Democratic societies see an ever greater number of people becoming involved in politics, all with a growing list of demands. Such a situation requires that the government shoulder too much burden and eventually lead to the government vulnerable. The weakened government is unable to turn down these demands, so expenditures increase without a corresponding rise in taxes. As a result, deficit financing and a spiraling national debt become pervasive.
More often than not, the government expansion, to a large
* *. Michael Crozier, Samuel Huntington and Watanuki Joji, The Crisis of Democracy. (New York: New York University Press, 1975).
See Michael Crozier, Samuel Huntington, and Joji Watakuni, The Crisis of Democracv. (New York: New York University Press, 1975), Chapter III "The United States," pp.59-118. 89 extent, results not from Keynsian spending policies but from an endless accumulation of modest funding requests, even
Including some for unusual purposes.*' This vas a common atmosphere In most advanced democratic countries at that time.
In the same book above, Watanuki, observing the political context created In Japan In the early 1970s, points out that, though the problems In Japan are not yet extreme, the trends described by Huntington have begun.* *
What was happening In other developed countries has apparently occurred and developed throughout 1970s In Japan as well.
The Japanese people also became familiar with election procedures and lobbying techniques after World War II. They learned to use the political process to satisfy their desires. From that time on, a political structure encouraging expansion of government organs and outlays was begun. One particularly noticeable phenomenon Is the shift from bureaucracy-dominant forces to those with a political rationale giving high priority to public demands In operating the state administrative machinery. Many cases.
Including the food control system, construction, and transportation, show the transition from the previous dependence on the bureaucracy control to the operation of
•*. Ibid., pp.59-118.
* Ibid., Chapter IV "Japan," pp.119-155. 90 the political lobby by the stripping of the administrative rationale.
Under such an atmosphere, worthy of attention is the increasing request for massive subsidies and appropriations from the government by interest sectors. The election system, in this situation, is often used as the midwife of subsidies."* Interest groups frequently maneuver power over elections. The structure of politics and government ultimately reflect the multidimensional character of society. Interest group politics revolves around the government's appropriations and subsidies, including the 3
K s : the JNR, rice-price supports, and health insurance.
3. 2. New Thought
In order to cope with these problems, the Western governments launched conservative administrative reforms: budget curtailment and workforce control. This conservative phenomenon should be understood in the global context. Since the latter half of the 1970s, conservatism has spread throughout the advanced industrial nations. After the oil
"* As one of such examples is found in the construction of new lines in the field of transportation. The role of elections as a midwife for the appropriations of the local lines' construction is explained in Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku: Kosha Kara Minei e (The JNR Reform: From Public Corporation to Privatization) (Tokyo: Asahi Shimbunsha Chosa Kenkyu Sitsu, 1982), p. 53. 91 crises, the worldwide economic trend slowed down. The heyday of high economic growth was over. However, the lives of most people became better in an affluent society that guarantees a certain level of social benefits. This conservative trend was accompanied by a disillusionment with socialism, which has long been the most definitive setback for anti- capitalistic idealism. Such a conservative mood led the advanced Western governments to try administrative reform.
They reevaluated the values of the big government, the welfare state or the positive state, and moved toward searching for a new philosophy.•‘
This changing trend of thought was accompanied by the rise of a new economic philosophy: neoliberalism"?. In specific, neoliberalism consists of privatization and deregulation in the level of public policy articulation. In the 1980s, privatization and deregulation have, in fact, formed a global trend, not only in the advanced countries, but also in developing countries. Even the USSR and the East
•*. Muramatsu Michio, "Gyosei no Gaien (The Outer Garden of Administration)," Jurisuto. no. 29 (Special Issue) (January 1983), pp. 36-42.
•?. The original doctrine of liberalism in politics is that constitutions, laws and political proposals should promote individual liberty based on the exercise of rational will. This definition is ambiguous and abstract, however, as a great variety of conflicting views have culminated in the title "liberalism." Such confusion is deepened when any modifying word is put before the original term. Nevertheless, it is not discussed precisely here for the lack of space. For a sketchy understanding, see Encyclopedia America. (1989), Vol.17, pp.294-297. 92
European countries have taken a ride in these currents. Both
.deregulation and privatization have become so familiar in
Japan that they are commonly used in the daily life. Efforts
in their favor are being made in various areas as an
important task of the government. In fact, privatization and
deregulation were the most important promoting drives of the
recent administrative reform.
A restrictive definition of privatization denotes
transfer of governmental business to the private sector.
Strictly, privatization means the permanent transferring of
service or goods production, activities previously carried
out by public service bureaucracies, to private firms or to
other forms of non-public organization, such as voluntary
groups.** By contrast, a broad sense of privatization
embraces the following points. First, it includes
denationalization, namely the policy of transferring
statutory ownership from public monopoly to private sector,
or, from dependence on tax payers to stock holders through
listing stocks. Secondly, it means liberalization or
deregulation, referring to the policy of enhancing
competitiveness by removing the industrial-entry barrier
while maintaining the monopolistic public ownership.
Thirdly, it connotes private-initiative policy or the
contracting-out of public services to the private sector. In
* * Patrick Dunleavy, "Explaining the Privatization Boom: Public Choice Versus Radical Approaches," Public Administration. Vol.64 (Spring 1986), pp. 13-34. 93 these senses, although there is no legal definition, it is safe to say that the terms of privatization and deregulation differ not in kind, but in degree.••
Under this trend, Japan took administrative reform measures, as well. They were used for both solving the government financial structure and adapting to society's changing needs. In the early 1980s, the Japanese government created the PCAR following the formation of a new, stable conservative system under the LDP's full control. The PCAR intended to deal with what one former PCAR member called the
"failure of government" or "non-governability.The primary purpose was to reduce national spending because the government budget was in trouble. Main promoters of its formation included Prime Minister Suzuki, the treasury staff, the head of the Administrative Management Agency
Nakasone and other business representatives. Although each of them had different interests, administrative-financial
•*. However, some critics of this argument present a different view on the definition of privatization. For instance, P. Dunleavy claims that he sees no analytic point whatsoever in fitting the label privatization to a range of other changes, such as cutting down the scope of public policy responsibilities, selling state-held equities in corporations, selling off public capital assets to finance revenue spending, or encouraging new private sector initiatives. For him, they have no theoretical or empirical inter-connections with each other or with contracting-out. He claims, however, that they are customarily grouped together for (conservative) ideological reasons. See P.Dunleavy (1986).
•*. Kumon Shumpei, "Japan Faces Its Future: Political Economics of Its Administrative Reform," Journal of Japanese Studies. 10:1 (1984), p.153. 9 4 reform'* seemed to all of them the biggest political Issue of the time. As public demands on political performance of the government were Increasing and diversifying, the government worried that the dissatisfied public, being suspicious of the system's ability, might move to even greater antagonism toward the system, which they saw as not benefiting them.
Meanwhile, Japanese administrative reform was stimulated by the Intertwining effects of domestic response to the outside (the global policy environment). One close observers says as follows:
. ..the appearance of a new president In the U. S. , with his grandiose plan to revitalize the American economy by applying the new theory of Reaganomics, greatly stimulated the Imagination of the Japanese people and brought out their competitiveness. In other words, the Japanese were captured by the "If the U.S. can, why can't Japan” psychology. I think this explains the reason why the administrative reform cyclone suddenly formed In Japan from late 1980 to early 1981.'*
''. In fact, what Is called administrative reform means in most circumstances of 1980s' Japan both administrative and financial reform. Although just administrative reform has been referred to. It specifically Implies administrative and financial reform In this study.
'•. Kumon Shumpei, "Japan Faces Its Future: Political Economics of Its Administrative Reform," Journal of Japanese Studies. 10:1, pp.153. 95
In addition to this psychological dimension, there were real concerns about avoiding the so-called advanced country disease. Based upon a common-sense notion that Japan should be careful not to contract the disease peculiar to advanced countries, concerned persons discussed the fact that the share of government expenditures In the national Income should remain well below 50%, about 45% to 40%. Although
Japan's figure was considerably below the level In European countries, about 50%, Japan had already reached around 35%
In the beginning of 1980s. According to official estimation.
If Japan Is to maintain Its present system of public pensions, given the maturlzatlon of the system and the aging of the population, the government's share In the national
Income will surpass the 50% level by the year 2000, and come close to 60% by 2010, even though the government refrains from adopting any new policies leading to major expenditure Increases. In the early 1980s, the Second PCAR embarked under these provisions, following the precedent of the First PCAR of 20 years earlier.
3.3. Administrative Reform History In Japan
Before discussing the recent administrative reform trials. It Is necessary to comprehend Japanese administrative reform history. The post-war administrative reform dates back to the restructuring of government 9 6 immediately after World War II**. When Japan regained its independence with the end of the occupation, the cabinets of
Yoshida Shigeru and Hatoyama Ichiro proposed administrative reform, being conscious of the need for the efficient increase of administrative structure.
Following the American-led administrative reform's emphasis on scientific management and bureaucratic efficiency,** the National Personnel Authority was created, charged with ensuring conformity with these goals of efficiency and neutrality through the National Public
Service Law. Even earlier, the Japanese government set up the Administrative Research Bureau, which was replaced by the Administrative Management Agency and then by the
Management and Coordination Agency (somucho) in 1984. It has played a significant role in administrative reforms.
**. For 7 years after World War II, the SCAP (Supreme Commander for the Allied Powers) carried out a comprehensive reform of Japan's civil service system. Apparent exemplar products of the American-sponsored reforms are the adoption of the National Public Service Law in 1947 and the establishment of the National Personnel Authority in 1948, both of which have been the object of controversy and discontent. An elaborated story about this experiment in planned political change by Americans is well provided in the chapter, "Civil-Service Reform under the American Occupation,” of Koh (1989), pp. 32-66.
* *. To this matter, one scholar claims that Japanese history of administrative reform trials can be briefly characterized as responding to the calling for the Americanization ' of public administration. See Kumon Shumpei, (1984), pp.145-146. 97
3.3.1. The Administrative Management Agency** (The Management and Coordination Agency)
Among the collection of the Prime Minister's agencies, the AMA (the present Management and Coordination Agency) represents the meat-and-potatoes level of public administration. The responsibilities of the agency Include the planning and development of basic administrative systems and procedures; administration of statutes defining the organizational structure of ministries and agencies; controlling organizational change and the staffing levels of ministries within the statutory defined celling; exerting similar control of the structure and staffing of government corporations; gathering and analyzing important statistical
Information, data bases, survey methods, and statistical reports; data processing and office automation; and
Inspections of functional evaluations of administrative systems by a group of field offices conducting audits and
Investigation both the prefectural and municipal levels.
Because of Its affiliation with the Prime Minister's
Office, the AMA's reputation Is highly regarded In the
* * An Introductory descriptive analysis on the Administrative Management Agency Is available In Kiyoakl Tsujl, ed. (1984). The book explains the role of administrative Inspection and the staff number control on pp. 173-184 and pp.71-86. In addition, administrative counseling and data processing In government which are also under the charge of the agency, are discussed on pp. 229-236 and pp. 237-252 respectively. Although far from being a political analysis, the study Is full of valuable factual Information and data on the overall aspects of public administration In Japan. 9 8 national government. Since the Japanese government has
increasingly fallen prey to the budget-deficit ills, this
Agency has taken on reform responsibilities. Recent Prime
Ministers have backed the Agency's authority, and its status has consequently risen in prestige. It has been thought that the position of as its Direct-General is not bad for rising politicians. In fact, the former Prime Minister Nakasone
Yasuhiro served as its Direct-General for 2.3 years'*. He could accumulate experiences within its functions which do not fit within the range of other major ministries. Since then, he has become a key figure in the major administrative reform program, which was one of the staples of his administration. The position provides for top careerists a chance to master some of the technical intricacies of the government management.
In recent years, this agency was changed, increasing administrative control over the size of staffs, thus ensuring rational and efficient administration. The administrative process of controlling the workforce size
illustrates the interplay between the Prime Minister Office and the rest of government. In Japanese government, the number of regular service national civil servants (ippan
'*. Nakasone Yasuhiro's previous cabinet portfolios cover the Minister of Transportation for 1 year, the Direct- General of the defense Agency for 1.5 years, the Minister of the MITI for 2.5 years, and the Director-General of the Administrative Management Agency for 2.3 years before accepting the primiership in 1982. 9 9
■hoku kokka komuin)'? Increased drastically from the end of
World War II until the mid-1970s, from 643,057 in 1955 to
867,172 in 1981, although it has gradually decreased to
858,359 in 1984; 847,004 in 1986; and 844,290 in 1987»•.
This expansion was driven by the need for public programs and administrative affairs accompanied by economic growth and prosperity. However, feeling uneasy with this growth, the Japanese government reached a consensus even before the energy crisis (the early 1970s) that government expansion had to be constrained.
» ^. The Japanese public employees (komuin) are categorized into the general service (ippan shoku) and the special service (tokubetsu shoku). The former includes those governed by the regular compensation law (43.1% of the total national public employees), those governed by the special compensation law (28.7%) and public prosecutors (0.2 %). The latter, comprising about 28.0% of the total, encompasses such diverse positions as the prime minister, ministers of state, commissioners of the National Personnel Authority, deputy director general of the cabinet secretariat, director general of the cabinet legislation bureau, parliamentary vice-ministers, judges and other employees of the courts, members of the Diet and their secretaries, and employees of the Defense Agency. See Jinji-in, Komuin Hakusho. (Tokyo: Okurasho, Insatsukyoku, 1988). Recited from B.C.Koh, Japan's Administrative Elite. (Berkeley: University of California Press, 1989), pp. 63-72.
»•. See Paul S. Kim, Japan's Civil Service System: Its Structure. Personnel. and Politics. (Westport, Connecticut: Greenwood Press, Inc., 1988), p.130; and B.C.Koh, Japan's Administrative Elite. (Berkeley: University of California Press, 1989), p. 63. 100
3.3.2. Work Force Control
In 1949 and again in 1951, the government called for the elimination of government bureaus and employees by over
300,000. It set a legal limit on the total number of government personnel that could be employed by each agency and ministry. Personnel was curtailed especially in the agencies employing the largest numbers of government officials, such as the Japan National Railways, the Ministry of Postal Services, and the Ministry of Telecommunications, along with those bureaus that were the hotbeds of public sector union activity. After struggling with administrative controls for several years, in 1969 the Diet enacted the
Extraordinary Law Concerning the Fixed Number of Personnel of Administrative Organizations (i.e., the Total Staff
Number Law). In order to reduce the existing government labor force, this law intended to put a ceiling on the total population of civil servants in the regular ministries and agencies of the national government.
In conducting a series of personnel reduction plans, the Administrative Management Agency led a "zero-sum" game among the ministerial establishment. This meant that personnel reduction plans were in effect for all government ministries, but any permitted increase of the labor force in any organization had to be matched by a comparable decreases 101 in others* * .
Under this "scrap and build strategy," a new bureau- level organization can be created only if another bureau is eliminated. Since increasing staffs in any new entity has to be done at the cost of reducing work force in existing organizations, a strong counterforce works against the creation of new organizations. Consequently, new programs or functions tend to be placed within existing ministries or agencies, so the total number of bureaus has been stabilized at about 114 for several years. At the same time, in order to keep up with the increasing work burden, ministries made use of labor-saving office automation equipment, relied heavily on the cooperation of the private sector for certain works, and attempted to moderate the creation of regulations and licensing activities. However, implementation of the work force control policy was rarely easy. First, the enactment of the Total Staff Number Law caused inflexibility in the administrative operation of the bureaucracy in following years. Second, the rigid legal limit applied to the government's regular ministries and bureaus did not
•*. For instance, the personnel increase of the Ministry of Education by almost 28,000 for building up nationally operated universities was compensated for by the reduction of work force in the Ministry of Agriculture, Forestry, and Fisheries by 23, 000 and in the Ministry of Posts and Telecommunications by more than 9, 000. See C.F. Bingman, Japanese Government Leadership and Management. (New York: St. Martin's Press, 1989), p.29; and Tsuji Kiyoaki, ed. , Public Administration in Japan. (Tokyo: University of Tokyo Press, 1984), pp.71-86. 102 strictly applied to the public corporations, such as JNR,
NTTPC, and JTSPC, which had also been created by the government. The total number of these corporations' personnel was counted at about 935,000, which was three- fourths as large as the population of the regular ministries. (The total number of the national public employees in 1987 was counted as 1,172,797.
3. 3. 3 The First Provisional Commission of Administrative Reform
Further reform attempts followed; notably the one orchestrated in November of 1961 by the First Provisional
Commission of Administrative Reform, which was headed by
Sato Kiichiro (the Chairman of the Mitsui Bank). The underlying reason for establishing the First PCAR laid in the Ikeda (Hayato) cabinet's aspirations. Following the anti-security treaty riots of 1960, Ikeda's government tried to turn public attention from political to economic issues.
Given this situation, his 10-year income doubling plan*‘
(see table 2.3) was structured by the Economic Planning
Agency. Giving private business a freer rein, the government
*®. Tsuji Kiyoaki, ed., Public Administration in Japan. (Tokyo: University of Tokyo Press, 1984), p.72.
* *. Responding to different problems in a variety of situations, Japanese Prime Ministers have designated their own economic or political plans with various versions. See Table 2. 3. 103
Inaugurated several administrative reform programs, such as streamlining the administrative apparatus and devising a more responsive administrative system.
Patterned after the Hoover Commission in the United
States, the Commission was established with the support of all parties except the Japan Communist Party. For 3 years, at a cost of 110 million yen, the council was established with 138 members, specialists, investigators and administrators. In September, 1964, after 2 years and 7 months of study, the Councilpresented its final recommendations to the government, covering 16 major areas of reform. They consisted of a variety of sweeping measures, including the redistribution of administrative work, the consolidation or abolition of various administrative entities, and the streamlining of public corporations and other government-affiliated organizations. High hopes were held of the Sato reform, but the record showed that accomplishing financial and administrative reform was far from easy.♦•
**. See T.J.Pempel, Policy and Politics in Japan; Creative Conservatism. (Philadelphia: Temple University Press, 1982). 104
Table 2.3. Major Issues in Japanese Politics and LDP Policy Responses.
Year Major Issue Cabinet Party Platform
1958 Kishi Increase defense expenditure Clean and fair politics
1960 Following Ikeda Open and consensual revision of parliamentary politics US-Japan Implementation of revised Security Treaty Security Treaty and after turmoils subsided
1963 Rapid Ikeda Income doubling policy economic Making a New Japan growth
1967 Black Sato Rectification of politics Mist scandal Stabilized consumer prices
1969 Okinawa Sato Returning Okinawa reversion Non-nuclear politics
1972 Sino-Japanese Tanaka Remaking the Japanese Peace Accord Archipelago Increase welfare policies
1976 Lockheed Miki Clean politics affair Factions dissolved
1979 Ohira Consolidation of national finances Secure energy source
1980 Double Ohira Stabilize consumer prices election Increase defense power
1983 Tanaka's Nakasone Administrative and financial trial Reforms Entrenching political ethics
Source: Asahi Shimbun (November 12, 1985), p.2; and Tomita, Nakamura, and Hrebenar, "Liberal Democratic Party: The Ruling Party of Japan," in Hrebenar, The Japanese Party System (1986), p. 237. 105
A full-fledged commitment to ongoing administrative
reform led to the establishment of a body charged with
administrative inspection and management and the publication
of an annual white paper on administrative reform. A series
of institutions was set up in subsequent years to provide
the organizational framework and impetus for additional
administrative reform. The main thrust of this effort was to
improve managerial efficiency and to rationalize
administrative functions through cost cutting and personnel reduction. In addition, the Council intended to change the
recruitment system for higher-level civil servants, and it
also tried to curb the amakudari practice, where retiring civil servants "descend from heaven" to important posts in public corporations or private sector industries in fields related to their previous experience.
3.2.1. Why not Successful
The 1964 proposals of the First PCAR were regarded as the model of administrative reform. However, the result
proved unproductive for several reasons. One was the unexpected shift of leadership. Shortly after the First PCAR submitted its report to the government. Prime Minister Ikeda resigned due to illness. Sato Eisaku, his successor, lacked the courage to implement the reforms and the whole project
unfortunately ended as an exercise in futility. 1 06
A second and more important reason was the reluctance within the bureaucracy itself. Increasing efficiency and decreasing size had been the general reform principles during the Occupation and immediately thereafter. However, there was no significant impact. The size and expenditure of the national government of Japan continued to expand as they did in nearly all other industrial countries. Approximately lO,ODD new posts per year were created, and government expenditures as a percentage of the national income rose from 17% to 24% during the time between 1952 and 1963.
Much of this expansion must be attributed to bureaucracy's protectionist efforts. In Japan, a particularly high premium is placed on ministerial agency or bureau loyalty, and Intraorganizational efficiency is often encouraged by developing rivarlies among the various ministries, agencies and bureaus. Consequently, agencies often fight vigorously to protect their spheres of influence and budget shares. They try to expand their realm of control and to gain an ever-larger portion of public funds. It is reasonably safe to say that all organizations show elements of such loyalty. Such bureaucratic parochialism and competition is reinforced by the Japanese bureaucratic career patterns. Government careers tend to start and end in the same agency. This practice exacerbates the 107
organizational tenets of bureaucratic protectionism.*'
Thirdly, bureaucratic protectionism, sectionalism and parochialism were aided by a contradictory fact. According to the Total Staff Number Law, specific legislative limits were set on the number of personnel authorized for each of the agencies. The reduction of labour forces, even minor changes In personnel and the reallocation of the authorized strength between a central ministry and Its external agencies or local offices required a revision In the existing law. Lacking administrative flexibility, agencies were used to demonstrate additional needs for new personnel and to gain legislative support for higher authorizations.
Consequently, legislative efforts to reduce the number of authorized personnel were easily frustrated. Despite officially declared goals for administrative reform, bureaucracy was definitely unwilling to support them, and government size continued to expand.
Fourthly, the LDP was also unwilling to offend Its constituents, many of whom benefltted from government subsidies and grants. Finally, the JSP's dual attitude countenanced any measures that would not weaken the labour organizations on which It depended. Although the JSP declared Its public support for administrative reform. It was always cautious about the reactions from the powerful
Kubota Akira, "The Political Influence of the Japanese Higher Civil Service," Journal of Aslan and African Studies. 15:3-4, pp. 273-284. 108
National Council of Government and Public Worker's Unions
(kankoro), from whose ranks many Socialist Diet members had sprung. Therefore, even though everyone was apparently aware of the need of administrative, in face of such powerful oppositions, no politician was willing to implement the
First PCAR's proposals.
Even the Committee on Administrative Management and
Inspection (CAMI), which was established to monitor the
First PCAR's recommendations, admitted that the essential proposals framed by the First PCAR had not been put into effect for positive reform because of the above reasons.* *
The Administrative Management Agency introduced various reforms even after that, but most of them addressed just partial problems rather that general causes. Thus, reform trials remained ad hoc, piecemeal, and unintegral.
The diagnosis by the AMA was similar to CAMI. According to the AMA's study, resistance to reform included first, sectionalism and conservative mentality of administrative personnel; second, the general public's tendency to support reform ideas but not necessarily their implementation, particularly when a reform was likely to affect vested interest (the presence of pressure groups that bear witness to this); and third, opposition from government employee unions based on the fear that reforms could lead to discharge and coercive relocation of their members. See Administrative Management Agency, Administrative Reform in Japan. (Tokyo, 1982). 109
3.4. Measure of Tax Increases
After the national finance became aggravated, the government not only inaugurated work force control but also considered tax measures. Balancing the budget aimed to cut the appropriation outlay, which had continued to swell since
1965. In order to offset the recession of 1965, public investment was promoted, which led to the issuing of red-ink bonds to cover the interest payment
3.4.1. A Political Taboo
In order to restore financial soundness and to reduce the national debt. Prime Minister Ohira proposed raising taxes, especially the levying a general consumption tax. The tax policy, however, met with strong opposition. Especially the business world, which contended the government's suggestion of raising taxes. It maintained that the government rather had to rectify the country's administrative and financial structure, then if still necessary, it could consider imposing higher taxes. Since
Japan was no longer experiencing rapid growth, there was a need to cut government "fat" in order to adapt to leaner days. In the business sector's opinion, an overhaul of government spending would dispense with the need to increase taxes. 110
Ironically, however, some observers regard the business sector as one of the parties that contributed most to the deterioration of Japan's public finances. In the wake of the first oil crisis of 1973-1974, Japan was hit by a sudden recession and rising unemployment. To cope with these difficulties, private Industry sought for the government's help through the Prime Minister Fukuda Takeo. In respond to this request, the government Issued various Industrial bonds for public works. Fukuda Cabinet's Issuance of these government bonds led to an expansionary finance.
Japanese national government bonds were Issued In 1965 for the first time since the end of the Second World War, following the Keynesian counter cyclical policy. This policy permitted unprecedented large-scale personal Income tax reductions In 1966, which was politically attractive but. In fact, resulted In Increasing dependence on deficit financing. Critics of this policy have often argued that expansionary policies, by any means, are not only an
Ineffective remedy for recession but actually compound the problem by Increasing the national deficit.
Retrenchment of Its operations and great sacrifices. In addition to government support, caused the business community, fortunately, to see an economic upturn about a year later. Then, business Interests pressed the government not to go easy on further expansion of public works, reminding the government of Its responsibility for restoring Ill soundness to public finances. However, in the years that followed, the government continued to increase outlays of the tax burden. Attempting to assure recovery from the recession of the post oil-crisis era and to stimulate the world economy, the government adopted an anticyclical fiscal policy typical of the high growth period.
The Fukuda Cabinet planned to boost the economy by expanding public investment.It expected about 7% real growth of the GNP in 1977 and 1978. This policy was based upon an international pledge, which the government declared at the 1977 Summit Conference, to play the role of a
"locomotive" country. Far from expectation, however, subsequent depression was rather prolonged and recovery from the second oil crisis of 1979 was delayed. The business sector saw this government policy attitude as irresponsibility. They even harshly criticized the government saying "In the face of the desperate circumstances after the oil crisis, the government did nothing," compared to what the business sector did.*"
In order to overcome economic recession, the private sector coped with the difficult management problem--quantity reduction (genryo keiei), including layoffs, structural simplification of organizations, and application of resource- and energy-saving technology. The business sector
♦*. See Doko Toshio, "My View on Reform," Japan Echo. 8:3 (1981), p.31. 112 observed that, Instead of reducing their weight, the government and public corporations accumulated deficits and liabilities and maintained excess personnel and departments.
Although this business society's evaluation of the public sector was not absolutely correct, many people were aware of the failure of government.
From this reasoning, the private sectors have resisted increased tax. For the fiscal 1979 budget, however, the government eventually got its way. Soon after, in the
October 1979 general election, the ruling Liberal Democratic
Party nearly lost its majority in the lower house of the
Diet**, confounding the expectations of most political observers. Among a variety of reasons for this failure*?, it was thought that voters' displeasure over the tax policy was a fatal blow. Since then, tax increase has been considered politically impossible, although it is technically feasible.
From that time on, financial rehabilitation by tax measures
* *. The result of the October 7, 1979, House of Representatives election proved that only 248 of its officially endorsed candidates won (1 less than in 1976), even though its share of the popular votes cast increased by 2. 8% . Inviting 9 unaffiliated members quickly, the LDP barely could have 257 members that constituted just a one- seat margin above the absolute minimum of 256 seats (out of the total membership of 511). See Kokai Binran (Diet Handbook), (Feb. 1980), and Baerwald (1980a).
*?. In the chapter, "Accommodation, Confrontation and the Diet," of Baerwald (1986), the background of the 1979 election failure is discussed and the inside power politics of the LDP is analyzed. A focus is laid not on tax policies of the LDP but on the intraparty confrontation for the cause of electoral failure. See Baerwald (1986), pp.123-152. 113
has been a political taboo in the LDP and the government
because the election result was thought to indicate that the
electorate was opposed to tax increases decisively.
3.4.2. Tax Structure
The people's extraordinary resistance to any threatened
or potential tax increase, especially personal income
taxes,is a dominant fiscal matter in Japan. Given the
rate of economic growth, the government has conducted
several trials of leveling off personal income taxes were conducted in 1971, 1973, 1974, and 1983. Despite these decreasing rates, the resistance has been persistent. The government adopted a general tax policy in 1960 to limit the
total tax burden, exclusive of social security taxes, to
about 20% of national income, and the limitation was effective until 1980s. In 1982, the tax burden as a percentage of national revenue was somewhat low at 23.9%.
However, surprisingly, the dependency of tax revenue on
The tax structure of Japanese government is very sophisticated and complex. The main taxes levied by the national government include individual income taxes, which is about 39% of total tax revenues, corporation tax of about 32% in the total, the gasoline tax of about 5% of the total tax, the commodity tax of 4% and other taxes that amounts to be almost 15% of the total tax revenues. The tax revenue of national government versus the local government shows that the national government is a heavy financier for local governments and, as a result, has great influence over them. However, through a series of transfer arrangements by which nationally collected revenue is transferred to both prefectures and municipalities, recently the ratio becomes closer to 50-50. 114 direct taxes has been very high, over 73% of the total tax revenues. Since World War II, direct and visible taxes have
increased steadily from 55% in 1950. The government
introduced a new policy to reduce emphasis on indirect sources of income in favor of direct taxation. Noticing the impact of direct tax increases, the Japanese public has been very resistant to further tax increases of this kind.
In the post-war era, corporate taxes have been increasing both in absolute terms, in accordance with the rapid growth of economy, and in relative terms, showing the significance of corporations in the total Japanese economy.
Corporate income taxes increased from 14.7% of national tax revenues in 1950 to 42% in the middle of 1980s. Even though
Japanese corporate taxes which marked at 19.6% in 1983 seem high in comparison with the United States (5.5%), the United
Kingdom (10.8%), and France (4.3%), Japanese corporations were in turn treated favorably by a series of special laws in the high economic growth era which granted tax advantages to targeted industries. The national interest during that period had been to develop a broad policy that fitted into a fairly well articulated national strategy for the Japanese economy. For this reason, the government tried to keep a special relationship with corporations, to hold down corporate taxes wherever possible, and to grant certain tax advantages or subsidies to the private sector in various 115 ways.♦•
3. 4. 3. Tax Policy
In spite of the high sensitivity to the tax system, in the end of 1970s, the LDP had planned to impose a major indirect tax (a general consumption tax or value-added tax as planned by the MOF). However, at that time, the LDP was merely counted as the same strength as the opposition parties in both the upper and lower houses (hakuchu).**
There were, thus, few prospects for the passage of a tax- increase bill. Then, the ruling party scored a landslide victory in the twin elections of 1980.=‘ The Ministry of
Finance naturally expected that fiscal reconstruction would
The Ministry of International Trade and Industry (MITI) played a role of formulating this strategy along with leaders of the private sector. Despite of conflicts with the Ministry of Finance, the MITI advocated favorable measures for corporations as follows. They consist of specific tax exemptions for favored industries, rapid amortization for research and development investments, government loans at subsidized interest rates, réévaluation of inflated assets, exemptions of up to eight per cent on income from exports, exemptions from tariffs on critical imports such as technology, machinery and petrochemical feed materials, tax exemptions for industrial relocation, permission to create special tax exempt reserves for special purposes, tax payment deferrals, and elimination of commodity taxes on selected products. See C.F.Bingman (1989), p.37.
'*. Indeed, the Japanese political system had been under the condition of near parity between the governing and opposition parties (yo-yato hakuchu) since the mid 1970s. For more details, see Baerwald (1986), p. 90.
Hans Baerwald, "Japan's Double Elections," Asian Survey. (December 1980), pp.1169-84. 116 get under way without a hitch. This expectation, however, was soon frustrated.
The MOF thought that as the economy continued into better shape, the government could look forward to a steady increase in tax revenue during fiscal year 1981. Even so, the natural increase envisaged would be insufficient.
Therefore, the government had planned to raise the corporate tax rate in its budget bill. When the budget bill was deliberated in the Budget Committees of the upper and lower houses, the plan angered the opposition parties. They declared that the government, under the pretext of fiscal reconstruction, was planning to increase defense spending and expand overall expenditure with new taxation. They continued to request reducing income taxes in proportion to price Increases.
The LDP, however, rammed its budget bill through the
Budget Committee of the lower house, ignoring the weak numerical strength of the opposite parties in the Diet. This action eventually invited the opposition parties' boycott of all bills' deliberation. The prospect for a corporate tax increase also became dim. The ruling party and the cabinet could not help conceding to the Opposition. They therefore agreed to reduce the amount of the corporate tax increase, even though it was minor and conditional.'"
**. Japan Quarterly. Vol. XXVIII, no.3. (July-September 1981), pp. 334-337. 117
Because the effort to introduce general consumption
(sales) tax under the Ohira cabinet collapsed, the government feared an increase in corporate tax. This experience led the Suzuki cabinet to give up the idea of any tax increase for the fiscal 1962 budget. The business sector disliked any tax increase. They said they did not object to a corporate tax increase but definitely opposed the imposition of indirect tax. However, whether the increase would be a general consumer tax or a value-added tax, in the end it is consumers, not the business corporations, who would pay the increase. The business sector has therefore doubled its efforts demanding administrative-financial reform, under the slogan "Administrative Reform Without Tax
Increase."
It was, however, already obvious that merely decreasing spending could not reduce the deficit and balance the budget. Without any form of new tax, it was literally impossible to keep a sound national budget system. Even though the catchphrase, "Administrative Reform Without Tax
Increase” is frequently appealing to the public, in fact, it possesses intrinsic limitations in itself."* The administrative financial reform has not been able to reduce the budget deficit by much, as no measure had been taken to substantially increase tax revenues. Here is found the
"*. Inoguchi Takashi, "The Legacy of a Weathercock Prime Minister," Japan Quarterly. (Gctober-December 1987), p.365. 118
Inseparable relationship between ongoing administrative- financial reform and renovation of the existing tax system.
This fact remains true to this date.**
3.5. Admlstratlve-Flnanclal Reform In the 1980s
In the early 1980s, a prevailing general belief among politicians, bureaucrats and other concerned persons was that some urgent action for restructuring the country's finance and administration was needed. Under these circumstances the Second PCAR was launched. However, In people's minds remained the failure of several previous attempts to deal with the national financial deficits by cutting public expenditure. They failed because of the existence of vested Interests that were supported by the conservative governing party and spending ministries such as agriculture, social welfare, construction, and others.
**. Reforming the existing tax system has been a pending political Issue In Japan for some time. After the overwhelming victory of the Liberal Democratic Party In the double elections of July 6, 1986, and refusing the limitation of Implementing administrative reform alone, Nakasone gambled on realizing a tax reform. Introducing a value-added tax that year, but he lost It. A nationwide tax revolt occurring during winter of 1986 and spring of 1987, and especially during the period of the unified local elections, gave a cold shower to the Ministry of Finance and the LDP leaders who attempted to see a tax bill passed In the Diet with hast. Although the tax reform gamble In 1986- 1987 was regarded as one of Nakasone's biggest mistakes, his successors kept watching for chances to Introduce a new tax- reform package. And, It looks as If the Ministry of Finance wants to try again In the near future. 119
Moreover, remembering the history of the First PCAR's
failure, the public and other concerned persons, although
they welcomed the Second PCAR, were skeptical of Its chances
of success.
3.5.1. Toward A New Direction
Considering this mood, the government tried to direct
its focus in a new direction. The First PCAR had centered on
simplifying and increasing the efficiency the administrative
affairs and structures. It made real efforts for major
deregulation or regulatory reform. The goal of the recent
Second PCAR, however, moved further to use the private
sector's vitality for the exertion of systems and mechanism.
It tried to harmonize with international norms and to secure positive international relationships. Within the same spectrum of regulatory reform, the range of efforts to review and relax regulations had become wider during the time between the First PCAR and the Second PCAR.
In the background of the recent reform, there have been
intense efforts to review roles and responsibilities of the government. They are based upon the ideas that public services should be transferred to the private sector, if the private sector can manage them properly, and in order to allow the private sector to exert its vitality, government
intervention with individuals and private enterprises has to be reduced as much as possible. It is often called the 120
former as deregulation and the latter as privatization.**
Both of them put focus on the same trend of placing great
emphasis and expectation on the private sector's role. The
recent Japanese government policies in various areas have
reflected this trend.
Following the current of privatization and
deregulation, the objectives of Japanese government policy
consist of the following components. First, the government
reviews comprehensively the services which have long been
under government control and improves the efficiency of
central and local organizations. By doing these things, the government seeks to devote itself to functions within its
proper sphere. Second, the government intends to let the
market exert its function to the fullest extent by bringing
about higher a degree of fair competition. By these efforts,
it expects to push technological innovations forward and to
realize the provision of higher quality public service. The
government intends to bring these about improvements in
**. Advocates of privatization and respect for market forces were of course not new in Japan at that time. Ever since the Meiji government transferred various state enterprises to the private sector a century ago, kindred theorists have had a hand in administration. As a consequence of the reforms launched by the Occupation authorities after the war, the nature of the private sector changed even more radically. At the upshot, the market economy became an integral part of Japanese society during the postwar years. One such effort was to dismantle the zaibatsu. The enactment of the Antimonopoly Law was another such reform, which continues in effect today despite the occasional objection raised by the bureaucrats in charge of industry. 121
people's lives by reinforcing the vitality of the society
and the economy. Third, administration not fitted to the
needs of the times is eradicated and the government can
respond to changes.
It is basically toward this end that efforts have been
made for deregulation together with the privatization of major public corporations, such as the Japan National
Railways (JNR), the Nippon Telegraph and Telephone Public
Corporation (NTTPO, the Japan Tobacco and Salt Public
Corporation (JTSPC), and the contracting-out of various public services such as garbage collection.
The above review tells why the JNR reform matter was discussed at that particular time under the administrative- financial reform. It had been commonly recognized that the san-kosha (the big three public corporations) had greatly contributed to the postwar development of the economy, the improvement of public welfare, and the progress of technology. For instance, JNR's importance in the nation wide transportation of passengers and freight could hardly be ignored. However, the situation showed that the merits of public enterprise were not being exercised effectively. In addition, JNR reform efforts to improve management and financial ills proved unsuccessful, and those public roles the JNR had to play more and more tended to be impaired.
Consequently, a public atmosphere was created to raise the question of the public corporation system itself, the 122 objective of which is to harmonize public welfare and entrepreneurship.
Regarding this JNR reform, the administrative reform force considered three principle policies. First, privatization; not complete, but incomplete in the sense that the stocks are owned by and handled by the government, and remaining liabilities are left up to the government management. Second, deregulation; decreasing government intervention in key management and finance affairs. Third, break-up; splitting up the unified system into blocs for better management relating to the realities of local areas and for the realization of privatization. The breaking-up was thought necessary in order to meet local demands quickly and adequately. All these components of change are pertinent to the newly emerging liberalistic economic theory, which acts as a propelling force of the administrative reform.
According to it, privatization could revitalize JNR business activities through the deregulation of the railway business.
3.5.2. Political Approach
As seen above, the 1980s' administrative reform was a global trend. However, there were conspicuous differences between Japanese administrative reform and that of other countries. The reform programs in both Britain and the
United States were formulated with a clear objective in mind, that of recovery of economic vitality. By contrast. 123
the Japanese reform program has never been systematically
analyzed in terms of the economic effects it could be
expected or predicted to have. Prime Minister Suzuki did not
go beyond mentioning that spending had to be curtailed
because of snowballing national debt. The PCAR's reports
also did no more than sum up the economic situation and the
internal and external difficulties facing Japan. The objective of administrative reform, if any were specified, was the vague idea of avoiding the advanced-country disease.
It lacked a special economic theory attempting to justify the reform body's endorsement of government retrenchment.
However, the seeming lack of Japanese administrative reform objectives had its justifiable reason. At the outset, the PCAR believed that the political process caused the tendency for administrative machinery and government spending to grow ever larger. In the rapid economic growth era, conflicts between social groups demanding their shares had been mitigated in the budget compilation process by an increasingly large pie resulting from good economic performance. However, the high growth era came to an end due to the two oil crises. There were then few situations where conflicts between social groups could be mitigated through
There were critics who indicate that a sense of direction for implementing reform that would provide reform with a coherent outlook was lacking. Uchida Tadao, "In Search of a Reform Philosophy," Japan Echo. 8,3 (1981), p.42. Also see Ito Daiichi, "Policy Implications of Administrative Reform," in Stockwin ed., Dynamic and Immobilist Politics in Japan. (1988), p.105. 124 the budget compilation process resulting from a constantly growing pie. Therefore, a "catalyst" for a new system was needed in order to bring about policy innovation that would provide recoordination of vested interests."?
Given this situation, by imposing new rules on the process, the PCAR targeted Japanese politics broadly. The
PCAR's choice of political orientation led it to wield its scalpel first to the remedy the government subsidy system.
As mentioned earlier, it was well noticed that ever expanding subsidies' distribution was the very causes of various administrative, political and economic problems.
Therefore, in order to balance the budget, the government examined precisely the function of the subsidy system. The
PCAR tended to consider it the core of a dysfunctional political system.
To be specific, Japanese administrative reform had two political aims. First, it attempted to adapt budgetary allocations to changed policy needs, and second, by doing this, it attempted to reestablish the support base of the
LDP government more broadly."' This does not mean that the
"?. Ito Daiichi, "Policy Implications of Administrative Reform," (1988), p. 100.
One of the clues to this regard was displayed in Nakasone's statement shortly after the LDP's victory in the July, 1986, elections. He said that, although he would take care of those who had supported the LDP up to then, the LDP had to spread its wings to the Left in order to gain support from the middle-of-the road voters. He continued by saying that those voters who did not pick one party at the polls found ultranationalism anathema, so that the LDP had to be a 125
administrative financial reform vas altogether lacking in a
contingent economic rationale. Behind the business quarters'
enthusiasm for the reform program were also economic reasons
as well. Because general revenue resources were indeed
incapable of supporting endless aggrandizement of the
government budget and national deficit, according to the
business world's opinion, recovery from the recession was
contingent on an improvement in public finance. Even so, as
Muramatsu pointed out, the economy was not the PCAR's
explicit concern.** In the PCAR’s perspective, the growing
budget deficit was ultimately the result of politics, so
that it turned its attention to the political process to
root out the problems and get the reform campaign rolling.
However, this political task was not easy. Most
political and bureaucratic organizations agreed with the
need for reform as long as their own individual
jurisdictions of activities were not curtailed unfairly. To
make the financial cuts more acceptable given this political
sensitivity, the government took into account two
considerations in procedure. One was to conduct
administrative reform in an indiscriminative and sweeping
manner. This method made financial cuts and personnel
reduction in each part of government organization being part
moderate and sound democratic party.
**. Muramatsu Michio, "Administrative Reform in a Pluralist Political System," <1983), p. 31. 126 of overall administrative reform. As a result, one particular section, such as welfare or agriculture, did not become a scapegoat.'* The other was to entrust the task to an independent expert committee of high status established relatively free from the incumbent offices. Going along the need of the time, the PCAR was set up in such a way as to allow almost extraconstitutional authority to intervene openly in the domains of ministerial responsibility.
3.5.3. Political Spotlight on the JNR
Under the government's political orientation, administrative reform discussion focused on the 3 Ks: the
JNR, the Health Care System, and the Food Control System.
These three areas had occupied the lion share of the government subsidies and were criticized as being the very source of the national deficit. However, the PCAR could in no way cut off those subsidies by nature of its birth. With
**. By the adoption of a uniform reduction method, all ministries and agencies are required to eliminate the same number of bureaus, sections, or other units. See Koh (1989), p.63. Critical assessments of this matter are offered by Yoshinori Ide, "Administrative Reform and Innovation-The Japanese Case," International Social Science Journal. 21, no.1 (1969), pp.56-67 and Nakamura Mamoru, "Kongetsu no Shoten: Nakasone Gyokaku no Sannenban o Sokatsu Suru (Focus of the Month: Summarizing Three and a Half Years of Nakasone's Administrative Reform)," Kankai. (Aug. 1986), pp.82-93. A recent example of such an approach is found in former Prime Minister Takeshita Noboru's plan of transferring one unit from each national-government ministry or agency to the local level, allowing flexibility and possible exemptions from the proposed reduction. Aeahi Shinbun. (Dec. 5, 1987). 127
ever-increasing difficulties due to the mounting subsidies,
the government and the ruling party was forced to do
something about handling the situation. In order to convince
the public of his commitment and with the leader of the
business sector promising to reform administration, Prime
Minister had to take some immediate and definitive action.
Meanwhile, the public sector was expected to reduce its
organizational inefficiencies. Hence, the government
believed emphatically in the steady retrenchment in public-
sector employment by privatizing large-scale quasi-
governmental bodies, such as JNR, NTT and JTS. Under these
circumstances, then given the problems of the 3 Ks and the 3
public corporations, the JNR was especially conspicuous,
because of the high public concern about the National
Railways and its astronomical deficit.
Unlike other countries such as France, public
enterprise in Japan received no warm welcome. In general,
the Japanese public's opinion of publicly-owned corporations
was not very good. It felt that such corporations caused
unreasonable financial losses, and that their workers lacked
discipline. In particular, the public objected to the manner
in which they were treated as customers as opposed to the
superior service they received from private organizations.
Many JNR workers were members of Kokuro and Doro, which were affiliated with the General Council of Trade Unions of Japan
(Sohyo). Sohyo is the leading sponsor of the Japan Socialist 128 and Communist parties. Because of this organizational affiliation, many people thought of the JNR as the evil genius of socialism in Japan. Eventually, the public's suspiciousness of public management and of socialism brought the red ink of the JNR into the political limelight.*'
At the beginning of JNR reform dispute, the leading political parties end power groups of Japan were all opposed to JNR's radical reorganization. Above all, the Liberal
Democratic Party, mostly interested in the construction of new rail lines, opposed it. Some of the business organization that had made profits by being involved in the new lines' construction made political contributions to various political parties, especially the ruling party. If
JNR was broken up and its management handed into private hands, the latter would undoubtedly turn thumbs down on the construction of new lines and not likely pay for the LDP.*"
*‘. In this regard, some critics proclaim that the argument on the subsidy system as the main hole of government deficit was replaced, with the JNR becoming the scapegoat. In general, according to them, it was akin to public corporations taking the—blame for the oil crises in the 1970s. By doing this, even if the deficit of the three Ks disappeared, the government's finances could not be balanced. Such an argument, focusing only on public corporation system, i.e., eliminating the loss of the JNR or abolishing the labor cost of the JNR, could not balance the national budget. They contend that what is required may be to conduct a simultaneous review of the subsidy system as well as the tax system in a comprehensive way. Imashiro Mitsuhide, "Restructuring of JNR and Its Problems," (Tokyo: Institute of Business Research, Daito Bunka University, Research Paper No.5. 1987), pp.12-3
*". Asahi Shimbun (March 15, 1983); and Japan Times (March 15, 1983). 129
These same groups also opposed the bureaucracy, Including the MOT, because they thought the new plan stymied a coalition of vested interests.**
The Japan Socialist Party, the Japan Communist Party, and Sohyo, which favor public management, opposed JNR's privatization. In contrast, the Democratic Socialist Party and the Japanese Confederation of Labor (Domei) supported it. Domei's main support came from unions in private enterprise corporations and had long sponsored the DSP. The
Sohyo is made up mainly of members who are government employees or employees of government-owned corporations. If the national railways were broken up and put under private management, the presently militant Kokuro and Doro were likely to weaken and break up. Moreover, they might possibly leave Sohyo and join the Domei, the Confederation supported by unions of private enterprises. The Sohyo is the leading supporter for the JSP; however, the Domei favors the DSP.
The main victim of the breakup, thus, would be the Sohyo and
Socialist Party, because the new system's employees might
Join the Domei.
Following the reformists' active role, however, the antagonistic situation changed in favor of the JNR's
•*. For a discussion of the ruling conservative camp's opposition to the administrative reform, see Michio Muramatsu, "Daini Rincho Toshin o Saiten Suru," Chuo Koron. (June 1983), pp. 146-159, which appears as "Administrative Reform in a Pluralist Political System," in Japan Echo. Vol. X, no. 3, (1983), pp. 30-39. 130 systematic reform throughout the period considered.
Eventually, all participants except the JCP and Kokuro followed the reform drift. One of significant devices that the reform force used to mobilize the atmosphere was public campaign by the mass media.
3.5.4. Public Campaign
At the beginning, the discussion of the administrative reform issue seemed to be, to a great extent, talking in a vacuum. The whole topic appeared to arouse little public interest. Certainly, the public atmosphere of the time was such that no one could begin to talk about the emergence of any sort of consensus among the people as a whole. Over the next few years, perhaps the most significant development was an organized campaign on the part of government as well as the PCAR to educate or mobilize the population by making them aware of the significance of the problem. In fact, throughout the campaign, they were softened up in preparation for the unpleasant decisions that lay ahead.
Following years saw the publication of a flood of books, pamphlets and survey reports, all hammering home the message that the public must accept the necessity for administrative-financial reform, including that of the magnitude of the 3 Ks' issue.
In such a way, the mass media was actively involved in this campaign as a promoting force. Notably, the government. 131
under the Nakasone premiership, very often depended on the
mass media. The former Prime Minister Nakasone made efforts
to stage political performances with mass appeal.**
Compared to preceding prime ministers, he appeared on TV
quite often in an attempt to gain support for his policies.
He was often viewed as the first leader of the conservative
party to try to appeal through the mass media. He penetrated
the drift of the time under which special target group had
to be the urban middle class, who had become the consumer
spectators of politics in the affluent society. In his
appeal to them, he pointed out that the administrative reform as well as JNRrehabilitation campaigns had to be made more appealing through the help of mass media, which
has the most powerful means of approaching the urbanites.
There was no doubt that the campaign was effective, at
least in making the public aware that major problems
existed in the country's finance and administration in general and in the JNR particularly. Concerning the issues, a very real change in public awareness had been achieved by
the campaign. In one sense, this was likely to make change more acceptable. The public was then in no doubt that there was a very real financial crisis. Gradually, the words
"administrative reform" (gyosei kaikaku) and "the JNR reform" (kokutetsu kaikaku) had become a part of everyday vocabulary. Seemingly, administrative reform had become a
* *. Interviews. 132 catch-word for a range of changes that had to be made for national survival. It was in this context that the mass media's "kokutetsu roshi kokuzokuron” (JNR Labour Management
Are Betraying the Country) campaign was culminated.
In fact, the public campaign had two purposes: remolding public consciousness to be self-reliant psychologically and remedying administrative malpractices behaviorally. First of all, the propagandists in the campaign pointed out the serious implications of administrative organizational dysfunctions. At the same time, they pointed out the demoralizing effects of dependence on the state power, which could easily seen in the economic malaise of Western Europe. The campaign appealed to national pride and explicitly derided the
Western experience. It exhorted against the Western model, calling for a Japanese way of handling problems.*"
By the end of 1982, in preliminary discussions on the national budget, a general mood of financial crisis had been effectively created not only in political and business circles but also among the public at large. The phrase of a
"zero ceiling" on the budget growth was therefore often discussed, and the final budget figures announced in
*" See, for example, Kato Hiroshi, an academic member of the PCAR, Gosei Kaikaku wa Nihon o Kaeru (Administrative Reform Will Change Japan) (Tokyo: Shunjusha, 1982). 133
December of that year reflected such a consideration.**
However, public opinion is easy to inflame and equally easily to cool down. It is not organized consistently.
Because of this nature of public opinion, the strong opposition of political parties and labour unions prevailed during the JNR reform dispute period. Nonetheless, the general impact of the public campaign was quite effective.
4. LONG-TERM POLITICAL STRUCTURE
From the above discussion, two points can be made.
First, the orientation of administrative reform and the JNR reconstruction was based on a political intention to structurally transform the system. Second, the method of launching the reform depended on public campaigning, which was successfully conducted by the active help of the mass media and Prime Minister Nakasone's mass-appeal leadership.
**. The amount of the budget for fiscal 1983 of which draft was passed in the Diet on December 30, 1982, was 50. 38 trillion yen. While it was nominally 1.4% bigger than the fiscal 1982 budget, it was actually 3.1% smaller when the amount of dividends to be paid on state bonds was deducted. This was the first time in 28 years that a budget had been smaller than that of the previous year. Nonetheless, it was not terribly austere. In mid-July of 1983, however, the Cabinet formally decided to impose 10% cuts, "minus ceiling lids, on most budgetary requests from government agencies to the Finance Ministry in the initial stage of 1984 budgeting, with several significant exceptions such as overseas development assistance funds, social security payments, science and technology, and others. See Asahi Shimbun. (December 31, 1962) and E.S.Krauss, (1984), p.90. 134
These orientation end method were based on the conservative political atmosphere.
Given this consideration, It Is necessary to take a look at the long-term political structure Indicated by political leadership characteristics, LDP's continuous rule, bureaucratic prominence, and the business sector's
Influence.
4. 1. Mirror on Political Leadership
4.1.1. Cooperative Leadership
In the process of administrative reform and specifically JNR reconstruction, the PCAR loomed large with wide political clout. One obvious factor was the competitive cooperation between Suzuki Zenko and Nakasone Yasuhlro, which helped the PCAR's investigation proceed smoothly.
Their support for the appointment of the business leader
Doko Toshlo to head the PCAR was another key factor In enhancing the PCAR's prestige from the outset.
Doko's definite will*? for accomplishing administrative reform was well presented in his suggestion of the four
*?. Doko Toshlo's view on the direction of administrative reform appear In Doko Toshlo, "Konomama Ittara Nihon wa Hasanda (If We Go on Like This, Japan Will be Bankrupt)," Gendal (July 1981) pp.88-94, abridged and translated as "My View on Reform, " Japan Echo Vol. 8, no. 3 (1981) pp.29-34. This issue of Japan Echo contains translations of several Japanese journal articles on the topic. 135 conditions to Prime Minister Suzuki. In response to them,
Suzuki stated decisively that he would bet his political life on the realization of administrative reform. Doko's positive determination definitely raised the "esprit de corp" of the PCAR and Its Executive Office. As many former
PCAR members like to say, Doko kept reminding them to speak out regarding what was best for the nation without regard for political considerations.**
Whenever he saw any seemed In danger of slowing momentum, Doko Issued angry statements** or questioning views, ultimately forcing a break-through by eliciting a final decision from Prime Minister. The PCAR's first report, which was presented In July 1981, particularly Included his public pronouncements on administrative and financial reform. The report criticized the government's continued failure to undertake a thorough overhaul of the system, emphasizing "encouragement of self-reliance and self-help,"
* * Several former PCAR members or references who were Interviewed Indicated almost the same evaluation of Doko's active role In encouraging them to do so.
* * One example Is found In his reaction toward government Inconsistency farm policies. On July 18, 1981, the government decided to grant an Increase of O.5% to the producers' rice price, responding to the farm lobbies despite a recommendation from the PCAR to the Minister of Agriculture, Forestry and Fisheries to keep the price unchanged In view of strained state finances. The government decision would require 9 billion yen In expenditure to farmers. It was regarded, of course, as a bad start for the government administrative reform scheme by Doko, who Immediately expressed his distrust to the government. Asahl Shimbun. (July 18-19, 1981). 136
and "respect for the habit of Individual responsibility."’®
It was the rising clamor of public opinion for
administrative reform and JNR's drastic reorganization, that
gave strength to Doko In his endeavors. His Indefatigable
efforts to mobilize public opinion behind administrative
reform had been In the news constantly before the PCAR
Itself was officially disbanded. Even after that, he again
took on the chairmanship of the Administrative Reform
Promotion Committee, which was set up to push PCAR's
proposals and oversee their Implementation.
As the government's highest official. Prime Minister
Suzuki had frequently declared his conclusive resolution for
the administrative reform In his policy speeches In the
Diet.’‘ At the same time, he had made quite concrete statements on the JNR matter to the public.
’®. Dalnljl Rlnjl Gyosel Chosakal, Dal Ichlil Toshln (First Report) (July 1981). The text can be found In Asahl Shimbun. July 11, 1981; and Yomlurl Shimbun Seljlbu Dal N1 Rlncho Shuzalhan, Dokvumento Gvosel Kaikaku; Dalnl Rlncho wa Nihon o Sukueruka (Document of the PCAR: Can the PCAR Save Japan?), (Tokyo; Chobunsha, 1981), pp.169-183.
On details of the former Prime Minister Suzuki's public speaking on administrative reform and JNR restructuring, see "Gyosel Kaikaku nl Kansuru Suzuki Shusyo no Koshlkl Hakken (Public Speaking of Prime Minister Suzuki on Administrative Reform)," In Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku; Kosha Kara Mlnel e (The JNR Reform; From Public Corporation to Privatization), (Tokyo; Asahl Shimbunsha Chosa Kenku Sltsu, 1982), Appendix 2, pp.116-120. 137
In a TBS program, "Talk With the Prime Minister" on
April 30, 1982, Suzuki determinedly stated "The government
will execute the policy recommendations submitted by the
PCAR, whatever they might be. People desire for administrative reform, and if not a total reform, at least for the JNR reform. There is such an encouragement by the people for the PCAR to launch administrative reform as well as the JNR reform."?' Around that time, the Fourth
Subcommittee was concentrating on the investigation of recommendations to be included in its report to the PCAR.
Suzuki continued by stating that the PCAR was about to conceive even a radical plan to change the JNR management structure and a completely new personnel policy. Under the new rehabilitation measure, according to him, the government would rely on the private sectors' knowledge and vitality to sweep up JNR workers' attitude; "oyakata hi no maru" (No matter what happens, the national treasury will foot the bills).
However, Suzuki had been haunted by two difficulties:
First, international pressures from Japan-US trade and security relations, and second, domestic constraints from the budget deficit. Particularly, in the autumn of 1982, conditions for an unprecedented crisis in government finance were compounded by a rekindling of the old political rivalry
?'. For details, see Kusano Atsushi, Kokutetsu Kaikaku (1989), chapter 2. 138 between Tanaka and Fukuda’•. Aware that hie cabinet's support structure was crumbling, Suzuki resolved to restore harmony within the party as his last task as Prime Minister and party president.’*
Suzuki was handling the problem correctly and showed extraordinary tenacity in trying to mediate the forces of
Tanaka and Fukuda. Suzuki suggested that Secretary-General
Nikaido Susumu (Tanaka faction) remain in office, Tanaka- backed Nakasone become Prime Minister, and Tanaka's archrival Fukuda assume the party presidency.’®
Unfortunately, Suzuki's suggestion was regarded as the worst possible, indicating insufficient knowledge of the rules for ensuring a satisfactory resolution.
Because Suzuki was bound to Tanaka by deep ties of friendship and loyalty, he attempted to use his offer to step aside as a bargaining chip to force Tanaka's withdrawal from his position as a major power behind the scenes.
However, Suzuki missed this opportunity. His arbitration proposal was evaluated as ineffective for the restoration of the party unity. Thus, a solution for the Kaku-Fuku (Tanaka-
Fukuda) conflict was yet to be seen until the next presidential election was held. After Suzuki's resignation.
The continuous struggle between the Tanaka faction and the Fukuda faction has been known as "Kaku-Fuku war”.
’*. Kawakuchi Hiroyuki, "The Japanese Method of Settling Disputes," Japan Echo. 10:1 (1983), pp.26-32.
’ ® . Ibid., p. 32. 139 an election was held for his successor in November, 1982.
Although Suzuki stepped down from premiership before seeing the accomplishment of administrative-financial reform, his frequent displays of determination undoubtedly encouraged the PCAR to act independently and to consider a drastic measure for the JNR rehabilitation, as well as other reforms.
4.1.2. Changes under the Nakasone Premiership
Compared to others in the government's top posts, particularly noticeable was Nakasone's leadership. Nakasone, who had been the AMA's Director-General, was maneuvering to become Prime Minister after Suzuki stepped down. He had realized the significance of administrative reform for both the country's vitality and his political career. It is extremely difficult in the case of Japan, as with many other
Eastern societies, to disentangle personal leadership from the influence of subordinates. Nevertheless, compared to his predecessors, Nakasone had exercised an unexpected degree of personal leadership (see Table 2.4).
Above all, as seen in Table 2.4, he is clearly distinguished from other Prime Ministers by his relatively long tenure of office and exceptional exercise of leadership in the field of defense. 140
Table 2.4. Japanese Prime Ministers in the Post-War Era.
Name Date of Years of assuming office Service
Higashikumimomiya Naruhiko August 17, 1945 1 mo. Shidehara Kijuro October 9, 1945 7 mo. Yoshida Shigeru May 22, 1946 1 yrs. Katayama Tetsu May 24, 1947 10 mo. Ashida Hitoshi March 10, 1948 7 mo. Yoshida Shigeru October 19, 1948 6yrs.2mo. Hatoyama Ichiro December 10, 1954 2 yrs. Ishibashi Tanzan December 23, 1956 2 mo. Kishi Nobusuke February 25, 1957 3yrs.5mo. Ikeda Hayato July 19, 1960 4yrs.4mo. Sato Eisaku November 9, 1964 7yrs.8mo. Tanaka Kakuei July 7, 1972 2yrs.5mo. Miki Takeo December 9, 1974 2yrs. Fukuda Takeo December 24, 1976 2yrs. Ohira Masayoshi December 7, 1978 lyrs.7mo. Suzuki Zenko July 17, 1980 2yrs.4mo. Nakasone Yasuhiro November 27, 1982 5yrs. Takeshida Noboru November 1987 lyrs. 7mo. Uno Sosuke June 2, 1989 2mo. Kaifu Toshiki August 9, 1989
Nakasone had been widely regarded abroad as an unusually dynamic leader determined to exercise personal power in order to "Sengo Seiji no Sokessan" (General
Settlement of Accounts in Post-war Era) for five years.
After Nakasone took office in November, 1982, the newly installed Prime Minister characterized the task of his administration in grandiloquent terms as "settling the accounts of post war politics." He later explained what he had meant by this catch phrase at an informal study group organized by the LDP in July, 1985, as follows. 141
We are now clearing up, one by one. Issues that have been left in abeyance all these years since the end of the war. We are dealing in a comprehensive way with matters that have been desparate before, that have not been squarely faced before. We are looking toward the 21st century and putting together a consensus, building unity as a nation, the Japanese nation: the Japanese people are walking in the world with our heads held high and contributing to the development of the state. We are reached a turning point. This is what I mean by "settling the accounts of post war politics."?*
Nakasone wanted it known that he would address issues that had hitherto been considered taboo; issues that in the past were too controversial to deal with openly. He showed doubts on some issues, such as the justness of the
International Military Tribunal for the Far East and the government officers' visit to Yasukuni Shrine. On the other hand, he showed strong will for educational reform, emphasizing the fostering of national identity and love of country. According to his perspective, all of these items were primary examples of the postwar accounts that had to be settled. The JNR reform was, of course, included in his list of the post-war accounts because it was a public corporation that was imposed by the Occupation Authority after the war and had been in financial crisis since 1964.
? *. Jivu Minshu (The Liberal Democrats), (September 1985). 142
4.1.3. The Belief System of Nakasone
Nakasone has often been characterized as a representative politician in the conservative camp. His well-known policies of easing government restrictions and regulations, privatizing big public corporations such as the
JNR, NTT and JTS, and increasing military spending qualify his conservative political tone.’’ Paralleling the same political line, PCAR's proposals clearly showed reformers'?' motives in the administrative reform process. This increasingly forceful reform had sometimes been distinctively restrained by various interest groups' resistance.
However, the general electoral support for the Nakasone
Cabinet and his popularity proved unquestionable, with the
1986 LDP's landslide its culminating point. According to one interpretation, Nakasone's views on domestic and foreign policies and his reform intentions were generally approved by Japanese voters, who had been satisfied with their prosperity under the LDP in the 1980s.?•
??. Various expressions of conservatism under the Nakasone Era and the 1980s have developed in broad terms: neoconservatism, pragmatic conservatism, creative conservatism, and dynamic conservatism.
The term "reformer" here is not used as any ideological connotation, but simply indicates those groups promoting administrative-financial reform at that time.
?*. The LDP support group included a fair number of people who originally said they supported "no party." The voter group loyal to no party, but if they had to chose, they would support LDP, was esimated 25% of the electorate. 143
With his "middle-mass politics" perspective, Murakami
Yasusuke persuasively explains the basic trends of Japanese politics In the mid-1980s and their underlying social structures.'* In his view, Japanese foreign, defense and domestic policies In the mid-1980s revealed Increasingly nationalist and conservative casts. He Insightfully analyzes the relationship between nationalistic and conservative rivalry In 1980s Japan through the prediction that Japanese politics might well exhibit more stable, conservatively oriented tendencies In the short-term future. Such a phenomenon obviously played a central role for administrative reform under the Nakasone premiership.
As Stockwln points out, Nakasone as Prime Minister was clearly Inclined to play the political game according to somewhat different rules from his predecessors. Nakasone understood the domestic political gains that could be made
This Implies the voters have been Indicating a clear drift away from the progressive parties, revealing a growing conservatism. This conservative group of voters has become the cause for the wide fluctuations In voter turnout and this turnout has had Impact on the fortunes of the LDP. See Takabatake Mlchltoshl, "Nakasone Watch: The Shift to Political Corporatism," Japan Quarterly. 33:2 (Aprll-June 1986), pp.118-128; and Bradley M. Rlcharsdon, "Japan's Habitual Voters: Partisanship on the Emotional Periphery," Comparative Political Studies. 19:3 (October 1986), pp.356- 383.
•*. For details of the interesting term, "middle-mass politics," see Murakami Yasusuke, "Shin Chukan Talshu Seljl no Jldal (The Age of New Middle Mass Politics)" Chuo Koron (December 1980), pp.202-29. The English translation appears In Journal of Japanese Studies (Winter 1982), pp. 29-72, titled, "The Age of New Middle Mass Politics: The Case of Japan." 144 from being seen to stand tall on the international stage.■*
He often emphasized that Japan was facing a historical turning point and needed to contribute positively to world peace In both the political and economic spheres. He also warned that Japan may be Isolated from the International community If narrow-minded nationalism mounted.
Nakasone saw foreign pressure as a means of
Implementing his domestic societal reforms. He launched domestic reforms, 1.e., administrative, financial, educational and taxation. At the same time, he stressed the need to cooperate with foreign countries In economic and other fields by reminding Japan that It would be held In contempt by International society otherwise, and In the not- too-dlstant future. It would be shut out economically. In other words, he emphasized good International relations as the basic requirement If the system was to work smoothly and efficiently.
Under Intense International pressure, this leader, prepared to play the trump card of personal charisma, could expect to win support. Nakasone was willing to break through
Immoblllst barriers to change. He reversed the normal practice whereby Japanese governments respond primarily to domestic pressure and only secondly to foreign pressure, to
•‘. See J.A.A. Stockwln, Dynamic and Immoblllst Politics In Japan (London: Macmillan Press, 1988), particularly Chapter 1 and Conclusion. 145 a practice which had theratio the other way round.••
Following such a new method, Nakasone suggested the establishment of "a third political body," the PCAR, which was able to penetrate the existing rigid barrier of domestic-interest politics. In fact, the PCAR engaged collusively in the successful presentation of the political play called "foreign pressures."** Indeed, the PCAR and the
JNR Restructuring Supervisory Council were sustained through the will of the Prime Minister. These ad-hoc commissions, along with other advisory groups and various private brain trusts, were considered "vehicles of prime ministerial politics."•*
In short. Prime Minister Nakasone had expressed the idea of national pride and superiority, proposing Japan's membership in the international community.*" Because their two commitments--nationalism and internationalism--seemed to be contradictory, a question was raised. What, then, was the honne (the true intentions) of the conservative forces led by Prime Minister Nakasone? To what extent were their
**. Ibid., pp.325-331.
**. Ito Daiichi, "Policy Implications of Administrative Reform, " in J. A. A. Stockwin, ed., Dynamic and Immobilist Politics in Japan (1986), pp.77-105.
**. Sone Yasunori, "Yarase no Seiji: Shingikai Hoshiki o Kenso Suru (Pseudo-Politics; Reviewing the Methods of Public Advisory Bodies)," Chuo Koron. (January 1986), p.150.
**. Nakasone Yasuhiro, "Toward a Nation of Dynamic Culture and Welfare," Japan Echo. 10:1 (1983), pp.12-18. 146 tatemae (their expressed intentions) genuine? The answer may be that he was a leader of considerable flexibility as well as clear goals. Such a flexible mind-set is rooted in his ability to maneuver and manipulate warranting the nickname, "a weathercock" or "a weathervane."
Instead of being bothered by such a nickname, Nakasone justified flexibility as an appropriate principle for Japan in the international community of nations. In the weekly
Shukan Yomiuri. he is quoted as having said:
What is most important in Japan now is the weathercock. A weathercock's legs are fixed, but its body is very flexible. Thus it can tell the direction of the wind. If its legs are not fixed, it cannot be a weathercock. It is important to have fixed legs and, at the same time, good sense and good judgement. The Greater East Asian War was led by runaway horses that did not have such abilities. Japan needs the attributes of a weathercock if it is to survive despite a vulnerable security system and international economic encirclement. Among the personalities in modern Japanese history, Katsu Kaishu and Saigo Nanshu Takamori are the most weathercocklike, in my view. Those who become weathercocks are truly courageous people. They must not use their abilities for selfish purposes.**
Even earlier, in an interview, he proclaimed that all great politicians were weathervanes, possessing the aforementioned admirable qualities.*? Interestingly enough, however, his wife, Nakasone Nobuko, declared that she would
* *. Shukan Yomiuri (May 23, 1983).
*?. Nakasone Yasuhiro, "Daiseijika wa Minna Kazamidorida (Great Politicians Are All Weathervanes)," (Interview) Bunqei Shunju (January 1983), pp.136-148. 147 no longer let others call him a weathervane because she thought that the term implied her husband as an opportunitistic politician.•• It is beyond the focus of this study to argue such contradicting views, though it is a provocative issue. The bottom line is, whatever he may be called, Nakasone is a skillful politician with great flexibility in differing circumstances.
4.1.4. The 1986 System
Since pragmatic conservatism has spread since the late
1970s, the urban middle class has been leaning toward the conservative parties. They want to pursue their own interests, expecting the conservative camp to offer stability. Meanwhile, public enterprises, long the opposition's base of support, have been in decline for the accelerated administrative-financial reform. The LDP, assured of the rural vote and now gaining urban voters, landslide in the 1986 double elections.•• It could hold a decisive advantage over the other parties, particularly the
Japan Socialist and Democratic Socialist Parties which were
**. Nakasone Nobuko, "Moo Kazamidori to Yobasenai: Nakasone 'Huzin” Gundan no Sento no Tatte Tatakatta Hibi (I Will No Longer Let Them Call Him Weathervanes)," Bunqei Shunju (January 1983), pp. 136-148.
In the parliamentary elections of July 1986, the LDP achieved a solid victory, winning 300 of the 512 seats in the House of Representatives (a gain of SO) and 72 of 126 seats being contested in the House of Councillors. Its share of the popular vote was recorded at 49.6%, higher than in any election since 1963 when it won with 57.6%. 148 devastated. In short, the support basis of the LDP began to change.
The fundamental dilemma that has bedeviled the LDP from the beginning originated in its power base. Although it was founded in 1955 as a rural area-based party, the main sources of its funds come from industry, especially manufacturing. The two main supporting interest groups-- farmers and manufacturers--are basically at odds with each other. Despite miraculous success, industrialization in the high economic growth era led to depopulation of farming villages. Such a redistribution of population over the past
30 years cast the party's clientele group of rural votes into a long-term decline.
In order to shore up farm constituencies, the LDP strove to provide protecting measures for agricultural products and generous subsidization programs. By implementing various supporting policies, the LDP prevented a significant loss of Diet seats by leaving unaltered the number of representatives allowed from each of the old electoral districts.*® In consequence, rural areas have been given an obviously unfair advantage. LDP's long years in power have made this selectivity possible, giving rise to a national vote-getting organization that can tap central administrative agencies for pork-barreling funds. However,
* ®. Takabatake Michitoshi, "The Liberal-Democratic Party in Crisis," Japan Quarterly (July-September 1989), pp.244-251. 149 it does not eradicate the root of the ruling party's dilemma.
Since the end of 1970s, other countries, especially the
United States, have become intolerant of Japanese protectionism. As a result, trade frictions in specifically agricultural field have begun to surface. The LDP realized again that it had to do something to resolve its "power base dilemma." In fact, Tanaka Kakuei's Cabinet plan for remodeling the Japanese archipelago was intended to bring industry to rural areas and turn farmers into nonfarming workers, i.e., construction laborers deriving their livelihood from public work projects. The plan attempted to provide an effective substructure for incorporating ex farmers into the LDP's vote-collecting apparatus.
Unfortunately, however, it failed for compounding reasons, such as domestic inflation, the oil crisis of 1973, and former Prime Minister Tanaka's resignation due to a bribery scandal.
Declaring its intention to undertake drastic reforms of the postwar system, the Nakasone administration set up an ultimate goal: reorganizing the constituency for the LDP.*‘
* ‘ . Ibid., pp.247-249. To this matter, a close relationship between what Ohira tried to do and the Nakasone's line of thought is well observed. In fact, Ohira was the very Prime Minister who instigated the effort to change the policy outfit of the LDP to suit the new era and introduced the concept of Japan's international responsibilities as an economic superpower. See Takabatake Michitoshi, "Nakasone Watch: The Shift to Political Corporatism," (1986), p. 122. 150
With this clear political intention, his cabinet launched an
internationalization policy, large scale development projects using private-sector resources, such as urban redevelopment, to boost the economy and expand domestic demand, a spectacular plan to redevelop Tokyo and Osaka into
international information centers, and privatization of public corporations and enterprises. It tried to move away from the policy of protecting farmers, to liberalize the agricultural market, and to make Japan an advanced industrial society. The government policy intended to shift
LDP's support base from rural to urban areas, i.e., population reconcentrated major cities.
Nakasone was also taking an active part in wooing support from the middle-of-the-road parties. They had been openly cooperating with the Nakasone Cabinet, hoping that their intervention might accelerate intra-conflicts of the
LDP and give them a chance to join the government. In addition, Nakasone sought to dismantle the power base of the opposition parties, particularly the JSP. Thus, he considered privatizing the public corporations with strong labor unions whose electoral and financial support was vital to the opposition parties. Close observers of Japanese politics often characterize Nakasone as a "presidential prime minister." Critics see such Nakasone's neoconservatism as a departure from parliamentary politics and consensus politics of conservatism in the high economic growth era. 151 and a move toward the formation of a new system of corporatism. * “
The efforts of the Nakasone Cabinet were quite highly rewarded in the form of unprecedented strong support for him and his cabinet. The landslide victory of 1986 had been a pinnacle, registering a large increase in the rate of votes cast for the party in major cities for the first time since
1960. Nakasone boasted about the startling election results that he had engineered a new "1986 system" based on firm support among the urban middle class. The time July, 1986, recorded the massive conservative landslide and the dissolution of the principal conservative splinter group, the New Liberal Club. It was a historical turning point during which persistent conservative aspirations toward political stability were realized. Under Nakasone leadership, the LDP seemed to succeed in expanding and reorganizing its support base. Around that time, he also settled the JNR reform dispute and uttered decisive convictions for its privatization.
4. 1.5. The Upshot of the 1986 System
Even Nakasone's position was far from invulnerable. In
1987 he attempted to institute a consumption tax reduction.
The new tax system created not only income tax reductions
**. Takabatake Michitoshi, "Nakasone Watch: The Shift to Political Corporatism," (1986), pp.122-123. 152 but also the abolition of commodity taxes on automobiles, videos, and the like. He believed that the new system would be welcomed by salaried workers in the cities, which was the target group of the LDP for electoral support, even if it was attacked by storeowners and distribution agents, who had traditionally been LDP's strong backers. However, far from his anticipation, because of the increased vocal opposition to the tax reform, the introduction of a new tax system also turned out to be unsuccessful. When the tax debate heated up,** he yielded the prime ministership to Takeshita in
November, 1987.
Despite a generally positive assessment, Nakasone's leadership was criticized for his overissuing of public pledges and his tightrope-walking tactics. To middle-class urban workers, Nakasone promised the future of Japan as an economic superpower with rosy visions of affluence and internationalism. On the other hand, to farmers, he went on assuring that he would be faithful to the old protective policies for farm products. Some people see the recent
Recruit scandal as an inevitable product of the Nakasone
•*. After the LDP's biggest victory in the double elections for both houses of the Diet in July, 1986, the first chance of voters to show their preference to the government was the local elections held in April, 1987. It was right after Nakasone publicly introduced a value added tax. Nakasone's drop in popularity, and the public rejection of the new tax, grew among people. The anti-tax storm and the unprecedented assaults on Nakasone's character were raging all over the country, leading the party's poor showing in the election. 153
Cabinet because he neglected real reform efforts on the part of his own Cabinet.** Considering these respects, some critics denounced the victory of the 1986 elections as nothing but the success of his disguised tactics.
Toward the end of his tenure, Nakasone set to work carrying out the pledges he had postponed. However, just before the end of Nakasone's term, popular support of the cabinet and his own popularity had plummeted. Several unfortunate outcomes of his policies led to the people's dislikes. First, his plan for remodeling the major cities had resulted in skyrocketing land prices in Tokyo and other major cities. Second, people had accepted Nakasone's introduction of a new consumption tax system (i.e., large- scale indirect taxes) as a violation of his own election campaign pledges. The urban middle class, who suffered from the resultant rise in fixed property taxes under the new tax system, was sorely disillusioned. Third, his abandonment of the 1% GNP ceiling on defense spending had brought a decline in the confidence of government.
Nevertheless, even after stepping down, Nakasone's dynamic leadership has been frequently referred to with admiration. At the same time, his determinant leadership style had often been compared with his successor
(Takeshita), who, little known outside Japan hitherto, came in as a behind-the-scenes politician, hesitating to move
**. Ibid., p.248. 154 politically until he had constructed a broad consensus of opinion behind him.
4.1.6. What Did Nakasone Do?
Regarding the JNR reform policy-making process,
Nakasone showed a determinant leadership In his decision to dismiss the JNR president Nlsugl Iwao from his post In June
1985. The JNR reform policy-making process had become complicated because of factional confrontations. Various groups with different Interests sought to build relationships with Influential politicians to protect their vested Interests. Around 1985, the JNR status-quo group officers were very reluctant to accept the reform trend. The
PCAR asked Nakasone to take conclusive action to settle this problem. Nakasone also perceived the JNR status-group's objection as an obstacle to reform.
At last, Nakasone made an unprecedented decision to replace the JNR president Nlsugl with Sugiura Takaya and to reshuffle top officials who were opposed to the sectlonalizlng privatization plan. In JNR history, the Prime
Minister had never Interrupted the personnel affairs of
JNR's top officers Including the president. Nakasone's sudden personnel decision proved a turning point, which was incomparable to any other factor In the whole process of reform. Since then, the status-quo group's power base has been uprooted from the JNR management. Many JNR observers 155
have assessed Nakasone's decision as a plowlng-up process
for the realization of the JNR breakup and privatization.•“
On the other hand, some suspicious viewers evaluate
Nakasone's role In the entire JNR reform process as
Insignificant. According to such a perspective, In his
Director-General era, Nakasone's Initiative was not main
factor In the breakup and privatization plan.'* This
examination of his role by periods Is very suggestive for
comparison. In fact, as a politician leading a smaller
faction, Nakasone had sometimes appeared Inactive because of
his political caution. However, In general. It Is not
accurate to devaluate Nakasone's role as the acting
leadership In the JNR reform dispute.
4.2. The LDP In Policy-Making
In addition to political leadership, the long-term political structure of Japan Includes the perpetuating rule of one conservative party for the last 35 years. The strength of the ruling Liberal Democratic Party In Japanese policy-making has risen since the early 1970s. Nonetheless,
as Johnson, Pempel and others have pointed out, politicians have generally not been dominant in Japanese policy-making
•*. Interviews with JNR researchers.
•*. On such a view, see Kusano Atsushi, Kokutetsu kaikaku (1989), pp.218-227. 156 processes and have often had trouble imposing their preferences on bureaucracy and big business. They claim that because of bureaucratic strength, the emergence of the
"integrated LDP-bureaucracy structure" (Jlmlnto-kancho kongotai) may be a more accurate description than the dichotonomy of "party up, government down" (tokoseitei)*? to describe the change. Thus, it is hard to claim that a political party can replace the bureaucracy.
However, the bureaucracy has obviously been forced to accommodate the conservative political world in certain domestic policy arenas--regional, small business, and agriculture. The importance of distributive politics responding to interest groups' pressure has been intensified in these arenas. Thus, bureaucrat-technocratic concerns have merged with political considerations.
Meanwhile, during the first half of the 1980s, Japanese policy-making has become more political than it had been in the past. The JNR reform dispute also spelled out a high degree of politicization, especially with the presence of various interests revolving around the ruling party. Thus, what is necessary is to take a look at the ruling party's activities in the policy-making process being considered.
The interests of the governing LDP are not necessarily identical with those of the government. Because of factional interests and individual members' considerations of
. Sato Seizaburo and Matsuzaki Tetsuhisa, (1984), p.74. 157 electoral advantage, the LDP can not be relied on for unquestioning support of government initiatives. In the following analysis, the LDP is illuminated in its top posts, the Policy Affairs Research Council, the Dietmembers and the factions, with regards to the JNR reform dispute.
4.2.1. Party's Leading Posts
In the LDP's leadership, the four most important party positions after the presidency are identified as the
Secretary-General, the Chairman of the Policy Affairs
Research Council (PARC, Seimu Chosa Kai; abbreviated in
Japanese as Seichokai), the Chairman of the Executive
Council, and the Vice-President." When no Vice-President is appointed, the leadership of the LDP is called the big three
On the organizational structure of the LDP, see a leading Japanese scholar, Fukui Haruhiro's following writings: Fukui's entry on the LDP in the Kodansha Encyclopedia of Japan (Tokyo: Kodansha; and New York: Kodansha International, 1983), Vol.4, pp. 384-386; Party in Power: The Liberal Democrats and Policy Making. (Canberra: Australian National University Press; and Berkeley and Los Angeles: University of California Press, 1970); and "The Liberal Democratic Party Revisited: Continuity and Change in the Party's Structure and Performance," Journal of Japanese Studies. 10:2 (Summer 1984), pp.385-435. Another basic book written in English on the LDP organization is Nathaniel B. Thayer, How the Conservatives Rule Japan. (Princeton, N.J.: Princeton University Press, 1969). One can also consult Tomita Nobuo, Nakamura Akira, and Ronald J. Hrebenar, "The Liberal Democratic Party: The Ruling Party in Japan," in R. J.Hrebenar, The Japanese Party System: From One-Party Rule to Coalition Government. (Boulder, Colorado: Westview Press, 1986), pp.235-282. 158 rather than the big four.**
In terms of the leadership's nominal role, the
Secretary-General is quite prominent in managing nearly all affairs. The PARC chairman is the key post covering various specific policy matters. The Executive Council is the authoritative decision-making organ for most matters, functioning as a legislative body. Decision-making by the
Council is thus entrusted to the party executive for implementation. Beyond these functions, the LDP leadership sometimes attempts to perform activist roles, such as comprehensive policy planning initiation and support of specific programs.'** However, in the JNR reform dispute, this conception of leadership as activists was not found.
For the sake of the party's interests, some flexibility is given to the leadership such as interpreting the party's policy line to formulate the party's position. Formally, the leadership's participation in decision-making for certain areas is as outlined below. They discuss the subject under consideration or any official pronouncement on it, securing an early agreement with the relevant ministry as well as
* * On the leadership of the LDP, see Nathaniel B. Thayer, How the Conservatives Rule Japan (Princeton, N.J.: Princeton University Press, 1969), pp.295-96; Fukui Haruhiro, Party in Power: The Liberal Democratic Party in Policymaking (Berkeley and Los Angeles: University of California Press, 1970), pp. 93-95; and John Creighton Campbell, Contemporary Japanese Budget Politics (Berkeley and Los Angeles: University of California Press, 1977), pp.144-148.
'*“. J.C. Campbell, (1977), p. 148. 159
Impressing the ministry with the strength of the party's interest. In addition, most of the time, Informal discussions are simultaneously held to smoothly gear up the process of the issue involved. Policy consultation between the ministries and the party leadership is a pervasive pattern of the informal discussion levels in order to gain approval or understanding of the ministries' positions.
Pursuing every possible advantage for the party, the leadership commonly intervenes in these discussions to pass along demands from LDP members on certain issues.
On the other hand, playing a broker's role, the leadership tries to balance the demands from the rank-and- file or various groups within the party, which are unwilling to go along with other participants. They always fear the threat of disruption from the lower levels of the party.
Thus, the leadership takes seriously the internal pressures from back-benchers who are related which would certain interest groups. Otherwise, resentment may incur to erupt in policy disputes or negotiations on particular matters, especially in elections times. In short, the leadership tries to keep a balance between the two roles: looking beyond parochial interests to national needs, and representing sufficiently the views of the rank-and-file. 160
4.2.2. Policy Affairs Research Council
The ruling party has the legal responsibility for passing the annual budget and draft bills in the Diet. On behalf of performing such legal responsibility, the party establishes internal organs from the outset. The Policy
Affairs Research Council is one such key setup, which has an executive committee (Seicho shingikai), some 17 sections
(Bukai), standing committees in each house of the Diet and a large number of less formal investigative and special committees. The PARC's executive committee channels its recommendations on substantive issues to the party's
Executive Council, and to sections that correspond to the ministries. * * *
With the LDP's increasing role in the policy-making process, the party's various deliberative components have played significant roles. Among them, the PARC is where the interest groups' various demands are negotiated with the party's leaders. In this respect, the PARC has become the most critical point of Japanese politics.
By looking at PARC's units relating to the JNR reform dispute, one can illustrate its internal structure. Dealing with the issue involved, there was the Transportation
Affairs Section (Kotsu Bukai), members of which are normally
‘ ‘. For the organizational structure of the PARC, see Inoguchi Takashi and Iwai Tomoaki, (1985); Sato Seizaburo and Matsuzaki Tetsuhisa, (1984); and Tomita Nobuo, Nakamura Akira, and Ronald J. Hrebenar, (1986). 161
also LDP members on the Transport Standing Committees in
each house of the Diet. According to the bylaws of the
party, all matters relevant to policy affairs must first be
examined by the PARC. The problems bearing on the transport
and traffic issues including the JNR matter were assigned to
the Transportation Affairs Section. (During the JNR reform
dispute, the section chief was Mitsuzuka Hiroshi.) In the
middle of the 1980s, the relative sizes of the PARC sections
were agriculture and forestry with 117 members, construction
with 108, commerce and industry with 81, welfare and labor
with 52, and transportation with 51. Among the rest, science
and technology with 17 members was the smallest.
Within the PARC, many special committees exist separate
from the sections. The Transportation Affairs Section has
also several influential auxiliary committees,*®* one of which was the JNR Basic Problems Investigation Committee
(chaired by Kubota Enji during the JNR reform debate). Under
this committee, there was the JNR Restructuring Subcommittee
(chaired by Mitsuzuka Hiroshi during the JNR reform period: sometimes called the Mitsuzuka Subcommittee). In the field
‘®“. Inoguchi Takashi and Iwai Tomoyuki, (1985), pp.138-139.
‘®*. Normally, that policy matters initiated by the bureaucrats are referred to one of the seventeen sections of the PARC, organized paralleling the standing committees of the Diet. In recent years, the various sections have spun off over 100 subcommittees, which tend to function as quasi pressure groups in the operation of the LDP's organizational structure. See Tomita, Nakamura and Hrebenar, (1986), p.274. 162 of JNR matters, this subcommittee was the party's telling voice.‘® *
The policies, which are approved by the PARC throughout the functions of the sections, committees and subcommittees, are then sent to the Executive Council for a final approval prior to being brought to the Diet for legislative deliberation. A graphical display may help one better understand the formal structure of policy-making in
Japan (see Figure 2.1).
During the period of approximately 1957-1972, the LDP had reigned, but the bureaucracy had actually ruled. The bureaucracy may have actually created the annual budgets and drafted all bills. A large number of senior bureaucrats on retirement from public service hod been elected to the Diet as members of the LDP.In these early days, the PARC sections and the executive committee were also the stronghold of ex-bureaucrats within the party. Although the ex-bureaucrats were usually assigned to supervise the ministries from which they had just retired, in reality, that the LDP members were instead instructed on policy by the ministries. In other words, a bureau or section chief
‘®*. See Jiyuminshuto Kokutetsu Kihon Mondai Chosakai (JNR Basic Problems Investigation Committee of the LDP), Kokutetsu Saiken ni Kansuru Shoiinkai Kaiairoku (JNR Restructuring Subcommittee Minutes), (Tokyo: Jiyuminshuto, 1984).
‘ . Sato and Matsuzaki, (1984), p. 89. 163
Ministry a Liberal Democratic Party
1. Original draft in section Policy Affairs Research Council (Seimu Chosa Kai) 2. Bureau (kyoku) conference 1. PARC Sections (bukai), 3. Ministerial (sho) investigation Commit conference tee (chosakai), and Special Committees (Tokubetsu Ilnkai) 2. PARC Executive Committee (shingikai)
Vice Ministers LDP Executive Council Conference b (Somukai)
Cabinet LDP Diet Policy Meeting Committee (Kokkal Taisaku Ilnkai)
Diet c
House of Representatives: Standing or Special Committee, to Plenary Session and Enactment by Straight Party vote. House of Councillors: same procedure.
Figure 2.1. The Japanese Legislative Process.
Source: Murakawa Ichiro, Seisaku Kettei Katei (The Policy making Process) (Tokyo: Kyoiku Sha, 1979), pp.192- 93; Chalmers Johnson, "MITI, and the Telecom Wars: How Japan Makes Policy for High Technology," in Politics and Productivity: The Real Story of Why Japan Works (1989), p.202.
Note I a. All legislation, including the budget, originates in a ministry. b. LDP Diet members from both houses belong to several committees. c. Legislation is invariably broad in scope and short on detail. Concrete norms are supplied by cabinet orders, ministerial orders, and administrative guidance. 164 from the appropriate ministry used section meetings to lecture on bills that they Intended to Introduce In the Diet during a current session.*** Since the 1970s, however, the
PARC's activities have changed as explained below.
First, the substance of the PARC's deliberations has changed and Its Independence from the bureaucracy has been observed. According to Sato and Matsuzaki's analysis on the frequency of the PARC meetings over time, the executive committee meetings were held 162 times In 1956, which declined to 52 times In 1983. In contrast, the number of section and special committee meetings greatly Increased:'**
29 In the LDP's beginning year and 80 In 1975 (the same number as of 1980).'**
This change reflects the LDP's organizational effort to aptly respond to new policy problems.'®* For example. In
'**. On the historical shift of the PARC, see Sato Seizaburo and Matsuzaki Tetsuhisa, "Jlmlnto Chochokl Selken no Kalbo (Autopsy on the Super-long Term Reign of the LDP)," Chuo Koron. (November 1984), pp.66-100; and as the most Important study of the PARC, Nihon Kelzal Shlmbun, ed., Jlmlnto Selchokal (The LDP's Policy Affairs Research Council), (Tokyo: Nihon Kelzal Shlmbunsha, 1983).
'**. Sato Seizaburo and Matsuzaki Tetsuhisa, (1984), pp. 89-90.
'*'. Ibid., pp.92-93.
'*". In his study on changing Diet and party politics, Ellis S.Krauss distinguishes two different concepts of leadership In terms of legislative skill. One is the "policy type" (selchozoku), who contributes to the discussion of bills within the party. The other Is "the Diet strategy type" (kokutalzoku> who merely carries out the task of negotiating with the opposition for the minor procedural 165 order to Investigate administrative-financial reform problems, the LDP established its PARC unit prior to the setup of its bureaucratic counterpart. The PARC's
Administrative-Financial Special Committee was set up in
1976 and annexed to the existing Administrative
Investigation Committee in January 1977.‘‘® It occurred 4 years earlier than the birth of the PCAR under the Prime
Minister's Office. This LDP's movement shows its independent effort to respond to new policy problems.
In the 1950s and 1960s, the PARC spent most of its time ratifying ministerial plans. In the 1970s, it began to pay more attention to substantial policy issues. As a result, subunits have become more important, whereas the executive committee has become a place to normally approve the section's decision without opposition. In addition, it has become a custom that bureaucrats participate in the PARC section discussions to make their appeals to the LDP.
Legally, bureaucrats are not required to bring the matter to the appropriate section. Under the changing political concessions necessary to hasten a bill's inevitable passage. Historically, importance of the political leadership has been transitted from the latter to the former type. This finding provides evidence of the increasing role of the political party. See Ellis S. Krauss, "Japanese Parties and Parliament: Changing Leadership Roles and Role Conflict," in Terry Edward MacDougall, ed., Political Leadership in Contemporary Japan (Ann Arbor, MI: Center for Japanese Studies, the University of Michigan, 1982), pp.93-114.
Sato Seizaburo and Matsuzaki Tetsuhisa, (1984), pp. 92-93. 166 bargaining process, however, they are aware that it is unwise to skip a PARC sectional deliberation. They well know that without the PARC's formal recognition, a bill would face serious opposition in the Diet legislative session.
Regarding the JNR matter, the working of the Mitsuzuka
Subcommittee also showed such a pattern of bureaucratic participation. They realized that the Mitsuzuka
Subcommittee, as a subunit of the Transportation Affairs
Section, was virtually endowed with real decisioning-making power from the party leadership as to the JNR reform issue.
Second, the PARC sections' independent activities became conspicuous. Many sections came to be dominated by their chairmen, vice chairmen, and members with more than 10 years of service, getting out from under the influence of ex-bureaucrats. Such section leaders are the persons who have polished broad and accurate knowledge of the administrative fields in which they specialize. Combined with such speciality, their longevity in the same policy arena led them to develop political influence in that field.
During the 1970s, the press and Diet observers identified them as zoku (policy tribes or caucus members), who have one or another functional area of expertise.
4. 2.3. Zoku Politics
Recently an increasing concern with the fundamental principles of the democratic process based on the primacy of 167 the legislature has produced considerable research of the contending elites, top bureaucrats and politicians. These studies have been conducted both on the West and on Japan.
Considering the threat of a growing degree of bureaucratic control of the political system, Joel D. Aberbach and his associates conducted a comparative study of bureaucrats and politicians in Western democracies.*‘‘ According to their suggestion, bureaucrats and politicians are both active participants in the policy process, but have different functions in the political system, responding to different audiences and carrying distinctive orientations.‘‘• They claim :
Bureaucrats are integrators, preferring tranquility, predictability, manageability, and tideness. Politicians, on the other hand, are particians who bring both visionary and particularistic elements to the process. They bring general direction, but rarely a concern for detail. Bureaucrats at times must persuade politicians to confront vague goals with intractable facts, and politicians, in turn, sometimes must stretch the incrementalist instincts of bureaucrats. These distinctions express the contemporary division of labor between bureaucrats and politicians.''*
‘‘ . Joel D. Aberbach, Robert D. Putnam, and Bert A, Rockman, Bureaucrats and Politicians in Western Democracies (Cambridge: Harvard University Press, 1961).
**“. Ibid., p. 93.
Ibid., p. 93. 168
According to their conclusions, bureaucrats are
"equilibrators," and politicians are "energizers."
Bureaucrats and politicians likely foster different kinds of change (incremental versus sudden) with different approaches
(caution versus risk-taking) to public issues.‘ ‘ ^
Their final remark is that "bureaucratization of politics" and "politicization of bureaucracy" are unavoidable, and the roles of both bureaucrats and politicians become inseparable and confused.''* Even though they look conflictuel and competitive, the relationship between politicians and bureaucrats are not based on the scheme of a zero-sum game. They are interdependent participants in the policy-making process. With interchangeable merits, both can make important contributions to the operation of a political system.
Nonetheless, if their respective weak and ineffective aspects do not offset each other, the policy-making process would fall into a dilemma. Excessively bureaucratic policy making may lead to the dilemma of power without responsibility and then a crisis of legitimacy. In contrast, excessively political policy-making may pose the dilemma of power without competence and then threaten a crisis of
''*. Ibid., Chapter 8.
Aberbach et. al.. Bureaucrats and Politicians in Western Democracies, p. 19. 169 effectiveness.* ‘ •
The findings of their study do not exactly fit the
Japanese case. That is because quite often in Japan there are other energizers, such as bureaucrats themselves and external groups. ‘* ^ Moreover, bureaucrats are not the only actors avoiding risk or seeking for compromise and consensus. Likewise, Japanese politicians do not always act as risk takers favoring a sudden a p p r o a c h . •
However, this study provides provocative insights on
Japanese studies. With a similar perspective to the above study, Huramatsu and Krauss demonstrates that the trend toward partial convergence of politicians and bureaucrats in policy-making among the advanced industrialized countries has been observed in Japan also. Their study is based on the proposition that as changes have occurred in the course of time, there has been a steady increase in the degree of the
LDP politicians' influence and expertise. Of course, they do not ignore differences in attitude, roles and styles of the
*‘ . Aberbach et. al. , Bureaucrats and Politicians in Western Democracies. p.252; and B.C.Koh, Japan's Administrative Elite, p. 218.
**’. See John C. Campbell, "The Old People Boom and Japanese Policy Making," Journal of Japanese Studies. 5:2 (1979), pp.321-358.
**•. Alan Rix, "Bureaucracy and Political Change in Japan," in J.A.A. Stockwin, Dynamic and Immobilist Politics in Japan. (London: Macmillan Press, 1988), p.62. 170 two groups In the West and in Japan.***
A study by Yung Ho Park on Japanese bureaucrats and ministers also explores an Increase in the relative influence of cabinet ministers and LDP politicians. He observed the specialization of politicians and the
"partisanization" of former bureaucrats, who enter politics.
A widely held assumption is that former bureaucrats in the
Diet and the cabinet are "Trojan horses" functioning to reinforce their former colleagues. Although former bureaucrats still constitute a sizable proportion of the
LDP's Diet contingent, they undergo, in the new balance system, an internalization process of the LDP's goals and values. In this way, they become politicized and partisanized. Partisanization also occurs among incumbent bureaucrats, especially bureau chiefs who interact most frequently with politicians. Under the politicization of administration, government ministries are depicted as being mere support arms for the LDP and its zoku Dietmembers, or are junior partners with the LDP or they end up suffocating under LDP pressure.*"*
The specialization of politicians is often attributed to the following factors: the accumulation of vast
***. Muramatsu Michio and Ellis S. Krauss, "Bureaucrats and Politicians in Policy Making: The Case of Japan," American Political Science Review. 78:1 (March 1984), pp.126-46.
* • * . Yung Ho Park, Bureaucrats and Ministries in Contemporary Japanese Government (1986), pp. 37-47. 171 administrative knowledge and experience in the hands of politicians, the prolonged rule of the LDP, the lengthened duration of LDP Dietmembers' service as parliamentary vice- ministers, ministers, and members of the Diet standing committees and PARC sections, and relatively weakened power of bureaucratic counterparts.‘•‘ Such informal groups of LDP politicians with speciality in one or two policy areas are known as zoku.
A literal meaning of zoku might be "a policy tribe"; a tribe of powerful LDP members with years of experience in a particular section for certain matters. Once a Dietmember joins a section of the PARC, he or she tends to remain in that section as long as he or she holds a seat in the Diet.
Their long tenure helps some Dietmembers to be able to accumulate policy expertise and knowledge on specific policy subjects.
Quite often, they are involved with an issue for longer periods than their bureaucratic counterparts. Members of zoku, serving in a certain field for a long time, boast more expertise in that field of specialization than senior bureaucrats, who are subject to frequent rotation in a s s i g n m e n t s . I n this process, a close personal relationship is easily built between them and both interest
Ibid., pp. 29-54.
‘ . Inoguchi and Iwai, 'Zoku Giin' no Kenkvu. pp. 120- 21 and 293-304. 172 groups and bureaucrats. They work for the best interests of their client groups, such as interest groups as well as the
appropriate groups of bureaucrats. In this sense, they spearhead the LDP's pressure group politics.
During the late 1970s, a subtle combination of events gave impact to an apparent decline in the power of the bureaucracy and a concurrent rise in the power of the LDP.
The Japanese Press named it a trend away from the bureaucratic leadership structure (kanryo shudo taiaei) and toward the party leadership structure (to shudo taiaei).''*
There is a tendency in Japan for ideological pressure to pretend that the political party is more influential and active than it actually is. And even during bureaucratic supremacy, it was uttered publicly that the relationship between the bureaucracy and the politicians had been cyclical rather than linear historically, assuming the regaining of power by the politicians during times of crisis.*'' However, the trend toward the party leadership structure was real at that time, primarily led by the following three causes.
*•*. Inoguchi Takashi and Iwai Tomoaki, 'Zoku Giin no Kenkvu (A Study of Zoku Dietmembers), (Tokyo: Nihon Keizai Shlmbunsha, 1987).
*•*. On the details, see Daily Yomiuri. "Tanaka's Decline and LDP Maneuvers," (June 12-27, 1986) (16 parts).
*'“. J.A.A.Stockwin, Dynamic and Immobilist Politics in Japan. (London: Macmillan Press, 1988), pp.1-21. 173
First, along with the consolidation of LDP power, the role of LDP politicians has manifestly increased. The formerly dominant position of bureaucracy, the power of which had already declined as the necessity of administrative guidance in industry had recently diminished
, became eroded. In the 1970s, the long time praised rationality and efficiency of bureaucracy had been casted into critical doubt. Senior LDP politicians developed more expertise about policy than in the past and their views came to be more trusted in policy deliberation. In the 17 sections with about 49 special councils and 35 research councils of the LDP's PARC, the politicians with a little seniority became much more assertive than before.
The LDP's so-called zoku includes those party officials who have developed vital knowledge in their areas of policy specialization. For instance, in the area of transportation, the LDP's unyuzoku (transportation policy specialists) have been actively involved in the overall transportation policies as well as in the JNR restructuring policy-making
(see Table 2.5 for the size of unyuzoku and its list). More specifically, kokutetsu zoku (JNR policy tribe) from among unyuzoku was the group dominating the process of the JNR reform dispute.'"* The bunkyozoku (education specialists)
'**. There is no formal list of kokutetsu zoku or unyuzoku. Nonetheless, interview information helped to categorize the following persons as kokutetse zoku because of their visible activities regarding the JNR matter. They are Moriyama Ginji, Tamura Gen, Hasegawa Shun, Hosoda 174 were vocal in the textbook controversy of 1982. The norinzoku (agricultural specialists) are referred as to those who are fighting to halt all competitive farm imports.
The shokozoku (trade and industry specialists) spearheaded
MITI's proposals in the party and the Diet. Such emerging politicians with knowledge in the LDP have substituted to certain extent their previous dependence on bureaucracy.
Table 2.5. The List of Unyuzoku LDP Dietmembers (As of 1985).
Name # of electoral faction earlier being elected district career
House of Representatives
Moriyama Kinji** 13 Tochigi 1 Komoto MOP
Harada Ken** 12 Osaka 3 Tanaka Secretary
Tamura Gen** 12 Mie 2 Tanaka Teacher
Hsegawa Shun** 12 Miyagi 2 Abe Vice Minister's Secretary Hosoda Kichizo** 10 Shimane Abe MOT @
Kato Mutsuki* 8 Okayama 2 Abe Teacher
Shiokawa Seijyuro * * 8 Osaka Abe Municipal Office Sato Humio* 8 Ooita 2 Nakasone Prefectural Governor Huruya Tooru 8 Gihu 2 Abe Prime Minister's Office
Kichizo, Kato Mutsuki, Shiokawa Masajuro, Okonogi Hikosaburo, and Mitsuzuka Hiroshi among unyuzoku. See Table 2. 5. 175
Table 2.5 (continued).
Minowa Noboru 8 Hokkaido 1 Tanaka Hospital Chief Sato Moriyoshi* 7 Hiroshima 3 Tanaka Secretary of MOT @ Okonogi Hikosaburo* 7 Kanakawa 1 Nakasone Municipal Governor Sunada Shigetami 7 Hyogo 1 Nakasone Secretary of MOAF Yamashida Tokuo** 7 Saga Komoto Prefectural Governor Matsuda Hirohumi* 7 Hiroshima Miyazava office man
Mitsuzuka Hiroshi** 6 Miyagi Abe Prefectural * Governor Miyazaki Shigekazu 6 Kagoshima Miyazava MOT @
Shikano Michihiko * 5 Yamagata Abe Secretary
Sekiya Katsunori* 5 Ehime Nakasone Secretary
House of Councillors ------Head of Tokunaga Masatoshi«*5 PR* Tanaka Bereaved («Proportional Representative) Association Kimura Mutsuo * * 5 Okayama non^affiliated MOT e le Asao 2 PR Tanaka JNR e
Eto Jyun 2 Yamaguchi Abe JNR 0
Kajivara Kyoshi 2 PR Tanaka MOT 0
Yoshimura Makoto 1 PR Abe MOT 0
Source: Inoguchi Takashi and Iwai Tomoyuki, 'Zoku' Giin no Kenkvu. (Tokyo: Nihon Keizai Shimbun Sha, 1987), p. 297.
Note: »* Former Minister of Transportation » Former Vice-minister of Transportation @ Former background in the related areas 176
The second factor propelling the rise of zoku is intra- bureaucratic organizations' relationships. The increasing interministériel conflicts in the 1970s brought in excessive sectionalism and jurisdictional infighting within the bureaucracy. This context provided numerous opportunities for politicians to support one ministry against another, to profit from the deadlocks by offering real supra- bureaucratic leadership and to go further in expanding their power at the expense of the quarrelling bureaucrats.^ In this atmosphere, zoku politicians frequently play the role of power-brokering and testify to pluralistic elements within the political class. This pattern has been often labeled as "zoku politics. ”
Thirdly, the recruitment pattern of political leadership has shifted from ex-bureaucrats to long- incumbent pure politicians (tojinha), who are veteran
Dietmen primarily from rural constituencies. Their typical career pattern displays a progression in service through one or more of the following stages for a particular ministry: parliamentary vice minister, PARC section chairman or vice chairman. Diet Standing Committee chairman, and minister or
For details, see C. Johnson, "Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics, " The Journal of Japanese Studies. 12:1 (Winter 1986), pp. 1- 28. 177
director general.'*' Surprisingly enough, during the time between 1955 and 1966 about 45% of the major cabinet members were former bureaucrats. Indeed the extensive reemployment of senior bureaucrats in big business and politics after their retirement (what the Japanese call amakudari) had been singled out as an area of needed reform. Compared to this, a current trend has been the rise of pure politicians rather than ex-bureaucrats, although the amakudari practice can not easily be stopped completely.‘ •
Noticeably, as to the JNR reform discussion, these politicians affiliated with the Transportation Section of the LDP's PARC played active roles. More specifically,
Mitsuzuka Hiroshi, Kato Mutsuki and Okonogi Hikosaburo rather than the party's big three, exercised active initiative. The LDP's Secretary General, Kanemaru Shin named these three representatives as the group responsible for JNR reform affairs at the party level.
*•'. A parsimonious analysis on the zoku politicians' career pattern is provided in Inoguchi and Iwai, (1985), pp.132-138.
'* *. On studies of amakudari practice, see C. Johnson, "The Reemployment of Retired Government Bureaucrats in Japanese Big Business,” Asian Survey. 14 (1974), pp.935-965 and "Japan: Who Governs? An Essay on Official Bureaucracy," The Journal of Japanese Studies. 2 (1975), pp.1-28; B.C. Koh, Japan's Administrative Elite. (Berkeley: University of California Press, 1989). See also Tuvia Blumenthal, "The Practice of Amakudari Within the Japanese Employment System," Asian Survey. 25:3 (1985), pp.310-21, in which the view to see the amakudari practice reduced is suspiciously looked at, and counterevidence is provided. 178
Zoku Dietmembers are at the same time, members of a
faction within the party. Each faction is eager to have a
range of zoku among their members to cope with any type of
policy problem. The more comprehensive array of zoku a
faction has, the more effective and stronger its problem
handling ability. Tanaka Kakuei's faction, as the largest,
was of this kind, staffed by qualified specialists covering
various fields.**®
During the 1970s, influence within the party shifted
subtly from factions to PARC sections and zoku Dietmembers
whose activities are substantial in them. As a result, the
ministries began to consult with the zoku Dietmembers at the
stage of policy formulation, ceasing the previous pattern of
the party's dependence on government agencies for policy
decisions. Although the zoku themselves are not
independently responsible for making the policies that ministries execute, politicians began doing more than simply
lobbying the ministries and running interference for them.
**0 . Tanaka Kakuei's expression of the faction as a "general hospital" parsimoniously captures the relationship between a faction and the zoku. For this term, his own faction as the largest within the LDP worked like a first- rate hospital which is operated by a qualified staff in all medical fields (having a comprehensive array of zoku) with the best special equipments (bureaucratic connections). Consequently, the Tanaka faction could cope with any kind of illness (various pressures of need). On details of his metaphor, see Shukan Yomiuri. "Tanaka Kakuei Klnkyu Intabyu (An Urgent Interview with Tanaka Kakuei)," (June 19, 1981). Also see Joho Kenkyujo, ed. , Tanaka Kakuei (Tokyo: Deta Hausu, 1983), p.139; and Sato Seizaburo and Matuzaki Tetsuhisa, Jiminto Seiken (Tokyo: Chuo Koron Sha, 1986), pp. 61-62. 179
However, the Interests of a zoku sometimes differ from
those of a faction or a factional leader. Regarding a
particular issue area, several sub-zoku often conflict with
each other regardless of their factional affiliation. In the
JNR reform dispute, such an example might be seen between
Kato Mutsuki and Mitsuzuka Hiroshi. They are affiliated with
the same Fukuda (Abe) faction and are leading participants
among unyuzoku. However, throughout the JNR reform dispute
period, they conflicted with each other blazingly having different perspectives and interests. In this context, provocative questions can be raised about behavioral
patterns of unyuzoku relating to the JNR reform matter.
According to Inoguchi and Iwai, zoku Dietmembers are classified into the following two types: a watch-dog type and a haunting-dog type.*'‘ The former is characterized by the participation of a small zoku Dietmember's group on a particular policy issue under the leadership of a
"master,"'*" who generally has played outstanding influence on that area. The latter type differs from the first in
'*‘. On details, see Inguchi Takashi and Iwai Tomoaki, Zoku Giin' no Kenkvu (A Study of Zoku Dietmembers), (Tokyo Nihon Keizai Shimbunsha, 1987), pp. 257-273.
'*". According to the Kawaguchi Hiroyuki's criteria, zoku Dietmembers are ranked into five grades as follows; the don (the Mafia chieftain, Don Carleone, in the 1972 film, the Godfather), boss (bosu), elder (choro), strong man (Jltfluryokusha), and ordinary zoku. See Kawaguchi Hiroyuki, "Jiminto Habatsu to Kanryo: 'Zoku' no Rankingu (LDP Factions and the Bureaucracy: Rankings of Zoku),” Gekkan Kankai. 9 (November 1983). 180 terms of the numbers of participating zoku Dietmembers. In this case, many politicians exercise a collective power to control the direction of the policy issue. '''
Following this classification, zoku Dietmembers's behavioral pattern in the JNR reform dispute can be characterized as a shift from the haunting-dog pattern to the watch-dog pattern. At the beginning of the discussion, many Dietmembers with their own political interests tried to influence the issue. However, as the focus of the issue moved from JNR management structure to the subsidy problem, which was related to the large sum of the budget, most
Dietmembers realized that the watch-dog type behavior would be better suited. In addition, when the issue of local lines' curtailment was discussed, the reformers' side effectively conducted a public campaign. Thus, there was little room for the politicians to play influence.
A more significant factor was Mitsuzuka Hiroshi's rise in power. Actually, Kato Mutsuki had been known as the boss of the field (a watch-dog). However, Mitsuzuka, as the chairman of the JNR Restructuring Subcommittee, increased his influence and emerged as a new watch-dog, comparable to the existing boss Kato Mutsuki. (For the background and career tracks of the two leaders in the field of transportation policy, see Table 2. 6. >
Inoguchi and Iwai, 'Zoku Giin' no Kenkvu (1987), pp.257-273. 181
Table 2.6. Two Leading Unyuzoku Dietmembers' Career: Kato Mutsuki and Mitsuzuka Hiroshi.
Kato Mutsuki (Faction: Abe)
Born in 1925 in Kasaoka City Graduated from Himeji High School (old system) Teacher; Labor Union Movement (Japan Teachers' Union); 10 times elected for HR in Okayama 2 district since 1967; Unyuzoku and Yuseizoku (Post and Telecommunications policy specialist); Chair and Vice-Chair of PARC (PARC's Chair as of February 1990); Standing Committee on Transportation; Transportation Section of PARC; JNR Reconstruction Basic Problems Committee; Director-General of National Land Agency; Vice-Minister of Ministry of Transportation; Minister of Agriculture and Forestry (3rd Nakasone Cabinet).
Mitsuzuka Hiroshi (Faction: Abe)
Born in 1927 in Miyagi Prefecture Graduated from Medical Department of Nihon Agricultural College and Law Department of Waseda University. Secretary; Prefectural Governor; 7 times elected for HR in Miyagi 1 district since 1972; Unyuzoku and Bunkyozoku (Education policy specialist); Chair and Vice-Chair of PARC; Standing Committee on Transportation; Transportation Section of PARC; Chair of JNR Reconstruction Subcommittee under the JNR Reconstruction Basic Problems Committee; Vice-Minister of Ministries of Transportation and of Education ; Minister of Transportation (2nd Nakasone Cabinet) and Foreign Affairs (Uno Cabinet).
Source: Kokkai Binran (1990); and other materials.
As a result, the process shifted from participation of various zoku Dietmembers to a tug-of-war between "two wild watch-dogs that sat by in the same house."*'* The inferior
*•*. Kusano Atushi, Kokutetsu Kaikaku. (Tokyo: Chuokoron Sha, 1989), pp.239-241. 182 one, Mitsuzuka Hiroshi, began to take initiative by making the superior one, Kato Mutsuki, surrender tamely and obey its will. Indeed, despite opposing views within the unyuzoku, Mitsuzuka eventually declared the breakup and privatization plan in June 1‘ 85. There were two factors enabling him to do so. One was his exceptionally long reigning in the chairmanship of the JNR Restructuring
Subcommittee. In fact, he had been in the chairmanship during the period from 1982 to 1985, the crucial years for the JNR reform dispute. The second factor was his strong determination for initiating the JNR break-up and privatization and political sense to locate the presence of decisive power.* *"
Consequently, the settling process of the JNR reform dispute displayed a shift of the balance of power between the two masters, Kato Mutsuki and Mitsuzuka Hiroshi. Some observers indicated this change as a generational shiftfrom old to new leaders (see Table 2 . 6 ) . However, this point is not tested in this study.
Mitsuzuka Hiroshi's own retrospect on this issue is available in "Taidan: Kokutetsu Kaikaku wa Abe Seiken e no Hukusen de Aru (Interview: JNR Reform Foreshadows the Abe Dominance)," Chuo Koron (March 1986), pp.132-139.
‘ . Among interviewees, some who saw the process as the change of the nature of leadership interpreted it in such a way. (Interview). 183
4.2.4. Factions
The rise of zoku politics is important, but it does not override the presence of factions and their significance.
In the Japanese political party structure, informal organizations,''? relationships and groups are so important that they often form internal networks controlling decision making at various levels of the formal organizational process. Among the variety of informal networks, the most conspicuous element in Japanese political parties is factionalism. With the exception of the Communist and Clean
Government Parties, all parties' internal and external structures have continuously organized, split or reorganized revolving around the pole of factions. In the LDP, JSP, and
DSP, factions provide building blocks to party organizations semi-permanently.
In comparison with those of other countries, Japanese factionalism is highly institutionalized showing remarkable continuity. This might be because the basic personal ties of the groupings around particular leaders have been recognized
‘ . In short, informal organization means interpersonal networks of friendship and mutual ideological agreement and other relationships or groups which come to be in the domain of parties and which are not called for by the formal activities of the party organization. In this regard, all political parties have informal as well as formal organization so that they normally feature "overlapping dual structures." See B.M.Richardson and S.C. Flanagan, Politics in Japan (Boston & Toronto: Little, Brown and Company, 1984), pp.100-106. 184 as being significant, distinctively stable, and sustained at times even after the death or retirement of their boss from politics. Due to this persistency of factions in political party organizations, political parties are often viewed as
"coalitions or confederations of factions" rather than as integrated systems.*''
The existence of factions within the ruling party is regarded as a leading factor of the LDP's long hold on power. During the formation of the LDP in 1955, the conservative camp feared the socialist threat in the face of the two socialist parties' merger*** according that same
**'. For details of factionalism in Japanese political parties, see Fukui, Party in Power; The Japanese Liberal Democrats and Policy Making. (Berkeley: University of California Press, 1970), pp. 107-203; Fukui, "Japan: Factionalism in a Dominant Party System," in F.P.Belloni and D.C. Beller, eds., Political Parties and Factionalism in Comparative Perspective. (Santa Barbara: ABC Clio, 1978), 43-72; N. Thayer, How the Conservatives Rule Japan. (Princeton: Princeton University Press, 1969), pp.15-17; B. M. Richardson and S. C. Flanagan, Politics in Japan. (Boston & Toronto: Little, Brown and Company, 1984), pp. lOO- 106; and H. Baerwald, Party Politics in Japan. (Boston: Allen & Unwin, 1986), pp. 16-28.
***. Although around the pole of a reunified Japan Socialist Party, most of the progressive (kakushin kei) members of the Diet gathered in 1955, after 4 years period of fragile unity, the JSP split again for intraparty ideological discrepancies. It was in January 1960 that the Democratic Socialist Party formally came into being, separate from the JSP. The confronting ability of the progressives against the conservatives thereby became greatly shortened. Consequently, the fragmentation of the opposition pole led them to devote most of their energy to competing with each other rather than confronting the LDP, their presumptive major antagonist. Thus, the increasing fragmentation among the ranks of the opposition parties have definitely been of assistance to the LDP in retaining its ability to be Japan's governing party. On such a review, see 185 year.**® They thought that an amalgamation of conservative forces was necessary to keep the conservative domination, to achieve economic growth, and to Improve Japan's position In the world. The conservative leaders compromised in order to establish a cartel of factions of which they were as the heads. This change began the era of what is referred to as
"the political system of 1955" (gojugo-nen talsei). The real appearance of such observable bifurcation revealed not a two-party, but a one-and-a-half party system.
In this sense, the LDP Is far from an Ideological association. Instead It Is an antl-Soclallst united front of key factions motivated by a common practical consideration of ensuring the ongoing rule of the conservative power. The factions are. In other words, alliances among Diet members to advance their own Interests within the party. Since Its foundation, despite the Internal periodical tendency of disunity, the LDP has been able to hang together under the common Interest of remaining In power. The current main factions are led by and named after, Takeshlta Noboru,
Hans Baerwald, Party Politics In Japan. (Boston: Allen & Unwin, 1986).
‘*®. The evolutionary process of the conservative camp to the birth of the LDP Is explained In Fukui, Party In Power (1970), Chapter 1, "Evolution of the Prewar Party Models" and Chapter 2, "Transmission of the Prewar Heritage to Postwar Parties." Also see, Tomlta, Nakamura and Hrebenar, "The Liberal Democratic Party; The Ruling Party In Japan," In Hrebenar, ed., The Japanese Party System (1985), 235-282. For a graphical summary, consult Sato and Matsuzakl (1987), Appendix and Hrebenar, ed. (1986), Appendix, pp.299- 300. 186
Ml/azawa Kiichi, Watanabe Michio, Abe Shlntaro and Komoto
Toshio. Figure 2. 2 shows the factional lineage of the LDP since its establishment.
Yoshida
1956 Ikeda Sato Kishi Miki Kono
Maeo Fujiyama Kawashima
Ohira Shiina Tanaka
Suzuki Fukuda Nakasone Nakagawa
1967 Miyazawa Takéshita Abe Komoto Watanabe
Figure 2.2. Liberal Democratic Party: Factional Lineage (1956-1987).
Source: Asahl Shimbun. December 20, 1983; Sato and Matsuzski (1987), Appendix; and Kokai Binran, 1984-1989.
Note: A number of smaller factions have been omitted from the figure.
The factions are vying for the highest political office. Their chiefs contend for the post of party president, who automatically becomes Prime Minister. At party presidential election time, presenting their platforms and policies, the factions maneuver to win over others to 187 gain a majority. In other words, they fill the function of quasi-parties. A mainstream faction (ehuryu-ha) controls the government and a non-mainstream faction (hlahuryu-ha) or anti-mainstream faction (hanshuryu-ha) is a virtual opposition party within the party. If three of the five factions come together, they are able to name the president.
Becoming the mainstream, they then control the government.
With the expectation of taking over power in the next election, the two non-mainstream factions assume the role of an opposition party. This is the mutual-restraint function of the factions, which has become a must if the LDP one- party rule is to be continued. The LDP's long time dominance of power has generated a confronting system between the quasi-ruling and the quasi-opposition groups within the ruling party itself.‘♦‘
In short, in order to assure political perpetuation, factions function as if miniparties within a party compete and combine. Despite the criticism of democratic government theorists, even with the lack of effective opposition parties, the factions within the ruling party have played some positive roles in the political system.'*" They function to avoid the pitfalls of one-party rule: one-
* * ‘ . With regard to the factional alignments within the LDP, see Uchida Kenzo, Habatsu (Factions), (Tokyo: Chuo Koron Sha, 1983).
‘* *. See B.M.Richardson and S. C.Flanagen, Politics in Japan (1984), pp.100-106. 188 sidedness In political policy-making and Implementation,
Isolation from the public, and organizational stagnation and rigidity of stance. In the 1950s and 1960s, without the usual side effects of single-party dominance, factions effectively worked for the LDP's long-term reign. Their positive operation provided Japan with an unusually high degree of political stability.
Considering the factional politics, Baerwald explained that "these surface (omote) manifestations tended to obscure rather than Illuminate the sub-surface (ura). I.e., subtext, of what was transpiring." *** In fact, the LDP's
Intraparty conflicts around factional conglomeration have existed for the last 35 years since Its establishment.
Since the mid-1970s, the Tanaka Kakuel faction turned out to be the most powerful faction, with the aid of his exceptional executive talents, his personal charisma, and his keen Insight Into the Inner workings of the public mind.
As the faction led by Tanaka gained more Influence than had normally been acceptable or possible In factional politics, the factional balance began to go awry. His success came close to splitting the party for the rest of the decade and an Intra-party struggle (Kaku-Fuku war) occurred.
In the LDP's national convention of 1972, Fukuda was challenged by Tanaka. Fukuda had been outside of retiring
Hans Baerwald, (1986), p.1. 189
Prime Minister Sato Eisaku's own faction but had been his stanchest supporter. Tanaka, as Sato's key factional lieutenant, had been an active fund raiser. Fukuda presumed to have the inside track because the general custom was that an ongoing party president (Prime Minister) would not be succeeded by a member of his own faction. By aggregating coalitional power, however, Tanaka took the position at that convention. ‘ ♦ * Needless to say, party solidarity was shaken by this unanticipated result. As Baerwald succinctly indicates, "For even if the principals were no longer direct participants, their factional followers have continued the grudge war."**® This was true in the case of the JNR reform dispute process.
Channeling huge sums into the faction's coffers through wheelings and dealings, Tanaka Kakuei had controlled the faction as if being based on an intense solidarity. Such a relationship has been called the "Tanaka Corp."***
Consequently, the affiliation of a politician with the
Tanaka faction was believed to be a shortcut to the realization of obtaining a powerful post in the government.
Similarly, Tanaka used various means to swell the ranks of his faction and establish control of the selection of the
***. On details of the story, see Hans Baerwald, "Accommodation, Confrontation and the Diet," Party Politics in Japan. (1986), pp.123-152.
**=. Ibid., p.126.
***. Tomita, Nakamura and Hrebenar (1986), p.249. 190 party president. Thus, only someone loyal to him could assume the party's presidential position. The Ohira, Suzuki and Nakasone Cabinets all came to power under the hegemony of the "kingmaker"‘ ^ Tanaka Kakuei.
Especially Nakasone, who led a relatively small faction, owed his premiership entirely to the Tanaka faction and remained there wholly at that faction's pleasure. Tanaka comprised 120 of the 420 LDP members in the Diet at that time. Soon after Nakasone became Prime Minister in 1982,
Tanaka gave the following expression: "The Nakasone government is like a fox riding on the back of an elephant.
The elephant goes where it wants to go, and if the fox does not like it, let it get off."'*"
In the middle of the 1970s, Tanaka was standing trial and making appeals in successive criminal courts, as a result of reports of tax evasion. In 1974, he could not help but step down as Prime Minister and resign involuntarily from the LDP. In 1976, he was arrested for receiving 500 million yen in bribes from the Lockheed Corp.'*" In October
'* ^. Far Eastern Economic Review. "Japan: Still the Kingmaker," (November 13, 1981), p. 22.
**"• See Tanaka Toyozo, "Breakup of the Tanaka Faction: End of an Era," Japan Quarterly. (October-December 1987), p. 328.
'*•• A short version of the Lockheed event can be told as follows.
Lockheed began as a phenomenon in Japanese politics as a result of testimony given in 1976 before a subcommittee of the U. S. Senate Foreign 191
1983, the District Court in Tokyo issued a guilty verdict to the charges. A common rule in Japan is that politicians under suspicion of having committed a crime lose their political power and careers. However, Tanaka had exerted extraordinarily durable influences on politics with real power behind-the-scenes.*9° Tanaka himself and many members
Relations Committee. The testimony indicated that certain senior Japanese business and government officials had received bribes to promote sales of Lockheed LlOll wide-body passenger planes to Japan's major domestic carrier, All-Nippon Airways. After months of preliminary maneuvering, former Prime Minister Tanaka Kakuei was indicted in August 1976 for having accepted 500 million yen (1.6 million dollars at then prevailing exchange rates) from Lockheed agents. Former Minister of Transportation Hashimoto Tomisaburo, a senior leader in the Tanaka faction, and Parliamentary Vice Minister of Transportation Sato Takayuki were also alleged to have received payments. Ultimately Tanaka went on trial and was convicted in October 1983. See K. E.Calder, (1988), p. 111.
*90. For details on the scandal, see, among others, Larry Warren Fisher, "The Lockheed Affair: A Phenomenon of Japanese Politics" (Ph.D. diss., University of Colorado, Boulder, 1980); and Hans H. Baerwald, "Lockheed and Japanese Politics," Asian Survey (December 1976), pp.817-29. See also the work on Tanaka by Nigata Nippo Sha, ed., Kakuei no Fudo (The Political Culture of Tanaka Kakuei), (Nigato: Nigata Nipposha, 1983); and Za Etssuzan Kai (The Etsuzan Association) (Nigata: Nigato Nipposah, 1983). On the structural nature of Tanaka Kakuei's politics, see Tachibana Takashi, Tanaka Kakuei Kenkvu; Zenkiroku (Research on Tanaka Kakuei: The Complete Record). Vol.2. (Tokyo: Kodansha, 1982), which criticized Tanaka's political style. Other sources in English on Tanaka's Political style and his involvement in the Lockheed affair are Fukuoka Masayuki, "Naze Tsuyoi Kakuei Seiji," Chuo Koron. (January 1983), pp.112-22, of which appears in English "Tanaka Kakuei's Grass Roots," in Japan Echo. Vol.X, no.1, (1983), pp.33-39; and Chalmers Johnson, "Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics in Japan," The Journal of Japanese Studies 12:1 (Winter 1986) pp. 1-28. 192 of his faction regarded these attacks as a politically
Inspired conspiracy of other LDP factions. Consequently, he devoted himself to enlarging his faction to the extent that
It eventually became a "political machine"; the most powerful force In the LDP and In Japanese politics in the
1980s. This continued until his severe cerebral hemorrhage on February 27, 1985.
According to an analysis, Tanaka established a "new order" in which bureaucrats were expected to pay some attention to what politicians asked them to do. This change elevated the status of the party In relation to both the
Prime Minister and the bureaucracy.* ®‘ However, a general retrospective assessment Is that the abuses, which resulted from a particular faction's holding the power to make or break administrations, distorted politics over a decade.
Factional politics also has a central place In understanding the JNR reform dispute. In terms of factions, the transportation policy group (unyuzoku), particularly JNR specialist group, has been a stronghold of the Fukuda faction. Tanaka was also one of the central figures in the
JNR reform matter with various visible and Invisible
Influences.
As of 1983, Prime Minister Nakasone Yasuhlro has led his own faction, which had about 67 members out of the 392
LDP Diet members. Nakasone was unable to run either the
See C.Johnson, (1986), pp.1-28 and (1985), p. 205. 193
party or the affairs of government by himself with such a
small faction. Under this situation, the Tanaka faction had
been a strong backer for Nakasone. Another group that
maintained a cooperative relationship with Nakasone was the
Suzuki faction, formerly led by the late Ohira Masayoshi.
Lacking independence, the very existence of the Nakasone government was dependent up to his ability to sustain the cooperation with these two powerful factions. As a result,
these two assisting factions held a near veto power over policies presented by Nakasone. Some persons, who strongly criticized the Nakasone Cabinet's dependency with respect to policy matters, used to call it the "Tanaka-sone" government.'*" Although mainstream and nonmainstream factions fluctuate somewhat, the mainstream factions under the Nakasone administration consisted of the Tanaka,
Nakasone and Suzuki factions. In contrast, the Fukuda and
Komoto factions were opposed to them. It should be understood that the JNR reform dispute occurred under this factional interconnections.
Concretely speaking, at the peak time of the JNR dispute around 1984, an appropriate legislative procedure, which was required for the deliberation of bills on the JNR reform as well as other administrative reforms, was put off for a little while. This was because of the Prime Minister's consideration on his indispensable supporter, the Tanaka
Tomita, Nakamura and Hrebenar (1986), p.250. 194 faction. Tanaka himself and many of his followers favored
JNR privâtizaion, but still opposed its breakup. On October
30, 1984, in a party presidential election, Nakasone could not be reelected without the Tanaka faction's support.
Nakasone as a smaller-sized faction leader clearly intended to push the legislative vote after he was reelected. Owing to the substantial backup of the two supporting factions
(Tanaka and Suzuki factions), Nakasone was reelected to a second term as the LDP president. After that, the JNR reform dispute entered into a new phase.
Recent structural changes in the factions have eroded the centralization of political power being held by one man in the party. Since the summer of 1987, the Tanaka faction, except for the Nikaido group and a few strays, has in effect become the Takeshita faction.*** The Takeshita faction is, with 105 members as of 1990, still the largest in the party
(see Table 2.7). However, the fact that it is contending for the party presidency makes it quite different from its predecessor. Instead of exerting strong charismatic leadership, Takeshita kept mentioning that management is not the job of just one strong person. Since the double elections in July 1986, the Fukuda faction has become the
Abe faction, and the Suzuki faction (the former Ohira faction) has become the Miyazawa faction. The era of the
***. Fukui Haruhiro, "Japan in 1987: An Eventful Year," Asian Survey. 28:1 (1988), pp.32-34. 195 strongmen which was called San-Kaku-Dai-Fuku-Chu*’♦ came to an end when Nakasone stepped down in October 1987. The era of the new leaders- Takeshita, Abe, Miyazawa, and Watanabe- began in earnest.
Table 2.7. LDP Factional Strength in the House of Represenntatives and House of Councillors ( As of February 1990). •
Faction HR HC total
Takeshita 70 (71 ) 35 105 Abe 62 (55) 24 86 Watanabe 49 (62)* 17 66 Miyazawa 62 (61) 19 81 Komoto 26 (24) 7 33
Nikkaido 4 (9) 3 7 nonaffiliated/ 13 (13) 4 17 minor
total 266 109 395
«Does not include Nakasone Yasuhiro and Fujinami Takao who are formally not LDP members. Note: <) reflects pre-election strength.
Source: Kokai Binran. (1990).
4.3. Bureaucratic Tradition
As seen from the discussion so far, in the 1970s'
Japanese political scene, the emergence of politicians was a typical phenomenon. Given the prevailing pressure of various
'* *. What is called San-Kaku-Dal-Fuku-Chu refers to an alternative pronouncing of the ideogram for Prime Ministers Mi(San)ki, Tanaka Kakuei, OCDaDhira, Fukuda and Naka(Chu)sone. 196 groups' demands, politicians played active roles. Because of their significance in the policy-making process, the JNR reform Issue also revolved around the pole of their influence. However, the way of settling the Issue did not only depend on the presence of politicians. There was another long-term significant political entity, the bureaucracy.
4.3.1. The Question of Relative Power
As seen In this study as well as other case studies, a common picture of policy-making Includes a diversity of participants, regardless of their relative significance.
Although various perspectives assert the significance of different figures or an alliance of actors, there Is general agreement that the bureaucracy and the LDP are the two most powerful Institutions In the policy-making process.*®®
However, what matters Is that opinion is divided about which of these two Institutions Is more influential.
It Is ultimately difficult to settle the controversy as to who governs In a determinant way, given a complicate real world setting. As discussed In the literature review section, two schools of thought prevail. They are the
* ® ®. See Bradley M. Richardson, "Policymaking In Japan: An Organizing Perspective, " In T.J. Pempel, ed. , Policymaking In Contemporary Japan (Ithaca: Cornell University Press, 1977), pp.239-68 and T. J. Pempel, "Conclusion," In Ibid., pp.318-23. See also, for an overview, Fukui Haruhiro, "Studies In Policymaking- A Review of the Literature," In Ibid., pp.22-59. 197 bureaucracy-dominant school (kanryo yulron) and the party- dominance school (seito yulron). Many provoking studies have been done with effort to establish a detailed framework for understanding either when political Impact prevails over bureaucratic rationalism, or what the functional relationship Is between the realms of technocratic and indulgent politics.
Some persons feel that politicians dominate the bureaucracy, and bureaucracies are merely puppets for
Important political Interests within the persisting power tent of the ruling party.* However, despite recent recognition of the Increasing Influence of politicians, a diversity of opinion points out ambiguity, complexity and a change of their actual roles. The existing bureaucracy- dominant perspective views the Involvement of politicians as really only cheering squads for the bureaucratic armies. ‘ ^
Still for others, politicians In bureaucratic turf struggles are like having control of the skies over a battle field, which Is Indispensable for winning a war. However, the substantial ground fighting necessary for seizing the land
For the view of politicians' dominance, see Takahashl Yoshlyukl, "Jlmlnto Habatsu to Kanryo: 'Tanaka Shlhal' no Nouhau (LDP Factions and the Bureaucracy: The Knowhow of the 'Tanaka Dominance'," Gekkan Kankal. 9 (June 1983), pp. 114-24.
For details of this view, see Gekkan Kankal (November 1983). 198 still remains, which cannot be accomplished by air cover.*“•
A common valuable realization obtained from various case studies is that there is no conclusive dominant pattern. Bradley M. Richardson conceptualizes seven different patterns of policy-making during one year.'** He indicates that the configuration of forces varies from case to case, to such an extent that what acts prominently in one case becomes all but irrelevant in another. Chalmers Johnson also points out that in order to determine which power was ascendent, whether in either the prewar or postwar periods, it would require "detailed ministry-by-ministry analysis."'** In addition, Pempel identifies three differentiated policy-making patterns in one policy area, i.e., higher education. All these prove the complexity of the reality.'‘' Thus, a balanced understanding of policy making has to consider not only the ruling political party but also the bureaucracy.
'*•. For details, see Inoguchi Takashi and Iwai Tomoaki, "Jiminto Rieki Yudo Seiji-Keizaigaku (The Political Economy of Guidance of the LDP by Special Interests)," Chuo Koron (March 1985), p.160.
'**. Bradley M. Richardson, "Policymaking in Japan: An Organizing Perspective," in T.J.Pempel, ed. Policymaking in Contemporary Japan (1977), pp.239-68.
'**. Chalmers Johnson, "Japan: Who Governs? An Essay on Official Bureaucracy," The Journal of Japanese Studies. 2:1 (Autumn 1975), p. 14.
'*'. T.J.Pempel, Policymaking in Contemporary Japan. pp.269-307. 199
4.3.2. Dual Structure of Administration
The Japanese government Includes both central offices of ministries and a series of intermediate offices, less formal organizations, which are much bigger but less visible. The government ministries are able to manage the
Increasing burden of administration by establishing new legal entities. To cope with the growing and changing functional needs of public administration, public enterprises and special legal entities have been organized as alternatives to internal expansion and diversification, which would require higher costs. The expandable auxiliary organizations fit the interests of government ministries in protecting their time life employed labour force and keeping the scope of their work clearly focused. These organizations also provide post-retirement positions for ex-officials
(amakudari).
The existence of a cluster of affiliated public advisory organs has incurred from the functional need of
Japanese public administration. This aspect seems to solve the paradox of the perspective of viewing Japan as a minimalist, but interventionist state. Japan may appear minimalist when considering its central institutions only.
However, once the focus is laid on the intermediate level of organizational structure, one sees the enormous maze of networks which function to activate the administrative system and structure. The complex machinery of the Japanese 2 0 0 state has been operated, being geared on "a dual administrative structure" including central and intermediate organizations, formal and informal channels, and purely public and mixed public-private groups.**"
This broadened latitude gives the political system of
Japan an extraordinary degree of smoothness and flexibility.
The degree of dependence of the main functions of the political structures on the connections linking formal and informal, and public and private is quite high in Japan. The
Japanese political process often increases adaptability and resilience by developing public-private relationships through creating a network of ad hoc and informal ties.
As Richardson and Flanagan suggest, a major difference between the Japanese political system and expectations of
Western political theory is the former's complicate social networks and their functions. ‘ ‘ " According to their study, given the persistence of personal ties, the significance of the group in an individual's life, and the ability of the group to enforce conformity among its members, the social network model works for Japan.
Daniel I. Okimoto, Between MITI and the Market: Japanese Industrial Policy for High Technology. (Stanford, Calif.: Stanford University Press, 1989), p.155.
B.M.Richardson and S. C. Flanagan, Politics in Japan (1984) and "Political Disaffection and Political Stability," in R.T. Jannuzzi, ed., Comparative Social Research (Greenwich, Conn.: JAI Press, 1980), pp.19-27. In these works, they argue that the best model for understanding Japanese political behaviors including voting behavior is one based on social networks. 2 0 1
More specifically, Peter J. Katzensteln devises the
term "policy networks"**" to describe the formal-informal
networks which bring government authorities and interest
sectors' leaders together to formulate public policy. These networks are embedded in the political structure and function for the interpenetration of state and society. The
informal policy networks include various public corporations, public enterprises and several thousand non profit organizations such as extra-departmental groups
(galkaku dantai)*** in which interest groups form part of
**". Peter J. Katzensteln, "Conclusion : Domestic Structures and Strategies," International Organization. 31:4 (Autumn 1977), p.892.
‘*“. According to Aurelia George,
the gaikaku dantai represent a specialized form of administrative or institutional interest group which function as auxiliary organs of government. They are formally private groups organized as incorporated associations, foundations or unions under the Civil Code, but their founding impetus is bureaucratic and their functions are public. Each is affiliated with a particular ministry or section of it, and each has an intimate clientele relationship with the part of the bureaucracy to which it is attached. This relationship is built around financial, functional and personnel links. The gaikaku dantai rely on government funding in varying degrees for their activities and they are staffed predominantly by retired government officials. There are around 5,000 such groups in Japan.
For details, see Aurelia George, "Japanese Interest Group Behavior," in J.A.A. Stockwin, ed., Dynamic and Immobilist Politics in Japan (London: Macmillan Press, 1988), p.124. Also see Charlmers A. Johnsn, Japan's Public Policy Companies (Washington, DC: American Enterprise Institute for Public Policy Research, 1978), p.49 and Peter Cheng, "Japanese Interest Group Politics: An Institutional 2 0 2 the executive, advisory or membership structure.‘ “
To put it more concretely, these intermediate organizations can be categorized into two kinds. The first group covers quasi-governmental organizations under government regulatory control, including public corporations, public enterprises and other auxiliary organizations like councils and commissions. The second category consists of quasi-non governmental organizations like non-profit organizations which are relatively independent from government interference.'*? The existence of such networks makes government officials and the leaders of the private sector able to transcend the narrow membership confines of formal institutions. Therefore, in order to complete the picture of the Japanese government system and operation, it is indispensable to explore the map of the connections between the intermediate levels just beneath the formal government organizations.
This is of course a must in understanding the JNR restructuring dispute, also. Particularly, in the process of the JNR reform discussion, the roles of the public advisory
Framework," Asian Survey. 30:3 (March 1990), pp.257-258.
Chalmers Johnson, Japan's Public Policy Companies. (Washington, D.C.: American Enterprise Institute, 1978), p. 27.
**?. For the categorization of these organizations, see Imai Kenichi, Itami Hiroyuki, and Koike Kazuo, Naibu Soshiki no Keizaigaku (The Economics of Internal Organizations) (Tokyo: Toyo Keizai Shimposha, 1982), pp.131-4. 203 councils, committees and subcommittees (i.e., the PCAR, its subcommittees, and the JNR Restructuring Supervisory
Council) were conspicuous among the intermediate organizatirns. Relating to the JNR debate, the dual structure of the administration can be briefly drawn as follows (see Figure 2.3),
Among other intermediate bodies, a variety of non profit organizations, including several gaikaku dantai, were also involved. However, for lack of sufficient information, this study could not cover them aptly. Thus, the discussion is confined to quasi-governmental public advisory bodies: the PCAR, its subcommittees, and the JNR Restructuring
(formal) government Prime Minister offices Cabinet Ministry of Transportation Prime Minister's office
ad hoc auxiliary PCAR JNR public organization corporation Second Special (Intermediate) Subcommittee
Fourth Subcommittee
JNR Restructuring Supervisory Council
Figure 2.3. A Double Faced Administrative System Relative to the JNR Reform Policy-Making. 204
Supervisory Council.
The JNR sectionalizing privatization plan would not have been accomplished without the reports of the PCAR. The reports were formed by the investigating activities of the subcommittees of the PCAR. Particularly, the Fourth
Subcommittee of the PCAR played an active part in forming the JNR privatization and break-up plan as the largest issue of the PCAR reports.
Based upon the reports, the specifics of the reform plan were dealt with by the JNR Restructuring Supervisory
Council which was established right after the PCAR was dismantled. After the JNR Restructuring Supervisory Council took over the charge of executing the PCAR's suggestions, new development began to take place. On the one hand, the
Council, being totally independent from the JNR, discussed the JNR matter under the assumption of the Ministry of
Transportation's initiative. In fact, the MOT initially claimed a functional division plan. However, later giving up its own initial plan of functional division, the MOT began to be cooperative with the Council. In July 1985, the
Council submitted a report titled "Opinion on the JNR
Restructuring," reconfirming PCAR's recommendation. Since that time, the reformist center coalition of government had influence on delievering the plan to the Diet's legislative process. With this respect, the policy consultation process 205 of these public advisory bodies was crucial.**'
4.3.3. Public Advisory Bodies
Public advisory bodies in Japan include both non- statutory and statutory ones.**' Another standard categorizes them into ad hoc or permanent ones. Because ad hoc advisory bodies are entrusted with a policy problem, they are disbanded when reaching a certain deadline or when accomplishing their task. The PCAR, its subcommittees and the JNR Restructuring Supervisory Council are included in this category. In addition, advisory bodies are also distinguished into two legal statuses according to the
***. For general understanding and bibliographical guidance of public consultation, see Ehud Harari, The Politics of Labour Legislation in Japan; National- International Interaction. (Berkeley: University of California Press, 1973); E.Harari, "Japanese Politics of Advice in Comparative Perspective: A Framework for Analysis and a Case Study," Public Policv. Vol.22 (1974) pp.537-77; E. Harari, "Turnover and Autonomy in Japanese Permanent Public Advisory Bodies," Journal of Asian and African Studies (Leiden), Vol. xvii, nos 3-4 (1982) pp. 246-9; E. Harari, "Policy Consultation in Japan, " Occasional Paper. no. 58/59, East Asian Institute, Free University of Berlin (Berlin: Verlag Ute Schiller, 1986); E.Harari, "Institutionalization of Policy Consultation in Japan," in G. L. Berstein and H. Fukui, eds., Japan and the World (London: Macmillan Press, 1988) pp.144-157.
***. The first consists of the private advisory bodies of which the number was counted at the approximately 231 in 1984, while the latter, formal statutory ones, amounted to be about 213 in 1983. The official and unofficial estimates are mentioned in Sone Yasunori, "Yarase no Seiji: Shingikai Hoshiki o Kenso Suru (Pseudo-Politics: Reviewing the Methods of Public Advisory Bodies)," Chuo Koron. (January 1986) p. 151. 206
National Government Organization Law.'?*
It has been a widely held view that advisory bodies have been used by the bureaucracy as the dominant force in policy-making processes to legitimatize its own policy positions. The bureaucracy played its role as one of controller or manipulator in the business of advisory bodies. ‘ ? ‘ The officially stated goals of the advisory bodies are to introduce new expertise into government, to reflect views and ideas of interests concerned with public policies, to promote fair and equitable implementation of public policies, and to help to coordinate related programs of various government organizations. These official goals of the advisory bodies were no more than principles for democratic appearance.'?* In the past, thus, reality remained in the bureaucratic dominance, because the majority of advisory bodies were controlled by the bureaucracy.
However, a recent tendency shows that advisory bodies actually have made inroads into the bureaucratic dominate
'?*• They are Article 8 and Article 3 statuses respectively following the specification of the National Government Organization Law, passed July 10, 1948, which came into effect June 1, 1949. In Chapter V, the difference is discussed when the controversy of the JNR Restructuring Supervisory Council's status was analyzed.
* ?' . T.J. Pempel, Patterns of Japanese Policymaking (1977), pp. 70-71.
'?“. Ibid., pp.70-71. 207
policy-making process.In the 1970s and 1980s, several
significant changes have taken place in the system of
advisory bodies, partly paralleling the changes in politics
such as the increasing weight of the LDP in policy-making
and the growing importance of the National Diet.'?*
First of all, the role of advisory bodies has expanded in
line with the enlarged scope and diversity of subjects discussed by them. Indeed, recent advisory bodies have been more active than before. Moreover, in general practice, draft legislation has often been referred to advisory bodies, and in doing such, advisory bodies are more in the public eye. Relating to this, the information gathering capabilities of public advisory bodies have been developed by the help of non-governmental organizations such as research institutes and associational interest groups. The quality of information gathered by them has increased to the point where they can effectively challenge the bureaucracy-
'?*. Ehud Harari, "Institutionalization of Policy Consultation in Japan,” in G.L.Berstein and Fukui Haruhiro. eds., Japan and the World (1980), pp. 144-157.
*?*. For analyses of these changes, see Otake Hideo, Gendai Nihon no Seiji Kenrvoku Keizai Kenryoku (Political Power, Economic Power in Modern Japan) (Tokyo: Sanichi Shobo, 1979); Muramatsu Michio, Sengo Nihon no Kanrvosei (Bureaucracy in the Postwar Japan) (Tokyo: Toyo Keizai Shimposha, 1981); Inoguchi Takashi, Gendai Nihon no Sei1i Keizai no Kozo: Seifu to Shi1o (Contemporary Japanese Political Economy: Government and Market) (Tokyo: Toyo Keizai Shimposha, 1983); and Sato Seizaburo and Matsuzaki Tetsuhisa, "Jiminto Chochoki Seiken no Kaibo (Autopsy on the Super-long term Reign of the LDP)," Chuo Koron. (November 1984), pp. 66-100. 208 type of information.
The second conspicuous change is in their membership.
Specifically, the number of state bureaucrats, officials of tokushu hojin (special corporations), and Diet members serving on advisory bodies has decreased. Concomitantly, there has been an increase in membership of university, academic and mass media persons, as well as specific interest group (labour*professions, and prefectural and local governments) and public interest group (consumers and environmentalists) involvement.* ^‘
The third visible change is the regular use of public advisory bodies. The political salience of public consultation through advisory bodies has risen increasingly.
For instance, by the end of 1985, after 3 years in office, former Prime Minister Nakasone had formed 3 ad hoc shingikai: the Provisional Council of Administrative Reform
(Rinji Gyosei Kaikaku Suishin Shingikai), the JNR
Even Sohyo, the General Council of Trade Unions of Japan, Japan's most dissident national organization of labour unions, which in the past has shown a strongly negative posture towards advisory bodies, has not only increased the scope of its participation in them, but has also admitted publicly that more can be gained by participating in them than by staying out. Ignoring the opposition of the Japan Socialist Party, Sohyo decided to nominate a member, Maruyama Yasuo, to the Provisional Council of the Administrative Reform in 1981 and to the Temporary Council for Promoting Implementation of Administrative Reform in 1983. Harari, "Institutionalization of Policy Consultation in Japan," (1988), pp.155-6.
Ehud Harari, "Institutionalization of Policy Consultation in Japan," in Berstein and Fukui, eds., Japan and the World (1988), pp.154. 209
Restructuring Supervisory Council (Kokutetsu Saiken Kanri linkai), and the Temporary Investigatory Council on
Education (Kyolku Rincho). In addition, 12 private advisory bodies were set up, including those dealing with severance payments (Taishoku Teate Seldo Kihon Mondai Kenkukai), foreign economic assistance (Talgai Kelsai Mondai Kodankai), and the highly controversial issue of cabinet members' visits to the Yasukuni Shrine (Kakuryo no Yasukuni Jinja
Sampei no Kansuru Kodankai). Beyond these, during the Ohira and Nakasone premierships, a number of private advisory bodies, dealing with foreign policy and defense, markedly increased. In this respect andothers, Nakasone's political style has been known as "brainpolitics (buren seiji)" or
"shingikai politics (shingikai seiji).
In this regard, one can claim that, contrary to conventional wisdom, public policy consultation in Japan has displayed "pluralization while reaching a notable level of institutionalization."*’* According to this view, increasing government consultation with individuals and groups from outside the government is an important measure of a political system's democratic character. This perspective
For more details of the terms and explanations, see Sono Yasunori, "Yarase no Seiji: Shingikai Hoshiki o Kensho Suru (Pseudo-Politics: Reviewing the Methods of Public Advisory Bodies)," Chuo Koron (January 1986) p.150; Uenishi Akio, Bren Seili (Brain Politics) (Tokyo: Kodansha, 1985); Asahi Shimbun. (December 12, 1985).
»’•. Ibid. 2 1 0 maintains that more responsive. Innovative and Implementable policies have been made through the process of Involving an
Interactive and equitable exchange of Ideas between the government and society.
However, no matter how pluralistic In nature they appear, public advisory bodies were still "a third force" designated by the government to find a way out of the
Immoblllst difficulties of the 1980s.
4.3.4. Public Advisory Bodies in the JNR Affair
In general, the public advisory bodies relating to the
JNR reform policy-making process were assigned the following types of tasks, which were relatively well accomplished In the process. The tasks Included study and deliberation on significant policy measures, the examination of administrative standards for application of laws, the consideration of examination and qualifications of related matters, the examination of administrative malpractices, the conciliation of disputes. If any, and the investigation of technical and scientific expertise of related matters.
Certainly, the PCAR was endowed with unusually great authority to cover a broad scope of Issues and diverse subjects of government administration and organization. The government promised to respect any report structured by the
PCAR and to make Its best effort to fulfill PCAR's recommendations. Among the four conditions Issued by PCAR's 2 1 1
chairman Doko Toshio In accepting the responsibility of Its
chairmanship, the first was to require the backup of the
Prime Minister and the last was to solve the 3 Ks' deficit
problems. To such suggestions, the Prime Minister Suzuki,
betting his political career, declared he would executed and
accomplished the recommendations produced by the PCAR. Under
such a strong supportive atmosphere, the PCAR, Its
subcommittees and the JNR Restructuring Supervisory Council,
could suggest the need of a drastic change of the JNR
management structure and formulate the sectlonallzlng
privatization plan. With this and other respects, responsive
activities of the PCAR and the JNR Restructuring Supervisory
Council were a crucial to the political process of the JNR
reform dispute as a whole.
The PCAR and the JNR Restructuring Supervisory Council had clearly different characteristics from other conventional types of public advisory bodies. They handled substantial Information and vast subjects. Their membership composition differed, also. Indeed, they took exceptionally significant part In the process toward the breakup and privatization of the JNR.
4.3.5. Function of the Informal Meeting
The above section emphasizes the Importance of public advisory bodies under the bureaucratic setting. However, It does not deny that the Influence of politicians was 2 1 2
determinately significant as well. This was because the LDP
is the actor in charge of introducing the bills recommended
by the public advisory bodies. In order to mitigate the
antagonism of the LDP, particularly the unyuzoku, the
reform promoting force represented by these public advisory bodies had to conduct a series of negotiations with them.
Before any formal legislative process began, policy consultations behind the scenes had been held between reform promoters and the opposition. This section is concerned with such informal negotiating activities as an aspect of
Japanese bureacuratic tradition regarding the JNR reform dispute.
One remarkable feature of the Japanese system of politics and the structure of the government is the function of informal contacts, in contrast to formal and rigid rules and laws. As a result, one can argue that the Japanese system heavily relies on the role of informal policy networks for the maximization of consensus building. Endless informal consultations (nemawashi) are no more than consensus building geared through the operation of informal policy networks. Indeed, most Japanese top politicians are reputed for their performances not only on the official level (in the Nagatacho district, the Tokyo district where the Diet, party headquarters and some governmental offices are located) but also in unofficial, behind-the-scenes negotiations (which often take place in the fine restaurants 213 clustered in the neighboring Akasaka district).
However, the picture of political turbulence and policy fluidity in Japanese politics calls into question conventional generalizations that Japanese policy-making is harmonious and consensus-oriented. Because of the various patterns of the policy-making structure and process over time, it is hard to parsimoniously characterize postwar
Japanese public policy in terms of any clear, undeviating words. In order to understand the pronounced oscillations in
Japanese domestic policy-making, one is required to assume a high degree of coexistence of dual characteristics, i.e., change and rigidity, formality and informality, or conflict and consensus.*’* Considering this duality, the conventional wisdom viewing Japan as simply harmonious needs to be reconsidered.*• “ Thus, recent revisionist arguments stress conflict as a dominant theme in Japanese social history.***
*’*. Stockwin's dynamism versus immobilism, Pempel's creative conservatism, and Calder's innovative creativity versus uninspired rigidity are all produced by penetrating into fluctuating patterns of the Japanese public policy making process. See Stockwin, Dynamic and Immobilist Politics in Japan. (1988); Pempel, Policy and Politics in Japan: Creative Conservatism. (1982); and Calder, Crisis and Compensation; Public Policy and Political Stability in Japan. 1949-1986. (1989) respectively.
*•*. See Ellist S. Krauss, "Japan: A Land of Harmony and Hostility," The Japan Times Weekly. (July 2, 1983).
*•*. Exemplar studies employing a conflict perspective are Ellis Krauss, Thomas Rohlen, and Particia Steinhoff, eds.. Conflict in Japan (Honolulu: University of Hawaii Press, 1984); Tetsuo Najita and J. Victor Koshmann, eds.. Conflict in Modern Japanese History; The Neglected Tradition (Princeton: Princeton University, 1982); and Andrew Gordon, 214
In the same vein, one suggests that "conflictuel outbursts in the midst of consensus” is one of the major anomalies of
Japanese politics.'"" Others point out that conflict and consensus lie in a dialectical relationship to one another. ‘ • "
However, this does not negate that the Japanese society reveals more consensus-oriented and conflict-avoidance characteristics in general than any other society.
Nevertheless, conflicts or oppositions do exist in Japan. A notable point is that once they incur, the conflict resolution process works fairly effectively. Informal negotiations behind the scenes function as a reconciliating mechanism of confrontation and agreement. As Daniel Okimoto succinctly explained, the informal, non-legalistic policy making process is thus a hallmark of the Japanese administrative apparatus.‘•* The Japanese today, even under the political system of parliamentary democracy, continue to be influenced by the traditional reconciliation process in both politics and daily life. Japanese political behavior
The Evolution of Labour Relations in Japan; Heavy Industry. 1853-1955 (Cambridge: Harvard University Press, 1988).
*•*. T.J. Pempel, Policy and Politics in Japan: Creative Conservatism. (Philadelphia: Temple University Press, 1982), p. 3.
*•". Kent E. Calder, Crisis and Compensation: Public Policy and Political Stability in Japan, 1949-1986 (1988), p. 16.
*•*. Okimoto Daniel, Between MITI and the Market: Japanese Industrial Policy for High Technology (1989). 215 employs a combination of the principle of majority rule and the principle of informal conflict resolution methods, despite the letter's apparent irrationality.***
In this regard, one can expect no effective results from viewing events merely through the prism of formal institutions, such as the functions of the Diet, ignoring the realities which heavily depend on informal institutions.
Political disputes frequently occur at informal levels, reflecting complex personal conflicts and political circumstances. The Japanese methods of resolving disputes are peculiar and differ fundamentally from the power principle of the West. The Japanese principle is epitomized by agreement through negotiation.*•* As a result of talks between parties, the conquest of one party is accomplished without a fight.
In doing this, a fuller understanding is presupposed on the process leading to settlement through discussion. In general, certain predetermined conditions and procedures are assumed for settling disputes before they reach catastrophic proportions such as building unity or reducing antagonism.
Basically informal negotiations are held for either one of these two purposes. Throughout the process of the JNR reform
*':. Ibid. p.32.
* * *. Kawaguchi Hiroyuki, "The Japanese Method of Settling Disputes," Japan Echo. 10:1 (1983), pp.26-32. Translated from "Nihon Seiji no Kirifuda 'Teuchi no Ronri'," Chuo Koron. (December 1982), pp.94-105. 216 dispute, the reformist force had tried to build a consensus among key politicians and bureaucrats. Their efforts were quite effective for the realization of the JNR break-up and privatization plan.
4.4.. Business Influence in Politics
Another significant component of the long-term political structure in Japan is the persisting business impact on politics. There are four business organizations constituting what is commonly referred to as zaikai: the
Federation of Economic Organizations (Keizai Dantai
Rengokai>, the Japan Federation of Employers' Association
(Nihon Keieisha Dantai Renmei), the Committee for Economic
Development (Keizai Doyukai), and the Japanese Chamber of
Commerce and Industry (Nihon Shoko Kaigisho).
Extremely close ties between conservative parties and the business world have been historically observed in Japan.
According to many studies, pressures from corporate Japan
(zaikai; financial world; business community) persistently have existed toward the decisions of the conservative government throughout the post-war era, regardless of the degree. Critics see such a tight relationship as a product of the cooperative efforts of the government and the zaikai.
Resting on the analogy between the Japanese politico- economic system and a giant conglomerate firm, it has been 217
cynically referred to as "Japan Incorporated," which is a
variant of the power elite model. The significance of
business participation in public policy decision making is
reflected in the widely held perception that the governing process is essentially dominated by a three element power elite: big business, party government and the bureaucracy. ‘
If the proposition that the business world takes a significant part, though partially, in controlling policy decisions, is acknowledged, the question arises: Why is the business world's opinion so seriously taken into consideration in Japanese politics? In Japan, the most visible relationship between the government and the business sector is found in the close connection between the business community and the LDP. Business's influence in politics stems from several factors. One factor is the funds given to the LDP by big business both at the party level and at the
*"'. For the discussion of various modes of business involvement in the government decisioning, see, among others. Big Business in Japanese Politics (New Haven: Yale University Press, 1968); Haruhiro Fukui, "Economic Planning in Postwar Japan: A Case Study in Policy Making," Asian Survey. 12, 4 (April 1972), pp.327-348; Eugene J. Kaplan, Japan; The Government- Business Relationship (Washington, D. C. : U.S. Department of Commerce, February 1972); Gerald L. Curtis, "Big Business and Political Influence in Japan," in Ezra Vogel, Modern Japanese Organization and Decision- Making. (Berkeley and Los Angeles: University of California Press, 1975); and Philip Tresize and Suzuki Yukio, "Politics, Government and Economic Growth," in Hugh Patrick and Henry Rosovsky, eds., Asia's New Giant: How the Japanese Economy Works. (Washington, D. C. : The Brookings Institution, 1976), pp.753-811. 218 factional level. The business society in turn, is allowed access to and can voice their preferences to the ruling party. In 1984, large business corporations reported contributions almost 5 billion yen (about 20 million dollars) to the political parties, and about 90% of it went to the LDP.‘ • The actual figure might be much larger, because this figure only represents officially reported amounts.
On behalf of their own particular interest, individual business firms attempt to influence policy frequently, depending on the route of money politics in Japan. The
Japanese version of interest group politics by the ruling party has shown thoroughly pro-business orientation in the post-war era. In extreme cases, many scandals involving corruption, resulted in various types of give-and-take relationships between businessmen and politicians. The
Lockheed scandal and the recent Recruit scandal are just two representative examples evident on the surface.
The other way in which business exerts influence on politics is through organizational strength. The Federation of Economic Organizations (Keidanren), the most important among four or five major business associations'"*, plays a
The Japan Times Weekly. (September 21, 1985), p.4.
***. In terms of the coverage of interest groups, business in Japan is represented basically by four major groups: the Federation of Economic Organizations, the Federation of Employers Organizations, the Japan Chamber of Commerce and Industry, and the Keizai Doyukai. They 219 leading role in attempting to achieve a consensus from the business community about policy and then trying to Influence the government to adopt policies favorable to them. Their focus has been particularly laid on the area of macroeconomic policy.
In the early postwar era, business was dependent on and subservient to the bureaucracy most of the time. However, the business sector has become much more vociferous and autonomous as Japan has recorded economic success. With
Increasing Influence, the business sector has pushed for a more lalssez-falr attitude on the part of government. The business community has been one of two key supporting groups of the LDP, agriculture being the other. Therefore, the ruling political party, being sensitive to obtaining power
In elections, can not Ignore the demand of the business community. One common assessment of the meaning of the business world's role In the context of administrative- financial reform Is that It actively called for the restoration of the right of the business society.
Indeed, the breath of big business can be seen apparently In the call for an administrative reform on the part of the LDP. Undoubtedly, the reform catchphrase represent different groups respectively. The Federation of Economic Organizations has constituency In large businesses; the Federation of Employers Organizations, In employers of big companies; the Chamber of Commerce, In business of all sizes; and the Kelsal Doyukai, In a small group of pollcy- orlented business leaders. See B.Richardson and C.Flanagen, (1984), p. 292. 2 2 0
"financial reconstruction not by tax increases but by expenditure cuts" reflected the business sectors' reasoning.
Administrative reform in the early 1980s was taken as the long-term solution to cope with major domestic issues such as state finances, how to cut them back and how to use them to stimulate the economy out of stagnation. In addition, the most basic was the reorganization of the bureaucracy, its affiliated agencies and corporations to decrease the size and role of the central and local governments so as to manage them more efficiently. Ironically, the Japanese government was already the smallest of the industrialized democracies. During the 1970s, central governments elsewhere continued to grow. However, Japan did not follow the same pace, owing to continuous administrative reform efforts.
Thus, It employed the smallest percentage of the work force of any Western democracy.**®
Under such a circumstance, business and government circles had reasons for their concern about the scope and efficiency of the government. After all, the focus was to keep the balance of the national accounts without increasing or introducing taxes. In order to do so, financial retrenchment was the only solution. Additionally, in many
Western democracies, the private sector accounted for about
80% of the overall fixed capital formation from the 1970s.
* * ®. T.J. Pempel, Policy and Politics in Japan; Creative Conservatism. (Philadelphia: Temple University Press, 1982), pp. 255-195. 221
However, Japan's private sector share was around 70%, with even Britain recently surpassing Japan.*"' Dissatisfied with this situation, the business society was not pleased within public management of various sectors that private enterprises were able to control effectively. Needless to say, the JNR was one of such items. The business sector's opinion was not united regarding the specific ways to reform the JNR. However, it was the business sector that claimed to introduce "private vitality" to the public corporation system.
5. CONCLUSION
As discussed so far, the JNR reform policy-making debate was not conducted in a vacuum. Primarily, the conservative political atmosphere of Japan and the world in the 1980s provided the environment for it.
In specific, expansionary economic policies in the
1970s and before increased the demands of Interest groups and generated a financial deficit problem. Under the existing system, the government could not aptly cope with these difficulties. Thus, the government tried to reestablish its whole political and economic distributive structure along the new conservative trend toward "the small government."
The Japan Times. (July 23, 1983), p.5. 2 2 2
Accepting the suggestion of the business sector, the government began to depend on the private vitality for the management of various areas, which it had controlled thus far. The JNR was selected as a target field because of its management inefficiency and financial bankruptcy.
Besides this economic concern, the conservative ruling party had another definite political purpose for the administrative reform: restructuring its supporting base in the new era. It especially spotlighted the reform of the JNR which traditionally had had strong labor unions with an anti-government orientation.
However, throughout the JNR reform debate process, the reform promoting group realized the thick wall of vested interests regarding the reform of the JNR and other government organizations. Thus, the government established public advisory bodies, expecting them to work as a
"catalyst" to the existing barriers of interest group politics revolving around the political parties. Locating its power base on these public advisory bodies supported by the government, the reformist coalition increased its influence in setting up the JNR break-up and privatization plan. Under this general environment, the JNR reform policy was debated by various participants before reaching the final outcome, JNR's break-up and privatization. The following chapters will discuss the modes of interaction 223 among these actors and the evolutionary process of the reform issue, with the next chapter focusing on the JNR, including its organizational structure, problems, and recovery plans. CHAPTER III
THE JNR AS A MULTI-FACETED PROBLEM: DESCRIPTIVE OBSERVATION
1. INTRODUCTION
The main theme of this chapter is to examine the JNR system by reviewing the scope and context of its problem. In reality, the scope and context of the JNR problem are interrelated. They can be separately treated only in an analytical sense.
Key components of the JNR problem are financial crisis, erosion of its monopoly in the transportation market, and unstable labor-management relations. This chapter also examines JNR's institutional arrangement as a public corporation system, which brought with it heavy political overtones. It then compares the Japanese government's financing policies for the national railways with other countries' policies.
In addition, this chapter takes a look at a series of recovery plans by the JNR and why they all failed. After the failure of the JNR's efforts, in the 1980s, the government set up the JNR break-up and privatization plan and constructed new legislation along with the reformist PCAR's
224 2 2 5 new administrative ideology.
2. BACKGROUND OF THE JNR SECTIONALIZING PRIVATIZATION POLICY
The JNR's financial losses caused managerial inefficiency and a fiscal burden on the government, which motivated privatization of the JNR. Since the 1964 financial year, the JNR was in the red and the deficits increased year by year. Its debts had increased more rapidly than its deficits (see Figure 3.1). In 1976 and 1980, the government shouldered some portion of the JNR's long-term debts in accordance with the JNR's reconstruction plans. * However, the JNR never designed a successful reconstruction plan.
In the 1980s, because of its own financial difficulties, the government found it impossible to shoulder the ever-increasing fiscal burden caused by the JNR. In order to solve its national financial problems, the government established in 1981 an ad hoc commission on administrative reform.
The PCAR, which was set up under the control of the
Prime Minister, then proposed an outline of JNR reform in its third report in July 1982. Following this report, the
JNR Restructuring Supervisory Council was organized in June
*. Okano Yukihide, "The Privatization of the Japanese National Railways: The Early Experience," (Manuscript, Department of Economics, the University of Tokyo, 1989), pp. 2-3. Trillion
Lobs carried forward (Special occounCi Long-term 4- Loon carried forward (General Account! debt - 15 Looo carried forward
REVENUE -10
EXPENSE
1949 '64 '85
Figure 3.1. Financial Performance of the JNR (1985)
Source: Compiled from the JNR source K) 2 2 7
1983 and submitted its final proposal, titled "Opinions on
JNR Restructuring: For Exploring the Future of Railways," to the Prime Minister in 1965. In November 1986, the bills of systematic change for the JNR were passed in the National
Diet. The JNR was eventually privatized on April 1, 1987, and was broken up into 7 separate railway companies. This simplified summary shows JNR's sectionalizing privatization policy-making process.
Before examining how this decision was made, the scope of the JNR's problems, and the context that forced the JNR to go into bankruptcy need to be taken into account.*
3. SCOPE OF PROBLEM
One of the biggest concerns among a variety of problems in the JNR was its financial crisis. In addition, the long term and essential cause that brought about the massive deficit was the quick erosion of the monopoly the JNR enjoyed. On the management side, the persistent instability
*. The overall commentary review of this chapter is constructed based on the following works. Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku; Kosha Kara Mine! e (The JNR Reform: From Public Corporation to Privatization), (Tokyo: Asahi Shimbunsha Chosa Kenkyu Sitsu, 1982); Kakumoto Ryohei, Tetsuado Seisaku no Kensho. 1869- 1987: JR no Mirai o Saouru (Review of Railway Policies, 1869-1987: Seeking for the Future of the JR), (Tokyo: Hakuto Shobo, 1989); and Unyu Keizai Kenkyu Senta hen, Tetsudo Seisakuron no Tenkai; Soavo kara JR made 120 Nen (The Theory of Railways Policies: During 120 Years From Foundation to the JR), (Tokyo: Hakuto Shobo, 1988). 2 2 8 of the labor-management relations precluded the efficient operation of the JNR. These problems will be dealt with one by one.
3.1. Financial Crisis
In fiscal 1964, the financial condition of the JNR began to deteriorate, recording 30 billion yen as a deficit.
Nevertheless, the government hoped by the time that the JNR had retained some of its earnings, the deficit would be temporary if the operation was profitable. However, the deficit kept growing until 1966, when the reserve evaporated and the net loss began to accumulate (see Figure 3.1).
The debt snowballed, and 1971 recorded a huge operating loss before depreciation of 234 billion yen. The loss continued and after the oil crises, deficits of about 1 trillion yen were consistently recorded. The balance was mainly paid by incurring debts. Funds for capital investments to return the JNR back to profitability were also raised by borrowing.
Meanwhile, even the ways of raising funds were limited. As long-term liability snowballed for increasing borrowing, dependence on debt continued to increase. As a result, interest payment came to disturb the management.
Even though the government suspended the interest payment on debts in 1976 and in 1980, its relief effect was only 2 2 9 temporary. In 1981, long-term liability became over 16.4 trillion yen and in 1987, just before its privatization, the amount reached 37.5 trillion yen, which was almost one-third of the general account of that year. If it would be shared by the people, the amount to be borne would have been about
60,000 yen a person.
General Account Details
Labor Expenses (41% ) Cj 2.302.4 Expenses Revenue 5.582.4 3.734.6 O ther Operating Expenses (Deducting Special • (26% ) Labor Lost and Others) 1.461.3 Paid Interest -317.8 General Loss (22%) 1.219.9 Loss Special Labor Cost and -1.847.8 1.530.0 O thers Shinkansen Capital Expenses
Special Account
347.7 347.7 Interest Subsidy and and Others Others
Figure 3. 2. Overall Balance of the JNR (billion yen) (1985).
Source: Compiled from the JNR source
In the income statement of fiscal 1985, the net loss was 1,850 billion yen (see Figure 3.2). The loss amounts to 2 3 0
a staggering 5 billion yen per day and 200 million yen per
hour. The figure shows the special account (the frozen debt
of the past) along with the general account. According to
the figure, the Interest payment of 350 billion yen for the
debt was paid with a government subsidy of the same amount.
In the statement of Income, two points are noteworthy.
First, the expense Included a special labor cost Incurred by the JNR's accepting employees of Colonial Railroads. The absorption of extra personnel from outside was planned by the government right after World War II. Second, Tohoku and
Joetsu Shlnkansen capital Investment were the expenses decided to not be the responsibility of the JNR management, because these outlays were approved by the government, not by the JNR. Excluding such expenses, although It was not clear If the JNR could be totally free of all the responsibility for these expenditures, the loss shrank to
300 billion yen.'
When looking at the balance sheet of 1985, one can find that long-term debt composed 88% of the total liability (see
Figure 3.3). It resulted from financing not only the loss but also most of the Investment with debt. The fact that paid-in capital composed a minor part of the liability suggested that the government had been reluctant to provide
*. Imashlro Mltsuhlde, "Restructuring of JNR and Its Problems, ” (Tokyo: Institute of Business Research, Daito Bunka University, 1988), Research Paper No.5, p.4. 2 31 any financial aid to the JNR for a long time. 14 trillion
yen of accumulated loss, including the frozen debt and 23.6 trillion yen of long-term liability, were enormous sums,
implying that out of over 23 trillion yen of debt, 14 trillion was already consumed to pay off losses. Only 9 trillion could be converted to some form of equipment.
General Accouni
Tangible Long-term A sseu Debt 9,829.5 18.240.9
2.Ü73.3
Deferred Charges 8.801.1 O ther 1.625.5 Liabilities 837.5 Equity
Special Account
Deferred Long-term Charges Debt 5.320.1 5.320.1
Figure 3.3. Balance Sheet of the JNR (billion yen) (1985).
Source: Compiled from the JNR source.
This brief review shows that the JNR was nearly bankrupt before its break-up and privatization. 2 3 2
Nevertheless, it kept making essentially the same capital investment during the 1970s as the way to the recovery. This definitely worsened the financial condition of the JNR, resulting in two problems. First, the JNR could not adjust to the changing economic environment engendered by the two oil crises. Even in serious depression, it stuck with expansion while most private companies were cutting back their operations. Second, the subjects of investment were much too fragmented because the JNR lacked a clear concept of the field that could exploit the full advantage of railroad against competition. Therefore, these two shortcomings led to decreasing competitiveness, leading to an unprofitable operation.
3.2. Erosion of Monopoly
The JNR's lack of competitiveness in the whole transportation system was centered especially in the management of local railways and freight.
3.2.1. Local Railway Operation
The local lines were an obvious source of the JNR's red ink. The divisional accounting released by the JNR confirmed this fact (see Figure 3.4). It was calculated in terms of the cost of each division and compared with the financial statement of the entire company. It also disclosed the 2 3 3
Individual results of maln-llne railways, local railways, and automobile.
Maln-llne railways Included railways operated In and between cities, and consisted of about half the length of the line operated. Maln-llne railways handled 90% of the total volume of transportation, while local railways handled the remainder of transportation. As shown In Figure 3.4, the absolute amount of loss was bigger for main-line railways but the proportion of loss was larger for local railways.
Excluding the expense for special labor cost, the maln-llne railway would be operating at a profit.
On the other hand, for several years before privatization, the loss Incurred by the local railway made up about 30% of the total loss. In order to tackle It, the
JNR made various efforts following rationalization. The balance of local railways, however, became worse as the volume of transportation declined.
The decline of the transportation volume In this division was caused by the following change. Above all, bus transportation rapidly developed and resulted In shifts In population. More fundamentally, automobiles proliferated In the 1960s and thereafter. Because the relative price for autos was reduced by mass production, cars quickly spread
Into the rural areas. Multi-vehicle households became commonplace because of the Increase of trucks for agricultural goods and the poularlzatlon of relatively 2 3 4 cheap autos for passengers. Motorbikes also became popular as their prices decreased.
Main-line Operation
(Deducting Special Labor Expense Revenue Cost and Others) 4.675.3 3.490,7
G eneral Income 141.4
Special Labor Cost and Loss Shinkansen Capital Expense 1.184.6 U 2 6 .0 t
Local Railway Operation Revenue 198.0 Expense Loss 802.8 -604.8
Automobile c 104.3 Revenue 45.9 Expense ■ Loss -58.4
Figure 3.4. Railways Income of the JNR (billion yen) (1985).
Source: Compiled from the JNR source.
Under this situation, railroads and other public transportation could hardly compete with cars in terms of convenience, particularly in the local areas. The monopoly that railroads enjoyed necessarily eroded. Public transportation came to be used only for the "transportation 2 3 5
poor,"* who did not have their own means of transportation.
This change affected equally the JNR and private
railroads. Private railways survived this environmental
change but the JNR local railways could not. Under the free
market environment, private railroads switched some of their
operations into buses during the early stage of change and
provided system of fares that differed in different regions.
In contrast, although the JNR was deprived of its monopoly,
it did not have the leverage to cope with change because its
nation-wide unified management system was out of control
under the public corporation system.
3.2. 2. Freight Operation
As a matter of course, the JNR lost its enjoyment of
monopoly in the freight operation as well. The JNR dominated
the domestic freight market after World War II because of
the completely destroyed shipping industry and the fact that
it predated other means of transportation. Railroads enjoyed their heyday for the time being. At the beginning of economic development, the government ranked the railroads at the top of the industrial development list along with coal and steel. When shipping and other land transportation began to compete with railways, they obtained their own share of market stability in each industry. Nonetheless, the JNR
*. Imashiro Hitsuhide, "Restructuring of JNR and Its Problems,” (1988), p. 7. 2 3 6 still led the land transport market. Moreover, the capacity of the JNR was not sufficient enough to take care of the sudden volume of freight. Thus, during the high economic growth era, the freight was left piled up in the stations.
However, things changed when private companies began to provide scheduled truck service. Truck transportation business has been quite competitive because it can be initiated with a small amount of capital. In addition, investment in road construction was initiated, aiming to ease the domestic flow of goods. The JNR implemented several countermeasures in order to compete. However, under free market economy, the JNR freight operation remained a weak competitor, became unprofitable, and shrank in size (see
Figure 3.5). The figure shows cost calculation of passengers and cargo by comparing cost with revenue.
Passenger as well as freight operations could not cover the cost. However, freight was in such serious condition as to be unable to cover even its proprietary expense, which was only a part of its total expense (see Figure 3.5). In other words, main-line railways could balance at least the revenue and total expense, but freight revenue could not even balance the revenue and proprietary expense. It showed how seriously unprofitable the freight operation was. 2 3 7
Expense Revenue Income (Loss)
3.960.5 3.031.2
Passenger
Common Expense -929.3
800.2 -603.9 Freight IW.3
(Balance of Proprietary (Proprietary Expense 363.5) Expense and Total Revenue -165.2)
Figure 3.5. Income of Passenger/Freight Operation of the JNR (billion yen) (1985).
Source: Compiled from the JNR source.
In the meantime, even though passenger operation was still profitable. It also lost Its long-time monopoly. With the development of a domestic airline system, highways, and highway buses, JNR's market dominance In passenger transportation disappeared except In major cities. In 1955,
10 years after the end of the war, JNR's share of total domestic transportation was 55% of passengers and 52% of freight. However, with the development of automobile, air. 2 3 8 and marine transportation, JNR's share began to decline year by year to reach 24.3% of passengers and only 7.8% of freight in 1976.= For these reasons, JNR's profitability in the competitive market was looked at suspiciously under the
1980s' reform atmosphere.
3.3. Unstable Labor-Management Relation
In addition to an unsound financial structure and a decline in competitiveness, the JNR labor-capital relationship can be seen as another problem that led to a management crisis. The JNR had made efforts for rationalization to improve productivity and competitiveness in the transportation market. However, without sufficient cooperation of the labor unions, this was not fruitful.
The JNR labor-management problem was complex for the following three reasons: 1) the legal provision of withdrawing from public sector employees the right to collective bargaining and the right to strike; 2) the presence of numerous labor unions in the JNR and their complicated relationship with management; 3> the labor unions' infighting, which brought forth their inconsistent attitudes and orientation toward policies of the government and the JNR authority.
=. Kusano Atsushi, Kokutetsu Kaikaku. (Tokyo: Chuo Koron Sha, 1989), p. 20. 2 3 9
3.3.1. Labor Relation Law
In attempting to democratize the post-war Japan, the
Supreme Commander for Allied Power (SCAP) repealed all suppressive laws against trade union movements. In the beginning, the SCAP officials, being preoccupied with democratization of Japan, did not oppose union political activities. The trade union movement in Japan, in fact, had been political orientation since the Melji Era. Because the
SCAP officials had hoped that the trade unions would evolve and coalesce into something like the British Labor Party, they passed the Trade Union Law in 1946.
This law abolished differential treatment of private and public sector labor relations by granting workers three fundamental rights: the right to organize, the right to collective bargaining and the right to strike. The real problem with this policy was, however, not that the unions were not political enough but that the Communists, not being plagued by the same frictional rivalries as non-Communist labor leaders, had been able to capture control of the labor movement and were running it in a decidedly undemocratic manner.•
In the latter half of 1946, when post-war inflation was running high and the living conditions of railway employees were deteriorating rapidly, the trade union movement became
‘. Chalmers Johnson, Conspiracy at Matsukawa. (Berkeley: University of California Press, 1972), pp.21-22. 2 4 0
more radical and large scale.^ The SCAP came to regard the
strikes In the public sector as undesirable. The non
interference position of the SCAP was accordingly abandoned
In 1947. In order to withdraw from public sector employees
the right to collective bargaining and the right to strike, the SCAP established the National Public Service Law In
1947. Workers In state enterprises, Including the railways,
viewed the law as an Infringement on the rights they had
gained previously. Thus, they violently opposed It.
In order to pacify the workers In state enterprises and
to prohibit strikes In the public sector, the SCAP took an
Immediate step to effect a comprehensive revision of the
1947 law. The Public Corporations and National Enterprises
Labor Relation Law of 1948 was Its product. The new law granted the workers In 5 direct government enterprises and big 3 public corporations (kosha) the right to organize and to bargain collectively, but the right to strike was still denied. Since then, the employees of these organizations have resented the law of 1948. Their Illegal strikes against
^. On details of the general trend of labor union movement and unions' decision-making processed, see Shlmada Haruo, "Japan's Postwar Industrial Growth and Labor- Hanagement Relations," In Industrial Relations Research Association, ed., Proceedings of the Thirty Fifth Annual Meeting. (New York); "Japanese Industrial Relations: New General Model? A Survey of the English-Language Literature," In Talshlro Shral, ed., Contemporary Industrial Relations In Japan. (Madison: University of Wisconsin Press), pp.3-27; and "Wage Determination and Information Sharing: An Alternative Approach to Income Policy?" Journal of Industrial Relations. 25:2, pp.177-200. 2 4 1 the JNR was one of the major sources of labor strife in
Japan. The powerful General Council of Trade Unions (Sohyo) kept asking the government to repeal the 1948 law and extend to workers in direct government enterprises and kosha the same rights that have been enjoyed by workers in other state enterprises and in the private sector.*
3.3.2. Various Labor Unions in the JNR
Before 1987, representative labor unions in the JNR were National Railway Labor Union (Kokuro), National Railway
Locomotive Engineers Union (Doro), Railway Industry Labor
Union (Tetsuro) and National Railways Construction Labor
Union (Zenshiro).
Kokuro was one of the most strongest labor unions in
Japan, which could be comparable to Japanese Self-Governing
Labor Union (Jishiro) and Japan Teachers' Union (JTU:
Nikkyojo). In fact, Kokuro had e leading position at the bargaining table with the government and the JNR management.
At its peak, Kokuro, affiliated with the Sohyo* and Japan
•. Chalmers Johnson, Japan Public Policy Companies. (Washington, D.C.: American Enterprise Institute), p. 30.
*. A feature of Japan's trade union movement is that the unions are in general based on single enterprise, embracing workers of different occupations in that enterprise. In 1986, union membership stood at 12.4 million workers (28.9% of total labor force). After JNR's privatization, the unions of JR companies became affiliated with the major private trade union federations (Domei). In November 1987, the Domei agreed to merge into a confederation. National Federation of Private Sector Trade Unions (Rengo). 2 4 2
Socialist Party (JSP), had about 570,000 members with mostly revolutionary or at least reformist attitudes to the policies of the government and the JNR authority.
Doro consisted of about 40,000 drivers of locomotive engines at the beginning of 1980s. Like Kokuro, Doro was also associated with the Sohyo, but it represented a more radical and even war-like orientation toward the establishment of politics, and the JNR. At the time of the
New Left Movement in Japan in the 1970s, Doro was deeply affected by its doctrines. The radical political orientation was sustained until its sudden change in the early 1980s from an anti-management to a pro-management stance. Then it cooperated for the sectionalizing privatization policy.
Compared with these two labor unions, Tetsuro, with about 40, 000 members as of the early 1980s, which was controlled by the Democratic Socialist Party (DSP) and Japan
Federation of Labor (Domei), took up a position of labor- capital cooperation. It persisted in its cooperative attitude with the management authority and promoted the sectionalizing privatization policy.
These three major JNR labor unions either confronted or cooperated with each other depending on their different ideological stance, policy orientations, and political interests. In order to realize their purposes, they kept using their political closeness with various institutional networks in negotiation with the JNR officials and the 2 4 3 government.
3.3.3. Interrelations of Labor Unions in the JNR
During the postwar period, the JNR labor union movement had two turning points, which led to changes of the unions' power structure. One was Productivity Increase
Movement (marusei undo) launched by the Japan Headquarters for Productivity Increase and the JNR authority in the
1970s. The other was JNR sectionalizing privatization policy-making in the 1980s. The interval period between these two events obviously showed the changing characteristics of the JNR labor union movement.
The major purposes of the Productivity Increase
Movement were as follows: first, the prevention of unemployment that resulted from technocratic development; second, the cooperation between labor and management; and third, the fair distribution of products from development to general consumers as well as to employees. The JNR labor unions' reactions to the movement were not the same.
The Movement had several effects on the JNR labor unions. One impact was a sudden increase of membership in
Tetsuro, which favored the Movement's objectives and cooperated with its promoting group. In 1968, just before the Productivity Increase Movement was launched, Tetsuro was reestablished with the existing basis of the National
Railway Craft Labor Union Confederation. The birth of 2 4 4
Tetsuro had a new impact on the JNR labor unions' configuration. Tetsuro promised to develop a cooperative labor-management relationship, ignoring the Doro-Kokuro's class confrontation position. Needless to say, Tetsuro's attitude was welcomed by the JNR authority. For this reason, during the Productivity Increase Movement, Tetsuro played an active role, getting along with the Japan Headquarters for
Productivity Increase. In 1970, before the Movement started, its membership amounted to about 70,000, then increased rapidly to 150,000 during the movement. Its membership almost doubled compared with prior to the Movement. In contrast, the membership of Kokuro decreased from 270,000 to
220,000 throughout the Movement.
Another effect was rather ironic. The Movement was intended to build a cooperative relationship between labor and management. However, it resulted in severe competition and confrontation between Tetsuro and the management side on the one hand and Kokuro and Doro on the other hand.
During the Movement, Kokuro members suffered from the
JNR authority's inappropriate treatment, such as oppressive demands to withdraw from Kokuro, unfair promotion decisions, and unfavorable advancement policies. Kokuro reported over
30 appeals to the Public Labor Relations Commission to correct these unjust labor treatments, but only 2 out of 30 were accepted. For one of these cases, however, the Public
Labor Relations Commission ordered the JNR authority 2 4 5
(president: Zsozaki) to amend Its policies with a public apology statement. The mass media centered its attention on this uncommon event. This decision struck a fatal blow to the JNR management, while bringing a complete victory to
Kokuro and Doro, which were discontent with the Productivity
Increase Movement.
In fact, Kokuro continued to hold an opposite-regime orientation at an abstract ideological level until the
Productivity Increase Movement. After that, Kokuro's confrontational attitude to the JNR official policy line evidently became concrete. Kokuro-Doro communicated closely with the JNR Staff Relations Bureau, which was in charge of labor affairs. By doing so, Kokuro-Doro aimed to use it for the realization of its demands. Kokuro-Doro even asked to replace the key participants in the Productivity Increase
Movement from the JNR work place. They came to rely more political networks and strikes, which were considered illegal by the Public Corporations and National Enterprises
Labor Relations Law of 1948, to carry through their demands.
In this sense, the Productivity Increase Movement definitely worsened the relationship between labor and management and of labor unions and ruined the JNR work atmosphere. After the Productivity Increase Movement,
Kokuro/Doro and Tetsuro were at odds with one another. Thus, the work place environment for the JNR employees was completely destroyed. 2 4 6
3.3.4. Mistaken Labor Policies
After the unfruitful Productivity Increase Movement,
JNR labor policies became to be overconscious of the actions of labor unions. The JNR authorities, being afraid of
Kokuro-Doro's opposition to management rationalization,'* set appeasement policies. Because the JNR authorities tended to listen to what these labor unions demanded, they could not cope with reality adequately. Efforts for rationalization. Including realistic personnel policies, were very reluctantly taken or delayed completely. In contrast, private railways promptly confronted the necessity of rationalization by the time. Because of this situation, the JNR could hardly be considered competitive.
Indeed, the JNR did not promote any personnel rationalization policy even under the serious financial situation worsened by the two oil crises (1973-74 and 1979)
(see Table 3.1). Small number of personnel decreasing since
1950 was only due to retired employees. Thus, the inability to compete and unhealthy management were inevitable results under this circumstance.
The JNR's weak management was partly reflected In its labor productivity, too. Compared to private railways, JNR's
* *. In a broad sense, the development of the favorable operating conditions for railroads requires not only technological modernization, such as dieselization and electrification, but also rationalization of rail networks and labor forces. Rationalization mentioned in this section Is, nevertheless, confined mainly in the last content, i. e. , the rationalization of labour forces. 2 4 7 labor productivity was reportedly lower. Taking the figure in 1970 as 100, JNR labor productivity in 1980 was calculated only as 103, while that of private railways was
140. ‘ ‘
Table 3. 1. The Shift in Number of JNR Personnel (1945-1981).
Year Number of Personnel
1945 537, 800 1946 573, 100 1947 610, 500 1948 604, 200 1949 490, 700 1950 473, 500 1955 442, 500 1960 448,400 1965 462, 400 1970 459, 700 1975 430,100 1976 429, 200 1977 428,900 1978 427,700 1979 420, 800 1980 413, 600 1981 401, 400
Source: Compiled from the JNR source.
When the JNR labor-management relationship was discussed, some persons claimed that JNR workers' strikes resulted in a lack of work discipline and inefficient
Kudoo Yoshio, Yasashii Kokutetsu Saikenron (The Easiest Way to Reform the JNR), (Tokyo: Kasakura Shuppansha, 1982). 2 4 8 management. However, laborers should not be unilaterally responsible for the lack of competitiveness and poor management. The JNR officials. Including especially the president and the Staff Relations Bureau, also did not make any productive effort to design cooperative labor policies that would produce healthy management. This situation
Inevitably brought about a vicious circle of labor- management relations, which placed the JNR management In a predicament In the 1970s and 1980s.
There were two noticeable reactions to the labor policies of the JNR managing authorities. First, the mass media, which showed sympathy to the JNR laborers during the
Productivity Increase Movement, was critical of labor policies and laborers under the 1980s' reform atmosphere.
The mass media frequently spotlighted the behavior of undisciplined JNR laborers and of Irresponsible JNR authorities. Second, a reformist group took form within the
JNR middle-high officials' strata, following the PCAR's Idea and being cooperative with Tetsuro. The group complained about the attitude and labor policies of the JNR mainstream officials. In the beginning, they Implicitly and Informally presented an Idea of systematic reform, but more and more they became actively Involved In promoting the sectionalizing privatization policy. 2 4 9
4. CONTEXT OF PROBLEM
So far, only the scope of the problem leading to the
JNR's failure has been examined. This represented generally
Internal aspects of the JNR matter. On the other side of the coin, the context of the JNR problem should be taken Into account next. The sources that provided the context of the
JNR bankruptcy consisted of external factors. Including structural and Institutional arrangements and the governmental policy line.
4. 1. Overall Organizations of Railways
The Institutional models for railroads of various countries are founded upon different organizational arrangements, such as government departments, semi- autonomous boards and commissions, public corporations, and joint-stock companies. The primary motives behind the organizational adoption of countries for railways are usually of a political and macroeconomic nature. Indeed, the criterion of commercial profitability plays only a very secondary role. In consequence, statutory provisions for railroad organization were set up taking Into consideration the balance of power among political authorities.
The relations between the railroads and political authorities were shaped by complex blends of forces. 250
including legal philosophies, political and administrative
traditions, and other historical circumstances. These
relations, then, profoundly influenced two important aspects
of the railways' internal organizations. One was the
orientation of the managerial structure of the railroads,
emphasizing publicity or business interest. The other was
the characteristics of a field organization, centralized or
decentralized.* * Based upon this general nature of railway
organizations, 5 countries' railroads' institutional
arrangements can be clarified and compared with each other
(see Table 3.2).
The administrative frameworks of the nationalized
railroads in Western countries were the products of their own political, legal, and historical backgrounds as reviewed
above. However, the Japan National Railway public
corporation system was an alien concept. Railways in Japan
had been a government departmental undertaking within the
Ministry of Communication after 1906, and then, an
independent Railway Ministry after 1920. In 1949, the existing nationalized railroad system was replaced by an outside force, the Supreme Commander for the Allied Power
(SCAP).
*•. Thuong, Le Trung, "A Comparative Study of Administration of Nationalized Railroads in the United Kingdom, France, West Germany, and Japan,” (Ph.D. dissertation, Michigan State University, 1980). 2 51
Table 3. 2. An Outline of Railways of Five Countries (As of 1979).
Type of Subject of Management Industry
U. K Public British Corporation Railway Board = BD established in 1962
West National ownership Deutsche Germany and management as a Eisenbahn=DE part of Federal established administrative structure in 1951 An independent profit system for accounting & budgeting, but without capacity for enjoyment of rights
France Public & Private Société joint stock company Nationale 51% of stock des Chemins from public and de fer 49% from private sector. Francias In 1982, a complete = SNCF nationalization was established planned. in 1937
U. S. A. Private Ownership General and Management Railway Stock Company companies except AmTrack, Con Railway, and a few of local railways
Japan Public Corporation Japan National Railway established in 1949
Source: Compiled from Statistics of Railways in the World (1979); Recited from Kato and Sando, Kokutetsu. Denden. Sanbai Saisei no Kozu (The Rehabilitating Composition for JNR, NTT, and JST), (Tokyo: Toyo Keizai Shumppansha, 1982), p.146. 2 5 2
From the beginning of the occupation, SCAP encouraged the establishment of semi-autonomous state enterprises in order to democratize Japan. With the labor relations in state enterprises getting out of control, this policy was extended to the nationalized railroads (JNR), the tobacco and salt monopoly (NTT) undertaking. Such a move was put forth by SCAP as an effective means to break the trade unions of these 3 organizations from those of other state enterprises, thus weakening the militancy of their labor movements.*' Consequently, these 3 undertakings were quickly converted from direct government undertakings into kosha-type public corporations, beginning with the railroads in 1949. 4.2. Institutional Arrangements of the JNR 4.2.1. General Characteristics of Japanese Public Corporations State enterprises in Japan can be divided into two major legal groups. One is private law establishments consisting of mixed enterprises. The other is public law establishments, which can be further divided into: 1) Those without a corporate personality such as government departmental undertakings, including the Postal Service and * *. This problem was discussed in a previous section, titled "Unstable Labor-Management Relations. ” 2 5 3 the Mint Bureau, and municipal enterprises. 2> Public law establishments with a corporate personality such as public corporations and semi-independent agencies. Most important state enterprises in Japan belong to the latter category with several variations, i.e., kosha, kodan, koko, ginko, and kinko (see Table 3.3). 1) Kosha consists of three important natural and political monopolies such as the JNR, the Nippon Telephone and Telegraph, and the Salt and Tobacco Monopolies. 2) Kodan are primarily in the field of construction. 3) Koko engage in financing risky business ventures that lack alternative credit sources. 4) Ginko are generally public finance corporations. 5) Kinko provide loans and finances to co-operatives.'* In the early years of the JNR, the General Headquarters of the Allied Forces guided the National Railways informally. It intended the management of the JNR to be flexible and have as much initiative as public corporations in the United States or the United Kingdom. The JNR management side was, thus, expected to concentrate on managerial efficiency without any concern for parliamentary accountability. Thus, the JNR authorities could avoid having any contact with the Diet or other authorities. The Minister of Transport was supposed to take care of these political * *. Yoshitake Kiyohiko, An Introduction to Public Enterprise in Japan. (London: Sage Publications, 1973), pp. 1-28. 2 5 4 and legal activities. Table 3. 3. Financial Control by the Government on Main Groups of Public Enterprise In Japan. Kosha Koko Kodan (JNR, NTT, Salt (Loans and Japan Road and Tobacco Finance Public Corporation Monopoly) Corporations) and Housing Corp., etc.> Budget Voting of Voting of Approval of Estimates Diet Diet Minister Annual Examined Examined Corporate Together with Together with Planning Budget Budget Estimates Estimates Bond Issue Ministerial Ministerial Approval Approval Long-Term Ministerial Borrowing Approval ( Non- Appllcable) Short-Term Borrowing - Price Diet Voting Diet Voting Ministerial Determi or Ministerial or Ministerial Approval nation Approval Approval Source: K. Yoshitake, Public Enterprise In Japan (1973), p. 131. 2 5 5 However, the expectation of the Headquarters was not observed by the Japanese side even from the beginning. The activities of the Diet and the JNR were done in the same manner as they had been during the pre-war years when the Railways were still a government department. For instance, the Diet required the attendance of the JNR officers for answering the questions asked by members of the Diet on the National Railways even after its transformation into a public corporation. In fact, compared to its counterparts in the United Kingdom, the public corporations in Japan had been under statutorily stricter control of the Diet and ministries. The reasons were presumably an absence of a clear concept of public corporations, non-commercial motives behind the Acts of Incorporation, and a long tradition of pre-war government departments.** The kosha, in particular into which the JNR can be categorized, was the most public of all (see Table 3. 3). In this matter, Yoshitake pointed out the failure of the Headquarters in resisting the tendency toward heavy control by Japanese authorities.** The headquarters failed because SCAP officials might have been biased toward *". Le Trung Thung, "A Comparative Study of Administration of Nationalized Railroads in the United Kingdom, France, West Germany, and Japan," (1980), p. 94. * *. Yoshitake Kiyohiko, An Introduction to Public Enterprise in Japan (1973), pp.270-271. 2 5 6 government corporate enterprises in the United States, disregarding the political tradition of Japan.'^ Therefore, from the very beginning, the degree of the governmental control and the involvement of public authorities in the JNR management was been conspicuously problematic.* * 4.2.2. Structural Obstacles in the JNR System The Japanese system of public corporation has been always cited as the most prominent cause for the JNR's unsuccessful management. An ideal type of public corporation system attempts to embody both efficiency and publicity at the same time. Japanese public corporations, including the * ^. On the SCAP authority's lack of understanding on Japan and Japanese, the former Prime Minister Yoshida wrote this: The Occupation, with all the power and authority behind its operation, was hampered by its lack of knowledge of the people it had come to govern, and even more so, perhaps, by its generally happy ignorance of the amount of requisite knowledge it lacked. See Yoshida Shigeru, The Yoshida Memoirs. (Cambridge, Mass: Houghton Mifflin, 1962), p.128. **. As matter of fact, during the drafting of the JNR law, various sections of the General Headquarters of the Allied Forces had different opinions concerning the degree of independence to be granted to railroad management. The Civil Transport Section insisted on a high degree of managerial independence for the JNR, while the Economic and Scientific Section pressed for strong governmental control of the National Railways. The Japanese Ministry of Finance, Ministry of Transport and the Diet shared the same view with the Economic and Scientific Section. Given such strong alliance among several public authorities, heavy governmental control naturally prevailed. For details, see Le Trung Thuong, "A Comparative Study of Administration of Nationalized Railroads in the United Kingdom, France, West Germany, and Japan," (1980), pp. 94-95. 2 5 7 JNR, demonstrated the worst results from both purposes. Briefly put, they embodied decreasing efficiency and losing publicity. The JNR system had structural problems in three levels, the substance of the public corporation system, the institutional limitations, and its distorted operation in reality (see Figure 3.6). The biggest limitation on the JNR public corporation system was lack of decision-making power on crucial matters. In fact, significant issues of management were decided not by the JNR, but by outside forces. Revenue, fare, and capital investment were under the control of the Diet; building and reconstruction of Shinkansen, construction of new lines, loans, and credit were handled by the government; and the decision of wages was at the discretion of the Public Labor Relations Committee (see Figure 3.6). To put it concretely, the JNR Law required the National Railways to submit budget estimates with other related developmental and financial plans and documents to the Minister of Transport. The MOT, after necessary consultation and coordination with the Minister of Finance, had to get the approval of the Cabinet. The Cabinet then submitted the estimates of the JNR budget to the Diet along with the general budget of the government. Although there was some degree of flexibility granted to the JNR management in spending the appropriation, in practice, the budgetary 2 5 8 Substance of the System Nature of Public Japan Corporation System National Railway Efficiency National Ownership Publicity Monopoly High Publicity Unified System Limitations of the System Lack of decision Dependence Prohibition Investment making power on the Diet of strike plans by on for fund Government budget. raising fare. wages, and construction of new lines Problems External Interference No responsibility system Unstable labor- management relation Impossibility of diversified management Inefficient Reality Erosion of management Monopoly Result Destruction of management Figure 3. 6. The Public Corporation System and Its Problems. 2 5 9 process did not differ much from that of a government department. With respect to pricing, the JNR had to seek the approval of the Diet and the HOT in most cases. The decisional levels of the JNR fares were categorized into 3 groups: statutory, approval, and autonomous. 1> The statutory category included non-commuter passenger fares, ferry passenger fares, and carload freight rates, and required the Diet approval. 2) The approval category needed only the approval of the Minister of Transport. This category included commuter passenger fares, less-than-carload freight rates, baggage and express rates, minimum passenger fares, and freight rates. 3) The autonomous category contained only rate and fare adjustments of a routine nature that did not affect the total revenue of the JNR to any extent, i.e., demurrage changes and promotional fares. Only this category was left up to the JNR's discretion. In average, the autonomous category accounted for approximately only 2% of the total operating revenue.* * The JNR's freedom to make budgets and set prices had been virtually nonexistent under the public corporation system. Consequently, the JNR followed an easy-going way of **. Key Whan Kim, "The Price and Output Policies of the Japan National Railways, 1949-1963,” (Ph.D. dissertation. University of California, Berkeley, 1971), pp. 45-46. 2 6 0 management that eventually ushered in inefficiency and irresponsibility, unstable and ever-tense labor-management relationships, and heavy involvement of political authorities. This situation inevitably produced JNR's "oyakata hi no maru"** attitude (an ever-dependency on the government finance). Therefore, although it was frequently discussed that the culprit of the bankruptcy of the JNR was politicians or labor unions or managers, the real blame should be placed on the structural limitations of the Japanese public corporation system. 4.3. Political Interference Not all public corporation systems originate in the politically oriented behaviors of actors. However, in case of the JNR, the difficulties from political intervention were inevitable products of the JNR public corporation system. An analysis of bureaucracy by Ludwig von Mises about a half century ago was astonishingly correct in pointing out the defects intrinsic to publicly owned enterprises. His *". The term "oyakata hi no maru” literally means "the employees of Japan, Inc." To descriptively translate it, it might connotate "No matter what happens, the national treasury will foot to the bill" attitude. With respect to the JNR problem, it implies an dependent attitude of the JNR authorities on the central government in decision making, management and finance. "Oyakata hi no maru” attitude is often referred to as a typical characteristic of Japanese public corporation system. 2 6 1 Indication of bureaucratic Impediments of public managing systems exactly fits the sources of the JNR management's failure."* According to him, one of ultimate causes of unsuccessful management Is the bureaucratic context of the public corporation system under which political Influence cannot be checked and balanced. Political Intervention was very much responsible for the failure of the JNR on two levels. One was political lines (seljlsen), meaning the local lines constructed by political Interferences. Another was the establishment of the "JNR family," which referred to the relationship between the JNR officials, politicians, and railway construction and material supplying companies. The next sections will exemplify how political Intervention In the JNR public corporation system occurred In terms of the above two aspects. 4.3.1. Political Lines (Seljlsen) Seljlsen can be literally translated as political lines. Implying the local lines developed for political pressure In spite of apparent unprofItablllty. In many local areas, the citizens persistently demanded new railroads. Using the easiest and effective method, the local residents asked politicians to work for their demands. Politicians **. Ludwig Von Mises, Bureaucracy. (New Haven: Yale University Press, 1944). 2 6 2 were always sensitive to the voice of their electorates. Thus, they were enthusiastic about the construction of new local lines regardless whether those lines would be profitable or not. A quick response to any voter's request was as a very effective political Instrument. Under these circumstances, politicians did their best to have a new line set up In their electoral wards, often disregarding other reasonable alternatives. Meanwhile, the construction plan of new railways was determined not by the JNR but by the Railway Construction Council, which was created by the government. In this endeavor, the JNR management was so severely constrained that It had no voice at all In shaping the new networks. As of 1980, the Council was composed of 29 members, as follows: 1) 6 members from the Lower House and four from the Upper House of the Diet, 2) 10 government representatives. Including the Vice- Ministers of Transport, Finance, Agriculture, Trade and Industry, the Deputy-Dlrector of the Economic Planning Board and other officials, 3) the President of the JNR, and 4) 8 outside representatives to be appointed by the Cabinet with the consent of the Diet: 2 of them would be selected on the basis of their experience In railway construction, the other 6 on the basis of their broad knowledge and experience 2 6 3 In Industries such as mining, transport, and finance.*" As a result, 10 out of 29 were politicians whose main political interests were re-election of them, other politicians with the same party affiliation in general, and those who belonged to the same faction in particular. Because they had important roles in the placement of new lines, various sectors approached them with their demands. Accordingly, the degree of politicians' involvement could help but be maximized. As a result, most branch lines in secluded places were constructed by logrolling among politicians, although it was clearly that they could not be remunerative. The government moved even further to create a separate public corporation (kodan type), the Japan Railway Construction Corporation (JRCC). The primary aim of the JRCC was to strengthen regional economic base and creating regional income differentials by means of completing greater rail network throughout the nation. In practice, however, the JRCC was simply a move on the part of political leaders to carry out railway construction at a level beyond what the JNR management was willing to undertake. In other words, the JRCC worked to nullify any opposition from the JNR management toward unprofitable railway construction. It was therefore of little surprise to find excessive political •*. Key Whan Kim, "The Price and Output Policies of the Japan National Railways, 1949-1963," (1971), pp.239-240. 2 6 4 interference in railroad construction.** In fact, on September 6, 1979, the Board of Audit, the only institution that audited the final accounts of State revenues and expenditures, began checking the books and questioning officials of the Japan Railway Construction Corporation (JRCC) on the suspicion that it had been paying for many years tens of thousands to hundreds of thousands of yen a month to employees as expenses for official trips that they did not actually make."* Such alleged illegal payments were estimated to amount to hundreds of millions of yen a year, and one senior official allegedly donated more than 300,000 yen raised by this practice to the supporters of a politician. The JRCC chief officer, who was responsible for the scandal in the JRCC of 1979, resigned. Politically, the corruption case in the JRCC weakened the LDP at the polls of the time. Even after the event, much construction was politically motivated, for trunk lines and local lines alike. As the **. For details of the JRCC's relations with other railways-related organs, including HOT, JNR, and Railway Construction Council, as well as its personnel structure, see Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku: Kosha Kara Minei e (The JNR Reform: From Public Corporation to Privatization), (Tokyo: Asahi shimbun sha Chosa Kenkyu Sitsu, 1982), pp.66-67. According to this analysis, the JRCC, which was legally controlled by the HOT, was under the umbrella of the Tanaka faction's influence, whereas the Railway Construction Council and JNR were influenced by the Fukuda faction. **. On details of the JRCC corruption scandal in 1979, see Asahi Shimbun. (September 7, 1979). 2 6 5 economy had revived and freight demand had peaked up, many politicians, eager to please constituents, pressured the JNR to build nev lines In their districts. Putting a new JNR line In an area brought convenient transportation to the residents and businesses. Because the JNR had a public dimension, the local lines were undeniably a public service. However, they were frequently built In spite of the absolute certainty from the start that they would lose money. After the Introduction of Tokaldo Shlnkanaen In 1964, the high-speed service was extended to Hakata, Kyushu, with completion of the Sanyo Shlnkanaen in 1975. In 1982, the Joetsu Shlnkanaen linked Tokyo and Niigata Prefecture**, the bailiwick of former Prime Minister Tanaka Kakuel, who pushed for the project until he was forced out of office In the **. Niigata Is the place where Tanaka was born In 1918, the son of a cattle broker who was also a dissolute gambler. The Niigata Third district, which Tanaka had continuously represented In the Diet since he was first elected on April 26, 1947 at the age of 28, Is a secluded place that supplies workers, electricity and rice for the Pacific Coast of the country Including Tokyo. The heavy snows, usually about 15 feet, made the place close to Impassable In winter. Because most men had to set out on seasonal work In the big cities, often on construction projects, and students were almost all residing In school dormitories, the only people left at home were female, such as mothers and old women. When Tanaka published Nihon Retto Kalzoron (Plan for the remodeling of the Japanese Archipelago), Niigata as well as other Japan Sea Prefectures were developmental target areas. Likewise, the construction of Joetsu Shlnkanaen commuting from Tokyo to Niigata was definitely because of the political Influence of Tanaka. Thus, It has been often referred as a typical example of seljlsen. 2 6 6 Lockheed bribery scandal.** The Tohoku Shlnkanaen from Tokyo to Iwate prefecture, home district of another former Prime Minister, Suzuki Zenko, was completed the same year. As predicted, they all operated In the red, a major reason for the JNR's fiscal hemorrhaging. Of JNR's 245 trunk and local lines only the Tokaido-Sanyo Shlnkanaen and 7 other trunk lines between Tokyo and the Osaka area made a profit In fiscal 1984 "^. All the other lines lost money. The Tohoku and Joetsu Shlnkanaen lines had huge revenues but because of payments for construction and other costs, they were In the red.** **. Chalmers Johnson, "Tanaka Kakuel, Structural Corruption, and the Advent of Machine politics," Journal of Japanese Studies. 12:1 (Winter 1966), pp.1-28. * ^. In 1984, the JNR earned 2.75 trillion yen from passengers. Including 890 billion yen from the Tokaldo-Sanyo Shlnkanaen and 200 billion yen from the Joetau and Tohoku Shlnkanaen, 190 billion yen from freight, and 4.4 trillion yen from government subsidies and other sources. As a result. It earned a total of 3.38 trillion yen In revenue. On the other hand, expenses were 5.2 trillion yen. Therefore, Including nonoperating profits, the total deficit was 1.65 trillion yen. The JNR's cumulative deficit through fiscal 1984 was 12.2 trillion yen and the total long-term debt came to 21.8 trillion yen (See Japan National Railway, Facts and Figures. 1985). On this matter, critics said. If a private firm had a sales (3 trillion yen) to debt (21 trillion yen) ratio of one to seven. It would have gone bankrupt long ago. **. Kamltsuka Aklhlro, "Reform of the Red-Ink Railroad,” Japan Quarterly. 33:1 (January-Aprll 1986), p. 26. 2 6 7 4 .3 .2 . The JNR family Because the JNR, as a public corporation system, was under the control of the government, financial responsibility- loss or gain--was totally up to the government. Even in the case of a financial surplus, it was absorbed by the National Treasury. Therefore, the JNR had no incentive to reduce costs as much as possible. The JNR became accustomed to be having no knowledge of its budget, because that was not under its discretion. Railways tend to demand a large amount of track cost, which lengthens the lead time of investment. The purchase prices of input, including constructing and repairing equipment and buying supplies are usually high. In the JNR public corporation era, it was not uncommon that retired JNR officials were reemployed by railway materials and equipment supplying companies. In this situation, quite naturally the JNR employees and the material suppliers to the JNR, who were frequently represented by the former JNR officials, set up a common interest relationship. Sharing common material interests, some JNR employees and certain railway-related business firms shared a group spirit, and then they cultivated close relationships with bureaucrats and politicians for consolidation of their interests. This interest conglomeration, which was frequently frowned upon, was called the "JNR family." The JNR family was indeed big. 268 Including about 50, ODD companies in 1982. Key participating firms are shown in Table 3.4. Table 3.4. JNR Equipment Investment Budget and Participating Companies (billion yen) (1982). Business Area Budget Companies Civil 700 Taisei Kensetsu; Kshima Kensetsu; Engineering Shimizu Kensetsu; Mitsui Kensetsu; Sumitomo Kensetsu; Takenaka Komuten; Kumagayagumi; Fujita Kogyo; Aidagumi; Zenidakagumi; Tobishima Kensetsu; Tetsudo Kensetsu; Hatssuo Kyoryo; (Rails provided by Shinnittetsu* and Nihon Kokan) Electricity 160 Tokyo Shibaura Denki*; Mitsubishi Denki; Hitachi Seisakujyo*; Huji Denki Seize; Nihon Denki; Mei Denki. Vehicle 150 Hitachi Seisakujyo*; Mitsubishi Jyukogyo; Tokyo Shibaura Tenki*; Huji Jyukogyo; Niigata Tetkojyo; Sanyo Denki; Toyo Denki; Nihon Syaryo Seizo; Kawasaki Jyuko; Kinkyo Syaryo; Tokyu Syaryo Seizo. Others 260 Sumitomo Kinzoku Kogyo; Kyosan Seisakujo; Ikegu Tetko; Nihon Shingo. Total 1036 Source: Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku; Kosha Kara Minei e (1982), p.47. A notable point is that among the listed companies, Shinnittetsu (New Nippon Steel), Tokyo Shibaura Denki, and Hitachi Seisakujyo were the top three business firms in terms of financial contribution to political parties 2 6 9 according to a 1982 government report. It may be not an accident that Shinnittetsu, which monopolized about over 75% of the JNR rail supply, was recorded in first place on the contribution list."' Establishing interest relations with politicians was indispensable to the JNR family for advancing its purposes. First, the JNR family took every measure to win politicians over to its side for the construction of new lines by a company it favored. Protecting their respective needs, politicians and the JNR family negotiated with each other through secret processes. In this case, reciprocal relations were set up, following an exchange scheme. Politicians received money and votes, guaranteeing vested interests to the JNR family. Their bilateral interests were not conflicting but beneficial. Second, a relationship between politicians and the JNR family was set up for decisions about fares and the government subsidy. Under the monopoly system, excessive costs due to inefficient management were expected to be covered by raising fares. However, the JNR Law required the JNR to submit a budget estimate to the National Diet after the Ministry of Finance examined it. In addition, an increase in the JNR standard fare was also a matter of decision by the Diet. The JNR had so strictly limited in **. Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku: Kosha Kara Minei e (1982), p. 47 and p.66. 2 7 0 managerial discretion as to completely depend upon the decision-making of the government and politicians for whatever It wanted. Meanwhile, the bills of fare Increase often became heated political Issues to the political parties. People always opposed fare Increases and demanded that the government subsidize the JNR. Both politicians and the government needed to listen to and consider their demands. However, the government particularly, the MOF, being responsible for appropriate national budget distribution, was always conscious of the extent of spending. At the same time, the government could not permit fare Increases either. Thus, JNR's demands for fare Increases were often blocked or stalled, and government subsidies to the JNR had been a hot political Issue. With the development of this political situation, the JNR family shared a common concern for fare Increases and the government subsidy with the JNR authority. They tried to make use of their established Interest relationships with politicians. In this case, politicians were obviously In the middle of a strengthened tug-of-war of interests between the government and the JNR. Because money (including that from the JNR family) Is always considered Indispensable by politicians of ruling or opposition parties, they could not simply Ignore the demands of the JNR family. 271 The above observation confirms how great the extent of political Intervention vas In JNR matters during the pre reform period. A notable point Is not that politics Influenced JNR policy-making, but that the vay politics worked vas not sound. Rather, politics provided a perplexing cause to the JNR management. 4.4. Impacts of Government Policy In addition to the structure of public corporation systems and the political Involvement of various Interests, the long-term government policy toward the JNR matters should be mentioned as the context of the JNR problem. The government policies did not help the JNR to get rid of problems on two levels: personnel policy and subsidy policy. 4.4.1. Age Composition In the JNR Personnel Structure Following the decision of the government, the JNR accepted 250,000 repatriated railroad workers after World War II. The government ordered the JNR to absorb those who returned from the Manchuria Railways and other railway workers from various areas under Japanese military control. As pointed out previously, the JNR financial loss would have shrunk to quite a small amount If the special personal expense Incurred by the acceptance of Colonial Railroads employees was excluded. 2 7 2 Compared with other public corporations such as the Nippon Telegraph and Telephone Public Corporation (NTT) and the Postal Service, the age composition of the JNR personnel structure was apparently distorted. In 1980, the average ages of staff were 39.8 in the JNR, 37 in the NTT and 39.1 in the Postal Service, respectively. However, in terms of the average years of continuous service, the JNR showed 21.1 years, whereas the other two organizations reached just about 18 years. The sudden increase in the age group who were rehired in the JNR by the government after the war amounted to over 19,000 to 23,000 per year. At the same time, 2,983 persons of this age bracket were of retirement age by 1980. Accordingly, the JNR became financially pressed by increasing personnel costs'*, retirement allowances and annuities.'‘ These burdens went up rapidly and went out of •*. The yearly expenses of the JNR for personnel increased extraordinarily at the end of 1970s and the beginning of the 1980s. For instance, in 1980, personnel expenses were 2.2 billion yen, which were about 82% of the total income of 2.7 billion yen. It was surprisingly high compared to private railways' 45% for the personnel expenses in the total income of the same year. See Kudoo, Yoshio, Yasashii Kokutetsu Saikenron (1982). * ‘ . In 1976, the actual payment for the retirement allowance started to" exceed the reserve fund for it. Thereafter, it became uncontrollable. See Kudoo Yoshio, Yasashii Kokutetsu Saikenron (1982). 2 7 3 the JNR's control after the end of 1970s. However, the government did not pay due attention to this burden of the JNR. 4.4.2. Government Financing Policy for the JNR Compared to other countries, the Japanese government has treated its deficit railways differently. Host nationalized railways have been in the red after changes of transportation structure occurred in the 1960s (see Table 3.5). West Germany, Japan, the U.K., and France stand in order of unsound balance figures before the governments subsidization. Many governments had a policy to provide subsidies to clear off the financial loss of railways each year. The railroads then could start a new financial year without being burdened by cumulative debts. In these countries, the national railways' shortfall in operating revenue is made up annually from the treasury. The railway system in Japan before 1949 was also operated in the same way. However, the JNR acquired an independent accounting system from the national finance after 1949. After that, the JNR had to tackle the deficit problem by itself. Some critics claim that if the clear-off financial measure by the government had continued even after the JNR became a public corporation, there would not be a gargantuan deficit in the JNR. Other assert that the JNR should have been kept as it 2 7 4 was vlth government subsidies regardless of its financial structure, since it belonged to public domain. Table 3. 5. Balance Sheets and Governments Subsidies for Railway Industry in Four Countries (billion yen) (1985). Balance Government support Net Expenses E/I Subsidy S/I Income West 23, 649 41,091 173. 8 17,932 75. 8 Germany France 18,025 23, 369 129.6 11,991 66. 5 U. K. 10, 898 14,720 135. 1 3,876 35. 6 Japan 27,105 40,080 147. 9 6,761 24. 9 E-Expenses; I=Income; S-Subsidy. Source: Kato Hiroshi and Sando Yoiichi, Kokutetsu. Denden. Senbai Saisei no Kozu (The rehabilitating Composition for JNR, NTT, and JST) (1982), p.145. Basically the Japanese government was unwilling to provide any financial support of a redemption fund for the JNR's accumulated debts in the long run, except to take over several interest payments (see Table 3.5). Indeed, the Japanese government had taken an indifferent financial policy toward the JNR when it had a snowballing deficit. It was apparently a comparable policy line to those of other 2 7 5 countries. 5. PRODUCTS OP PREVIOUS PLANS 5.1. Considering Reconstruction The Japanese railway Industry was started In 1692. Both public and private railways were operated In the early years. However, most of them, except urban railways, were nationalized In 1906.* * After that, railways monopolized transportation In Japan, and the management of nationalized railways was healthy and sound until 1944, just before the end of World War II. In 1949, at the direction of the Occupation authorities under General Douglas MacArthur, the JNR was changed from a state-owned enterprise to a public corporation with Independent accounting. Funds could not be transferred from the nation's general account. In other words, the JNR had to finance all construction of new lines and expansion of facilities from Its own earnings or by borrowing. In the early stages of Its operation, the JNR made efforts to expand the transport capacity to recover from the damages Incurred by the war and to revive the post-war economy. In fact, there were no fare Increases for the 20 '". Before the nationalization of 1906, privately owned railways covered 5,231 Km and the national railways did 2,562 Km of the land. Since 1906, however, the former covered only 717 Km, whereas the latter served 7,153 Km. 2 7 6 years between 1920 and 1940. However, the JNR had to rely on the Increases in fare to overcome post-war Inflation under its monopolistic status. From the 1960s onward, the JNR lost its long enjoyed monopoly because of its weakened competitiveness, and its business condition worsened due to the astronomical amount of its deficits. Although there were multiple causes leading to ruin of the JNR management, the most painful suffering of the JNR was from the extraordinary high deficits and indebtedness. After 1964'*, the year the JNR recorded its first net- loss of 30 billion yen, the deficit increased year by year. In 1965 the deficit was 123 billion yen, reached the 900 billion yen mark in 1970, and then more than doubled to 184 trillion yen in 1973. In 1980, the amount of the deficit was 1,008.4 billion yen, excluding 269.1 billion of grant-in-aid from the government. Accumulated deficit amounted to 6.5 trillion yen in 1981 and 15. 5 trillion yen in 1986, one year before the JNR sectionalizing privatization. Including the ''. The year 1964 was a memorable one for Japan. It was in 1964 that the Tokyo Olympics showed the world that Japan had completely recovered from the ravages of World War II. Another event of the year, just ten days before the Games opened, also attracted enormous attention. That was the opening of the Tokaldo Shlnkanaen (Tokaido New Trunk Line) between Tokyo and Osaka by the JNR. Shlnkanaen is often called the Bullet Train; its top speed of 210 kilometers per hour was then the fastest in the world. However, while the Japanese were enormously proud of the Shlnkanaen's innovative technology, ironically the JNR was critically ill. It was also in 1964 when the JNR first recorded its financial loss. 2 7 7 debt of 25 trillion yen and mutual-ald pension fund of 4.9 trillion yen, the total debt owed by the JNR was about 30 trillion yen, an amount more than 40% of the general account of the national budget for the year. Without any doubt, the financial Illness struck a fatal blow to the JNR management, which was arleady In a marginal situation. During those years of bad management, the government and the JNR considered proper recovery means for sound management. The JNR tried a series of reform plans after 1969 to prevent Its fiscal disaster. The common focuses of these reform efforts were reduction of labor forces, fare Increases'*, cuts in freight operations, abolition of local lines, and temporary suspension of payments on the principal and Interest of the debt. Despite these efforts, however, the JNR could not recover as well as was expected. For various reasons, these recovery plans were not enough to turn the system around. Eventually, the JNR problem became unsurmountable within the existing system. Structural reform was then discussed for a systematic change of JNR's management. The following section elaborates on this. '* « Although the JNR fares were successively Increased 11 times In thirteen years between 1976 and 1986, they did not help the JNR's finances, but rather contributed to the widening gap In fares with private railways. 2 7 8 5.2. Failed Efforts for Reform Before the PCAR (1981-1983) and JNR Restructuring Supervisory Council (1983-1986) put the JNR matter on their agenda in the 1980s, the JNR continued to frame reform plans by itself. After its first deficit in 1964, JNR designed consecutive reform plans in 1969, 1972, 1973, 1975, 1977 respectively, and the Management Reconstruction Plan in 1980 (see Figure 3.7). 1st 2nd 3rd 4th 5th 1969 I 70 I 71 I 72 73 74 «oil 75 crisis 76 I 77 I 78 79 Manage 80 ment 81 Improve 82 ment 83 Plan 84 85 note: plan period accomplishment discontinuance Figure 3.7. The JNR Reform Plans and Accomplishment. Source: Compiled from Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku; Kosha Kara Minei e (1982), p.70. 2 7 9 The history of the JNR recovery planning was a sense of trials and errors. To be specific, the first recovery plan in 1969 aimed at increasing the volume of transportation and the amount of investment, and resettling railway fares. By that time, the auto industry had rapidly developed, with a high degree of competitiveness. As a result, the JNR's initial plan failed far from the anticipation of the planners. Thus, passenger and freight transportation in railways became rather sluggish, and the rationalization plan for personnel expenses could not be achieved. Looking back at the failure of the first trial, the JNR developed a new reform plan in 1972. However, even before it was implemented, it was sacrificed by the political circumstance at that time. The draft was thus withdrawn. Right after the 1972 plan was rejected, the JNR launched a revised rescue project in 1973. Unfortunately, around that time the first oil crisis hit worldwide. In the middle of the 1970s, the JNR could not successfully implement the Productivity Increase Movement (Harusei Undo). Because the JNR could not cope with these changes, the project of 1973 was proven unproductive as well and ended in 1974. In 1975, the JNR set up the fourth reform plan with the intent of a 50% increase of fare, promotion of rationalization, and improvement of government's support for 2 8 0 liability. Due to a too optimistic vision, however. It did not have productive results. Rapid and big fare Increases only widened the existing fare gap with the private railways, and thus the number of passengers dropped sharply. Moreover, because even the fare Increase was not accomplished as well as planned, the balance between Income and expenses could not be kept. All these recovery trials focused on capital Investment, as In the Special Act for Promotion of the JNR Financial Recovery that adopted Investment policies of long term plans designed years back.*" The basic thinking was to Invest capital for modernization In order to bring the cost down and to Improve service. In other words. In order to Improve the bottom line, the JNR made efforts to Increase the volume of transportation. This meant that In order to recover from the worsened financial condition, the JNR kept making essentially the same capital Investment during the 1970s. In short, the recovery trials, no matter how ambitious they were, did not pay attention to changing objectives. Indeed, all the JNR's recovery attempts failed because Inflation and Increasing labor cost pushed up the total cost, growth In the volume of transportation remained lackluster, and competition from autos and airlines fierce. *" Unyu Kelzal Kenkyu Senta hen, Tetsudo Selsakuron no Tenkal: Soovo Kara JR Made 120 Nen (The Theory of Railways Policies: During 120 Years From Foundation to the JR), (Tokyo: Hakuto Shobo, 1988), pp.280-319. 2 81 In 1977, the previous rescue plans were critically subjected to a thorough examination. The JNR began to change its attitude that fare increase would improve its situation. The HOT and the JNR authorities began to shift their previous inactive and impractical positions. They saw that improvement of the transportation volume and fare increase could only bring on temporary relief, which was insufficient for the JNR's rehabilitation. In other words, fare adjustment could play only a minimum role of protecting the balance sheet from getting worse. After this review, the reform plan of 1977 focused on the recovery of entrepreneurship by the JNR itself. The new plan also examined counter-measures to public factors that forced the JNR to be burdened with structural limitations. With such a changing perspective, in 1980, a new rescue plan, the Management Improvement Plan, was launched. Backed by the JNR Recovery Act, the Management Improvement Plan** basically aimed at scaling down and balancing the operation. To be specific, it tried to cut off the unprofitable * *. The contents of the law and the text of the plan appears in Hosoda Kichizo, Kokuvu Tetsudo o Kataru: Kokutetsu Saiken Mondai ni Kansuru Teioen (Talking About the JNR: Suggestions for the Problems of the JNR Reform), (Tokyo: Rikuun Keizai Shimbunsha, 1981), pp. 285-314. The book includes some valuable interview information from which the opinions of several JNR related persons and concerned persons can be gleaned. 2 8 2 operation, such as closure of rural lines'?, and discount fare system, and the cargo division's retrenchment from the yard-system. Additionally, for the rationalization of labor forces, it proposed to reduce labor forces by 75,000 to set the JNR a 350,000-person system. In this sense, it was characterized as revolutionary compared to the previous attempts and had in success in part of its purposes. For instance, the conditional budget balancing of main-line railways that was proposed by the Management Improvement Plan was accomplished ahead of time and surpassed the financial goal. Contrary to the general belief that examining past failures helped to predict the plan's goal, the JNR management underwent determined rationalization to succeed in that specific area. The plan as a whole, nevertheless, also lacked the perspective to revive the railroad operation itself. 6. CONCLUSION From the above observations, it is clear that the JNR definitely kept trying to cope with managerial problems. However, all these reform trials were not productive, and failed for a variety of reasons. '?. In an effort to restore health to its finances, the JNR sought the Transport Ministry approval for a plan to discontinue services on 33 local lines on November 22, 1982. In addition, the JNR scheduled to discontinue services on 40 other local lines. See Asahi Shimbun. (November 23, 1982). 2 6 3 First, railroads were losing out to other means of transportation. Second, there was the widening fare gap with private railways. Third, the JNR lacked autonomy in its operations as a public corporation. The budget and fare increases had to be approved by the Diet. After 1977 fare increases had required approval from the Minister of Transportation as well. The JNR's attempts to increase revenues by raising fares were blocked or delayed because of the government's low-price policy and because of moves by opposition political parties in the Diet. Fourth, the stupendous amount of debt reached such a point that it was impossible for the JNR to repay it from earnings. Ideological unions dominated workers whose discipline was deteriorated. The JNR unions, particularly Kokuro, the backbone of the labor movement in Japan, were very strong. Attempts by the JNR authorities to cut the work force and increase efficiency were frustrated by stiff union opposition. Therefore, labor force control plans to reduce personnel were only partially implemented. This situation led the decrease of users. From the beginning of the 1960s, the government's shaky finances as a whole and the JNR problem in particular were seriously reviewed under the scheme of an administrative reform plan. Nevertheless, the JNR's systematic change was not considered at the beginning of the administrative reform trials. In other words, the government 2 8 4 and the PCAR still recognized JNR's Management Improvement Plan at that time. It was after 1981 that the persons concerned began to doubt the systematic substance of the JNR and the feasibility of the Management Improvement Plan. The realization of the PCAR's JNR sectionalizing privatization plan was closely related to the crumbling of the JNR reform efforts. One may argue that the JNR break-up and privatization policy would not have been considered and adopted, if the JNR recovery plans had succeeded. However, no matter how successful the JNR Management Improvement Plan would have been, the government must have considered a drastic reform of the JNR. This was because the JNR's Management Improvement Plan completely differed from the PCAR's plan in mind for reform. While the former presupposed a big government's continuous aid, the PCAR had a political orientation emphasizing self-reliance of systems. Thus, PCAR's new administrative philosophy was based on the shift of the conservative regime's orientation from favoring the big government to the small government. Indeed, the restructuring of the JNR was part of the former Prime Minister Nakasone Yasuhiro's administrative reform program. As a Director-General of the Administrative Management Agency in the Suzuki Zenko administration (1980- 82), Nakasone became a champion of streamlined government. He agreed with business leaders that because of the government's fiscal crisis, waste and duplication in the 285 government had to be stopped and the government be run more efficiently, like a private corporation. Nakasone heeded the call for a small government, trying to get out of political stagnation and economic malpractice that resulted from a system with a big government orientation. His accomplishment in this movement was a major stepping stone to the Prime Minister's office. After that, a national debate over who was responsible for the JNR's staggering debt continued for several years. The background and process of the JNR reform dispute had political aspects. In the political process of the JNR reform dispute, many actors were involved and had come under fire. They were mainly the politicians, the government, the JNR management, bureaucrats, the railway worker's unions, the public, and the mass media. The next chapter illuminates these participants' activities in the JNR reform dispute process. The Break-up and Privatization Policy of The Japan National Railways, 1980-87: A Case Study of Japanese Public Policy-making Structure and Process Volume II Dissertation Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of the Ohio State University By Eunbong Choi, B.A. , M.A. ***** The Ohio State University 1991 Dissertation Committee Approved by Bradley M. Richardson (Chair) ^ William Liddle — Advisor Richard Gunther Department of Political Science TABLE OF CONTENTS PAGE LIST OF TABLES...... xvl LIST OF FIGURES...... xvii CHAPTER IV. THE MODES OF THE ACTORS' INTERACTION 1. Introduction...... 266 1.1. Focus of Analysis...... 286 1.2. The Scope and Method...... 288 2. Trends of the JNR...... 291 2.1. The JNR Mainstream: The Status-Quo Position...... 291 2. 2. Disunion of the JNR Authority...... 297 2.3. Confrontation...... 301 2.4. The JNR Reformers' Rise In Status...... 305 3. Attitude of the Ministries...... 309 3.1. Roles of Bureaucracy...... 309 3. 2- The MOT During the JNR Reform Dispute 314 3.2.1. Getting Along With the JNR...... 314 3.2.2. Tension Between the MOT and the JNR... 315 3.2.3. The MOT's Independent Plan...... 318 3.3. Increasing Sphere of MOT's Influence...... 324 3.3.1. MOT'S Change...... 324 3.3.2. A Turning Point...... 328 4. The LDP In the JNR Reform Dispute...... 330 4. 1. Mltsuzuka Subcommittee...... 330 4. 2. The Three Representatives...... 335 4. 3. Disunity and Settlement...... 337 5. The Business World In the JNR Affair...... 341 5.1. The Private Sector's Vitality...... 341 5.2. Internal Conflict of Business Society. .... 343 5. 3. Building Up A Reform Atmosphere...... 346 6. Public Opinion and Mass Media...... 348 6.1. The Japanese Mass Media...... 348 6.2. The Mass Media: Creating a Mood for Reform 349 6.3. The "Kokuzokuron" (Traitor Theory)...... 352 6. 4. The JNR Matter In Newspapers...... 357 7. Opposition Parties and Labor Unions...... 360 7. 1. Kokuro after Reform Movement...... 361 7.2. Criticism of the Opposition to the PCAR. . . 365 7.3. Kokuro's Counter-Argument...... 366 7.4. Change of the Opposition During the Reform Dispute...... 369 xlll 8. Conclusion...... 372 CHAPTER V. THE PROCESS OF ISSUE EVOLUTION 1. Introduction...... 375 2. Stages of Decision...... 376 2.1 Stage I: Issue Definition...... 377 2.2. Stage II: Considering Alternatives...... 378 2.3. Stage III: Final Choice...... 360 3. Issue Development: From the JNR to the JR 384 3.1. The Second PCAR (March 1981- May 1983).... 385 3. 1. 1. Objectives...... 385 3. 1. 2. Composition...... 388 3.1.3. Doko's Four Conditions...... 393 3.1.4. Features...... 394 3.1.5. The PCAR's Meaning for the JNR Reform. 400 3.2. PCAR' Second Special Subcommittee Period.. 403 3.2.1. The Color of the Second Special Subcommittee...... 403 3. 2. 2. The Emergency Report...... 405 3.2.3. Impacts of Other Public Corporations.. 409 3.3. PCAR's Fourth Subcommittee Period...... 412 3.3.1. Membership Composition and Functions.. 412 3. 3. 2. Subcommittee Hearings...... 417 3.3.3. Confirmation...... 424 3. 3. 4. Informal Negotiations...... 425 3. 3. S. Resolution...... 429 3.3.6. Controversy...... 431 3.3.7. Dispute on the New Council's Status, Revisited...... 434 3. 3. 8. The Basic Report...... 436 3.4. The JNR Restructuring Supervisory Council Period...... 440 3. 4. 1. Political Background...... 440 3.4.2. Inauguration of the New Council.... 444 3.4.3. The Council's Reports...... 447 3.4.4. Dismissal of JNR President Nisugi..... 448 3.4.5. Finis to the JNR...... 450 4. Systems of Laws Related to the JNR Restructuring...... 453 4. 1. Setting Environment...... 453 4.2. Objectives and Basic Policies of the Law...... 455 4. 2. 1. Objectives...... 455 4. 2. 2. Basic Policies...... 456 4. 3. Implications of Key Laws...... 460 4. 3. 1. The JNR Restructuring Law...... 461 4.3.2. The Railway Business Law...... 463 5. Remaining Problems and the Future of the Policy...... 464 5. 1. Prospectus of the new JR System...... 464 xiv 5.2. Beyond the Reform's Reach: Unsolved Problems...... 467 5.2.1. Regional Disparity...... 467 5. 2. 2. Settlement of Liability...... 470 5. 2. 3. Handling Excessive Personnel...... 472 6. Conclusion...... 475 CHAPTER VI. CONCLUSION...... 478 BIBLIOGRAPHY...... 493 APPENDICES APPENDIX A: Chronology...... 530 APPENDIX B: On Interview...... 533 APPENDIX C.1 : Tentative Questionnaire (Japanese). 541 APPENDIX C.2: Tentative Questionnaire (English).. 543 APPENDIX D: Revised Questionnaire...... 545 XV LIST OF TABLE TABLE PAGE 4.1. Presidents of Japan National Railways (Kokuyu Tetsudo), 1949-1987...... 292 4.2. The Leadership of the Ministry of Transportation during JNR Restructuring Dispute...... 321 4.3. JNR Reconstruction Subcommittee Under the JNR Basic Problems Investigation Committee in the Policy Affairs Research Council of the LDP...... 332 4.4. Number of Editorial Articles in the Major Japanese Newspapers in Relation to the Policy toward the JNR during the Reform Dispute...... 358 5.1. Distribution of Research Assistants of the Provisional Commission of Administrative Reform's Executive Office...... 398 5.2. Summary of Phases of the JNR Restructuring Policy Process*•••••••••••••••••••••*•••••••• 475 6.1. The Overall Scheme of the Administrative- Financial Reform and the Japan National Railways Restructuring in the 1960s...... 482 xvi LIST OF FIGURES FIGURES PAGE 4.1. Japan National Railways Organizational Chart (As of 1985)...... 298 4.2. Organizational Change of the Ministry of Transportation During the JNR Reform...... 326 4.3. The Shift of Labor Unions' Size in the JNR... 362 5. 1. The System of the Second Provisional Council of Administrative Reform...... 402 5.2. Outline of Laws Related to the JNR Restructuring...... 454 5. 3. Outline of New JR Administrations...... 456 5. 4. Outline of Division of Railway Lines and Regions...... 457 5.5. JNR's Long-Term Liabilities and Their Disposition...... 471 5. 6. Reemployment of the JNR Employees and the Number of the JNR Settlement Corporation Employees...... 474 6. 1. The Modes of Actors' Interaction and Their Shift during the JNR Reform Dispute...... 486 xvii CHAPTER IV THE MODES OF THE ACTORS' INTERACTION 1. INTRODUCTION 1.1. Focus of Analysis By mid-1981, the government preferred a solution that focused on the political aspects of the JNR problem. Its execution, however, was not as straightforward as it hoped. The whole course of the JNR reform debate suggested a far greater degree of diversity than might be expected from a government with a massive parliamentary majority. Both supporters and opponents believed that the JNR could not be left as it was and draconian measures were clearly needed. However, the very boldness of the privatization and breakup plan increased the people's anxiety. Despite a general opinion that the existing system should be changed, public opinion was divided. The taxpayers thought that they might be stuck with the JNR's astronomical debt. However, the large-scale layoff to relax it was a sad prospect, particularly in a country where job security is almost a civil right. The National Railway Workers' Unions (Kokuro), with 200,000 members, thus absolutely opposed the 286 287 rehabilitation pian, If It meant work force control. Among political parties, the JSP, which the Kokuro supported as the largest of the opposition parties In Diet strength, would lose popularity In elections once a sectlonallzed and private form of management system reduced the JNR labor unions' power. Therefore, It held an opposing opinion for a long time. In contrast, the Democratic Socialist Party supported the JNR break-up and privatization plan. It was not clear about the Komelto's (Clean Government Party) position. However, as a middle-of-the-road opposition party. It basically agreed on the reformists' sectionalizing privatization plan. The LDP's attitude was more complicated. Acknowledging the tense situation among various groups, even some members of the JNR Restructuring Supervisory Council said that their prescription was not the best medicine for the ailing JNR.* The general process of the JNR reform toward sectionalizing privatization looked as If It were a piece of drama, with various political actors' rise and fall. On the one hand, the vicissitudes of their Influences partly reflected the ups and downs of their status In the political power game. On the other hand, the process followed the drift of the time which required administrative-financial reform at a national level. Most participants gradually recognized such a trend. ‘. Interview with a former JNR Restructuring Supervisory Council member. 2 8 8 This chapter examines various political participants' complex Interactions In terms of their concepts, motivations, roles, attitudes, and behavior toward the JNR reform. The basic questions are: who participated In the process? How was the system of government changing throughout the process? Undoubtedly, such questions touch upon the most controversial subject In contemporary Japanese studies. Although many different answers may be given to these questions, their components must Include the key actors In the JNR reform policy-making process. 1.2. The Scope and Method In order to understand the political participants in the JNR reform process, this chapter focuses on three considerations. The first one Is "who were actually Involved In the process?" Among the participants, one who had only Indirect Influence should be separately categorized from one who had direct power. The second consideration Is the behavior and attitude of these actors. Put concretely, did they agree with or oppose the JNR sectionalizing privatization plan? Their positions on the policy may be related to their evaluation of the existing system at the time of the policy dispute. One who disliked the system would support the reform. An opposite proposition can apply to the status-quo group. The third consideration Is about 289 the reason why some supported the JNR sectionalizing privatization and others opposed It, and on what basis. However, participants did not hold the same position throughout the process. Thus, It Is worthwhile to explore the change. If any, and the motive leading to this change. According to Richardson's typology, the actors In the Japanese policy process can be categorized Into the bureaucracy. Prime Minister, executive elite, the Liberal Democratic Party (LDP), LDP's Internal components, the opposition parties, and the Interest groups.* While using his grouping, this study, which looks most closely at the JNR reform dispute, subdivides the bureaucracy Into two kinds: permanent and ad hoc organizations. The former group Includes bureaus, departments, and divisions, which are found In an organizational chart. The latter group covers ad hoes, formed to deal with a particular Issue and staffed with personnel from several formal divisions.* The PCAR, Its subcommittees, and the JNR Restructuring Supervisory Council *. On the specific theoretical background In selecting various actors, see Bradley M. Richardson, "Policy-making In Japan: An Organizing Perspective," in T.J.Pempel, ed. , Policymaking In Contemporary Japan (Ithaca: Cornell University Press, 1977) pp.253-254. To put it simply, his assumption Is that the nature of the Issue Involved Is an Important factor In policy-making variation. Patterns of the different actors' Interactions, and the output of a decision vary depending on the Issue under discussion. The aforementioned list of participants Is therefore a kind of common denominator basically found In most of policy cases. Michael Minor, "Decision Models and Japanese Foreign Policy Decision Making," Aslan Survey. Vol. XXV, No. 12 (December 1985), p.1230. 290 as key participants were Included In this ad hoc category. They had the duty of advising the Prime Minister on all aspects of the JNR Issue. Their recommendations, although not binding, were so closely argued and so well supported by consistent research that It was difficult for the government to Ignore them entirely. Since their formation, their Independence of mind and thoroughness of approach were evident. Opposing any short-term partial solutions to problems, they argued for an unified approach to the JNR reform. They continuously pursued a sweeping reform In their deliberations on the JNR Issue. Thus, this chapter attempts to explain actors such as the JNR, the state bureaucracy (the MOT and the MOF), and political parties, especially the ruling party and Its zoku members (policy tribes or caucuses In loose translation). It considers public opinion, the mass media, and JNR's labor unions, as well. The PCAR and JNR Restructuring Supervisory Council are also considered In this chapter, but will be examined more detail In Chapter V. Although the participants and battles of the JNR matter during the period with which we are concerned, roughly between 1980 and 1986, are fixed In time and place, the kinds of relationships they had are of continuing significance. It Is hoped that this chapter may help, even In a small part, to make clear the structure and processes of the contemporary Japanese political system. 291 2. TRENDS OF THE JNR The JNR, as the very responsible interest group, has to be observed first in order to understand the overall policy making process. As far as the JNR reform was concerned, there was complexity within the JNR itself because various JNR groups held different opinions. In short, there were showdowns between employees (laborers) and employers (management) on the one hand, and between the status-quo group officers and the reformists on the other hand. Further, their various stands were supported by political powers--either by an opposition political party or the ruling party. 2.1. The JNR Mainstream: The Status-Quo Position During the public corporation years, the JNR strengthened the relationship that the old Ministry of Railroads had established with preferred suppliers of equipment and construction companies. The JNR set specifications for what it wanted to buy, designated businesses on the premises, bought all of its equipment from a group of civilian firms and ordered railway construction from them, this group came to be known as the "JNR family."* *. After the establishment of the Japan Railway Construction Public Corporation, the control that the JNR had regarding the construction and reconstruction of lines 292 The JNR leaders were invariably bureaucrats from the old Railroads Ministry with close ties to the "JNR family" (see Table 4.1). As of 1982, the JNR's family firms were over 50,000, that interests of politics, the MOT (as the supervising agency), and the JNR management intervened.* (For the amount of the JNR investment budget, and related construction and equipment companies, see Table 3.4.) Table 4.1. Presidents of Japan National Railways (Kokuyu Tetsudo), 1949-1987. Year Duration Name and Background 1. 1949 3 mo. Shimoyama Sadanori Chief of Tokyo Railway Bureau; Vice- Minister of Railroads; d. 1949. 2. 1949-1951 2 yrs. Nagayama Yukio JNR Railway Supervision Bureau Chief; JNR Vice-President; d.1970. 3. 1951-1955 3yrs. Nagasaki Sonosuke 3mo. Vice-Minister of MOT; Cabinet Investigating Bureau Chief; d.1962. 4. 1955-1963 8yrs. Togawa Shinji Railway administration positions of JNR; d.1981. 5. 1963-1969 8yrs. Ishida Reisuke President of Trade Corporation (Koeki Eidan); Railway Construction Council member; d.1978. was greatly lessened. The extent of political intervention was enlarged, because the headquarters of the JRCPC was controlled by politicians and bureaucrats. *. Mainichi Shimbun. (April 22, 1982). 293 Table 4.1 (continued), 6. 1969-1973 4yrs. Isozaki Satoshi 4mo. JNR Advisory Director; JNR Vice- President; Senior Counselor of Sunshine City Co. (as of 1990). 7. 1973-1976 2yrs. Fujii Shyotaro 5mo. JNR Chief Engineer; President of Japan Traffic Technology Co.; d.1988. 8. 1976-1982 7yrs. Takagi Fumio 8mo. b.1918. Graduate of Tokyo University, Political Science, 1943. Passed the senior civil officers' exam before graduation. Joined MOF, 1943-1983; Tokyo Tax Administration Bureau Chief, General Secretariat, Tax Bureau Chief, and Vice-Minister (1974-75). President of Yokohama Minato Mirai Co. (as of 1990). 9. 1982-1985 lyrs. Nisugi Iwao 6mo. b.1915. Graduate of Tokyo University, Civil Engineering, 1938. Joined JNR, 1938-66; Construction Bureau Chief, Advisory Director. Senior Advisory Director of Seibu Railway Co., 1971- 1976. President of Japan Railways Construction Public corporation, 1979- 1983. President of Seibu Railway Co. (as of 1990) 10.1985-1987 lyrs. Sugiura Takaya 9mo. b.1924. Graduate of Tokyo University, Economics, 1951. Joined MOT, 1952- 1985; Railway Supervision Bureau National Railways Department Chief, Tourism Department Chief, Minister's Secretariat, Railway Supervision Bureau Chief, and Vice-Minister. President of JNR Account Settlement Corporation, 1987. Senior Counselor of All Nippon Airways Co. (To be assigned for ANA Chairman, as of 1990). Source: Kokutetsu Tokei Daijesto, Tetsudo Yoran. (Tokyo: Unyusho, 1986), pp.168-170; and compiled from various related readings and materials provided by MOT. 294 A general assessment of the JNR leadership Indicates its status-quo attitude throughout its history. During the JNR reform dispute period, roughly from 1980 to 1987, the JNR had three presidents. Except for the last president, Sugiura, the previous two presidents seemed to be unwilling to accept any drastic reform plan. When the government set up the Second PCAR for administrative reform, Takagi was the eighth JNR president. Because of his deep-rooted interest with the existing system, he expressed his unwillingness to cooperate with the PCAR's reform plan. When the PCAR announced the establishment of the JNR Restructuring Supervisory Council in 1983, he again opposed it. At some times, he seemed to change his personal attitude* and acknowledge the value of the new advisory institution for the JNR reform. Nonetheless, his personal attitude was never consistent with his official statement. It might show his limitation as a person with in favor of the reform but, as president, being responsible for the institution opposing it.'' Partly because *. Around April, 1982 the incumbent JNR president, Takagi, voiced up his complaint against the PCAR's critical view to the JNR labor-management relationship in a press conference, the Diet, and the LDP Executive Council meeting. On May 17, 1982, when the Fourth Subcommittee set up the plan of breaking up and privatization, his opposition was reportedly marked. See Yomiuri Shimbun. (May 18, 1982). '. One interviewee reproved him as an opportunist. However, another interviewee explained that Takagi could hgrdly move around himself under the situation he met at that time. Interviews with former JNR officials and a former PCAR member. 295 of such an Inconsistent attitude in the early 1980s, the anti-Takagi mood became widely spread, following the mass media's public campaign against the current JNR management system.• Prime Minister Nakasone had known about Takagi's grey, lukewarm, and noncorporative attitude since his AMA Director-General era. He thought it necessary to replace this sort of JNR leader with one who would actively promote the reform plan. Around the same time, the Japan Restructuring Supervisory Council delivered the Prime Minister an opinion to replace the JNR's top leader. Under these circumstances, Takagi, whose presidency had lasted for 7 years and 9 months, was advised to resign at the end of November, 1983.* Responding to this, Nakasone named a new JNR president. As a result, on December 2, 1983, Nisugi Iwao took Takagi's place (on the shift of the JNR presidents and their background, see Table 4.1). The decision was made based on •. One of the former participants in the PCAR investigation process on the JNR reform recalled that: Acknowledging the significance of the JNR leadership, the PCAR headquarter decided to launch a public campaign of anti-JNR leadership (specifically anti- Takagi). (Interview with a former PCAR advisory member. > For details of the story, see also Yomiuri Shimbun Seijibu, Dokumento Gvosei Kaikaku (Tokyo: Yomiuri Shimbunsha, 1983), pp. 82-85, titled "Two Faces." •. Asahi Shimbun. (December 1, 1983). 296 the fact that Nisugi had experience In the Seibu Railway and was Involved In railway affairs as the president of the Public Corporation of Railway Construction. A more Important consideration was that Nisugi was thought to support the JNR privatization. Nisugi was welcomed by the reformers' side, which Included Prime Minister, the JNR Restructuring Supervisory Council, and the JNR reformist staffs. However, unlike what had been anticipated, Nisugi took a prudent attitude In addressing his opinion on the JNR reform. Rather than acknowledging the sectionalizing privatization plan as the only one, Nisugi treated It as one of several alternatives. He said that If the current efforts to recover the work force management went as planned, then the JNR authority could retrieve accountability, without changing Its management type.‘“ Moreover, Nisugi differed from the JNR Restructuring Supervisory Council In his view that breakup and privatization were not Inseparable, but Instead should be treated discretely. At the same time, the JNR authority was beer dominated by a status-quo group that declared Its Intention to keep the present unified system by supporting the existing Management Improvement Plan. Under such a situation, Nisugi's statement gave them the possibility persuade the * *. On Nisugi's general opinion, see Nisugi Iwao, "Kokutetsu no Genjo to Salken no Hoko (The Present Situation and Direction of Reform)," (Interview) Selkal (February 1985), pp.185-196. 297 new president to be on their side. Indeed, In early 1984, Nisugi did not actively support any group's position on the break-up plan, which was as a hot Issue In the newspapers. ' ‘ 2.2. Disunion of the JNR Authority Around that tine, there was a change In the JNR staff** (for the JNR organizational composition, see Figure 4.1). There were two groups: the status-quo group and reformers' group. The former consisted of Nawada Kunltake (an advisory director who later became Vice-President), Oota Tomoyukl (Staff Relation Bureau Chief and later Advisory Director), Kawano Masashl (Corporate Planning Bureau Chief; withdrawn from office In 1983), and Yoshll Hiroshi (Advisory Director; * ‘ . During that time, although the Idea of sectionalizing privatization was completely Ignored by the JNR status-group and Kokuro, many opinions on how to break It up were reported and discussed by various concerned parties. * * . On the details of the contention among JNR officials, see Kakumoto Ryohel, Tetsudo Selsaku no Kensho. 1869-1987: JR no Mlral o Saauru. (1989), pp.195-199. Mltsuzuka Hiroshi, Saraba Kokvutetsudo; Uganda Reruwa Naosarebanaranai (Unprofitable Railways Cannot Help Being Curtailed), (Tokyo: Bungel Shunju Sha, 1986); and Sankel Shimbun Kokutetsu Shuzalhan, Kokutetsu no Ichlban Naoal HI: Kaikaku Soshlte Salsel e no Zenklroku (The Longest Day for the JNR: The Complete Record of Reform and Recovery), (Tokyo: PHP, 1987) also explained the confrontation between the reformists and the status-quo group of JNR officers. 298 — President ---- -Inquiry and Audit Executive Board Board Vice-President — Vice-President Advisory Directors of Engineering to the President Head Offices and its Regional Administration attached organizations Offices and their attached organizations — Overall Personnel Committee President's Secretariat — Regional Office Corporate Planning Bureau Shinkansen Administration Technical Planning & Tokyo Metropolitan Area Development Bureau Headquarters Public Relations Bureau Tohoku & Joetsu Shinkansen International Bureau General Control Hqs. Information System Bureau — Railway Operating Division Inspection & Audit Bureau Staff Relations Bureau Finance & Accounting Bureau Field Purchasing & Stores Bureau Organizations Mutual Aid Association Secretariat Passenger Bureau Freight Bureau Ferry Service Bureau Motor Transportation Bureau Train Operation Bureau Rolling Stock & Mechanical Engineering Bureau Construction Bureau Track & Structures Bureau Electrical Engineering Bureau Diversification Bureau — Railway Police Bureau Figure 4.1. Japan National Railways Organization Chart (as of 1986). Source: Japan National Railways, Facts and Figures (1986 edition). 299 withdrawn from the post in 1983).** The reformist group included Ide Hasataka (the Corporate Planning Bureau Chief as of 1983), Matsude Masatake (Ability Development Department Chief in the Staff Relation Bureau as of 1983), and Kasai Takayuki (the Corporate Planning Bureau Investigator as of 1983).** In spite of their basic difference of opinion on the matter of reform, actually both groups cooperated for increasing of JNR work discipline for a while. However, when the former group began to take an appeasement policy toward labor unions, especially Kokuro, the reformers, who favored the Tetsuro line, criticized the status-quo group's changing attitude. In consequence, their precarious cooperation broke,* = and the relationship between the two groups became markedly tense. In fact, the status-quo group opposed the "Exit Theory" launched by the LDP's Mltsuzuka Subcommittee. The Exit '*. In fact, the status-quo group was not solidly united. For the inside story on the status-quo group, particularly on how they confronted their different opinions on labor problems, see Naito Kunio, "Kokutetsu Rakujo Zenya no Shuraba (A Scene of Violence the Day Before the End of JNR)," Buncei Shuniu. (September 1985), pp. 94-112. Also see, for background, Yayama Taro, "Kokutetsu Roshi 'Kokuzoku'ron (JNR Labor and Management Are Betraying the Country)," Bunaei Shuniu. (April 1982), pp.92-112. * *. For their career changes, which were somewhat complex, see the references mentioned in the previous footnote as well as Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp.75-80 and pp.101-110. **. Naito Kunio, Bunaei Shuniu. (1985), p.104. 300 Theory consisted of a gradual change of the system by allowing time for the present Management Improvement Plan to proceed.*•. According to this theory, If the present Management Improvement Plan was effective, no drastic systematic change would be required. Otherwise, a sweeping change would be considered. Sharing the Kokuro's Interests, the status-quo group Intended to maintain the present centralized unified fare system In any circumstance and opposed the break-up of the JNR. In contrast, the reformist staffs maintained solidarity with the Mltsuzuka Subcommittee, particularly Mltsuzuka Hiroshi. The reformers began to ensure that the JNR would be never be rehabilitated If It only relied on the current Management Improvement Plan, because however well the plan worked, long-term debts could not be cleared up. They believed that a sectionalizing privatization plan was the only way for the JNR to recover. In particular, Ide, who was one of figures responsible for setting up the Plan, no longer expected Its success. The reformists used the Corporate Planning Bureau for consorting with Influential actors outside, including Mltsuzuka and the JNR Restructuring Supervisory Council members. Indeed, the relationship between the reformers inside the JNR authority and the Council helped make the Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp.101- 110. 301 privatization and breakup policy-making to proceed smoothly. Noticing such a movement, the status-quo group Ignored the Corporate Planning Bureau as well as the Council. They did not support any request from the Corporate Planning Bureau and treated the Council as nothing but a nominal ad hoc Institution.‘^ In the meantime, the JNR status-quo authority and labor unions continuously petitioned the MOT that the JNR Restructuring Supervisory Council should deal with the long term debt problem before the privatization plan discussion. They wanted the two matters to be treated separately. However, the Council claimed that the two problems had to be dealt with together. Distrusting the JNR mainstream staffs, the Council thought that If the government were to clear up the accumulated debt first, the JNR authority would put aside the temptation to take steps toward restructuring the present JNR system. Obviously, there was a gulf between the reformist force and the JNR status-quo groups. 2.3. Confrontation While Staff Relations Department Chief Oota switched from cooperating with the reformist officers to enhance discipline of laborers to appeasing the labor unions, particularly Kokuro, the status-quo group tried to transfer Ibid., p. 110. 302 the reformers in the JNR authority to other less-recognized positions. At the same time, they tried to form a new recovery plan independent from the reform headquarters (PCAR and the JNR Restructuring Supervisor Council) as fast as possible. On August 16, 1984, about a week after the delivery of the JNR Restructuring Supervisory Council's second report, the JNR Board of Officer again began to develop its own modified plan. While emphasizing the necessity of developing a less abstract, but fairly implementable plan, Nisugi asked to include the reformers in the discussion process. However, the three evident leading reform advocates (Ide, Matsuda, and Kasai) were excluded. Thus, the JNR mainstream was weighted on the side of the status-quo group. The reformist group was no more than a minority. In the Board of Officers meeting. Managing Director Takeuchi was the only person, among the status-quo group, who favored sectionalizing privatization.‘ • It was during this time that the Director of the Secretariat Officer Ide, who was a leading reformist, was made the West Tokyo Railway Department Chief, which was actually a lower position than the position he held. The decision was made on the basis that Ide's treatments of former JNR officers was unfavorable to the status-quo *•. Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp.190- 195. 303 group.'* Some time later, the Cooperate Planning Department Director-General Matsuda was also transferred by the status- quo officers. The status-quo group tried to divide the reformers themselves and to crush their relationship with the Mitsuzuka and the JNR Restructuring Supervisory Council.** The Council got angry at such conducts and viewed the transfers of key reformists as the JNR mainstream's undisguised resistance to the government and the Council. The turning point for dispelling the tension between the reformist force and the JNR was provided by Prime Minister Nakasone, who practically fired the JNR president Nisugi and reshuffled more than half the JNR top officials in June 1985. Actually, on February 27, 1985, in order to handle this problem. Prime Minister Nakasone presented a report, "Those JNR Officers Resistant to the Sectionalizing ‘*. Naito Kunio, "Kokutetsu Rakujyo Zenya no Shuraba (A Scene of Violence the Day Before the End of the JNR)," Bunoei Shunlu. (September 1985), pp.104-105. **. See Ibid., p.104. Matsuda, who was born in Hokkaido and graduated from Hokkaido University, was a leading reformist, and his father was also a former JNR staff member. Coming from a JNR background, Matsuda was also involved in the work of the Unyu Keizai Center, which mediated between the status-quo group and the JNR Reconstruction Supervisory Council, including Shumida Shyoji, a former Vice-Minister of MOT, then a JNR Restructuring Supervisory Council member, and the President of the East JR as of 1990. In fact, Matsuda was transferred to his home town, Hokkaido, as its Regional Office Vice-Chief, which was an upgrade by two positions compared to his former position, the Cooperative Planning Bureau director-general. However, in terms of functional importance, the Hokkaido office was not comparable to the Cooperative Planning Bureau. 304 Privatization Plan, Do Take Responsibility, " demanding the dominant JNR status-quo group's serious reflection. The status-quo group not only disregarded the warning, but also held in contempt the reform-promoting force. On May 27, Oota Hideyuki, a JNR Advisory Director, intentionally criticized the JNR Reconstruction Supervisory Council, because it could not implement what it recommended, and the Prime Minister, because he would not take the initiative for the realization of the break-up and privatization plan for political reasons. * ‘ In short, the JNR status-quo group officials seemed determined to humiliate both the government plan and Prime Minister Nakasone. JNR Reconstruction Supervisory Council Chairman Kamei requested that the government replace the JNR leaders who ignore the government policy. In anger. Prime Minister Nakasone took steps to replace them. Immediately following such an unprecedented measure, the JNR's new president, Sugiura Takaya (an incumbent MOT's Vice-Minister*“), paved the way to privatize and break up the JNR.** After that, the reformist force could increase its influential power, effectively expanding its territory. *‘. Naitoku Kunio, Bunoei Shunlu. (September 1985), pp. 106-108. * * For details of his career and thought on reform, see Sugiura Takaya, "Saigo no Sosai Kokutetsu Minei e no Hi o Asasu (The Last President of the JNR: To Clarify the Secret of Privatization), " Chuo Koron. (June 1986), 174-181. **. Asahi Shimbun. (June 26, 1985). 305 Along with this change, the JNR reformist group could also take the initiative within the JNR management and actively cooperate with the reform headquarter's JNR break-up and privatization plan. 2.4. The JNR Reformers' Rise in Status As Nonaka points out, public corporations are more difficult to conduct self-reform in because of its intrinsic systematic nature than are private enterprises."* Most often their reform is motivated by an outer impetus. In addition, according to Okano, for the success of public corporations' systematic reform, there should be certain prerequisites in addition to reform stimulus from outside."* The prerequisites include the formation of an inner- circle of reformists, a vision and a concept for reform, which provide the reform group with a base from which to work, and a reform strategy, against which their performance can be checked. NTT privatization is often referred to as a telling case that basically meets the above criteria. The president of NTT, Sinto Hisashi, who led the reform, was a charismatic leader and was supported by an organized Matsuda Masatake, Ide Masataka, Nonaka Ikujiro, and Okano Yukihide, "JNR kara JR e: Tetsudo no Keiei Kakushin,” Unyu to Keizai. 48:4 (April 1988), p.7. • * . Ibid. pp.6-8. 3 0 6 reformist group.** Similarly, the way in which the JNR reformist group opposed the status-quo group was similar to the above criterion. In the JNR reform process, both the reformist and the status-quo groups confronted and sought outer forces' help, including that of politicians, to carry out their intentions. In this situation, the reformist group eventually gained a victory. A former JNR reformist officers relates his view of a break in the deadlock of the opposing forces : If we are looking simply at the result, it (the breakup and privatization decision making) was generated from the obliteration of conflict among the top JNR officers. The top-top status-quo group and the top-middle reformist officers had different perspectives on systematic reform and ran into each other in the process of the JNR reform dispute. Although the former led the majority of JNR staffs and the latter was a minority, in the end, the victory was ascribed the reformists' side, owing to outside support. In this respect, the process can be described as "kyutei naka no kakumei" (coup d'etat within the •*. The NTT privatization process was far more complicated than it appears here. Despite its provocative aspects, it is beyond the scope of this study. For an introductory look, see Yayama Taro, "Denden Family ga Kyofusuru Shinto Kakumei (The Shinto Revolution that The NTT Family Is Afraid Of)," Bunaei Shunlu. (August 1982), pp. 122- 135; Kankai. "The Road to Placing Nippon Telegraph and Telephone Public Corporation (NTT) Under Private Management," (Interview with Shinto Hisashi, President of NTT), (May 1983) (Full Translation in American Embassy, Tokyo, Summaries of Selected Japanese Magazines); and Chalmers Johnson, "MITI, MPT, and The Telecom Wars: How Japan Makes Policy for High Technology," in Johnson, Tyson, and Zysman, eds. , Politics and Productivity; The Real Story of Why Japan Works? (Berkeley: Ballinger Publishing Company, 1989), pp.177-240. 307 Court). The term Is used based on the following sense. The personnel structure and management structure went through a drastic transformation. However, in fact, most National Railways personnel below the top and the public could not feel any real immediate change even after the JNR's breakup and privatization. Thus, a vital remaining task of the new JR companies is to develop a support of sympathy and to raise a common value concept. In order to succeed in the new phase, in short, we (the management of the new JR companies) have to stand with the JNR companies ordinary staffs and the people.*? Another former JNR reformist officer would not apply the notion "kyutei naka no kakumei” to what the reformist group did, arguing that the term assumed that the process was a pure power struggle among the JNR management. According to him, that was not the case. The truth was, he continued, that it resulted from the realization of their volition toward reform. “• However, from this observation of the interplay of the two strata of the JNR authority, it was apparent that their considerations were at that point less on the matter of policy than on that of the power game, considering their vested interests, together with involvement of other interest groups and politicians. In other words, the discussion process was substantially politicized because of the high stakes involved in the issue. Thus, a more *?. Interview; and see Matsuda, Ide, Nonaka, and Okano, (1988), pp.10-11. •*. Interview with Japan railways researchers. 308 realistic observation might be not to confine either one of the two aspects, but to simultaneously include both:** the reformists' devotion to systematic change on the one hand, and their victory in the power game within the JNR authority on the other hand.* ® * *. Most interviewees who were asked about this matter answered that simultaneous consideration of both regards might be accurate. (Interviews with JNR researchers and former JNR officers.) * ®. Apparent evidence to support such a claim is found in the personnel movement after the JNR breakup and privatization by April 1987. For instance, the three reformists (Ide, Kasai, and Matsuda) and Sumida have been assigned in key posts of the new JR companies. Likewise, the reform-oriented last president (Sugiura) and vice-presidents (Hashimoto Masashi and Sakato Konichi) of the JNR have taken also top positions in the new JR system. As of 1990, their posts are as follows; Sugiura, a former Chief of the JNR Account Settlement Corporation and now Senior Counselor of All Nippon Airways Co. ; Sumida, President of the East JR; Ide, Vice-President of the West JR; Matsuda, Vice-President of the East JR; Kasai, Vice-President of the Central JR; Hashimoto, President of Japan Freight Railway Corporation; and Sakata, President of Railway Telecommunication Corporation Ltd. By contrast, the former JNR status-quo officers have not been involved in the management of the new JR system, although many of them are still occupying railway-related positions. Specifically, Nawada Kunitake (the former JNR Vice-President) has been the chair of the Japanese Railways Welfare Business Association; Ota Tomoyuki, the Vice- President of Chiba Station Building Co.; and Kawano Masafuni, the President of Kousai Building Co. as of 1990. (Sources come from materials provided by the JR Companies.) 309 3. ATTITUDES OF THE MINISTRIES 3.1. Roles of Bureaucracy Besides the JNR, the first group ofthe formal organizations to participate in the JNR reform dispute consisted of the officials of the central government ministries and agencies. Being an inherent meritocracy of talent, and educated in the best schools and universities in the country, they had been the planners, engineers, and supervisors of Japan's economic and social development. Before political parties' rise in the 1970s, the official state bureaucracy virtually dominated policy-making powers in post-war Japan.** In the JNR restructuring process, there were the two main bureaucratic actors: the MQF and MOT as chief protagonists and antagonists. However, the MOT changed its position later to agree with the break-up and privatization. Other agencies or ministries also appeared in the process but only as allies of one or the other side. In a famous study of the MOF, John Campbell ranked the priorities of the ministry as it pursued its single most important task, that of drafting the national and investment • *. C. Johnson, "Tanaka Kakuei, Structural Corruption, and the Advent of Machine Politics, " The Journal of Japanese Studies. 12:1 (Winter 1986), pp.24-26. 310 budgets. According to the three broad theories of bureaucratic behavior, the state bureaucrats attempt to serve first the public's interest, second, the Interests of their clients, and finally their own Interests. Japanese evidence confirms that the last has the greatest explanatory power.* * Campbell's somewhat loosely estimated order of the priority of MOF's objectives also reaches the same conclusion,'* even though the ministries do not Itself distinguish among serving the public's, their clients, or their own Interests. The ministries presume that the way to achieve the public's and their client's Interests Is to ensure that their own needs are fulfilled, or vice-versa. What were, then, the respective Interests of the MOF and MOT In the JNR restructuring process? As the party responsible for distributing the national budget, the MOF has had a clear objective to reestablish the financial soundness of the central and local administration and organizations with as little political upheaval as possible. During the early 1970s, the government was driven J.C, Campbell, Contemporary Japanese Budget Politics. (New York: Columbia University Press, 1977), p. 111. C. Johnson, "MITI, MPT, and The Telecom Wars: How Japan Makes Policy for High Technology," In C.Johnson, L.D.Tyson, and J.Zysman, eds.. Politics and Productivity: The Real Story of Why Japan Works? (Berkeley: Ballinger Publishing Company, 1989), p.182. J. Campbell, (1977), p. 111. 311 to respond to grassroots pressure for fiscal expansion, dependent on Issuing bonds. After that, Japanese national budget deficits rose sharply for years, spawning a massive government bond market. Those deficits absorbed substantial and rising shares of Japan's consistently high domestic savings within the country Itself. The MOT understood the long-term economic Implications of high tax burdens on Individuals or business firms. It also knew that In an aging society, dependence on bond financing would bring out the negative upshot, such as Increasing unemployment rate and sluggish growth. Thus, the MOF was reluctant to endorse a more expansionary fiscal policy. The MOF believed that It was Important to restrain the Issue of government bonds and avoid Increasing the burden on future generations. Thus, administrative-financial reform was launched, focusing on the nation's financial rehabilitation without tax Increase.** The MOF, as the government's financier, was actively Involved In the enactment of the reform and responded to the need for fiscal cutback. In order to reduce Its own debt service charges, the MOF, as the responsible organ for taking care of the national debt, had a strong financial reason for wanting to keep domestic Interest rates low. **. For details of the MOF's orientation, see Ito Dallchl, "Policy Implications of Administrative Reform," In J.A.A. Stockwin, ed. , Dynamic and Immoblllst Politics in Japan. (London: Macmillan Press, 1988), pp.77-105. 312 Meanwhile, strong pressures during the early 1980s toward liberalization of Japanese domestic interest rates led to foreign exchange liberalization. In this way, Japanese public policy-making had important international implications. Japanese excess savings had been deprived by budget curtailment of an investment spot within Japan. Lowering domestic interest rates and financial liberalization led Japanese savings to move freely abroad and be poured into foreign financial markets. Japanese government spending style, the domestic saving rate, and investment level framed the flow of Japanese capital and, further, influenced the interest and exchange rate patterns in the global market.** On the other hand, officials of the spending ministries (i.e., WOT) pursue a hierarchy of objectives in budgeting in which maximizing budgets is primary. However, obtaining their own policy preferences and satisfying clientele groups are also important.*? Although the MOT was also concerned with the system's financial soundness, its support for the government was tempered by a desire for bureaucratic tidiness and efficiency, which would be best served by a **. A leading authority of the PCAR, Sejima Ryuzo discerned the multiple origins of the problem and the circumstantial fabric in which they were intertwined. See Sejima Ryuzo, "Gyokaku Seidan," Chuo Koron. (May 1983) pp.129-135. Its English translation appears as "Looking Beyond the Final Report," in Japan Echo. Vol.X, no.3, 1983, pp.24-29. *?. Campbell, (1977), pp. 12-42. 313 shifting power relationship with the JNR management. Therefore, the MOT genuinely expected to see an Increase In Its status In Its scheme for the JNR reform, which It would have the responsibility of administrating. In the meantime, the Ministry of Labor was worried about the problems likely to be caused by the sweeping rationalization policy of JNR labor forces. The Idea of the PCAR establishing an extra agency to handle their future jobs was received with something less than enthusiasm by the Labor Ministry. As seen above, there seemed to be signs of disunity within the government. In a government that has a vertically structured division of labor (tatewarl-gyosel) like Japan, the problem Is that the Interest of one agency of the government often conflicts with the interest of another agency.** The most significant events In the lives of state bureaucrats are conflict of jurisdiction; the great threat to the security of a bureaucrat comes from other bureaucrats. Therefore, the core of any bureaucratic Interest becomes protection of one's separate jurisdiction. Intra-bureaucratlc conflict may **. On the concept of "vertical administration," consult Albert M. Craig, "Functional and Dysfunctional Aspects of Government Bureaucracy," In Ezra F. Vogel, ed., Modern Japanese Organization and Decision Making (Berkeley: University California Press, 1975), p. 11. The vertical structure of administration was also raised as the most single Important problem In the malpractice of the JNR management. See Kato, Ono, and Yayama, "Mada mada Kokutetsu Roshl Kokuzokuron (Still Labor-Management Unhonorable) (Zadankal)," Bunoei Shunlu (August 1983), pp.388-9. 314 become a source of creativity and vitality for the system. However, in some circumstances, It results In Irresponsibility and policy failure. Nevertheless, the degree of Interministériel conflict was not so high In the JNR reform dispute process. It was partly because In general, all ministries agreed on the necessity of change of the existing system, despite differences on details and some jurisdictional friction among them. Moreover, because of the PCAR's Indifferent approach, all agencies were equally victimized under the scheme. Thus, Intra-bureaucratlc conflict tended to be relatively less visible than In previous administrative reform efforts. Instead, more visible conflict was found In the relationship between the MOT and the JNR In the JNR rehabilitating dispute case. 3.2. The MOT during the JNR Reform Dispute 3.2.1. Getting Along With the JNR In fiscal 1982, 57.7% of the MOT's general account, amounting to 830.1 billion yen, was related to the JNR. The MOT also held various powers and authorization for the JNR.:" Desperately longing to keep those Items of :". In general, the Ministry of Transportation was notorious for controlling the greatest number of licenses and patents. In spite of ineffectiveness, redundancy, and Inertia. For one such opinion, see Yayama Taro, "The Transportation Ministry la the Worst Among Government 315 administrative power, the MOT was unhappy with any Idea of JNR privatization. Meanwhile, the JNR also did not want drastic break up of Its long, nationwide unified system. Sharing with the same stand, the JNR and the MOT cooperated with each other for a while and sought for Influential politicians, especially LDP's unyuzoku, who could effectively lobby for them. On May 17, 1962, the PCAR Fourth Subcommittee announced its sectionalizing privatization plan and set-up of the JNR Restructuring Supervisory Council as a ministerial level commission for the JNR reform. On the next day, the MOT's top bureaucrats and the JNR officers held a joint meeting and announced their opposition to both agendas,** criticizing the Fourth Subcommittee's recommendation as vague and unrealistic.*‘ 3.2.2. Tension Between the MOT and the JNR When the antl-JNR movement by the mass media spread quickly, the MOT saw sectionalizing privatization as the way of the times, and It would be Inevitable to follow It. After that, the precarious cooperation between the JNR and MOT Offices,” Bunoei Shunlu. (June 1983) (full translation In the Summaries of Selected Japanese Magazines). **. Kato Hiroshi and Sando Yolchl, Doko San to Tomonl Nanahvaku Sanlu Nlchl; Bvokaku Hunsenkl (730 Days with Mr. Doko: Struggling for Administrative Reform), (Tokyo: Toyo Keizai Oral Sha, 1984) p.66. *‘. Yomlurl Shimbun. (May 18, 1982). 316 started to crack.** The MOT tried to better its chances of speaking to the JNR reform matter. * * The MOT conceived of using the new council as a platform to take the initiative for the JNR reform. Thus, it announced its intention of establishing it as an ordinary council. It cultivated independently its own inroads with politicians to protect their vested interests in the JNR. Realizing the MOT's change in attitude, the JNR took a separate road. Their conflict became even more complicated, as it was mixed up the long-standing emotional situation between them. Its roots went back to the time when the old Ministry of Railways was divided into the MOT and the JNR after World War II. From 1949 to 1987, the MOT and the JNR maintained a very peculiar relationship with each other. The JNR, although nominally supervised by the MOT, actually outclassed it. When the old Ministry of Railways was divided in 1949, virtually all the engineers and highly trained technicians went to the JNR. ^t that time, most qualified persons chose the JNR, and they developed pride in their position and looked down their noses at the staff of the MOT **. Kato Hiroshi and Sando Yoichi, (1984), p. 78. **. Yomiuri Shimbun Seijibu Dai Ni Rincho Shuzaihan, 1983, Dokvumento Gvosei Kaikaku; Tsuiseki Daini Rincho (Document of the PCAR: Pursuing the PCAR), (Tokyo: Chobunsha, 1983), p. 78. 317 after that.** The staff employment system that favored university graduates in the JNR organizational arrangement especially reinforced such an elite consciousness. The MOT's legal supervision of the JNR was therefore nominal. The MOT was assigned the role of liaison between the JNR and the Diet, which had the legal power to approve the JNR budget and railway fares. However, the JNR had many political friends independently of the MOT who were quick to come to its aid when it needed a favor.** The JNR by itself assigned an investigator to the National Diet with access to Diet members. This shows that the JNR had cultivated political power and relationships separately from its supervising office, the MOT. As a result, the relationship between the JNR and the MOT was somewhat different from the usual relationship between a certain supervising ministry and the interest groups under its discretion. As for the role of the JNR in the world of big business, the actual relationship between the MOT and the JNR was described as that between a foolish elder brother, since it still had legal superiority, and a **. Many persons concerned w_th the railways indicated this uneasy relationship between the JNR and the MOT. (Interviews with Japanese railways researchers.) **. In particular, top officers in the Cooperate Planning Bureau were assigned to construct a blueprint for the JNR. However, they put aside such a thing and went to the Diet as well as other places where politicians gathered to cultivate a close relationship with them. (Interview with a railways researcher.) 318 clever young brother.*' Obviously, the JNR often led the MOT in policy-making. Unsatisfied with this situation, the MOT watched for any chance to recover its power to control the JNR. Meanwhile, during the heyday of administrative reform, numerous questions were raised about the excessive independence of the public corporations, their poor financial accountability, and the lack of effective supervision by the ministries. Critics pointed out that public corporations were used as amakudari (descent from heaven) landing spots for recently retired bureaucrats. In general, the growing number of public corporations and other forms of special legal entities as retirement havens for bureaucrats had become unpopular with the public and had to be brought under control. To such critics, the MOT kept emphasizing the need for more clout and policy-making power in order for it to better supervise subordinate agencies, specifically the JNR. 3.2.3. The MOT's Independent Plan By this time, an article of the Asahi Shimbun on April 23, 1982 reported that the MOT had formed its own plan for According to the Kawakita's observation, the same relationship was found in between Ministry of Post and Telecommunication and the NTT during the time the NTT, as a public corporation, was legally supervised by the MPT. See Kawakita Takao, Tsusan-Yusei Senso (The MITI-MPT Wars) (Tokyo: Kyoikusha, 1985), p.73. 319 the JNR reform.*’ First of all, the plan Intended to reduce the personnel to 250,000 by 1985 and to 240,000 by 1990. Second, the business of railway operation and the management of property would become controlled by two separate special corporations. This plan by the MOT was based on the personal plan of the incumbent Minister of Transportation, Kosaka Tokusaburo (a senior Tanaka faction member)** (see Table 4.2. for the leadership of the MOT during the JNR reform dispute process). He clarified that he took the mean between the PCAR's original draft and the Tamura (Tamura Hajime, a former Minister of Transportation under Fukuda Cabinet) plan. His concerns was to acquire the MOT's initiative and to check it with other factions of the LDP. In fact, LDP unyuzoku was known to be dominated by the Fukuda faction. However, the LDP unyuzoku, that was represented by Mitsuzuka Hiroshi and Kato Mutsuki (the Fukuda faction), criticized the plan by the MOT because the MOT ran off alone without a negotiation with the party and the PCAR.** At that *’. Asahi Shimbun. (April 23, 1982). **. The political career of Kosaka Tokusaburo is well described and compared with the careers of other leading Dietmembers in Sato Seizaburo and Matsuzaki Tetsuhisa, "Jiminto Chochoki Seiken no Kaibo (Autopsy on the Super-long Term Reign of the LDP)," Chuo Koron. (November 1984), pp.74- 75. * * Asahi Shimbun. (April 23, 1982); Jiyuminshuto Kokutetsu Kihon Mondai Chosakai, Kokutetsu Saiken ni Kansuru Shoiinkai Kaioiroku. (Tokyo; Jiyuminshuto, 1984), pp.508- 515. 320 time, the Mitsuzuka Subcommittee of the LDP seemed generally unfavorable to any systematic change of the JNR system. After the Nakasone Cabinet was launched in November 1962, the Transport Minister, Kosaka, was replaced by Hasegawa Takashi (a former Labor Minister under Miki and Tanaka Cabinets, and as a leading Nakagawa group member, close to the Fukuda faction) (see Table 4.2). Nakasone intended Hasegawa's appointment to rejuvenate the inactive attitude of the LDP unyuzoku to the JNR reform, though it was definitely not an easy task. Falling short of such expectations, however, Hasegawa withdrew from the ministership at the end of 1983. Hosoda Kichizo was seated in the top post of the MOT under the second Nakasone Cabinet'» (see Table 4.2). Nakasone chose Hosoda as the new Minister of Transportation because Hosoda, as a member of the Fukuda faction, was one of the key unyuzoku, the group dominated by the Fukuda faction. He was seen to have the ability to accomodate the JNR reform Hosoka Kichizo was a former general secretary of the HOT and a LDP Diet member in the House of Representatives for the district Shimane. He, as a senior leading unyuzoku, had consecutively occupied the chair of the Transportation Section of the PARC and the head of the JNR Basic Problems Investigation Committee in the LDP. In September 1981, he published Kokutetsu o Kataru (Tokyo; Ryukun Keizaishimbusha), which includes a conversation with several persons concerned with the JNR matter. Because of such a background, he was called for by the PCAR's Fourth Subcommittee to a hearing, and addressed the idea of partial sectionalization and confined privatization. 321 Table 4.2. The Leadership of the Ministry of Transfortation during the JNR Restructuring Dispute. Minister Began Served Faction Earlier Career Kinji 12/7/78 Ohira Komoto Politician Moriyama Cabinet Chisaki 11/8/79 Ohira Nonaffiliated Businessman Usaburo Shiokawa 7/17/80 Suzuki Fukuda Lawyer Masajuroo 1st -Abe Kosaka 11/13/81 Suzuki Tanaka- Businessman Tokusaburo 2nd Takeshita Hasegawa 11/27/82 Nakasone Nakagawa Journalist Takashi 1st Hosoda 12/27/83 Nakasone Fukuda MOT OB Kichizo 2nd -Abe Yamashita 11/1/84 Nakasone Komoto Politician Tokuo 3rd Mitsuzuka 12/28/85 Nakasone Fukuda Politician Hiroshi 4th -Abe Hashimoto 7/22/86 Takeshita Komoto Politician Ryutaro 1st Shintaro Takeshita Unaffiliated Writer Ishihara First Suzuki Cabinet 7/15/80 - 9/30/81 Second Suzuki Cabinet 10/1/81 - 11/26/82 First Nakasone Cabinet 11/27/82 - 12/26/83 Second Nakasone Cabinet 12/27/83 - 10/31/84 Third Nakasone Cabinet 11/1/84 - 12/28/85 Fourth Nakasone Cabinet 12/29/85 - 7/23/86 Fifth Nakasone Cabinet 7/23/86 - 11/20/87 322 Table 4.2 (continued), Vice-Ministers Sumida Shoji (June 27, 1978 - July 27, 1979) b. 1921 in Tokyo. Graduate of Tokyo Imperial University, College of Law, Department of Politics in 1946. Joined MOT, 1947-1979; Railways Supervision Bureau Chief, 1975; Secretariat; and Vice-Minister, 1978-1979. Transportation Economy Research Center (Unyukeizai Center) Director, 1980-1985. PCAR member, 1981-1983. JNR Restructuring Supervisory Council member, 1983-1985. Transportation Economy Research Center President, 1986. President of East Japan Railways, 1987-. Nakamura Shiro (July 27, 1979 - June 11, 1982) b. 1925 in Sakidama. Graduate of Tokyo Imperial University College of Law, Department of Politics in 1948. Joined MOT, 1948-1979; Private Railway Department Head of Railways Supervision Bureau, Road Transport Bureau Chief, 1976; Secretariat; and Vice-Minister, 1979-1982. President of Ports and Harbor Modernization Promotion Association, 1982. Teido Highway Traffic Corporation (Eidan), 1986-. Sugiura Takaya (June 11, 1982 - July 1, 1984) See Table 4. 1 of this chapter, "Presidents of JNR, 1949- 1987." Matsui Kasuhara (July 1, 1984 - June 14, 1986) b. 1929 in Tokyo. Graduate of Tokyo University, College of Law, Department of Law in 1953. Joined MOT, 1953-1986; Civil Aviation Bureau Chief, 1980; Secretariat; Vice- Minister, 1984-1986; and Counselor, 1986. Vice-President of New Tokyo International Airport Corporation (Eidan), 1986- . Nakamitsu Yoichi (June 14, 1986 - June 19, 1987) b. 1930 in Hukuoka. Graduate of Tokyo University, College of Law, Public Law in 1954. Joined MOT, 1954-1987; Railway Supervision Bureau Chief, 1982; Secretariat; Vice- Minister, 1986; Counselor, 1987. President of Ports and Harbor Modernization Promoting Association, 1987. Teido Highway Traffic Corporation (Eidan), 1988. Hattori Keiji (June 9, 1987 - June 27, 1990) Hayashi Jyunji (June 27, 1990 - ) Source: Kokutetsu Tokei Digest, Tetsudo Yoran. Tokyo: Unyusho, (1986), pp.168-170; and compiled from various readings and materials provided by MOT. 323 discussion by bringing together the opinions of various groups such as the JNR, the LDP, and the MOT, with his rich administrative political ability as a former LDP top official (the Executive Council Chairman under the first Nakasone Cabinet) and experience In the MOT (a former MOT officer). However, his Inaugural address startled the Prime Minister and the JNR Restructuring Supervisory Council because he expressed a deficiency theory for the sectionalizing privatization plan. On December 28, newspapers reported that the new Transport Minister was warning that the JNR sectionalizing privatization would be troublesome.=‘ Actually, he had advocated since the Fourth Subcommittee era transferring the JNR to a special corporation that would differ from an ordinary private stock company. He also Insisted that he would apply a break-up plan only to selected local lines. The government worried that If the new Transport Minister held such a differing opinion from the Prime Minister and the JNR Restructuring Supervisory Council, It would drop hints of the Cabinet disunity to the public and opposition parties. The Prime Minister swiftly cautioned Hosoda to not make public his personal dissenting opinion. All In all, the Nakasone Cabinet's personnel appointments for the responsible posts, such as that of the Asahi Shimbun. (December 28, 1983) 324 JNR president and the Transport Minister, failed to realize the anticipated result. 3.3. Increasing Sphere of MOT's Influence 3.3.1. MOT'S change Internally, there was a group of technicians in the JNR that had long dominated it and much preferred that it remained a state-managed monopoly.»• The JNR family firms, which had benefitted from the existing public corporation system also opposed privatization. In addition, most of the LDP's unyuzoku, who feared that if the JNR were sectionalized and would go to private hands, they would lose benefits from it and control over it, did not favor the idea. For a while, because the MOT believed that privatizing the JNR (over which it had legal rights of organizational control, license and patent) would weaken its scope of decision-making on national railways, it did not approve of the break-up and privatization, either. Under this circumstance, the deadlock between the pros and cons of the JNR break-up and privatization was practically broken by the MOT itself. Seeking an opportunity *' According to an interview with a railway researcher, there was conflict in the JNR authority between the technicians' class, which worked for construction, electrical facilities, etc., and the usual management class. Moreover, because the engineer class had control of a huge amount of investment cost for line construction, they were fairly influential. 325 to better control the JNR, the MOT saw in a privatized JNR a way of expanding the ministry's jurisdiction. No matter what the politician Transport Minister's personal opinion was, the MOT veiled its changing attitude toward favoring the sectionalizing privatization. A group of creative bureaucrats reasoned that they could write the relating law in such a way as to keep the private JR under their power. At the same time, they intended to expand their coverage to include other railway related businesses, which were separated from the JNR management for independent operation. Simultaneously, the MOT would take care of the functions that the JNR previously performed by broadening its role in fare control, supervision of railroads, and certification procedures under a new privatized system. More important, privatizing the JNR would mean that the mainstream MOT officers had a timely chance to snub the JNR's proud engineers, who had long belittled them. The MOT took it as the best opportunity to make real inroads against the JNR.*' On the one hand, reasoning this way, the MOT had modified its structure in the midst of the JNR reform dispute to effectively manage the National Railways (see Figure 4.2). Several interviewees provide this interpretation. 326 Ab of June 1984 Minister Added In Vice Minister July 1984 Deputy Vice-Minister for Secretariat National Railway Reorganization Railway Supervision Bureau National Railways Dept. Finance Division Traffic Division Safety Operation Division Facilities Division Supervisor over the Japan Railway Construction Public Corporation and Honshu-Shikoku Bridge Authority Transformed in April 1987 Railway Supervision Bureau National Railways Restructuring Promotion Department Administration Division Settlement Guidance Division Transport Division Safety Operation Division Facilities Division Supervisory over the Japan Railway Construction Public Corporation and Honshu-Shikoku Bridge Authority Figure 4.2. Organizational Change of the Ministry of Transportation During the JNR Reform. Source: Compiled from materials provided by the MOT. On the other hand, on October 19, 1984, the MOT eventually declared its official agreement with the contents of the JNR Restructuring Supervisory Council's second report, which had been made public on August 10. The MOT 327 began to share with the Council's JNR reform concepts (privatization, separation of freight and passenger railways, and settlement of the cumulative debt), and gave up its previous plan (functional division).** Needless to say, because of the MOT's support, the Japan Restructuring Supervisory Council could effectively persuade those with opposing opinions through informal negotiations. Along with such new recognition, the MOT also helped to convince the LDP's unyuzoku, who did not favor it. They developed several good arguments in order to persuade politicians. A privatizing JR would reduce government subsidies by a substantial amount and decrease national debts so as to rehabilitate the sick national finance. One day, once the JNR's share, 100% of which the government planned to hold for a while, began to be sold to public, an enormous amount of money could potentially be generated for the government treasury. Similarly, as one of the largest enterprises in the country, the private JR would be a better source of political contributions than would the existing public corporation. On November 1, 1984, following the inauguration of the third Nakasone Cabinet, Transport Minister Hosoda, who was unwilling to support the privatization plan, turned the post over to Yamashita Tokuo (see Table 4.2). As a member of the **. Kusano Atsushi, (1989). 328 Komoto faction, Yamashita was known to be in good with the Tanaka faction. He was especially close to Kanemaru Shin, who, as the Secretary-General and a former Chairman of the Executive Council, was deeply involved and worked actively for the JNR reform, although he has been known to be a leading postal zoku.== In addition, because he was not affiliated with the Fukuda faction, Yamashita was anticipated to easily make a personnel decision for those key status-quo JNR officials, if requested under certain circumstances. In fact, most of unuzoku members were the Fukuda faction, and their relationships with the JNR status- quo group were deep-rooted. 3.3.2. A Turning Point In the meantime, in order to quell the stiff opposition of the JNR status-quo group. Prime Minister Nakasone ordered a drastic personnel switch in June 1985. This decision proved to be a turning point. Soon after, in December 1985, Mitsuzuka Hiroshi, who, as a leading unuzoku advocated the privatizing and breakup idea, was appointed the Minister of Transportation. For about half a year as the Minister of Transportation, Mitsuzuka tried to shape the final plan to '' See Sato Seizaburo and Matsuzaki Tetsuhisa, (1984); Inoguchi Takashi and Iwai Tomoaki, (1985). 329 be approved by the Diet.** Then the PCAR's reform concept could eventually be implemented. As can be seen in the above discussion, whatever the effect of the JNR privatization on the governmental reform, the reform headquarters had major unintended, though anticipated, consequences for the MOT. If the government really intended to privatize the JNR, then the MOT would need new legal power to regulate it and other firms that might enter the railway business in competition with it. Not surprisingly, some farsighted bureaucrats at the HOT began to envision a vast expansion of the ministry's jurisdiction over railways after the launch of the PCAR. Indeed, from that time on, the MOT's status as a foolish elder brother began to change. Particularly worthy of attention is the fact that the problem of conflicting interests was solved through the reversion of the balance of power between the JNR and the MOT by political authority, especially the Prime Minister's determinant decision.*? **. Mitsuzuka Hiroshi's determination of the JNR reform and political calculation within the LDP factional map were presented in Mitsuzuka Hiroshi, "Taidan: Kokutetsu Kaikaku wa Abe Seiken e no Hukusen de Aru (Interview: JNR Reform Foreshadows the Abe Dominance),” (Interviewer, Ito Masaya), Chuo Koron. (March 1986), pp.132-139. * ?. Regarding this decision, many interviewees suggested that it would be relevant to examine the JNR reform dispute within the overall structure of conservative political domination, particularly during the period led by former Prime Minister Nakasone. This subject was dealt with in Chapter II. 330 4. THE LDP IN THE JNR REFORM DISPUTE The main state ministries led by a politician minister and an actual commander-in-chief vice minister were not the only participants in the JNR restructuring dispute. In the field, there were other players, such as politicians. From the 1970s onward, the involvement of politicians in Japanese policy-making had been growing,** and their intervention in the JNR reform decision making process was decisive.** 4.1. Mitsuzuka Subcommittee Until the end of 1981, the LDP, especially unyuzoku (LDP's transportation policy tribe), put its energy into the compiling the fiscal year 1962 budget. It made an effort in the Diet to have passed the 12 billion yen budget appropriation for the Shinkansen facilities investigation and construction. So far it was too busy with this budget negotiation to pay serious attention to the JNR reform **. It has been a fad to discuss the relative strengths of politicians and bureaucrats in Japanese policy making process studies. It is well displayed in the dispute between the bureaucrat-dominance school and the pluralist argument with various restricting adjectives, which occurred in many theoretical as well as case studies. For references, see the literature review section of Chapter I of this study. * *. The unanimous answer to the interview question of identifying key actors and their relative strengths of influence in the JNR reform dispute was, not surprisingly, to confirm such an assessment on the extent of politicians' involvement. 331 matter. Right after that, the LDP turned its interest to the JNR reform agenda. In February 1982, the LDP set up the JNR Restructuring Subcommittee (called the Mitsuzuka Subcommittee) within the Policy Affairs Research Council's JNR Basic Problems Investigating Commission with 20 assigned members under the chairmanship of Mitsuzuka Hiroshi (PARC's Transportation Affairs Section Chief). Because of the increasing recognition of what was at stake in the JNR reform issue, the membership grew to over 50 members (see Table 4.3).*° In terms of factional composition, the subcommittee consisted of 15 Fukuda faction members, 5 from the Nakagawa group, and 9 of the Tanaka faction.** **. Only 11 out of 62 of the subcommittee's members and attendants of the meetings, are matched with the group of unyuzoku. However, the activities of unyuzoku, particularly kokutetsuzuku, were observed in the subcommittee. Zoku is not a formally listed grouping, but it had influence on both implicitly and explicitly, and formally and informally. * *. Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku Kosha kara Miei e (1982), p. 66. 3 3 2 Table 4.3. JNR Reconstruction Subcommittee under the JNR Basic Problems Investigation Committee In the Policy Affairs Research Council, LDP. Chair: Mitsuzuka Hiroshi (Hlyagl 1 electoral district; chair of Transportation Problems Section of PCAR; Fukuda faction) Members : Aizawa Hideyuki (Tottorl; Suzuki) Uettsa Yosikl (Hokkaido 2; Nakasone) Kozato Sadatoshl (Kagoshima 2) Koslchl Ihel (Ehlme 2) Oota Seiichi (Hukuoka 1; Suzuki) Karlno Aklo (Shlbaragl 1; Fukuda) Shlkano Mltchhlko (Yamagata 1; Fukuda) Kamel Sizuka (Hiroshima 3; nonaffiliated) Karasawa Shunjiro (Nagano 4; Fukuda) Kawasaki Jiro (Mle 1; Suzuki) Sato Shlnjl (Yamaguchl 2; Tanaka) Sato Takashi (Niigata 2; Fukuda) Mieda Saburo (Hokkado 4) Sakura Shin (Niigata 3; Fukuda) Shlka Setsu (Iwate 2; Komoto) Shlokawa Syojyuro (Osaka 4; Fukuda) Seklya Katsunorl (Ehime 1; Nakasone) Takahashi Tatsuo (Hokkado 4) Chlkaoka Rilchiro (Yamagata 2; Tanaka) Tsukahara Shumpei (Ibaragi 2; Fukuda) Narahashi Susumu (Hukuoka 3) Hasegawa Shun (Miyagi 2; Fukuda) Hayashl Daikan (Chiba 2; Nakasone) Hara Kenzaburo (Hyogo 2; nonaffiliated) Hlranuma Takeo (Okayama 1; Fukuda) Huklta Akira (Yamaguchl 2; Fukuda) Horluchl Mltsuo (Yamanashi) Mlzuno Kyo (Chiba 2; Suzuki) Mori Yoshlro (Ishlkawa 1; Fukuda) Yasuda Klroku (Hokkaido 5) Watanabe Tsunejoo (Hukuoka 2; Tanaka) Ootsubo Kenlchiro (Saga) Kajlwara Kyo (PR; Tanaka) Klmura Mutsuo (Okayama) Shlmojyo Shlnichlro (Nagano; Suzuki) Tanlkawa Siromltsu (Koochl; Fukuda) Hukuoka Hldemaru (Saga) Yasuda Takaaki (Ishlkawa) Yamazakl Tatsuo (Aomori; Nonaffiliated) Yamamoto Tomio (Gunma; Fukuda) 333 Table 4.3 (continued), Attendees in meetings at all times. Hujimoto Takao (Kagawa 1; vice-chief of PCAR) Kuboda Enji (Gunma 1; chair of JNR Basic Problems Investigation Committee [JBPIC]) Hosoda Kichizo (Shimane; advisor of JBPIC; Fukuda) Ishii Hajume (Hyogo 1; vice-chair of JBPIC; Tanaka) Etc Takami (Miyazaki 1; vice-chair of JBPIC) Okonogi Hikosaburo (Kanagawa; vice-chair of JBPIC; Nakasone) Kato Mutsuki (Okayama 2; vice-chair of JBPIC; Fukuda) Sato Moritoshi (Hiroshima 3; vice-chair of JBPIC; Tanaka) Hatta Sadayoshi (Hukuoka 2; vice-chair of JBPIC) Huruya Tooru (Gihu 2; vice-chair of JBPIC) Miyazaki Shigekazu (Kagoshima 1; Suzuki) le Asao (PR; vice-chair of JBPIC; Tanaka) Etc Jyun (Yamaguchi; vice-chair of JBPIC) Endo Kaname (Miyagi; vice-chair of JBPIC; Tanaka) Takahira Kimitoshi (Hukuyama; vice-chair of JBPIC) Source: Jiyuminshuto Kokutetsu Kihon Mondai Chosakai, Kokutetsu Saiken ni Kansuru Shoiinkai Kaioiroku. (Tokyo: Jiyuminshuto, 1984), p.701. After the first meeting on February 5, the Mitsuzuka Subcommittee tried to make the LDP's independent JNR reform plan different from that of the PCAR. It held meetings regularly twice a week,*' and conducted abnormally rapid deliberations. Many LDP Dietmembers thought that the PCAR went too far its own way. They took a special precaution against the PCAR's deliberations while warning that no matter what the PCAR submitted for legislation, the request would not be *“. A PARC (LDP) staff stated that the Subcommittee maintained a very rigorous schedule, meeting twice a week and each time from 8:30 AM in the morning. Interview with a PARC staff member. 334 passed In the Diet without their agreement.*' Not surprisingly, the LDP set up the Mitsuzuka Subcommittee in the LDP in response to PCAR's move, delving into the basic problems of the reconstruction of the JNR. With the LDP's advent, the discussion of the JNR restructuring matter proceeded into a more fragmentary and fierce. On April 16, 1982, the Mitsuzuka Subcommittee formulated an interim report titled "A Proposal Concerning the Right of Control and Management and Work-Site Discipline." Its main themes cast light on the JNR's problematic labor-management relationship.** It criticized the PCAR, which analyzed the JNR's crisis and situation by simply assuming a need for a structural change. At the same time, it surveyed the field managers with the implicit Intention of denouncing the JNR labor unions.*' In fact, the Mitsuzuka Subcommittee was generally regarded as a counter force to the PCAR at the time of its establishment, so that the anti-PCAR sectors believed that it would be on their side. However, far from what was anticipated, the Mitsuzuka Subcommittee concentrated on **. Yomiuri Shimbun. (February 6, 1982). **. The text of this report appears in Jiyuminshuto Kokutetsu Kihon Mondai Chosakai, (1984), pp.725-768. The Subcommittee's minutes on this matter are available in ibid., pp.463-469. *'. For details of the opinion survey, see Jiyuminshuto Kokutetsu Kihon Mondai Chosakai, (1984), pp.388-411 and pp. 821-857. 335 mobilizing public opinion for the reform of the JNR labor- management relationship. Quite naturally, an antl-JNR or antl-Kokuro campaign conducted by the media around that time provided the Mitsuzuka Subcommittee with sources of criticism of the JNR labor-management relationship. Soon after, on June 25, 1982, the Mitsuzuka Subcommittee produced its basic policy report "The Measures for the JNR Reform. Even after the JNR Restructuring Supervisory Council commenced Its activities on July 10, 1983, LDP politicians did not change their position. The JNR Restructuring Supervisory Council members were surprised at the unyuzoku's antagonistic attitude toward privatization as well as toward sectlonallzatlon. Despite the pervasiveness of such a negative atmosphere, however, the LDP Dietmembers were not united about the matter at hand. 4. 2. The Three Representatives In order to cope with such a difficult situation, the JNR Restructuring Supervisory Council chairman Kamei asked for help from LDP leader Itoml Masayukl (the LDP's PARC Chairman: December 26, 1983-July 22, 1986). In an Informal talk, Kamel asked Itoml to accommodate the LDP Dietmembers' negative attitudes. Itoml met with the Secretary-General '*. The text Is found In Jiyuminshuto Kokutetsu Kihon Mondai Chosakai, (1984), pp.769-796 and the record of the subcommittee's meeting is in Ibid., pp.689-700. 336 Kanemaru Shin (under Nakasone's 3rd and 4th Cabinets and the then the Executive Board chairman) on this matter. Through consultations with top LDP officials, Party Secretary- General Kanemaru Shin devised a solution by proposing three unyuzoku as the LDP's representatives to communicate and negotiate with the Council. The party entrusted the issue to them so that their opinion would be regarded as the party's official line. Appreciating the LDP leadership's swift response to the request, the JNR Restructuring Supervisory Council expected them to rid the party of its inactive mood.*? The three representatives were Kato Mutsuki, Mitsuzuka Hiroshi, and Okonogi Hikosaburo. They were selected with the consideration of maintaining the intra-party power balance. Okonogi Hikosaburo as a senior Tanaka faction member was close to Prime Minister Nakasone. Kato Mutsuki and Mitsuzuka Hiroshi were leading unyuzoku from the Fukuda faction. In fact, the unyuzoku has been assessed as the stronghold of Fukuda faction. However, Kato Mutsuki and Mitsuzuka Hiroshi held different personal opinions on the JNR reform measure. The very fact that the two leading persons from the same faction and with the same zoku affiliation expressed stiff opposition to each other on the issue became a source of strife throughout the period of dispute. To be specific. *?, Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp.166- 168. 337 Mitsuzuka, as the responsible person advocating the "Exit Theory," deviated from the rest of unyuzoku, led by Kato Mutsuki. Being critical of the "Exit Theory, " by contrast, Kato Mutsuki obstinately opposed the JNR sectionalizing privatization. Kato Mutsuki played the role of the JNR family's boss. He received strong pressure from the JNR status-quo group and the railways related business enterprises, including the construction companies.*" This group had enjoyed vested interests which had been cultivated under the nationwide unified public corporation system. 4. 3. Disunity and Settlement A surprising thing happened in the beginning of July 1984. It was Mitsuzuka's publication of the book Kokutetsu Saiken Suru Hohowa Koreshika Nai (About the Only Way to Reform the JNR) (Tokyo: Seijikobo Senta). Known to have been written with the help of the JNR reformist officers, "• the For instance, the relationship between Kato Mutsuki and Nawada (former JNR vice-president) was very close. Since their parents' generation, they have been known to help each other in various ways. Particularly, Nawada had supported politician Kato's elections (Okaama 2 district) in both finances and votes by using the spirit of "JNR family" that he shared with other JNR men. See Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp. 103-105. "*. Many interviewees stated that the real authors of the book were the three reformists, and that it was a telling example of the cooperation between them and Mitsuzuka. 338 book in fact signaled Mitsuzuka's farewell massage to his previous "Exit Theory." He moved steps further to declare that the sectionalizing privatization plan was the only measure that could rehabilitate the JNR (it was often called "Enter Theory"). The contents of the book almost exactly aped the JNR Restructuring Supervisory Council's assertions. It argued that those with opposing opinions had to look at the ineffective result of the current Management Improvement Plan and change their attitude from inactivity to support the JNR breakup and privatization. On July 17, the LDP Mitsuzuka Subcommittee, of which a majority was affiliated with the Fukuda faction, opened a meeting to deal with the situation. Around that time, the overall atmosphere of the LDP unyuzoku was not only opposed to the sectionalizing privatization, but also very suspicious of the implementability and practicality of the PCAR's recommendations. Therefore, not surprisingly, many young members, such as Takahashi Tatsuo, Ezima Zyun, Arima Motoharu, Sakura Shin, as well as senior members, including Hamada Koichi, delivered harsh attacks against Mitsuzuka's publication and treated it as a case of an anti-party behavior. ’ ® To this criticism, as the chairman of the subcommittee, Mitsuzuka declared that the meeting was closed after stating . Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp.183- 190. 339 that the Ideas In the book were his personal thoughts and that he did not intend to mobilize any change in the party line. Although it brought out a great deal of intra-party, particularly intra-unyuzoku, conflict, the book influenced the public to accept it as the LDP's official position. It seemed ironic that the people favoring reform responded to it with high expectations, despite the fact that Mitsuzuka called the book his personal opinion. In fact, however, such influence on the public opinion may have been anticipated by Mitsuzuka's implicit scheme. The overall mood of the Mitsuzuka Subcommittee on January 23, 1985 was in favor of the subcommittee's chairman Mitsuzuka. Despite the complaints of some members, such as Aims Motoharu and Sakurai Shin, who claimed to pay attention to the JNR plan, Mitsuzuka completely ignored it. In short, the subcommittee meeting ended up not giving any chance to the JNR sympathizers to clarify their position. After that, using his privilege as chairperson, Mitsuzuka did not allow a follow-up meeting, which was asked for. This was because he reckoned that the follow-up meetings would be used by his opposition. In the meantime, the JNR, which was about to construct its own new plan, became angry at Mitsuzuka and the three main JNR reformist staffs, who were known as the real writing team of the book. Indeed, Mitsuzuka and the three reformists had held discussions for a long time, from the 340 spring of 1982 to until the book appeared. By studying the JNR matter, they eventually concluded that the Exit Theory would be naive and insufficient, and that the present unified system was too big to become competitive with private railways. Sharing the same perspective and solutions, they solidified their relationship. When the JNR Vice-President, Nawada, launched an attack on Mitsuzuka, Mitsuzuka defended himself by saying that the JNR's Management Improvement Plan would be doomed to failure, and that the privatization and breakup plan inevitably would be the only obvious option available. As a leading unyuzoku of the Mitsuzuka Subcommittee, Kato Mutsuki realized the difficulty and complexity of the JNR reform matter. In addition, he, as a veteran politician, read the drift of the times, which required a revamping of the existing system. Despite pressure from the JNR status- quo group, he eventually decided to accept the PCAR's break up and privatization plan on February 13, 1985. In the JNR Basic Problems Investigating Committee meeting held in the Keidanren, Kato Mutsuki suggested 5 prerequisites for the sectionalizing privatization. ’’ ‘ Although he suggested conditional acceptance of the breakup and privatization plan, it may be his gesture as a politician. In fact, he . Kusano Atsushi, Kokutetsu Kaikaku. (1989), pp. 203-205. . . 341 gave up his stubborn opposition since then.?' Thereafter, both sides of the LDP reportedly agreed to private management, division through a reduction of functions, and a 2 0 0 ,0 0 0 -person personnel structure, through consultations with the JNR Restructuring Supervisory Council in particular. 5. THE BUSINESS WORLD IN THE JNR AFFAIR 5.1. Private Sector's Vitality Another significant player in the JNR dispute was the business sector. Around the end of the 1970s and the early 1980s, business society began to think of independent management and regional division as the solution to the JNR problem. It was the Japan Economic Investigation Council that took the lead in the JNR sectionalizing privatization. This council, as a business society's think tank, provided a set of consecutive suggestions, including "Restructuring and Reorganizing of Transportation" in August 1974, "The Basic Problems of Transportation Policies in the 1980s- Breaking Down a Superstition and Taboo" in December 1977 and "An A parsimonious review of Kato Mutsuki's political career as a prominent senior zoku is available in Inoguchi and Iwai, 'Zoku' Giin no Kenkvu (1987). In this book, the political disadvantage Kato Mutsuki had to endure for his status-quo position in the JNR reform issue is discussed as well. 342 Opinion on the JNR Reform" In July 1982. These reports defined the JNR problem as the most pivotal Issue among the current political agendas of administrative-financial reform. They also pointed out the present management form as the most basic cause for the JNR crisis and suggested the following four measures. First, regional breakup of the management system. Second, privatization to clarify those who are responsible for the management to eliminate political Interference. Third, an Independent accounting system. Fourth, setting up an administrative committee under the Prime Minister's office, such as the Railways Business Restructuring Committee, for a transitional period toward privatization.?' In general, those reports emphatically focused on the "private sector's vitality" (mlnkan katsuryoku) that would depend on a self-supporting accounting system and privatization to get rid of a state sponsored company's mismanagement. ?*. The Japan Economic Investigation Council, The Basic Problems of Transportation Policies In the 1980s. (December 1977). Recited from Dol, Hayakawa and Yamaguchl, "Gendal Nihon nl Okeru Seljl Katel e no Aprochl- Dalnl Rlncho to Kokutetsu (An Approach to the Political Process In Contemporary Japan- A Case Study on the JNR Reforming Process and the Second Provisional Administrative Reform Council)," Handa Hoaaku (Osaka Law Review), (1985), pp.202- 212 and pp.226-232. 3 4 3 5.2. Internal Conflict of Business Society It may be an exaggeration to generalize about the whole business society as a united force In terms of the JNR privatization.?* The Keidanren?® did not offer any concrete opinion about the JNR reform matter until the beginning of the 1980s. A Keidanren report "Looking Forward to Decisive Action For Administrative Reform" of November 1979 did not go beyond claiming that the JNR was as one of the main 3 Ks' deficit sources. In April 1980, Keidanren's Vice-President (a member of Keidanren's JNR Reform Supervisory Committee) delivered a presentation titled "Thinking about the Administrative- Financial Reform." He did not offer an opinion on the shift of the JNR management form either. He positively evaluated the JNR Reconstruction Law, which was reviewed at that time by the government and the LDP. He expected naively that If It rationalized the present personnel structure to be a 350000-person labor force following the new law, the JNR accounts would be balanced accordingly. Apparently, any comment on the reform of management and labor relations did ?*. Huramatsu Mlchlo, "Administrative Reform In a Pluralist Political System," Japan Echo. 10:3 (1983), p.32. ?®. Keidanren, the Federation of Economic Organizations, Is Japan's major business organization, counting as members about 110 Industry-wide groups, together with over 800 of Japan's largest corporations. The president of Keidanren Is often regarded as the prime minister of the business world. 344 not appear then in the Keidanren's official line.^* After the summer of 1981, the Keidanren began to consider the JNR reform problem specifically. Around that time, AHA Directoz— General Nakasone asked the Keidanren's Special Administrative Reform Council to review the JNR reform subject independently. Moreover, on January 27, 1982, Keidanren's Transportation Committee Chair Kikuchi Shyoro (President of Japanese Surface Mailing Company) was called to an open hearing by the PCAR's Fourth Subcommittee.?* The Keidanren brought forth the following three points: First, the JNR's Management Improvement Plan, which anticipated its accomplishment by 1985, seemed impossible to attain. Second, the vicious labor-management relations worsened and became a hot bed of the JNR problem. Third, the existing management structure should change to clarify who was responsibile.? * Keidanren's open hearings regarding the JNR problem's examination brought about this conclusion. Almost at the same time, both the Keidanren and the PCAR's Fourth Subcommittee conducted open hearings from a pro privatization group. The most influential presenters in ?*. Nihon Keizai Shimbun. (April 4, 1981). ? ?. On the open hearings of the Fourth Subcommittee of the PCAR, see Chapter V. ?•. Doi, Hyakawa and Yamaguchi, Handai Hocaku. (1985), pp.226-232. 3 4 5 those hearings were Kakumoto Ryohei and Otani Ken. * In fact, the Fourth Subcommittee as well as the business community did not start their investigations with any initial assumption of the sectionalizing privatization plan. The turning point that made them confident of the privatization and break-up plan came from Kakumoto Ryohei's presentation on November 2, 1961. After that, the business sector began to refer to the regional sectionalizing privatization plan as the most feasible idea. However, it could not be taken as the Keidanen's official line without compromise, because some members were still suspicious of the idea of break-up and privatization. As a result, on January 27, 1982, Kikuchi could not help suggesting that the privatization and break-up idea was his personal opinion in the Fourth Subcommittee's hearing.•“ Apparently, there were various opinions on the JNR sectionalizing privatization inside the Keidanren. In particular, being afraid of increasing competitiveness that would result in the JNR's privatization, the private railways companies were critical of it, and proclaimed that they would let the JNR's Management Improvement Plan to be implemented. Beyond this, the regional business groups who had vested interests in the Shinkansen reconstruction were Interview with JNR researchers. *°. See Chapter III for details on this issue. 346 also opposed to the Shinkansen construction freezing plan, which was announced as part of the PCAR's plan. For the sake of protecting their Interests, the regional economic Institutions made overtures to cooperate with the LDPers whose Interests coincided with theirs. Thus, although the privatization and breakup Ideas were gradually recognized by the Keidanren authority, there was a gap In the opinion among members of the business society. 5. 3. Building Up A Reform Atmosphere As Curtis Indicated, the business organization gradually began to change from being an effective moblllzer of consensus among members.*‘ Regarding the Issues under consideration, business organizations changed to look at comprehensive economic problems with a relatively long-term perspective. In short. In the 1970s and after, the business society transformed, revealing pluralistic characteristics, such as Increase of Its Independence from politics, reduction of Keldanrean's hegemony, and active roles of research groups. Including various think tanks. Undoubtedly, the business world was a very prominent force of administrative-financial reform for the JNR **. Gerald L. Curtis, "Big Business and Political Influence," In Ezra Vogel, ed., Modern Japanese Organization and Decision Making. (Berkeley: University of California Press, 1975) pp. 62-68. 347 problem. However, it is not wise to presume that the entire business society held a unified opinion and cooperated with the PCAR. Various backgrounds, perspectives, and interests of the various business organizations led them to take different responses to the JNR issue, depending on the circumstances. For instance, the Federation of Economic Organizations (Keidanren) and the Japanese Chamber of Commerce and Interest (Nisho) are differentiated in their membership composition. Thus, their focus of interest and ways of interpreting policies differ as well."" Therefore, even though the business society was the leading sector to claim "Administrative Reform Without Tax Increase," internal-conflicts existed. In short, the business society was working as an atmosphere-former, but was not the unified executing power of the reforms because of the subtle pluralism within the big business community. If so, who did exert the administrative-financial reform and JNR restructuring? Who expedited a national movement for these reforms? In order to answer these questions, the role of public opinion and the mass media has to be clarified. Nisho is composed of small and medium-sized enterprises, which are more sensitive to economic depression than are big ones. Thus, they asked for expansion of public works, protection of domestic industries with weak competitiveness, a low-interest rate monetary policy, as well as a low tax rate. On the other hand, Keidanren consists of almost exclusively big businesses. It has been emphatic in favor of export industries, requiring deregulation, liberalization, maintenance of liberal trade system, and low cooperate taxes. 348 6. PUBLIC OPINION AND MASS MEDIA 6.1. The Japanese Mass Media There are two paradoxical views on the media in Japan." A more conventional perspective is that Japanese newspapers, radio and television stations, and magazines have only benign and indirect influence on the public, servicing of the dominant elite group. The other perspective asserts that Japanese mass media has enormous and surprising power over society and politics, giving prominence to subordinate social groups and thus contributing to greater political pluralism. Although these two schemes are presented as dichotomouB, they allow for the evaluation of the role the media played in the politics of the JNR reform policy process. In the JNR reform process, the mass media exerted influence over key decision makers and, more broadly, over society as a whole. Obviously, the reform headquarters ''. On general accounts on mass media in Japan, see Kabashima Ikuo and Jeffrey Broadbent, "Referent Pluralism: Mass Media and Politics in Japan, " The Journal of Japanese Studies. 12 (Summer 1986), pp.335-341; Nathaniel B. Thayer, "Competition and Conformity: An Inquiry into the Structure of Japanese Newspaper, ” in Ezra Vogel, ed., Modern Japanese Organization and Decision-Making. (Berkeley: California University Press, 1975), pp. 284-303; and Jong Bok Lee, The Political Character of the Japanese Press. (Seoul: Seoul National University Press), 1985. **. Kabashima and Broadbent, (1986), p.329. 349 relied on the mass media to publicize Its cause and arouse the sympathies of the public for the JNR's structural reconstruction. 6.2. The Maas Media: Creating A Mood for Reform Despite the above-mentioned conflicting views of the Japanese mass media, In general most Japanese newspapers are sympathetic to labor unions, so they rarely carry articles that show the unions In a bad light. Such an attitude was clearly shown In the Labor Productivity Improvement Movement In the 1970s. In the early 1960s, however, the papers devoted much space to the collapse of JNR work discipline and Its staggering deficit. In turn, these reports Increased public concern, and a majority of the population then favored reforming the JNR. The mass media's reports on the JNR matter were supported by the reform force, the PCAR, which Intended to raise the public consciousness on the need for the administrative-financial reform. A former leading authority of the PCAR remembered this about the reform: We on the Council realized that the first step toward reform was to create popular awareness of the need for reform. People had to perceive that something needed to be done. Japan was sick even though we did not feel any pain yet. Without such an understanding, administrative reform was Impossible. Knowing that our reports would be worthless If the government and Diet did not act on It, we decided to limit ourselves to 350 recommendations whose Implementation vas feasible in Japan's present circumstances. The reform was performed like a triple time in music, with three principal actors: the government as a promoter, the PCAR as a responsible constructor, and people as cheering squads. In addition, the mass media played a significant role in creating a reform mood so as to lead people to cheer up. In this sense, the government and Council owed much to the mass media.** The PCAR realized the significance of public opinion for the success of the administrative-financial reform against the various strong opinions of the interest sectors against the reform. The PCAR's top leaders, including Doko Toshio and Sejima Ryuzo, wanted to mobilize a national movement via campaigns by the media.** "Financial Recovery Without Tax Increase" was taken as a catchphrase for such a national movement scheme, and was extremely effective in capturing people. As regards the JNR, in the middle of January, 1982, illegal (yami) labor practices, such as illegal allowances and illegal contracts, which occurred in the JNR workplace, came to the surface and then were critically reported upon in the newspapers. These reports escalated the criticism against the present JNR labor- management relations. * * Interview with a former PCAR member. **. Kato Hiroshi and Sando Yoichi, Kokutetsu. Denden. and Senbai Saisei no Kozu (The Rehabilitating Structure for the JNR, NTT, and JTS), (Tokyo: Toyo Keizai Shuppansha, 1983), p. 25. 351 In fact, the JNR workers had not cooperated with the Management Improvement Plan.'? Those belonging to the unions affiliated with the powerful Sohyo (General Council of Trade Unions of Japan), which advocates a Marxist Ideology attempted to make each workplace a battlefield. They employed confrontational and disruptive tactics and upset the normal workplace relations between labor and local managers.•• Unfortunately, preferring to stick an appeasement policy with the union leaders, the JNR top management had done little to help workplace supervisors '?. Starting In 1981, the plan set up Its ultimate goal of Improvement of management and reduction of the number of employees from 420,000 as of 1982 to 350,000 by 1985. In addition. It planed to close 40 local lines where losses were particularly bad. The plan made efforts to get more subsidies. However, even if targets set for 1985 were reached, the operating deficit for that year still would Increase In the amount of 1.39 trillion yen. Moreover, It expected the dismissal of personnel and rationalization of 74,000 persons, which was a big enterprise enough to wreck one huge steel company. The population as well as the railways workers were unhappy about It. Therefore, the opposition of the labor unions and local residents thought the enforcement of this plan by no means easy. ". Historically, Kokuro criticized the personnel system under which many National Railways workers of medium standing with managerial post were replaced by those who passed the examinations held by the National Railways headquarter for assistant station-masters and station masters. These managers were close to the authorities. However they were not managers of medium standing who were born of respective local organization with practical labor- management relations at the actual scene. According to Kokuro, such a system brought confusion Into labor- management relations at workplaces. See Muto Hlsashl, "Measures to Re-Construct National Railways and Struggles by Kokuro," Shakalto (June 1982). 352 retain their authority.•• As a result, there were many instances of corruption and lack of work discipline. One example is that allowances and extra payments were being paid to workers who were not entitled.** From the middle of March onward, a series of newspaper articles appeared almost everyday criticizing the JNR labor- management relations by reporting such dishonorable practices as "illegal or secret" (yaml) vacations and wages, and "sudden absence from work without notice" (pokayu). The news spread quickly, providing a bad image for the JNR. The unions were accused of being more interested in striking than in working. Critics claimed that JNR laborers and managers' bureaucratic mentality (oyakata hi no maru: no matter what happens, the national treasury will foot the bills) excused inefficiency and discouraged incentive under the public corporation system. 6.3. The "Kokuzokuron" (Traitor Theory) Two events occurred by chance almost simultaneously. They had quite profound impacts on the discussion of the JNR **. This subject is discussed concretely in section 7 on labour union and opposition parties of this chapter. **. For the details and examples of instances of corruption and lack of work discipline, see Kakumoto Ryohei, "The JNR's failings as a Public Organization," Japan Echo. 9:3, pp.83-85. 353 eectlonallzlng privatization plan In such a way of that they worsened the already pervasive critical mood. One was Yayama Taroo's article "Kokutetsu Roshl Kokuzokuron" (JNR Laboi— Management Relationship: A Traitor Theory to the Country), which was published In the April Issue of the monthly magazine Bunael Shuniu. Once the magazine began to be sold, at the beginning of March, the media Ignited a campaign of criticism. The article cited a series of examples of JNR officials' Irresponsible behavior and looked at the way workers were manipulated by union leaders who took a hard line view of class-struggle Ideology.•‘ The other was the Blue Train accident which occurred at dawn on March 15, 1982 In Nagoya. A drunken engineer drove a diesel locomotive Into a standing passenger train. More than 10 persons were seriously Injured In the accident.** Not surprisingly, most of mass media nationwide suddenly criticized the JNR. LDP's Mltsuzuka committee also conducted on-the-spot Inspections of the Blue Train accident scene along with an examination of the JNR labor-management relationship.* * Yayama Taro, "Kokutetsu Roshl Kokuzokuron" (JNR Labor and Management Are Betraying the Country), Bunael Shuniu. (April 1982), pp. 92-112. •*. Asahl Shlmbun. (March 16, 1982). **. See Jlyumlnshuto Kokutetsu Klhon Mondai Chosakal, (1984), pp. 266-286; and pp.313-331. 3 5 4 The results of the Yomlurl Shlmbun*s opinion poll'* on April 2&, 1982, which had been conducted a few weeks earlier, revealed the public's apparent negative attitude to the JNR. Indeed, the JNR had never been held In such low esteem as It was at that time. In a bid to put the JNR back on a sound footing, the PCAR was expected to recommend that the JNR be divided by region and denationalized. Supporting the PCAR's proposal, many articles on the JNR reform appeared In Japanese magazines as well. For Instance, Yoshlda Tadao charged that Takagl and other JNR upper level authorities who opposed the council's recommendations, as well as those of the unions, had been deluded Into thinking that, "what's good for the JNR Is good for Japan." He pointed out that such an attitude had hindered efforts to make the JNR an efficient corporation.*' He criticized not only the JNR organizations but also the * * To be specific about the opinion poll, 52% of respondents answered to the question "What Is your Impression of JNR workers?"; they thought most JNR workers were not enthusiastic about their work, while only 18% said they thought the opposite. To the question "Why Is the JNR running a deficit?," 50% laid the blame on overstaffing and 36% mentioned the spread of motor vehicle transport. To the question "What should be done about the JNR's management structure?," only 16% endorsed the present structure. Respondents who favored splitting It up Into a number of regional networks run by smaller public or special corporations amounted to 22%, whereas those who wanted to split It up and put It under private management amounted to 42%. See Yomlurl Shlmbun. (April 26, 1982). *'. Yoshlda Tadao, "Nihon o Nihon Suru Kokutetsu Salken Mondai (JNR Reform Issue to Make Japan Be As It Is)," Kelzal Oral. (July 1982). 355 bureaucracy in general, including the Transport Minister, who supervised the JNR, and the Socialist and Communist parties, which served as the support base for the JNR labor unions. In order to solve the JNR deficit problem, he proposed that it would be necessary to abolish freight operations and to sell land that was for the time being used for cargo transport and storage.*‘ On the other hand, an active reformist, Kato Hiroshi, whose nickname was "masukomi kyoju" (Professor Mass Communication), tried to provide the public with an easy way to understand the JNR issue. He took the initiative to change public opinion to favor administrative reform as well as privatization of the 3 public corporations, including the JNR. He frequently appeared on television and wrote summarizing articles*? of the reform headquarter's reports to explain the rationale behind its recommendations. The total number of his interviews and articles in newspapers as well as magazines was 60, 42 of which were related to the JNR problem, during the period between 1981 and 1982.*' " Ibid. *?. One of them was Kato Hiroshi, "Kokutetsu yo, mo Chansu wa nai, " in Will. (July 1982), pp. 100-104. The magazine Will is a new monthly edition of Chuo Koron's former quarterly special issue on management, being aimed at white collar workers. *' Shimbun Zassi Hatsuoensha Catalogue 1981-82. Nikkei Association, 1983: Recited from M.Doi, Y. Hayakawa, and Y.Yamaguchi, "An Approach to the Political Process in Contemporary Japan: A Case Study on the JNR-Reform Process," Handai Hogaku. 136 (September 1985), pp.237-240. 356 Of course, Kato Hiroshi was not the only person who went public. Many persons concerned with the reform movement, both supporters and opponents, also often appeared in the media. For instance, Doko Toshio, who was often called "Hr. Gyokaku" (Mr. Administrative Reform), showed up in the media advocating the administrative reform in general about 50 times.** Particularlly, "kokutetsu roshi 'kokuzoku'ron* (a claim that JNR labor and management were betraying the country) was asserted by Yayama Taro, who was critical of the JNR labor-management. The reformist circle definitely supported this argument. Although the pinnacle of the campaign was during the period of March to May, 1982, Yayama (with cooperation of Kato Hiroshi) raised "kokuzokuron” several times again until the settlement of the JNR reform dispute.'** Thus, following the PCAR * * Beyond Kato and Doko, Senda Hitoshi (a senior editor of Sankei Shimbun and an advisor of the PCAR) wrote many articles for the PCAR line in newspapers and magazines owned by the Sankei group about 25 times in 1981 and 1982. In addition, among advocates of privatization and breakup, Kakumoto Ryohei appeared 7 times, Otani Ken 4 times, and Yayama Taro 6 times (14 times on the administrative reform in general). Opposing voices were also heard; Takagi appeared 19 times, Mawatari Kazumasa (JNR vice-president) 15 times, Tamura Ken (a former minister of MOT) 5 times, and Muto Hisashi (Secretary general of Kokuro) 3 times. See Sinbum Zassi Hatsuoensha Catalogue. 1981-1982 (Nikkei Association, 1983); Recited from Doi, Hayakawa, and Yamaguchi, (1985), pp.238-240. '**. At first, it appeared in Yayama Taro, "Kokutetsu Roshi 'Kokuzoku'ron (JNR Labour and Management Are Betraying the Country)," Bungei Shuniu. (April 1982), pp.92-112. Secondly, it was discussed in Kato Hiroshi, Ono Mitsumoto and Yayama Taro, "Matamata Kokutetsu 'Kokuzoku'ron (Argument that Labour and Management at National Railways are 357 headquarters' scenario, the JNR matter came up in the public, came to be discussed actively, and was eventually recognized by the people as a crucial problem through various means of the media.'"' 6.4. The JNR Matter in Newspapers Such movement is well observed in the shift in number of major Japanese newspapers’ editorial articles'*" about the JNR policy during that time (see Table 4.4). Traitors, Appeal Again),” Bunoei Shuniu. (August 1983), pp.388-398. The 'kokuzoku'ron was dealt with again in "Hutatabi Kokutetsu Roshi 'Kokuzoku'ron (Labour and Management of the JNR Are Traitors to Their Country; Revisited)," Bunoei Shuniu. (April 1985), pp.150-168. *®‘. According to Kato Hiroshi's remembrance, "I said that it would be necessary to do something with newspapermen at that stage. Thus what seemed to attract their interests began to be made public, such as the JNR's deep-rooted labor-management relationship. As Sankei Shimbun stood in the vanguard of the public campaign for reform by reporting a series of articles criticizing the JNR, other newspapers competed against each other for the best report [see Table 4.4]. As a result, many stories became to be known to the public all of sudden. ” Kato Hiroshi and Sando Yoichi, Doko San to Tomoni Nanahvaku Saniu Nichi: Gvokaku Hunseki (730 Days with Mr. Doko: Struggling for Administrative Reform), (Tokyo: Keizai Oraisha, 1984), p.62; and interviews with former PCAR members and the PCAR's Executive Office staff. '*". See Kakumoto Ryohei, Tetsudo Seisaku no Kensho. 1869-1987: JR no Mirai o Saauro (Review of Railway Policies, 1869-1987: Seeking the Future of the JR), (Tokyo: Hakuto Shobo, 1989), pp. 213-220; and Unyu Keizai Kenkyu Senta Hen, Tetsudo Seisakuron no Tankai: Soavo kara JR made 120 Nen (The Theory of Railways Policies: 120 Years From Foundation to the JR), (Tokyo: Hakuto Shobo, 1988), pp.351-352, p.388, and pp.391-393. 3 5 8 T a b le 4.4. Number of Editorial Articles In the Major Japanese Newspapers In Relation to the Policy toward the JNR during the Reform Dispute. Newspaper 1981 -1984 1985 -1986 1987 -March « •/. # */. « •/. Asahl 35 16. 5 30 17. 9 7 25. 9 Sankei 80 37. 7 42 25. 0 8 29. 6 Malnlchl 36 16. 9 28 16. 7 4 14. 8 Nihon Keizai 23 10. 8 23 13. 7 2 7. 4 Yomlurl 36 16. 9 4 17. 9 4 14. 8 Others 23 10. 8 15 9. 0 2 7. 4 212 100 % 168 100 % 27 100 % Source: Unyu Kelzal Center, Tetsudo Kenkvu no Hensen nl Kansuru Choaa: Svasetsu no Bu. (Tokyo: Unyu Kelzal Center, 1987). When the JNR Restructuring Supervisory Council produced Its final report, concerned persons. Including the JNR authority, railways specialists, and other railway research Institutions (I.e., Japanese Transportation Research Society: Nihon Kotsu Kakal) were all Involved In the discussion of the JNR reform matter. The opinions were divided Into basically opposition and agreement as to the eectlonallzlng privatization. Specifically, three different positions developed. Some people supported the public corporation system. Others favored privatization without 359 breakup. Still others were for both break-up and privatization. According to the public opinion poll held by the Prime Minister's Office Public Information Section in July 1986, 4.5% favored breakup, but not privatization, and 14. 1% favored privatization but not breakup. Respondents agreeing to both breakup and privatization were about 40.1%, whereas 28.2% answered "Don't know."'*' The issue received exceptional support by the public who were unhappy with the amateurish quality of the JNR's customer service and relatively expensive fare in comparison with private railroads. Indeed, the public was fed up with the lackadaisical work habits and poor service provided by the JNR personnel. The widespread understanding that tolerated annual fare increases and strikes had prevented layoffs in the early 1970s. However, the public's supportive attitude eroded gradually. Urbanites did not show sympathy for local residents whose deficit-ridden local railways were being terminated. The public began to prefer efficiency to waste, even though many people still considered the publicity of railways important. As can be seen from the above discussion, the media played a significant role in creating a reform mood among the public. It shared with the PCAR's reform idea and cooperated the reform promoters. As long as the issue was '**. Prime Minister's Office Public Information Section, Kokutetsu Kaikaku ni Kansuru Seronchosa. (1986), pp.1-9. 360 under consideration, the mass media had not only benign and Indirect Influence but also strong and surprising power over society and politics. In fact, the JNR was attacked more deliberately. Lax office procedure and bureaucratic management provided the media with more to criticize. The JNR laborers, particularly Kokuro, who were especially targeted In this critical atmosphere, even characterized the public movement backed up by the media as a "propaganda war."'** 7. OPPOSITION PARTIES AND LABOR UNIONS The JNR workers were organized Into a number of unions. Among them, the moderate Japan Railway Workers Union (Tetsuro) cooperated with the JNR management policy. The National Railway Workers Union (Kokuro) and the driver's union, the National Railway Locomotive Engineer's Union (Doro), strongly opposed It until Doro changed sides In the early 1960s. During the Labor Productivity Improvement Movement (marusel undo), the management tried to arrange the disintegration of these two unions and encouraged workers '**. Former and present labor union members who were Interviewed described the situation of those times as follows. The media aimed at attacking the organizations of Kokuro and Doro by using diverse and skillful methods. Thus, union members were hardly able to cope with them effectively. Interviews with former and present Kokuro leaders. 361 leaving them to join Tetsuro. Kokuro and Doro, to defend their organizations, embarked on a counter-offensive. They denounced the actions of the management as unfair and Improper, and the Public Corporation and National Enterprise Labor Relations Commission upheld their claim, ordering the railway authorities to mend their ways. In this way, the Labor Productivity Improvement Movement became a forbidden phrase at the JNR. While the movement itself collapsed, the Kokuro and Doro unions took a new lease on life and Tetsuro*s influence declined. 7.1. Kokuro After Reform Movement What happened following the establishment of the PCAR was the decimation of public-sector labor as a political force, accompanied by the continuing atrophy of the opposition parties during the 1980s. Kokuro was long one of the principal political supporters of the Japan Socialist party. This militant union found itself with dramatically declining membership and the deliberations on its future by the PCAR. From 245,000 members in October 1982, Kokuro membership fell to only about 85,000 as of January 1987, and This subject is discussed more thoroughly in Chapter III. 362 to 45,000 in November 1987 after the JNR's privatization**' (see Figure 4.3). 1982 Mid-1980s July 18, 1986 Anti-management Anti-management Kokuro (245, 000)-->Kokuro >IKokuro >Kokuro Doro (45,000)--- I (180,000) IKokuro@-l (84,247; 33.6%) I I Pro-management I I Pro-management Tetsuro (46,000)1->Doro I------>1 JNR Reformed I TetsuroI Labor Union I------>(67,000) (125,543; 54.6%) Note: Kokuro@ (disunited Kokuro members) Figure 4.3. The Shift of Labor Unions' Size in the JNR. Source: Compiled from materials provided by the East JR. The PCAR Fourth Subcommittee's JNR reform plan was considered to be a severe attack on Kokuro. When the PCAR presented its Basic Report in June, 1982, the oppositions criticized it as "a desk plan," "an unrealizable dream," and a reflection of egoism on the part of a incumbent forces in power.**? The PCAR intended to correct the work-site ***. See Japan Labor Bulletin (October 1982), p.3; Nihon Rodo Kvokai Zassi (Journal of the Japan Labor Association), (May 1987), P.18; and Unyu Keizai Kenkyu Senta Hen, Tetsudo Seisakuron no Tenkai: Soao kara JR Made 120 Nen (The Theory of Railways Policies: During 120 Years From Foundation to the JR), (Tokyo: Hakuto Shobo, 1988), pp. 400-401. **?. For reviewing the labor unions' opposition on the PCAR's plan, the following materials were consulted. Nihon Kyosanto, Kokumln no Tamenl Kokutetsu Saikenron (JNR Reform 363 discipline at the first stage. It then reviewed the 350,000- person structure up till 1985, which was referred to In the Reconstruction Law, Including the abolition of the freight sector and the establishment of a 200,000 person structure. For this purpose, the PCAR Induced the government to declare a state of emergency. At the second stage. It established a National Railways Reorganization Law, set up a reconstruction promotion organ equivalent to a trustee, and launched rationalization and further personnel reduction. It excluded the wages for the JNR personnel from the application of the Public Corporations and Government Enterprises Labor Relations Law, and controlled them strictly. At the final stage. It divided the JNR Into enterprises In the unit of 50,000 persons by fractionalizing the management of personnel, and placed It under a seml- governmental management structure. ‘ • In fact, around that time, the National Railways Reconstruction Law, which was Issued In 1980, was still effective. It Included, with concrete figures, the 350,OOO- for the People), (TokyozNlhon Kyosanto Chuo Ilnkal Shuppankoku, 1982); kokumln Huzal no Kokutetsu Kaltal; Bunkatsu Mlnelka o Hlhansuru (Dismantling JNR In the Absence of People: Criticizing Breakup and Privatization), (Tokyo: Nihon Kyosanto Chuo Ilnkal Shuppankyoku, 1985); and Kokutetsu Mondai : Bunkatsu Mlelka no Shlnso (JNR Problem: The Truth of Breakup and Privatization), (Tokyo: Nihon Kyosanto Chuo Ilnkal Shuppankyoku, 1986). Also, various Issues of Zenel and Kekkan Shakalto were looked through. ‘®*. Nihon Kyosanto, Kokumln no Tameno Kokutetsu Saikenron. (1982), Appendix. 364 person structure with the reduction of about 74,000 by 1985, raising National Railway fares In proportion to price Increases every year, and a plan for abolishing local transportation lines.'*' However, the opposition side criticized the law for not specifying the responsibility of the government for the following problems: the amount of subsidies, the scale of Investments, the classification of burdens, and other structural defects, such as pensions and retirement allowances, the local lines' deficits, and public burdens. In spite of the opposition by the Opposition side Including the Kokuro, the National Railways Reconstruction Law and the Management Improvement Plan were forcibly established In 1980. However, the PCAR developed a separate plan In 1982. Therefore, the opposition side wondered what the Management Improvement Plan and the relating law was. If the Second PCAR and the government tried to emasculate the Reconstruction Law of 1980, which the government Itself established, the opposition side pointed out that this meant Inconsistency and Irresponsibility In politics, which had brought about the crisis of the JNR.‘'* '**. The details and text of the law appears In Hosoda Klchlzo, Kokuvu Tetsudo o Kataru: Kokutetsu Salken Mondai no Kansuru Taloen (Talking About the JNR: Suggestions for the Problems of the JNR Reform), (Tokyo: Rlkuun Kelzal Shlmbunsha, 1981), Appendix. *‘®. Ibid.; Interview. 365 7.2. Criticism of the Opposition to the PCAR In a broad scope, their complaint targeted the way the PCAR's administrative reform discussion particularly spotlighted the JNR. The PCAR publicly promised to conduct reforms of the unfair tax system, and consolidation, abolition, and amalgamation of ministries and agencies without regarding them as a sanctuary for defense appropriations. However, this argument had gone up in smoke and then was taking reforms out of public corporations and special corporations. Kokuro's Secretary-General Hisashi Muto characterized the substance of the PCAR as reigning supreme over the existing organs and being the best cloak to conceal the national crisis. He described it as follows. "There is the PCAR, but there is no government; there is the government, but there is no Diet ; and there is the Diet, but there are no people. The opposition camp claimed that the reformist force in the government ignored the real origins of the problematic points, and was lack of unified economic and scientific research. Then the opposition developed its own solid reasons for a counter-argument.‘ “ * * *. Muto Hisashi, "Measures to Re-Construct National Railways and Struggles by Kokuro," Shakalto. (June 1982). * *". Ibid., Appendix. 3 6 6 7.3. Kokuro'a Counter-Argument First, the opposition, particularly Kokuro, raised a question of who was responsible for the JNR financial crisis, whose cumulative liabilities amounted to 16 trillion yen in 1961. To answer its question first, the inconsistent and indefinite transportation policies of the government, the ruling party, and business circles, and their lack of the public policies had brought about the JNR crisis in its finances and management. The JNR fell into a deficit in fiscal 1964. In fiscal 1969, the government and JNR authorities formulated the Financial Reconstruction Special Measure Law and National Railways Financial Reconstruction 10-Year Plan for the JNR financial reconstruction, and they attempted to reconstruct the National Railways from a financial standpoint. Despite such efforts, the financial situation--the amount of losses and the balance of long-term liabilities--had been worsening year after year. It was not too much to say that financial reconstruction was literally impossible unless each of the people bore a certain amount.* *' According to labor unions' criticism, the terrible situation of the JNR finances and management was publicized by the media in 1960s with much fanfare, in comparison to Japan Ouarterlv. "Keeping the JNR on the Rails," 15,2 (April 1966), pp. 155-157. 367 the rationalization efforts by private enterprises. The mass media's publicizing of the JNR's bad financial situation seemed to not be helping people's objective understanding of what the true cause of the deficit was and who were responsible for It. Instead, It Intended to create a favorable atmosphere for Its structural reform through break-up and privatization of public corporations. They viewed It as seeming like trickery. In fact, the biggest cause of the JNR crisis was the disposition of Its debts, which accounted for 47% of Its annual transportation Income In 1981. Such a huge amount of the principal and Interest to be paid annually was caused by the "facilities Investments with no regard for Income" policy. As Japan made efforts to strengthen the Industrial foundation from the latter half of the 1950s onward, the government demanded to strengthen transport capacity rapidly, pressing the JNR Into doing that without regard for Its self-supporting accounting system, which was based on a balance between Income and expenses. For example, when the JNR Trunk Line Research Council, an advisory organ under the Transportation Minister, recommended the construction of the New Tokaldo Trunk Line, of which construction expenses were not borne by the National Treasury, the JNR constructed It by borrowing money from the World Bank. Without regard to its accounting formula, the JNR, in the nature of a state 368 railway, secured railroads, vehicles, and transport bases, and consolidated facilities. * * * The construction of the New Trunk Line was highly regarded by the government because it could strengthen freight transportation by ordinary lines for the use and consumption of a large amount of iron, cement, electricity, oil, and automobiles. Indeed, the transportation by the JNR came to serve as the foundation of the heavy chemical industry. For the Tokaido Trunk Line to open in time for the Tokyo Olympics, the JNR began to suffer from the debts and interest due to the expenses of its construction. Moreover, although the new line was in the black, its opening caused the Tokaido Main Line, which was a gold-mine line of the JNR up till then, to have a deficit.'** After that, regardless of the budget balance and the lack of competitiveness of the railways, the facilities investment and construction expenses were added up against the increasing long-term debts. These proved what a useful investment organ the JNR had been, regardless of the virtual crisis of its financial situation. In addition, the lack of competitiveness of railways to other transportation means since the 1970s onward also had ‘ ‘ . Aoki Kaizo, "The National Railways, " Japan Quarterly. 8 (January 1961), pp. 106-113. ‘ ‘ *. Unyu Keizai Kenkyu Santa Hen, Tetsudo Seisakuron no Tenkai; Soavo Kara JR Made 120 Nen. (Tokyo: Hakuto Shobo, 1988), pp. 191-386. 369 negative impacts. The JNR in fiscal 1960 had a share of 55% in transportation of passengers and 52% in cargo transportation. In fiscal 1980, its share in the former was 24.7%, and that in the latter was 8.4%. Thus, its transportation share has fallen sharply in the field of domestic transportation. What was the cause of this? What effects were had on the relative decrease in the amount of transportation on the JNR afterward? The opposition side tried to find an answer to such questions outside the JNR, such as the failing government transportation policy and ' political interference. The opposition declared, based upon such reasoning, that the short-sighted view taken by the government and the PCAR to expect that the JNR could be rehabilitated if the slackness of work-site discipline and labor-management were corrected by the breakup and privatization plan could not get the basis of the JNR problem.*'* 7.4. Change of the Opposition During the Reform Dispute When the Nakasone Cabinet was formed after the November election in 1982, an important event happened to the JNR labor unions under the new political atmosphere. The negotiation between the JNR authority and the JNR labor * ‘ . Nihon Kyosanto, Kokumin no Tameni Kokutetsu Saikenron. (1982). 370 unions was disrupted because of the matter of modifying the on-the-job conference system. The new system, if accepted, would take the negotiation out of the field management offices. Kokuro and Zendoro did not recognize this system, whereas Doro, Zenshiro and Tetsuro accepted it''^. Due to the different responses of labor unions on the matter, a significant change occurred in the structure of the labor unions' interrelationships. Because of Doro's attitudinal change, the previous confrontation scheme of Kokuro and Doro versus Tetsuro became shaken.''* To the management side, the Secretary-General of Sohyo, Japan's largest trade union confederation, announced that blocking the proposals would be one of the main aims of that year's spring struggle (shunto).''* However, losing the Doro's cooperation, the anti-management labor force (Kokuro) was drastically shrunk. Meanwhile, on August 9, 1984, for the first time, the Japan Socialist Party introduced its own JNR reform plan. It admitted the inevitability of regional breakup for efficient management.'**In this sense, it was far more progressive *'’. For the details of conglomeration of the JNR labour unions, see Chapter III. ''•. From information provided by interviewees, Doro changed its side, functioning as a turning point and weakening the power of anti-management labor unions. ''*. Fujii Shozo, "Labour Movement at the Crossroads,” Japan Quarterly. 32:3 (July-September 1986), 271-275. Unyu Keizai Kenkyu Senta Hen, Tetsudo Seisakuron no Tankai; Soavo kara JR made 120 Nen. (1988), pp. 398-399. 371 than that of the JNR status-quo group. The Socialist Party's reform plan did not of course exactly coincide with the government's plan launched by the PCAR. However, it was a kind of epoch-making event. That was because the JSP, which had been so far completely against the privatization idea itself, came to acknowledge the impoverishment of the present public corporation system and accept the privatization plan. Among the opposition parties, only the JCP still declared its determination to ignore the PCAR's recommendation and to block the legislative process in the Diet. On January 10, 1986, following the conservative drift, the pro-management labor unions such as Tetsuro, Doro, and Zenshiro, and disunited members from Kokuro announced a joint declaration "For the Reform of the United Way of Labor-Management." Only the mainstream Kokuro had been isolated. Needless to say, such a string of events led the JNR workers, especially Kokuro, to be embroiled in the biggest crisis that they had ever experienced. Because of its own shrinking strength, separation, continuous pressures from outside, and Doro's falling away from the anti management line, Kokuro could not make effective counter attacks. * • ‘ On details of the Kokuro's position around that time, see Kato Hiroshi and Yamazaki Jyunichi (the former Kokuro Chairman), (interview) "Kokutetsu Kaitaiwa Mirai o Hirakuka (Is Splitting JNR Cultivating the Future," Bunoei Shuniu (October 1985), pp. 170-182. Also see Kamata Satoshi, 372 Under these circumstances, the final blow to the Bill's chances of success came at the end of November 1986. Eight bills relating to JNR reconstructing were eventually passed in the Diet. Kokuro clearly lost this particular battle, but it was not willing to admit complete defeat.'** It accused the government of riding roughshod over all opposition. Even after privatization, Kokuro complained about the JNR Settlement Corporation's reemployment policy. 8. CONCLUSION This chapter analyzed key political participants' behavior and attitudes throughout the period concerned. The above exploration showed that in Japan, as in the American political system, stable and powerful triangular forces composing interest groups, bureaucrats, and politicians have become well established. The scale of the government was expanded to meet the many requests and demands of the people. This pattern reflected pervasive interest group politics. In the previous two decades, dramatic growth was witnessed in projects where leadership by the administration had given way to support by social groups organized around Kokutetsu Shobun (Disposal of the JNR) (Tokyo; Tsugeshobo, 1986). * * For details of the change of labor-management relation and labor unions interrelationships at that time, see Unyu Keizai Senta Hen, Tetsudo Seisakuron no Tenkai: Soavo karo JR made 120 Nen. (1988), pp.400-401. 373 special Interests. Certainly, with the consolidation of the LDP's hold on power, the interest group behind each government program entered into an alliance with politicians, chiefly LDP Diet members. Moreover, the Diet members, interlocked in a growing array of groups, became active in adjusting interests and closing deals. The complexity of various political actors' interactions in the JNR reform dispute evidently spelled out this nature of interests group politics. When the second PCAR inaugurated its deliberation, it had to take into account these countless alliances. The political process of the JNR reform decision making clearly confirmed this politicized phenomenon. Every time the PCAR, its subcommittees, and the JNR Restructuring Supervisory Council suggested that a subsidy be cut or a control loosened, they ran into resistance from this triangle of forces. Some participants in those public advisory bodies gave the impression that "they learned throughout the process that the wall of the vested interests were thick indeed."‘ * However, the reformist public advisory bodies could effectively function to break the wall so as to establish a new distributive rule of resources. At the same time, the participants changed their attitudes following the *". Interview; Kumon Shumpei, "Japan Faced Its Future: Political Economics of Its Administrative Reform," Journal of Japanese Studies. 10:1, pp.143-66. 374 recognition of the drift of the times. These changes directed the JNR reform policy to evolve toward the privatization and break-up plan. The next chapter focuses on the process of policy-making to understand these changes more appropriately. CHAPTER V THE PROCESS OF ISSUE EVOLUTION 1. INTRODUCTION The previous chapter Illustrated that the participation modes of political actors, because of their dynamic aspects, were significant for policy-making. Their interlocking relationships were made in a process that included a series of phases. Thus, policy-making should be understood as a process with distinctive stages. Because Chapter IV focused on only political participants, this chapter examines the whole process in which they acted. In the 1980s, the degree of political actors' involvement in the JNR reform policy increased in proportion to their rising concern for a change of the existing system, along with the development of the participants' coalitional formation or confrontation. The policy-making process for the JNR reform included many stages, such as planning, discussing, and decision-making throughout the 6 year period. Each stage had different characteristics. Focusing on the above aspects, this chapter will present the overall flow of JNR reform issue movement with a focus on the 3 7 5 376 aspects outlined above. 2. STAGES OP DECISION' As in any public policy case, political power and influence in the JNR reform policy process is sometimes indirect and circuitous and manifested in complicated interpersonal and factional relationships. Although it is too much to expect to explore them with clarity and finality, influence and pressure exerted by a variety of participants can be explained procedurally. This is because in Japan there is a reasonably systematic way of arriving at a decisional choice. Nevertheless, the JNR restructuring policy process possesses distinct features, which may be differentiated from others. The JNR privatization and break-up plan itself demonstrated drastic characteristics. However, the policy making process was done graduallly in the following three stages. ' . A number of political scientists have attempted to conceptualize the political process in terms of stages of decision. The most classic one is Harold Lasswell, The Decision Process; Seven Categories of Functional Analysis. (College Park: University of Maryland Press, 1956). A case study with applications for the stage perspective in studies of Japanese policy-making is Michael W. Donnelly, "Setting the Price of Rice: A Study in Political Decisionmaking," in T.J.Pempel, ed. Policy-making in Contemporary Japan (Ithaca: Cornell University Press, 1978), pp.142-200. 3 7 7 2.1. Stage I: Issue Definition In the first stage, the JNR reform policy discussion vas started by defining issues of various interest sectors and the center coalition of the government. Primarily, the JNR and the HOT intentionally confined the source of the JNR problem to economic factual aspects. Such definition of the JNR problem led them to expect that th JNR's current state could be improved by the existing Management Improvement Plan. By contrast, expecting an increase in the private sector's vitality, the business sector pushed the government to extend the scope of the issue to the JNR's structural level, i.e., its management structure. The business community induced the government to consider establishing a third entity that could overcome the existing barriers to reforms (for instance, the bureaucracy). Each side gathered preliminary information to back up its vay of defining the issue. Information collection involved not only gathering and analyzing raw economic data, but also evaluating the trend of politics both inside and outside the country, and calculating each others' tactical maneuverability. For instance, when an election or cabinet change was planned to occur, politicians reacted more sensitively than usual to the issue. LDPers' factional conflicts around elections composed, at times, a subtle part of the decision process. In short, this stage of the process 378 manifested the firm base of the status-quo group, and the emergence of a reformists' group with a new definition of issue. 2.2. Stage II: Considering Alternatives In the early 1980s, the center coalition of government set up the PCAR, expecting it to solve the existing problems in the JNR. In general, the PCAR was the first participant to publicly suggest JNR's structural reform. Throughout the activities of the functional subcommittees, the PCAR was involved in the development of alternatives for rehabilitating the JNR. The various investigation reports by the PCAR on the JNR matter were concerned less with specifics of financial structure than with the overall systematic constraints by which the JNR had been bound up. The PCAR considered the government subsidies (provided mainly in the 1970s to help JNR's interest payment) an ineffective remedy for the fiscal disaster from which the JNR suffered. Meanwhile, the deficit-conscious MOF felt severe constraints because of the increasingly worsened government finances. In the national budgetary discussion, the JNR, as one of th 3Ks' deficit sources, had been a subject of thorough investigation. The MOF, as a distributor, and the MOT, as a spending agency, were rarely in automatic 379 agreement. Before the process of decision reached the vice ministerial and cabinet levels, consultation and negotiation at high bureaucratic levels were necessary for agreement. The activities of the PCAR also partly covered bargaining with various interest groups before formal discussion. For the sake of the PCAR's effective advisory roles, its Executive Office skillfully arranged meetings with competing groups. Their bureaucratic bias toward efficiency often distorted the representation of each group's opinion. Because of PCAR's efforts, most informal consultation and negotiation could occur smoothly and constructively. This method broadened the scope of power of the reformist center coalition. Legally, the relationship between the MOT and the JNR was that the former was supposed to supervise the latter. However, the real pattern of their relationship presented the JNR with higher mobility of political means than it was supposed to have. Unhappy with such a relationship, the MOT wanted to take its initiative back in controlling the JNR through the JNR reform policy process. Thus, the MOT pulled out of the JNR status-quo authority and began to cooperate with the reformist coalition. For a certain period of time, the LDP's transportation policy specialists (unyuzoku) were split into two camps on the change of the JNR management structure. One group went along with the JNR top level status-quo group to protect 3 8 0 their shared Interests. The other group backd the newly emerging JNR reformist officers who were unsatisfied with Its upper-level establishment. The balance of power gradually moved from the status-quo to the reformist group. Not surprisingly, some JNR labor unions (I.e., Kokuro) were closely related to groups at the opposite pole--the Socialist and Communist parties. They spoke up loudly against any drastic change of the JNR management. However, In a series of publicity campaigns, the mass media raised public distrust decisively against the present JNR management and service. Thus, the harsh criticism of the public weakened the opposition's status-quo attitude and Its Influence on the JNR reform dispute. In short, this stage of the process was transitional and Included struggles between conflicting Interests that had various organizational affiliations of political advocacy. However, the tactics and strategies of the reformist center coalition effectively narrowed the number of choices In the process. 2.3. Stage III: Final Choice The politics of the final choice were frequently proceeded through the negotiation between the government and the ruling party before legislative treatment of the Issue and related laws. The Ministers, of Transportation and 381 Finance, the Chief Cabinet Secretary, and the head of the Administrative Management Agency represented the government part of the JNR affair. Their views reflected those of the Prime Minister, who was expected to respond positively to the recommendations of the PCAR and the JNR Restructuring Supervisory Council, other members of the cabinet, and the subordinate ministries or agencies. On the other hand, the LDP was represented by the Secretary-General, the PARC Chairmen, the Executive Council Chief, the Chairman of the Transportation Section (PARC), and the head of the JNR Restructuring Subcommittee, which framed the original party policy line on the JNR matter. Although all these participants were members of the same political party, the process of agreement required a good deal of informal interaction and discussion as well as formal meetings. They discussed tactical elements and specific sensitive issue with the opposing parties. Once a tentative agreement was finally reached, it had to be ratified by the party and the Prime Minister. Since the amalgamation of the conservative parties in 1955, no cabinet or transportation minister, nor any other ministers, could make an administrative railway decision without extensive consultation with, and the approval of, the LDP. The party always intervened in the revision or rejection of cabinet decisions. 382 Meanwhile, the method of decision within the party had a gereat impact on the result of decision. The usual course was that before the final decision, a choice was made by the party leadership either to set up a special investigation committee under the PARC or to use a joint committee drawn from the decisions of the party to discuss the issue. A special committee permitted party leadership more flexibility in appointments and thus a chance to broaden the spectrum of party interests in the committee's work. A joint committee that included non-transportation divisions would accomplish the same goal. Whichever route was taken, the committee did not serious work before the advisory commission under consideration made its formal recommendations to the Prime Minister. Because the committee was usually large with 50 or more members, the actual work was done by subcommittees. For the JNR reform, the so-called Mitsuzuka Subcommittee (under the JNR Affairs Investigation Committee of the PARC's Transportation Section of the LDP) accomplished these functions in the following ways. Like American Congressional investigating process, which is done by committees, government bureaucrats, railway group leaders, scholars in the area, and other LDP members were invited to present data and recommendations. Usually the party's official stance emerged from this subcommittee and the issue next moved either to the PARC deliberation commission or to the Joint 3 8 3 PARC-Executive Council meeting. On occasion, this subcommittee reported only to the three party leaders : the Secretary-General, the Chairman of the Executive-Board, and the PARC Chairman. After consultations at the party's top level, the party-government meetings would begin. Because the JNR policy decision required formal party approval, the negotiation process was tense and sometimes acrimonious. Mitsuzuka, as the JNR Restructuring Subcommittee's Chairman, frequently used skillful tactics to calm the opposition such as changing the time of the meetings. The party proclaimed Its official stance, after a long debate and an occasional convocation of all LDP Diet members In a general meeting of both houses (Ryo Glln Sokal>. After passing through this process, the policy was put up for legislative debate In the Diet. The policy Itself was drastic In terms of Its content, but the process to reach It followed the above three stages. Throughout the period concerned, the center coalition of the government established and consolidated the reformist force, which was represented by a third entity, 1.e. , public advisory bodies (the PCAR and the JNR Restructuring Supervisory Council). Therefore, the stages of the process can be better understood following the movement of this reformist force. 3 8 4 3 . ISSU E DEVELOPMENTt FROM THE JNR TO THE JR The 6 years between 1961 and 1967 were characterized as "the season of administrative reform"* in Japan. This particular period is called a "season" because in those years all the nation's activities, including those of the National Diet, the government, and even the mass media centered on administrative reform. The government put forward drastic reform plans that encompassed whole administrations and policies. During the trial of the administrative reform, the JNR was especially scrutinized because of the uniqueness and seriousness of its problem. The reform of the JNR was demanded by the political climate and the public, so the leader of the government, the Prime Minister, granted the request for reform quickly. * For the JNR reform, the government created extra institutional organizations and enacted new legislation. It established the Second •. Tanaka Kazuaki, Privatization and Deregulation: The Japanese Experience. (Tokyo: PHP, 1990) (Forthcoming), p.1. *. On March 16, 1961, Prime Minister Suzuki, at the inaugural meeting of the Second Provisional Council of Administrative Reform (PCAR), said that he would stake his political career on the administrative reform. The PCAR was formed with an intention to set up the "small government" by eliminating unnecessary bureaus, divisions, and sections in the government ministries and agencies and by cutting back financial grants to government and semi-government councils and organizations, including the JNR. Asahi Shimbun. (March 17, 1961). 385 Provisional Commission for Administrative Reform (PCAR) and the Subcommittees of the PCAR in 1981, and the JNR Reconstruction Supervisory Council in 1983 to respond the expectations of reform. These organizations framed a drastic blueprint for a sectionalizing privatization policy to rehabilitate the JNR, and formulated a variety of legislation for the effective implementation of the policy. 3.1. The Second PCAR (March 1981-May 1983) 3.1.1. Objectives* In March 1981, the Japanese government set up the Second Provisional Commission of the Administrative Reform (its full name was Rinji Gyosei Chosa Kai, and hereafter it is referred to as the PCAR). It was often called the Doko- Rincho after the name of its chairman, Doko Toshio. The movement to establish the PCAR was started when Suzuki became Prime Minister after Ohira's sudden death and Nakasone took office as the Director-General of the AMA in * . According to the PCAR establishment law, the PCAR was an institution set up under the Prime Minister's office. First, it attempted the realization of appropriate and rationalized administrative structures by responding to social economic changes (the first clause). Second, it examined and deliberated basic matters concerning the administrative system and management reform (the second clause). Third, it delivered its opinion to the Prime Minister and addressed its recommendations when the Prime Minister when he requested advice (the third clause). See Yomiuri Shimbun Seijibu Dai Ni Rincho Shuzaihan, Dokvumento Gvosei Kaikaku; Daini Rincho wa Nihon o Sukueruka. (Tokyo: Chobunsha, 1981), Appendix. 386 the Suzuki cabinet. Suzuki did not come prepared with a comprehensive plan to tackle the nation's problems, except to handle what was left Incomplete by the Ohlra cabinet. At that time, Horluchl Mltsuo* suggested to Suzuki that he launch an administrative reform of domestic affairs, which would provide Suzuki with a chance to make a favorable Impression on the public. Fortunately, on July 22, 1980, the government successfully got through a double election. In which the LDP won by overwhelming majority. This result had significant political Implications. After that, the LDP controlled the majority of the seats In the National Diet, which Is the formal promulgator of law and the arena for political debate and conflict. Its members also play Important roles In representing the people and creating public policy both at the preparllamentary stage and In the formal legislative process. Indeed, the establishment of the PCAR, most of the PCAR's restructuring plans for the JNR, the Installation of the JNR Restructuring Supervisory Council, and related laws possibly came Into being under these conditions favorable to the conservative ruling party. On December 5, 1980, The Diet passed the PCAR Establishment Law. The AMA, which was responsible for the '. As a member of the Suzuki faction, Horluchl Mltsuo was the Vice-Minister of the Administrative Management Agency, which was the responsible agency for the administrative reform. See Kusano Atsushl, Kokutetsu Kaikaku. (1989). 3 8 7 structure. Inspection, efficiency, and reform of government organizations, devised the lav to fulfill the objectives of the administrative reform.* Because the PCAR was intended to be provisional, its duration was limited to 2 years. After producing five reports for the Prime Minister during its two-year existence, its life of 2 years, the PCAR was dissolved in May 1983. Actually, the administrative reform was called for based on two background considerations. The first one was the immediate concern over the government financial crisis and the need to prepare for the advent of a rapidly aging society and other changes in the environment. The second consideration was the necessity to re-examine and remodel the administrative arrangements and policies. The existing establishment had been set up to meet the need of reconstructing the economy after World War II, and to catch up and overtake the advanced countries. Because these goals were mostly accomplished, Japan was asked to look to the outside world and to improve the domestic quality of life '. In fact, the Second PCAR took the First PCAR (1961- 1964) as its model. The First PCAR submitted a report for the administrative reform with 40 provisions, but only 11 of them were completely realized by the government. Pointing out the failure of the First PCAR, some critics opposed the establishment of the Second PCAR. However, Nakasone, as the Director-General of the AMA, ambitiously intended to reshape the PCAR with the help of Prime Minister Suzuki. For further analysis on the history of administrative reform trials in the post-war period in Japan, see T.J. Pempel (1982), Kumon Shumpei (1984), James Elliot (1983), and Daiichi Ito (1988). 3 8 8 for Its people. In order to respond these requests of the times, the PCAR conducted a thorough review of the whole sphere of administrations and policies. The PCAR outlined the basic objectives of the administrative reform roughly as follows: first, to construct a welfare society full of vitality; and second, to make a positive contribution to the international community.? With these purposes in mind, the government specified three changes: first, a shift from a patronal, patriarchal, and protective government to a government that was based on its citizens' self-help; second, a shift of economic activities from the government's direct execution or intervention to privatization and deregulation; and third, a transfer of the central government's authority to the local government. 3. 1. 2. Composition After the government announced the creation of the PCAR, on January 21, 1981, it tentatively decided that Doko Toshio (the honorary President of Keidanren [the Federation of Economic Organizations]) would be the chairman. Although Doke" was already 84 years old by that time, the government ?. Tanaka Kazuaki, Privatization and Deregulation: The Japanese Experience. (Tokyo: PHP, 1990) (Forthcoming), p. 2. * . Doko Thoshio was a man of great character and had a civil engineering background. He was one of the most successful entrepreneurs and led the business community as president of the Federation of Economic Organizations 389 believed that he wae as the most qualified person for one of the most difficult national tasks, the administrative reform. He had experience in restructuring the Ishigawashima Heavy Industry, which had been struggling because of financial problems. He was also a man the Japanese people could respect. On March 16, 1981, the establishment of the PCAR was officially announced. It consisted of 1 president and 8 members. The Prime Minister appointed them with the consent of the Diet from among persons who had knowledge and sound judgement about the problem of administrative reform. Because of an informal talk between Suzuki and Nakasone, the selection of PCAR members, including the choice of the chairman, Doko Toshio, fell to the jurisdiction of the Director-General of the AMA. Thus, Nakasone's influence colored the membership composition. In order to make PCAR's deliberations more persuasive and to secure the trust of the public, the AMA declared that it would select PCAR's members from a broad range of candidates with a background in industry, trade unions, academia, bureaucracy, and journalism. Following these implicit assumptions, these individuals were chosen to be (Keidanren) for many years. His love for Chinese classics made him the personification of oriental spirit and occidental technology. Doko lived a very simple life, which is immeasurably admired in Japan. He had a reputation for a man of honesty and poverty, and was recognized as a charismatic figure in Japanese society. 3 9 0 PCAR members: Enjyoji Jlroo (Advisor of the Nikkei Shimbun), Hayashi Keijoo (President of the Japan Red Cross), Miyazaki Tero (President of the Asahi Chemical and Synthetic Industry), Tsuji Kiyoaki (Professor Emeritus at Tokyo University), Tashimura Hiroshi (Vice-President of the Tokyo Stock Trading Company), Kanesuki Hidenobu (Vice-Chairman of Domei), Haruyama Yasuo (Vice-President of Sohyo), and Sejima Ryuzo (Vice-President of the East Japan Business Chamber and Counselor of the Itochu Company). In terms of the occupational background, 3 members, including the chairman, were chosen from the business world, 2 from labor unions, 2 from the civil service (former administrative vice-ministers of Ministries of Finance and Home Affairs), 1 from journalism and 1 from the academic world. Noting the fact that the business sector sent 3 members, the opposition (i.e., JSP, JCP and Sohyo) claimed that the PCAR was overrepresented and controlled by business interests. Indeed, most chiefs or vice chiefs of PCAR's various subcommittees or working groups, who played important roles, were noticeably Nakasone's close acquaintances and colleagues with civilian backgrounds. Among the members from the business society, Doko and Sejima were included, who wield great influence over the public in Japan. They have been known to effect the Japanese government's macroeconomic policy both publicly and behind the scenes even before the advent of the PCAR and after its 391 dissolution. They represented the business sector's interests, believing that it had proved its efficiency by successfully overcoming the oil crisis and the world recession. Because they disliked heavy-handed public management and favored the resurrection of the private sector's vitality in national enterprises, they played a crucial role in promoting JNR's privatization. Noticeably, it was AMA Director-General Nakasone who tempted them to join the PCAR. To the LDP, support from business sector was essential to keep itself in a governing position. Because elections in Japan desperately require great sums of money, most politicians are hardly able to combat the business community. Raising taxes as a possible solution to the financial problem was harshly denounced by the business sector, which would, otherwise, move away from the LDP. As politicians, neither the incumbent Prime Minister, Suzuki, nor the AMA Director-General, Nakasone, was exceptional in cautiously maintaining relations with business interests. J. Elliot succinctly points out the intertwined relationship between the LDP politicians' expectations and the business world's interest in administrative reform like this: An election had just been fought which required considerable funds, and the new Prime Minister Zenko Suzuki, was eager to win the support of business for himself. He believed he would consolidate his position by tackling the "difficult task” of administrative reform. 3 9 2 Yasuhlro Nakasone, Director General of the AHA and cabinet minister responsible for reform, also needed to improve his position. Although able and one of the most senior LDP politicians, he had failed to become Prime Minister. He thought the reform efforts would prove he was not just a "political weathervane” and would give him the necessary "thick pipeline" to the business leadership.* The PCAR establishment law did not specify the provision of advisory specialists. Following the First PCAR of 1961, the second PCAR originally planned to consist of 9 members and 21 expert members. However, the PCAR later added 5 counselors and 31 advisors with duties equal to those of the expert members to accept the request of most ministries and interest groups to be heard by the PCAR. To the public, it explained this enlargement under the premise that special advisors were necessary for technical matters in specialized areas to improve the effectiveness of its investigations. The original PCAR members discussed general problems with a broad perspective. In contrast, the technical councilors and expert members dealt with specific and concrete problems. Consequently, a division of labor appeared between the commission members and advisory members. This phenomenon could be seen in sight in the working processes of several special subcommittees and technical subcommittees of the PCAR. The advisory *. James Elliot, "The 1981 Administrative Reform in Japan," Asian Survey. 23:6 (June 1983), p.766. 393 specialists were basically (though not politically) responsible for forming the framework of PCAR's recommendations. After the experts developed a framework for the reports, then the PCAR headquarters launched a series of discussions on the subjects before writing final reports. The discussion process of the JNR affairs also demonstrated the practical aspect of having expert advisors and specialist members, as compared to the makeup of the original PCAR. 3.1.3. Doko's Four Conditions On March 11, 1981, the JNR problem appeared as a key component of the administrative reform agenda In the communication between Doko and Suzuki. When he accepted the chairmanship, Doko suggested four conditions to the Prime Minister and requested a document of agreement. Doko's four suggestions were as follows: 1) The Prime Minister should actively play on his personal leadership to accomplish the administrative reform; 2) Financial reconstruction, such as balancing the national budget, should be achieved without Increasing taxes; 3) Administrative reform should take place within both the central and the local governments; 4) It should Include the solution of the 3 Ks'deflclt 394 problem,* * and the privatization of public enterprises and semi-government corporations (tokushu hojin). One week later. Prime Minister Suzuki replied to Doko's suggestion, stating that he would sincerely bet his political career on the realization of the administrative reform. As a result, the PCAR started investigations relying upon Doko's request, with the Prime Minister's strong support. Compared to other commissions, the PCAR was allowed to have unusually high authority to handle with serious national issues that carried a big portion of national budget. Thus, from the beginning of the PCAR, the JNR problem was at the top of its agenda. 3.1.4. Features In technical terms, the PCAR was not different from over 200 other councils (shingikai): thus, the government actually had no legal obligation to adopt the proposals made by the PCAR. However, following the PCAR's establishment law, both Prime Minister Suzuki and the AMA Director-General Nakasone promised to pay the utmost respect to the proposals of the PCAR. Additionally, the PCAR was given authority to make proposals concerning almost anything directly or indirectly related to public administration. Following this '*. The fields of the 3Ks' deficits include kokutetsu (Japan National Railway), kenpo (Health Care System), and kome (Food Management Law). Among them, the JNR was the most appealing subject because of its magnitude and the public sentiment against it. 395 allowance, the PCAR not only touched on the conventional sphere of administrative reform, such as the organizational management and the method of work, but also included a variety of policy matters about diplomacy, defense, and privatization of public corporations. ‘ ‘ The PCAR was even encouraged by Prime Minister Suzuki to prepare feasible and practical proposals to be put into effect immediately. Another peculiar feature of the PCAR was that members played a really substantial part in the preparation of the proposals. Compared to other ordinary councils, the members were either spokesmen for related interest groups or at least persons with enough knowledge to be able to confirm to the ideas presented by the Executive Office. A former PCAR member remembered their active participation as follows: On the average expert members and counselors not only spent about one thousand hours in formal hearings and discussions, but also spent even more time in informal activities such as listening to the appeals of related ministries and organizations, giving public lectures concerning the administrative reforms, and directly negotiating with individual ministries with respect to the details of the reform items. Some * *. Some persons criticized the wide range of topics the PCAR handled. They claimed that policy matters were conventionally thought of as being what Prime Minister and his cabinet should deal with themselves. According to them, it was unjustifiable for an advisory body on administrative reform to invade into various fields of policy. See Ito Daiichi, "Policy Implications of Administrative Reform, In J. A. A. Stockwin, ed. , Dynamic and Immobilist Politics in Japan. (1986), p. 78. 396 members even wrote parts of the proposal drafts.‘" Thus, most members' active and specific involvement definitely made the PCAR very different from other ordinary public advisory bodies.‘* Among the various ways that the PCAR gathered information, the hearings held with individual spending departments were indispensable. After the hearings, the PCAR engaged in consultations and practical negotiations to set up realistic reform measures. In addition, the PCAR deliberately addressed separate, consecutive reports rather than submitting one final paper at the end of its service. By doing this, the proposals could be implemented immediately. The PCAR produced five reports, following the investigations and deliberations, and the ideas contained in each were considered seriously for immediate implementation. The PCAR's other peculiarity was its procedural rules to reach decisions by a majority of two-thirds or more. This *'. Kumon Shumpei, "Japan Faces Its Future: Political Economics of Its Administrative Reform," Journal of Japanese Studies. 10:1, p. 145. * *. Many interviewees confirmed such active involvement of PCAR members in the whole process, including preparation and actual investigation. Nonetheless, a few of the former members confessed that their membership was in name only. As a result, most key members worked tirelessly, but that was not true for all of them. (Interviews with former PCAR members). 397 method is unusual In Japanese administration.‘* This procedural rule Is Indispensable for an advisory body to accomplish anything substantial. On a practical level, the Commission expected an unanimous agreement after calming down objections raised by some members. By using this procedural rule, the Commission showed its determination to carry out its duties. Clearly, the activities of the PCAR were backed by various supporting systems on the inside and the outside. At the highest level, under the chairmanship of the Prime Minister, the Joint Administrative Reform Promotion Headquarters was set up, and included the cabinet and the LDP. In order to ascertain the thoughts of the cabinet and the LDP about prospective reform measures in advance, it was not unusual for an advisory commission to depend on this arrangement. Besides this outside back-up system, the PCAR had an inside organ, the Executive Office, which was headed by an executive director (the administrative vice-minister of the AMA). The Executive Office had about 70 research assistants who were seconded provisionally by various government departments (see Table 5.2). They were grouped into 11 task forces to primarily deal with technical research subjects for the PCAR and Its subcommittees. Undoubtedly, they . Ito Daiichi, (1988), pp.82-83. 398 contributed to an effective and efficient investigation by the Commission. Table 5.2. Distribution of Research Assistants of the PCAR's Executive Office. Affiliation Chief Senior Researcher Researcher Researcher Ministry of Finance 1 3 Ministry of Home Affairs 1 2 Economic Planning Agency 1 1 Ministry of International 4 Trade and Industry Prime Minister's Office 2 Ministry of Education 2 Ministry of Welfare 2 Ministry of Agriculture 2 Ministry of Transportation 2 Ministry of Post and 2 Telecommunication Ministry of Labor 2 Ministry of Construction 2 11 other ministries 11 and other agencies Administrative Management 1 8 22 Agency Local Authorities, public 17 corporations, etc. Total 1 11 76 Source: Ito Daiichi, "Policy Implications of Administrative Reform, ” In J.A.A. Stockvin, ed., Dynamic and Immobilist Politics in Japan (1988), pp.77-105. In terms of organizational affiliation, these researchers evenly represented government departments, excluding the AHA, the very government department sharing the burden of administrative reform with the MOF. However, 8 out of 11 senior researchers who had real powers and 399 responsibilities were affiliated with the AMA. Thus, the AHA substantially influenced the workings of the Executive Office (see Table 5.2). This office was Involved In preparing materials for Investigation. In fact, creating drafts, structuring question, formulating agenda and timetables, making consultations were carried out by the research assistants. Truly, without their assistance, the PCAR could not present any satisfactory report. However, at the same time, there was a possible danger In their technical help. As bureaucrats, they sorted out agendas and managed them In their own ways. They tended to avoid controversial arenas and disturbing powerful groups. The selection of "zero growth” as the main criterion for the national finance, the exclusion of defense from the discussion list, the delicate handling of the rice subsidy question, and the use of ambiguous language in some controversial parts of the reports reflected their bias.'* From the above discussion. It Is clear that the unusual authority was given to the Commission. It Is no wonder that political parties, the bureaucracy, and labor unions frequently criticized and resented the PCAR as "the Council of Councils," "the Privy Council," "the Fourth Power **. James Elliot, "The 1981 Administrative Reform In Japan,” Aslan Survey. 23:6, (June 1983), pp.765-779. 4 0 0 of the Country" or "the Headquarter of the Government."** 3.1.5. The PCAR's Meaning for the JNR Reform After the PCAR held its fourth meeting on April 17, 1981, it prepared two reports. One was "Urgently Faced Tasks," which was prepared for the Diet interpellation session for the fiscal 1982 budget compilation. The other was "The Basic Subjects for Investigation and Examination," indicating the general topics the PCAR would discuss in the next two years. Specifically, the latter report suggested the following three tasks for the administrative reform: 1) A review of the whole administrative ideology; 2) Curtailment of the national budget in the central and local governments, and acquisition of new income sources; 3> Rationalization and increase of efficiency of the central and local governments. Immediately after setting up this overall plan, the PCAR established one technical subcommittee and two special subcommittees to effectively tackle the above subjects. The Technical Subcommittee took over the first subject, which focused on broad and comprehensive administrative problems. The First Special Subcommittee (under the chairmanship of Kamei Masao, President of Sumitomo Electrical Industry) and the Second Special Subcommittee (under the chairmanship of Kato Hiroshi, professor at Keio University) dealt with the **. Interviews with former Kokuro leaders. 401 other two subjects. However, in September 1961, four new subcommittees replaced the existing subcommittees. Figure 5.1 presents the outline of PCAR's subcommittees system, the dates of their formation, and summarizes their respective purposes. These advisory organizations should be properly examined because of their significant roles. As seen in Figure 5.1, the process of their establishment, dissolution and reorganization was quite complex. For instance, the JNR affairs were dealt with by the Second Special Subcommittee and the Fourth Subcommittee in different periods. Therefore, for a systematic understanding of the JNR reform policy making process, it is worth examining the PCAR's activities at two times: the Second Special Subcommittee period and the Fourth Subcommittee period. 4 0 2 The Second Provisional Commission of Administrative Reform (March 1981-May 1983) Philosophy of organize Administration 1st: Budget Reduc 1 Technical Subcommittee- tion and Tax Cut 2 Special Subcommittees - E 2nd: Efficiency and Rationalization* (as of April 1961) replace 4 Subcommittees (as of September 1981) — 1st: Roles of Administration and Basic Present Policies — 2nd: Organizations and Structures of Administration — 3rd: Functional Division between Central and Local Governments — 4th: Three Public Corporations and Other National Enterprises* Executive Office -Executive Director (Post held by Administrative Vice- — General Affairs Minister of the Administrative Division Management Agency) — Research and — Executive Vice-Director Documents Division — Research Assistants Note: * indicates the areas relating to the JNR. Figure 5.1. The System of the Second Provisional Council of Administrative Reform. 403 3.2. PCAR's Second Special Subcommittee Period The Second Special Subcommittee focused on increasing administrative efficiency and rationalization, and dealt with the big three public corporations during April through August 1981. 3.2.1. The Color of the Second Special Subcommitte The expert members of the Second Special Subcommittee (chairman, Kato Hiroshi)*? represented a variety of interests of the society, as shown below. From the bureaucracy: Abe Yoshio (Executive Director of the Daiichi Kangin Bank; a former bureaucrat of HOF), Gtsu Domeatsu (President of Sumitomo Finance Organization; a former bureaucrat of Ministry of Construction), and Kawai Mitsuyoshi (Director of the International Development Center; a former bureaucrat of AHA). From the business sector: Sando Yoichi (Executive Manager of the Asahi Research Center). From labor unions: Tsurujono Tetsuo (Former President of the National Trade Union of Agricultural and Forestry). From the academic field: Watanabe Yashuo (Professor at International Christian University). * ?. Kato Hiroshi was picked up as the chairman of the Second Special Subcommittee for his expertise as an economist piercing the subject of administration, and for his personal acquaintanceship with Nakasone after the introduction by Ui Tsunehiko (Professor at Heiji University). 4 0 4 From the mass media: Yagl Jyun (Vice-Chief Editor for the Asahi Shimbun) In addition, the Second Special Subcommittee selected the following 5 advisors, expecting them to play parallel roles with those of the expert members. Yamada Keisaburo (Executive Director of the Mitsukoshi Company) of the business sector, Shyudoo Akira (President of the Public Enterprises Financing Institution and a former bureaucrat of Ministry of Home Affairs) of the bureaucracy, Swada Toshio (President of the Kyoto University) of academia, and Yayama Taroo (Commentator for the Jijitsushin Press) and Senda Hitoshi (Editor for the Sankei Shimbun) of the mass media. Compared to the composition of the First Special Subcommittee which included 9 former bureaucrats among its 17 members, the Second Special Subcommittee had just 4 former bureaucrats out of 13 members. The First Special Subcommittee focused heavily on the tax cut agenda. Recognizing the importance of the tax issue, all ministries protected their vested interests by trying to make their powerful former bureaucrats members of the First Special Subcommittee. Consequently, the proportion of ex-bureaucrats in the First Special Subcommittee increased relative to the small number of old bureaucrats in the Second Special Subcommittee. Given this atmosphere, the Second Special Subcommittee enjoyed opportunities for discussion fairly free from bureaucratic pressure, which, otherwise, would be put upon the investigation on the big three public 405 corporations, including the JNR. Immediately before the budget compilation, the two special subcommittees helped the PCAR to effectively investigate the curtailment of national expenditure. The PCAR itself also held meetings frequently, almost twice a week.‘* After a series of intensive examinations, on June 22, 1981, the Second Special Subcommittee submitted a report to the PCAR on administrative measures for the increase of efficiency and rationalization of the government organizations. This report provided the PCAR with the basis of its First Report (Emergency Report) of recommendations, which was then submitted to Prime Minister on July 10, 1981. 3.2.2. The Emergency Report** The Emergency Report of July 1981 was to lay the ground rules for the budget for fiscal 1982 (April 1982 to March 1983). This report was filled with some fine-sounding ideals in terms of national goals. It promulgated new visions, such as "a dynamic welfare society" and "active contribution to the international community,"** stressing the PCAR's primary * *. Interview with a former PCAR member. **. Text is found in Yomiuri Shimbun Seijibu Dai Ni Rincho Shuzaihan, Dokvumento Gvosei Kaikaku; Daini Rincho wa Nihon o Sukueruka. (Tokyo: Chobunsha, 1983). **. The contents of the PCAR's Emergency Report paralleled Prime Minister Suzuki's policy pledges. On January 26, 1981, Prime Minister Suzuki delivered his first policy speech at both Houses of the Diet. He stressed Japan's responsibility in the international community, and 4 0 6 concern: simplification and greater efficiency of administration. It called for severe cutbacks In the outlays of each government office, decreasing growth In government spending across the board, and a 10% reduction of government subsidies. It outlined In detail the need to reduce the number of civil servants by 5% within a 5-year period, emphasizing, among other things, the reconstruction of state finances without Increasing taxes, and a review of social welfare and education expenditures.*‘ The political Importance of the PCAR for the JNR reform was found In Its reports. Including the Emergency Report. During Its 2-year existence, the PCAR submitted 5 reports"', which focused on the reform of the big three public corporations (san kosha) (the Japan National Railways [JNR], Nippon Telegraph and Telephone Public Corporation [NTTPC3, and Japan Tobacco and Salt Public Corporation [JTSPC3). Their privatization and the deregulation of the telecommunications Industry were the key outcomes of the PCAR reports. Because of Its scale and the difficulties expressed his determination to rebuild the nation's finances. Asahi Shimbun. (January 27, 1981). Asahi Shimbun. (July 10, 1981). The PCAR delivered five reports: the first report (the Emergency Report) on July 10, 1981, the second on February 10, 1982, the third (the Basic Recommendations) on July 30, 1982, the fourth (the Basic Plan for the Administrative Reform) on September 24, 1982, and the final report on March 14, 1983. 4 0 7 encountered in the process,*' the rehabilitation plan of the san kosha was the most important in a series of recommendations. Particularly, the reform of the JNR vas considered to be at the very heart of the recommendations because it vas the symbol of the administrative and financial ills of Japan. A deeply involved person in the PCAR said it like this: Many of those concerned thought that vithout the successful reform of the JNR, the administrative reform under the PCAR could not be considered a success and consequently, the revitalization of Japanese administration and finance to prepare for their future task vould not be realized.* * The First Report of the PCAR specified the points on the reform of the JNR and the other tvo public corporations as outlined belov. A. The Japan Tobacco and Salt Public Corporation (omission) B. The JNR In order to effectively conduct the present Management Improvement Plan at a reasonable speed, the government vould outline its annual proceedings, in terms of the folloving measures. ••. Tanaka Kazuaki, Privatization and Deregulation: The Japanese Experience (1990), p. 2. * * Interviev vith a former PCAR Executive Office staff. 4 0 8 a. A new strict reform measure would be considered for the Improvement of the management's attitude and labor- management practices. It includes the introduction of a perfect personnel training system and the curtailment of the issuance of free-passes. b. It would conduct labor force control by reducing the number of new recruits, and management rationalization by increasing productivity (i,e., by retrenching the volume and by cutting back the operation of freight railways). c. Extra income sources would be sought by managing idle capital such as the unused land. d. Drastic measures (including privatization) would be undertaken for certain deficit local lines. C. The Nippon Telegraph and Telephone Public Corporation (Omission) In this report, the PCAR admitted the Management Improvement Plan established by the JNR was legitimate. The report did not mention the privatization of the entire JNR system yet. However, after publishing the report, the PCAR began to criticize JNR's (as well as the MOT's) inability to implement the Management Improvement Plan, and negated the plan. 409 3.2.3. Impact* of Other public Corporation* The PCAR's First Report (the Emergency Report) mentioned the possibility of NTTPC and JTSPC's privatization. Following this policy direction, the Ministry of Posts and Telecommunication, as the NTTPC's supervising agency, and the HOF, as the JTSPC's supervisory agency, finally created reform plans and submitted necessary legislation to the Diet**, which was duly passed. In April 1985, both the NTTPC and JTSPC finally came to be reorganized Into new companies, the NTT and Japan Tobacco, Inc.(JT>, respectively. At the same time, the related laws were drastically amended to relax regulations in the industries, and the new companies were placed in a competitive market from the previous setting of monopoly. The privatization of these two public corporations obviously had a significant Impact on the course of the JNR restructuring policy-making. Above all, they were privatized despite keeping their finances In the black. This Implied that the financial situation was not the only standard for transformation of the management structure of a public corporation. Besides that, the PCAR considered other factors * * A bill to privatize the Japan Tobacco and Salt Public Corporation was enacted as the House of Councillors (upper house) votes on It in August 3, 1984. See Asahi Shimbun. (August 4, 1984). And in December 1984, the House of Representatives (lower house) passedf 3 bills that would transform the Nippon Telegraph and Telephone Public Corporation into a private company by April 1985. See Asahi Shimbun. (December 10, 1984). 4 1 0 simultaneously, as will be seen below. First, it determined that political intervention by politicians and bureaucrats obscured managerial responsibility, and nurtured irresponsible management of the public corporation system. Because of the lack of legal decision-making power, the authorities could not settle wage rates on their own. Second, in the absence of independence, the public corporations tended to easily compromise the unions' demands for better labor policies and working conditions. Third, under the current Labor Relation Law, the labor unions of the public corporations took advantage of the public corporation system which knows of no bankruptcy. Thus, the labor unions were disregarded their obligations as workers, and tended to resort to illegal or inappropriate actions. Fourth, people believed that the government should keep supporting the public corporation systems, and tended to demand an unwarranted level of services from the the public corporations. Based on such an examination, the PCAR determined that the NTTPC and the JTCPC could be in the black not because of their enthusiastic managerial efforts, but because of their monopolistic stands, which were vulnerable to international pressure to open and liberalize the domestic market. Because the JNR had a huge financial deficit in addition to the above problems, the reform headquarters automatically considered a privatization measure for the JNR. 41 1 The other Impact vas that the Second Special Subcommittee members, who prepared the PCAR's First Report, participated again In the PCAR's Fourth Subcommittee. Quite naturally, because the JNR reform Issue was under the control of the advisory group that suggested the privatization of the NTT and the JTS, the discussion of privatization went smoothly. During the Second Special Subcommittee period, the LDP's position on the JNR reform differed from that of the subcommittee. However, the LDP did not pay much attention to the Second Special Subcommittee's position, which favored privatization. The LDP concentrated on developing a separate reform plan that cooperated with the JNR authority. In other words, LDP's political Influence did not affect the Second Special Subcommittee's discussion of the JNR's privatization. In the meantime, th NTTPC and JTSPC cases were examined only by the Second Special Subcommittee. However, the JNR problem was discussed by the First Special Subcommittee, because Its huge Shlnkansen construction Investment was politically targeted. Therefore, the JNR's ever-expanding Investment attitude was spotlighted and criticized more severely than were the others. Furthermore, the JNR was considered too huge to pursue responsible management and efficient operation. Therefore, according to the reformers, a mere revision of the present system was not sufficient for 4 1 2 solving social, political, and organizational problems of the JNR. Meanwhile, when restructuring plane of the three public corporations were proposed, the NTT was the first to jump on the bandwagon to accept privatization while avoiding a break-up. The JTS did not resist privatization, either. The JNR, however, resisted the privatization and break-up plan to preserve itself and to protect its vested interests. This process can be better understood when the activities of the PCAR's Fourth Subcommittee and the JNR Restructuring Supervisory Council are examined. 3.3. PCAR's Fourth Subcommittee Period 3.3.1. Membership Composition and Functions In September 1981, for the full-dress debate of specific issues, the PCAR reorganized the present technical subcommittee and two special subcommittees into four new subcommittees. The JNR matter, as well as other public corporations and national enterprises, was discussed in the Fourth Subcommittee under the chairman Kato Hiroshi (the former Second Special Subcommittee chairman). The assigned members of the Fourth Subcommittee were shown as below. Chairman: Kato Hiroshi (Professor at Keio University). Deputies: Sumida Syoji (Former Vice-Minister of the MOT) and Iwamura Seiichi (Visiting Researcher for the Research Foundation of the Yomiuri 413 Shimbun). Members: Abe Yoshio (Vice-President of Daiichi Kangin Bank), Sando Yoolchl (Executive Manager of the Asahi Research Center), Takano Kunlhlko (Chief Editor of the Keizai Rondan Sha), and Tsurujono Tetsuo (Former Chairman of the National Trade Union of Agriculture and Forestry). Advisors: Kunlhlro Kazuto (Professor at Senshu University), Suzue Kooel (Former Vice-Minister of the Scientific and Technical Administration Office), Soneyama Katsuml (Former Vice-Minister of the Ministry of Post and Telecommunication), Takebashl Masao (Vice-Chairman of Domel), Tanaka Humlo (President of the 01jl Paper Manufacturing Company), Nakagava Koojl (President of the Nomura Research Foundation), Nakabashl Keljlroo (Former Vice-Minister of the Office of National Land), leshlro Ichlroo (Commentator for the NHK) and Yayama Taroo (Commentator for the Jijitsushin Press). In selecting the Fourth Subcommittee members, the PCAR retained the former Second Special Subcommittee members to smoothly lead the debate of the three public corporations' privatization. In addition, emphasizing the private sector's initiative, the PCAR and Kato Hiroshi wanted to select members with civilian ' backgrounds. As a result, only 5 members (31.3%) out of 16 represented bureaucratic interests. Compared to this, half of the Second Subcommittee were ex-bureaucrats. Nonetheless, government ministries and agencies realized that their low participation led the Emergency Report to include the plans of privatization of the two public corporations without confronting with any severe opposition. Thus, they tried to get Involved In the 414 Investigations by the Fourth Subcommittee, which was expected to touch on the JNR reform policy. Influential former bureaucrats, such as Sumida (Former Vice-Minister of the MOT), were Included In the proceedings. Apparently, considering the historical conflict between the MOT and the JNR, and the MOT's consistent Interest In JNR, the PCAR's headquarters and the Fourth Subcommittee's chairman were skeptical of Sumida's response to their drastic reform of the JNR. Fortunately for them, Sumida did not oppose It. Instead, he advocated the necessity of a radical measure for the JNR. For Instance, when the MOT and the JNR were not as supportive of the PCAR's reform policy, Sumida criticized their own Management Improvement Plan as Irrational and unattainable. The Plan kept Increasing the amount of Investment over roughly 11 billion yen In 1982 for the extension of the Tohoku-Joetsu Shlnknasen'* to Ueno, and On Jun 23, 1982, the JNR's 466-Km Tohoku Shlnkansen line connected Omlya in Saltanma Prefecture and Morioka in Iwate Prefecture, northeast of Tokyo, in a trip that took 3 hours and 17 minutes (2 hours and 25 minutes less than the time required by the ordinary express train). The Joetsu Shlnkansen bullet trains started service on November 14, 1982, linking Omlya, north of Tokyo, with Niigata In only 1 hour and 45 minutes, thus bringing the snowy Japan sea coast within commuting distance of Tokyo. Niigata Is the former Prime Minister Tanaka Kakuel's hometown and electoral ward. Construction of the bullet train started In November 1971 and was often delayed. Even In 1960, It stopped three times, on June 26, 1986, October 29, 1980, and December 25, 1980, because of the budget problem and construction schedule. The total construction expenses were estimated at 2.8 trillion yen for the Joetsu Line, and 1.7 trillion yen for the Tohoku Line respectively. According to the original 415 later Tokyo, despite serious deficits and assuming that it would continuously receive government subsidies. Sumida proclaimed that the plan failed to streamline operations and to consolidate a management system that could effectively control the far-flung divisions of the gigantic railway organization. When the PCAR began to consider the JNR's privatization policy, the idea was opposed by the JNR's status quo-group, the HOT, and LDP's transportation policy specialists (unyuzoku). However, Sumida's active backing of the JNR privatization policy contributed to the consolidation of the reformist force. Needless to say, other members, such as Sando and Iwamura, were also active. In particular, Yayama, a commentator for the Jijitsushin Press, played a significant role. He has been known as one of the closest journalists to former Prime Minister Nakasone. Before Yayama's participation in the PCAR, however, the two were not closely connected. As Yayama himself described it, he was chosen as an advisor of the PCAR on the recommendation of his company. plans, the construction should have been completed in fiscal 1976, but the lines actually took 11 years to construct. With the trains' maximum speed increase from 210 Kph to 240 Kph, the lines were extended to Ueno, Tokyo in March 1985 13 years and 4 months after construction began. Because railroad use was on the decrease, the magnitude of construction for the two bullet trains was always at the top of the list of the JNR annual accounting topics. The Tohoku-Joetsu Shlnkansen matter was also discussed in Chapter III. 416 not on that of Nakasone."? The JNR reform and antl-Kokuro campaigns by the mass media were partly ascribed to Yayama's writing (particularly the "kokuzokuron" series) and Kato Hiroshi's propensity to speak out. Although the Fourth Subcommittee's chair, Kato Hiroshi, did not start with a firm belief in sectionalizing privatization, once he began to support it, then he, as the chairman, skillfully managed the subcommittee's discussion to direct converge various opinions toward sectionalizing privatization. Despite criticism of the way he conducted discussions, his management definitely worked to increase the effectiveness of the investigation process.* * Another factor that increased the effectiveness activities of the subcommittee was the quality information available to it, which was provided mainly by the Executive Office's staffs. Despite certain bureaucratic practices, the Executive Office was recognized for its high ability to select and analyze information, integrity, and manageability. In particular, Tanaka Kazuaki, a vice-chief of staff, played an important role in communicating with the JNR's reforminst officers."* In the bureaucratic policy- •?. Yayama Taro, "Transportation Ministry is Worst Among Government Offices," Bunaei Shunlu (June 1983). “". Interview. •*. Interview with a former PCAR Executive Office staff; and Kusano Atsushi, Kokutetsu Kaikaku (1989). 417 making process In Japan, it is common that the section chief class takes over a significant part of work. However, because of his ability and the circumstance under which his superiors allowed him to act differently from general patterns, Tanaka had unusual influence. The Japanese media took a positive attitude toward the sectionalizing and privatization plan for the JNR. On the one hand, such an unprecedented involvement of the mass media (with its unusually negative view on labor unions) was due to the uniqueness of the JNR problem. On the other hand, rich amounts of information provided by the PCAR through the Executive Office led the mass media to be active in reporting and campaigning for the JNR breakup and privatization. 3.3.2. Subcommittee Hearings Because of time limitations, the Fourth Subcommittee members agreed to deal with the problems of the three public corporations, especially the JNR, first. They usually met in every Wednesday. After the first meeting on September 9, 1981, the Fourth Subcommittee began to conduct a series of open hearings for persons involved in the JNR situation. In the third meeting of September 24, the NTTPC and its supervising ministry--the Ministry of Posts and Telecommunication--were called in to answer members' questions. On September 30, a hearing was held for the MOT's 4 1 8 Railway Supervisory Department Chief, Sugiura Takaya, and on October 19, 1981, there was one for JNR President Takagi Fumio. In that hearing session, Takagi emphasized political interference in the JNR decision-making process on key management matters, such as fare increase. Takagi pointed out the structural impediments that the JNR had been up against rather than the responsibilities of the present JNR management. He also criticized the government decision that resulted in the JNR increasing annual allowances. Government policy after World War II required the JNR to hire discharged soldiers and those who had worked on railroads in Japan's colonies. This large influx of employees had reached retirement age at about the same time. According to the average annual percentage of employees who retire at all government agencies, slightly more than 10,000 people should retire each year. However, at the JNR, with its more than 300,000 employees,the figure was actually 20,000 to 30,000 per year. In fiscal 1984 alone, the combined cost of JNR's retirement allowances and pension payments was 1.1 trillion yen. Moreover, the pension maturation rate at the JNR was 117.8%. That means that 100 present employees had to support 117.8 retired employees who were drawing their pensions.'* According to him, if such a problem were removed from the •*. Kamitsuka Akihiro, "Reform of the Red-Ink Railroad," Japan Quarterly. 33:1 (January-April 1986), pp.25-30. 419 JNR, the JNR would be rehabilitated without the necessity to reform the present management structure. Takagi realized that the JNR workers' decreasing work discipline had become a target of harsh criticism by the media and the public. However, he attacked the popular opinion that the JNR should be turned over to private management. He contended that railroads were a public utility, so that It would be a bad policy to operate them with only efficiency In mind.*‘ He proposed a personnel reduction from the current 420,000 to 350,000 by 1985. However, he naively expected that the Management Improvement Plan would soon Improve labor relations. Therefore, he did not agree with the Idea of management revolution, which the PCAR suggested as a method for JNR reform. The PCAR also acknowledged that pensions and retirement allowances were the main sources of the JNR's fiscal grief. Older workers made up a dlsproportlonally large part of the JNR staff. Nonetheless, the PCAR did not like the JNR authority's dependency on the government to handle the problem. Thus, the Fourth Subcommittee members accepted Takagi'8 presentation as a restraint on the JNR's systematic ''. Takagi's attitude was demonstrated In Interviews with Shunkan Tovo Kelzal (March 13, 1982) and myself (July 1990). He claimed that even If the JNR were split up and denationalized today, only the Tokyo region would make a handsome profit, and companies operating rural lines would Inevitably run In the red. He asserted that the overall result would be larger, not smaller, deficits. 4 2 0 reform, and as an expectation of continuous government subsidies. In the hearing, the Fourth Subcommittee criticized Takagi's overall view on the JNR's situation and his seemingly naive stance on labor-management relations. In short, the confrontation between the JNR status-quo group and the reform headquarters came to the surface. In its first report, the PCAR acknowledged the JNR's Management Improvement Plan and expected its implementation as planned. In the hearings, however, the reformist force began to publicly attack the plan, which aimed at setting up a 35,000-person system, as unrealistic. The PCAR began to be skeptical about JNR's ability to implement it. Around that time, the PCAR was unhappy with confronting attitude of the JNR and the MOT as well. On October 19, the JNR Management Inspection Report contained information about vicious patterns of labor-management practices that hindered JNR labor efficiency. Nonetheless, the PCAR did not yet clearly support any premise of the JNR sectionalizing privatization. On November 19, 1981, for the first time, Kakumoto Ryohei** (a former JNR officer and a critic of Kakumoto Ryohei had been a member of the Inquiry and Audit Board of the JNR and is now director of the Japan Transport Economic Research Center. He has written several seminal books on Japanese railroads after having devoted many years to studying the problems faced by railroads, and comparing the JNR with national railways in other countries. See Mobility to Nihon (Mobility and Japan), Tetaudo Seisaku no Kensho. 1869-1987: JR no Mirai o Saauru (Examining Railway Policies, 1869-1987: The Prospect of the JR's Future), (Tokyo: Hakuto Shobo, 1989), and "Kokutetsu Itsutsu no Taizai (The JNR's Failings as a Public Organization)," in 4 2 1 transportation affairs) publicly advocated the JNR sectionalization and spoke out for the JNR's transformation into a special corporation at the Fourth Subcommittee hearing session. His support for regional sectionalization brought an immediate response from the members of the Fourth Subcommittee. It gave a fresh impetus to the PCAR's privatization plan and provided feasible ideas that met local conditions. In short, Kakumoto's presentation negated the current Management Improvement Plan, which was created by the JNR and the HOT and approved by the government in 1980. Kakumoto's public announcement of the dissolution of the Management Improvement Plan was known to have been induced by the vice- president of the Domei (Japan Federation of Labor), which aligned itself with the Democratic Socialist Party. In the same vein, Qtani Ken'' (Editor of the Asahi Shimbun) cited the NTT experience as an example, asserting the necessity for the JNR sectionalizing privatization, including a change in the management set-up. Gendai. (July 1982), pp.57-74, which is translated in Japan Echo. Vol.IX, no.3, 1982, pp. 83-93. The precise contents of his proposal for the break-up of the JNR appear in "Kokutetsu Saiken Chiiki Bunkatsu Shika Nai, ” in Tovo Keizai. (December 12, 1981). Also consult Kusano (1989), pp. 85-87. " . He is the author of the book. Kobo (Rise and Fall), (Tokyo: Hakuto Shobo, 1984), which illuminates the process of sectionalizing privatization of the NTTPC. It has been considered a text of privatization. Ironically, the PCAR Executive Office was told to invite Otani for an hearing by a man of the JNR, which opposed privatization. 4 2 2 Kakumoto and Otani's presentations encouraged the reformist force to redefine the issue and to consider the break-up and privatization as the most feasible alternative. Their idea proved to be a turning point in the JNR reform debate. From that time on, many PCAR members were willing to accept the idea and draft specific policies based on it. However, in the next hearing, Hosoda Kichizo (a former MOT bureaucrat and a LDP unyuzoku) laid claim to a balanced recovery plan through the curtailment of only the deficit- ridden local lines, and opposed the break-up and privatization plan. More hearings were held on December 16, 1981 for labor unions, including Kokuro, Doro, and Tetsuro, and on December 19 for Takeda Hirotaroo (President of the Meitetsu, Private Nagoya Line), and on December 23 for the AMA about the JNR Administrative Inspection Report. Therefore, around that time, a confrontation erupted, between two forces: the reformist PCAR, which tried to frame the sectionalizing privatization in its resolution, and the opposition, which intended to halt the PCAR's advances. On December 18, Transport Minister Kosakato Tokusaburo held an informal meeting with the president of the Japanese Business Chamber and the 9 managers of private railway companies. In that meeting, th private railways' managers suggestd that the JNR privatization might be troublesome. Additionally, on December 1981, Murata Ken (a former Minister of Transportation) presented publicly the so-called 423 "Murata Pian." He claimed that any JNR recovery plan had to auggeat, first of all, a solution to the structural deficit, including retirement allowances and annuities, which resulted from an irresponsible government policy. His plan definitely appealed to the JNR status-quo group and Kokuro. Meanwhile, in an annual press interview on January 18, JNR president Takagi again harshly criticized the PCAR's ignorance of the JNR situation. He claimed that "the PCAR members focus on only deficit problems because they do not fully understand at all what the JNR problem is, and how it has to be solved. Nevertheless, they do not even try to study them."'* In contrast, the Fourth Subcommittee continued to schedule more hearings to make the privatization and break up plan as specific and persuasive as possible. On January 27 and February 5, 1982, Kikuchi Shyoroo (Chairman of the Transportation Committee of the Keidanren, the Federation of Economic Organization) and Sengo Masamichi (President of the Finance Organization for the Medium and Small-Sized Firms) presented their opinions and specific solutions for the JNR pension system in respective hearings. Both favored the PCAR's plan. . See Yomiuri Shimbun. (January 19, 1982). 424 3. 3.3. Confirmation By conducting a series of hearings, the PCAR and the Fourth Subcommittee could confirm the need of drastic reform for alter even the JNR management structure. In the meetings on January 23 and 25, 1982, the Fourth Subcommittee members acknowledged the sectionalizing privatization plan as their official line. At the beginning of February, the Fourth Subcommittee presented 10 provisions as the JNR reform measures, and requested that the government accept them. In February, those 10 provisions appeared at the top of the Yomiuri Shimbun*B first page.** They were: 1. Stop hiring new personnel; 2. Curb the level of salary; 3. Cease illegal contracts; 4. Cease issuing free passes; 5. Freeze the reconstruction of Shinkansen; 6. Promote the readjustment of local lines; 7. Reduce the amount of further investment; 8. Separate management of the Railway Hospital; 9. Separate management of the Railway Maintenance Factory. Around that time, a pervasive criticism was that the * * Yomiuri Shimbun. (February 5, 1982). 4 2 5 PCAR conducted Investigation too abstractly. With this report, the PCAR tried to display how specific the PCAR's deliberation was. Simultaneously, the PCAR intended to use this report to check opposing opinions, including those of the LDP, the MOT, and the JNR. Ironically, on the same day, the LDP set up the JNR Restructuring Subcommittee (Hitsuzuka Subcommittee) within the JNR Basic Affairs Investigating Commission, with 20 assigned members. Thinking that the PCAR went too far, the LPD wanted to restrain the PCAR's activities. The JNR dispute became even more complicated because of this political actor's involvement. After that, the reformist headquarters created another means to highten the reform mood. It was the anti-kokuro, movement which was motivated by the mass media, following a series of "kokuzokuron." Throughout this campaign, the public distrust of the JNR management and service became even higher. 3.3.4. Informal Negotiations In addition, the Fourth Subcommittee conducted informal negotiations (nemawashi process) with the LDP's transportation policy specialists (unyuzoku), the opposition parties, the JNR authorities, and the HOT. Such informal negotiations played crucial political roles, providing the reformist force with a chance to tap various opinions, and 426 to persuade the opposition to change Its stance. The total number of Informal meetings might have outnumbered the regular meetings of the PCAR and the Fourth Subcommittee. Actually, this consensus-making effort appeared both In the PCAR period and in the JNR Reconstruction Supervisory Council period. In the former era. Informal meetings were held among the PCAR members, heads of subcommittees, and Executive Office's staffs on a regular basis to discuss basic policies and specific Ideas. The most notable was what was known as "Ura Rlncho" (The PCAR behind the scenes).'* In the Ura Rlncho, reformists maintained their perspectives on the reform problem of the three public corporations. Including the JNR. The Idea of break-up and privatization was raised In one such Informal meeting. Its main purpose was to develop a unity of opinions. Sejlma Ryuzo, who was known as "the PCAR's Political Bureau Chief,"'? said that without the Ura Rlncho, the PCAR could not do Its duty. In fact, he played a significant role to reach a consensus and to ventilate '*. See Kusano Atushl, Kokutetsu Kaikaku (1989), pp. 233-236; and Dol, Hayagawa, and Yamaguchl, "Cendal Nihon nl Okeru Seljl Katel e no Apurochl: Dal N1 Rlncho to Kokutetsu Mondai (An Approach to the Contemporary Japanese Political Process: A Case Study on the Second PCAR and JNR Problems)," Hands! Hooaku (Osaka University Law Review), no. 136 (September 1986), pp.221-226. '?. One Interviewee referred to such a metaphor In describing how significant the role was that Sejlma RyuJo played In the whole process of administrative reform. 427 public opinion through the Ura Rlncho.** In these informal discussions, information vas gathered and discussed so that specific strategies could be set up before formal meetings. A procedural custom was that subcommittee chairmen had informal presentation sessions before they delivered their reports in formal meetings. Throughout the nemavashi process, the reformist force began to officially declare that the JNR should be transformed into a special corporation with breakup. The Fourth Subcommittee's February report was released to the mass media by the reformist headquarters for several tactical reasons. After that, on March 17, the above key members of the Ura Rincho specifically discussed its contents in an informal meeting. On April 19, in an informal meeting, they confirmed the transformation of the present JNR public corporation system into special companies. In the JNR Reconstruction Supervisory Council era, these informal meetings were held for the Council members and the JNR reformist officers. The informal meetings between LDP's Mitsuzuka and the JNR reformists functioned as a headquarters where they developed specific tactics, based upon the assumption of JNR sectionalizing privatization. Their informal discussion included the suggestion that JNR * * Nakasone Yasuhiro, the Director-General of Administrative Management Agency, praised Seijima Ryuzo's activities to reach a consensus for the reform of the three public corporations. Asahi Shimbun. (August 3, 1982). 4 2 8 president Nlsugl be replaced and the Introduction of countermeasures to confront the JNR status-quo group's unjust personnel decisions for the reformist group. Throughout these informal meetings, the reformists were encouraged and supported.'* Beyond this level, informal meetings were also held between reformists (the public advisory councils) and their opposites (the JNR officers, JNR labor unions, and political parties). However, informal negotiations with the JNR top level status-quo officers did not proceed effectively, compared to those with reformers, because of their stiff opposition. Among the many informal meetings, the most important one was between the reform promoters and the LDP. The general mood of the LDP toward the JNR's systematic change had been negative. The PCAR as well as the JNR Reconstruction Supervisory Council could not help but be sensitive to the response of the LDP, which was the very party responsible for introducing bills. While preparing the investigation, the Council conducted frequent informal meetings with the LDP members concerned, such as Kato Mutsuki, Mitsuzuka Hiroshi, Hosoda Kichizo, and Okonogi Hikosaburo. A fortunate situation for the PCAR and the JNR Reconstruction Supervisory Council was brought about by the *•. Interview. 4 2 9 LDP unyuzoku. Because the unyuzoku Itself was divided between the two masters (Kato Mutsuki and Mitsuzuka Hiroshi), the unyuzoku could not act collectively. By this time, Mitsuzuka appeared determined to support reform. Thus, in the latter part of the JNR reform policy dispute, the reformist headquarters was mainly engaged in persuading, rather than being persuaded by, the opposing side. 3. 3. 5. Resolution In the 58th meeting, on April 28, 1982, the Fourth Subcommittee submitted a report on the JNR restructuring schedule that included the following information. First, the JNR Restructuring Supervisory Commission, as an equal to the PCAR, should be established within the government after declaration of a state of emergency in the Diet. Second, urgent measures, such as stopping new personnel recruitment, should be implemented immediately. Third, the present JNR should be transformed into sectionalized special companies by 1985 in order to prepare for its future privatization. Briefly speaking, this report confirmed the findings of the previous 10 provisions, which appeared in the Yomiuri Shimbun in February and the government officially endorsed in March. In the meantime, along with the media's active campaign, various actors tried to implement their own suggestions. The MOT also formed its own JNR reform plan: a 430 functional dual system. The reformist force as veil as the LDP opposed it, because they evaluated it as impractical. In this accelerated reform atmosphere, the basic contents of the Fourth Subcommittee's report vere confirmed publicly. However, several important points were left undecided, such as the proper timing for sectionalization, further plans for the reconstruction of Shinkansen, and the legal status of the JNR Restructuring Supervisory Council. In particular, the new council's status agenda brought about a tug-of-war among several interest sectors. The debate was about whether to set up the JNR Restructuring Supervisory Council as a ministerial status of the administrative commission following Article 3 of the Establishment Law of the Administrative Organization,** or * *. According to the National Government Organization Law (Law No. 120 of 1948, as amended) of the Constitution of Japan, the establishment of commissions or advisory bodies in the government can be differentiated into the following two legal characterisitics. One is based on Article 3. Commissions and Agencies would be set up as independent organs of an Office on the Ministerial Level of a ministry, provided that, in case of special necessity, a Commission or Agency, of which the head is a Minister of State, is provided for by law. The other type is rooted in Article 8. In addition to the internal Subdivisions provided for in the proceeding article, each administrative organ referred to in Article 3 may, in case of special necessity, establish by law Councils or Consultative Bodies (including all those bodies having functions of an advisory, investigatory, or similar nature, other than the commission provided for in Article 3), Experimental Laboratories, Research institutes. Educational Facilities, Medical Facilities, and other organizations, within the scope of its jurisdiction as provided for by law. See Tsuji Kiyoaki, ed., Public Administration in Japan. (Tokyo: University of Tokyo Press, 1984). 431 as an institution to replace the Management Council within the existing JNR Board of Directors, or as an ordinary advisory council following Article 8. 3.3.6. Controversy Out of the unyuzoku, bureaucrats, and the JNR, one group advocated setting up a new commission in the Article 3 position, and the other advocated its legal status to be that suggested by Article 8. Such fierce controversy was due to conflicting interests in who would take the initiative in the JNR reform process. Following their own plans, they also thwarted the reform headquarters' high ambitions for the realization of JNR privatization. The Article 8 council plan was supported by most former and incumbent bureaucrats, including Sumida Syoji (a former MOT Vice-Minister and a then-Fourth Subcommittee deputy). They worried about establishing it as the Article 3 committee, because it, with the endowment of strong authority, would make the existing intra-bureaucratic and inter-governmental relations complicated. Meanwhile, the MOT, as the supervising organ of the JNR, intended to get back its initiative in the JNR restructuring process. Thus, the MOT intended to establish the new organ as an ordinary advisory body. On the other hand, the JNR actually supported to neither of the above ideas. In fact, the JNR continued to 432 oppose any debate on the change of its management structure. However, the situation became such that the JNR had to show its preference on the legal status of the JNR Restructuring Supervisory Council. If Article 8 were chosen, the HOT would be able to control the new council, and thus increase its power. That was not what the JNR wanted to see. If the new council were established within the JNR as a type of Management Council, then the existing Board of Officers would become meaningless. The JNR was not satisfied with that option either. The remaining alternative for the JNR was, therefore, to give its assent to the Article 3 committee, and then to expect to send its representatives to the new organization in order to protect its interests. Even on the reformist side, there was conflict over the new organ's legal status. Some Fourth Subcommittee members embraced the Article 8 option. However, majority members, including Kato Hiroshi, Iwamura, and Yayama, backed an Article 3 committee, claiming that it would not be possible to realize the PCAR's recommendations if the new Council were under the HOT's control, because HOT had been unable to conduct previous recovery plans successfully. As a result, although the JNR and the Fourth Subcommittee had different reasons and considerations, they agreed on the Article 3 commission plan. Nevertheless, the confrontation among various interests brought the situation to a stalemate. A tentative break to 4 3 3 this deadlock came from a suggestion by Nishlmura Elichi. Unsatisfied with any increase of MOT's power, the JNR strongly supported for the establishment of the JNR Restructuring Supervisory Council as an authoritative administrative commission. For such a purpose, the JNR even approached senior politicians, including the powerful Tanaka faction (mokuyokai). Nishimura Eiichi as a former Dietmember was a senior of the Tanaka faction. He had experience in the pre-war Railways Department and the MOT's Electricity Bureau Chief in the post-war period. Even though he was not holding a seat in the Diet at that time, he still had influence on the government and bureaucracy about the JNR policy. In a meeting that was arranged to settle the confrontation, he suggested that the new organ be established following Article 3, while setting up the Management Council within the JNR. After this meeting, the Fourth Subcommittee and the JNR publicly revealed that they favored the Article 3 commission plan. Beyond this agenda, other controversial problems were the timing of the JNR sectionalization and the method of its transformation into special corporations. In the middle of April, the Fourth Subcommittee stated that it expected to change the JNR into new companies in 1985. This would be about 3 years after the PCAR's third report, which was supposed to be delivered in July. However, in an informal meeting with LDP's unyuzoku on May 1, the LDP opposed the 434 plan as unrealistic. In addition, the freeze plan on the Shinkansen reconstruction also emerged as a hot Issue. The LDP pushed to lessen the freeze plan to a kind of restraint plan. Accepting the LDP's opinion, the Fourth Subcommittee's final report, which was submitted to the PCAR on May 15, Included several alternatives to handle the Shinkansen reconstruction matter, and the Article 3 plan for the new council. After that, the scene of the JNR reform debate was shifted from the Fourth Subcommittee to the PCAR headquarters. 3.3.7. Dispute on the New Council's Status, Revisited General reactions from various sectors to the Fourth Subcommittee's report were unfavorable. Most of the LDP's unyuzoku strongly opposed It. Kato Mutsuki even questioned the roles and qualification of the PCAR, denouncing It as unconstitutional. The JNR status-quo group, which had a close relationship with Kato Mutsuki, also criticized the report, claiming that the sectionalizing privatization plan was too simply based on economic considerations. Most JNR labor unions disliked It, as well. They proclaimed that If the existing unified system were broken up and operated on only an efficiency standard, then the railways' as well as Its passengers' safety would be seriously threatened. The Transport Minister, Kosakato, was also not satisfied with the Fourth Subcommittee's decision to 435 establish the JNR Restructuring Supervisory Council as an authoritative administrative committee. He contended that it would hurt the existing hierarchical structure of government administrative organizations. For the same reason, most government officials did not want any change of the existing power distribution and were opposed to setting it up as a ministerial-level organ. AMA Director-General Nakasone raised the issue in a meeting with the Keidanren's Special Council for Administrative Reform. He indicated that the new council would be restricted in reality far below the expectations if it were to become a separate administrative committee. Therefore, he claimed that it would be politically safe to set it up as an ordinary advisory council. According to a former PCAR participant,* * Nakasone thought that, at worst, the MOT might not cooperate with the PCAR in the realization of the JNR restructuring if the new council were established as one with status equal to the ministerial level. If the new council were to be freely independent from the MOT, the HOT would worry about losing its influence. On the other hand, the Fourth Subcommittee worried that if the new council were set up as an ordinary council, left * *. On this matter, Nakasone informally kept in touch with "the Article 3 members, " the members of the Fourth Subcommittee who declared that the new organ had to be an administrative committee. He persuaded them to reconsider their claim, explaining the political situations the government and the LDP met with. 4 3 6 under the control of the JNR authorities and the MOT, It would not function effectively to fulfill the results of the PCAR's Investigation. The Fourth Subcommittee also remembered the First PCAR's failure 20 years ago because of the sudden leadership change from Ikea to Sato. The Subcommittee thought If the new council were set up at an ordinary level. It too might fall. Thus, In order to push the JNR reform forward, no matter when Prime Minister would resign, the Fourth Subcommittee claimed to establish the new organization with an authoritative status. The reformist headquarters tried to settle the controversy about this matter. It held a series of Informal meetings with the HOT, the HOF, the AHA, the Ministry of Labor, and the LDP's Administration and Finance Section (Chairman: Hashlmoto Ryutaroo) of the PARC. Throughout the PCAR's consulting process, Interest groups' opinions, political considerations, and bureaucratic claims had a heavy Influence. In the end. It was settled following the HOT's contention, an Article 8 status council. 3. 3.8. The Basic Report On July 30, the PCAR presented Its third report, titled "Basic Recommendations." It had decided to set up the JNR Restructuring Supervisory Commission as an Article 8 status council. Although the government promised to endow It with more power than other ordinary councils had, It was not a 437 ministerial level council. As a result, It was established In the Prime Minister's Office like ordinary advisory councils. Needless to say, most Fourth Subcommittee members expressed their displeasure with the PCAR's third report. Feeling betrayed by the PCAR headquarters, they complained that the PCAR did not respect their recommendations. However, the Fourth Subcommittee soon changed Its attitude and accepted the PCAR's report, understanding the political situation of those days. At the cost of their concession, the Fourth Subcommittee members asked the government to allow the new council to have authority comparable to that of an administrative committee. In spite of Its legal status as an ordinary advisory council. In an Informal meeting, Kato Hiroshi (the Fourth Subcommittee Chair) and Hashlmoto (Chairman of LDP's Administrative and Finance PARC) discussed the specific provisions of the establishment law of the JNR Restructuring Supervisory Council. On the same topic, Kato also met with Hayashl Jyunjl (the MOT's JNR Supervisory Department Chief and the new council's Preparatory Office Chief). With the help of such efforts, the JNR Restructuring Supervisory Council was legally permitted to ask relevant government authorities and the JNR president to submit necessary materials with appropriate explanations on certain 4 3 8 subjects, and to request their cooperation If needed (the second clause). At the same time, the government had to report Its opinion on the reform to the council. Indeed, the PCAR vas endowed with greater powers than the other ordinary advisory councils had. The Idea of JNR privatization was especially based on the PCAR's third report (Basic Recommendations). This report was fundamentally Important in the JNR reform process. It did not clarify a regional break-up Idea yet, but definitely confirmed privatization. However, the government and the ruling party hesitated to put the term "privatization" Into the legal documents, although they promised to respect the PCAR's recommendations. They worried that opposition would come from Socialist and Communist parties, and labor unions. If the term "break-up and privatization” appeared officially. Then the bill might not be passed In the Diet. For such political reasons, the government wanted to escape from direct expression of "privatization." Because the PCAR and the Fourth Subcommittee had no systematic political power, they could not but be persuaded by the government to agree to not directly mention sectionalizing privatization In the contents of the law. Instead, the final version Included such phrases as "to strive for the establishment of an effective type of management" when referring to the enterprise of the JNR 4 3 9 management. It vae of course possible to Interpret the word "an effective type of management* to mean a privatized type of management, but only in a roundabout way. On this matter, the conservative center coalition of the government's political concerns was too straightforward to be softened by public advisory councils, which lacked enough political decisional strength to push through their opinions. In consequence, the law, which was issued with the intention of the JNR break-up and privatization, ironically did not include any direct expression of the term because of the government's expectation of and preparation for having to defend possible attacks from the opposition. After the controversy was guelled. Prime Minister Suzuki, AMA Director-General Nakasone, and the government actively supported the swift passage** of the law that would establish the JNR Restructuring Supervisory Council in the Diet, and for the implementation of the JNR restructuring policy.* * **. On August 10, Prime Minister Suzuki announced that he would respect the PCAR's report as best as he could. Even 5 days earlier, Nakasone expressed his support for the recommendations of the PCAR In the meeting with all successive vice-ministers of the government. *'. Around that time, government officials explicitly and implicitly tried to influence on the debate between Article 3 and Article 8. The mass media harshly criticized any political involvement. The government had to calm down the media. Given this circumstance, the government authorities tended to exaggerate their strong support for the speedy establishment of the JNR Restructuring Supervisory Council. (Interview with a former journalist.) 440 On August 27, a preparatory office for the establishment of the JNR Restructuring Supervisory Council was set up. It consisted of 13 representatives from the MOT, the HOF, the Ministry of Labor, the Ministry of Welfare, and the AMA under Chairman Hagekawa (the Cabinet Investigating Office Chief) and Chief Officer Hayashi Jyunji (the HOT's JNR Supervisory Department chief, and the Vice-Minister of the MOT as of 1990). On September 24, the government declared "The Basic Plan of Administrative Reform," confirming that it would realize the JNR restructuring plan within 5 years. It was duly passed in the Diet. In this situation, the PCAR urged the government to reconsider the previously suggested 10 urgent provisions. Meanwhile, on the one hand, the MOT reacted favorably to the realization of the JNR reform once the status of the new commission became congenial to its taste. On the other hand, the JNR tried to accommodate this change. It tried to participate in the new council's preparatory office to get a chance to offer its opinion. 3.4. The JNR Restructuring Supervisory Council Period 3.4.1. Political Background Around that time, the political latitude changed. On October 12, 1982, Prime Minister Suzuki suddenly handed in his resignation. The Suzuki cabinet had begun two years 441 before to reform the administration, reconstruct the financial situation, and improve Japan's role in international community.** However, it met with difficulties both inside and outside the country. Internationally, economic friction increased with Western countries that criticized the Japanese export flood and requested Japanese market be opened. Domestically, his pledges, such as "Financial Restructuring Without Increasing Taxes," and "Removing the Deficit From the National Finance by 1984," would not be unaccomplished as planned. Partly because of such policy failures, public support for the Suzuki cabinet decreased.*" On November 24, 1982, about a month after Suzuki's expression of resignation, Nakasone was elected as the LDP's 11th president by an overwhelming majority, leaving * *. Succeeding Ohira Masayoshi, Suzuki Zenko was elected President of the LDP and Prime Minister in January 1980. In press conferences and policy speeches, he continually emphasized the rehabilitation of the nation's finances and Japan's responsibility in the international community. He staked his political career on administrative reform. At the same time, he promoted friendship with China, members of the Association of Southeast Asian Nations, the Mideast countries, and the United States, as a pivot. See Asahi Shimbun. (July 16-19, 1980); (January 27, 1981); and (March 17, 1981). *". On September 10, 1982, the Asahi Shimbun reported that popular support for the Suzuki Zenko Cabinet dropped to 26%, down 4% from June 1982. The non-support rate had risen from 46% to 52%, an unusually high rate for a cabinet. The public opinion poll indicated that Suzuki was unpopular for his economic policies, including an income tax reduction, his approach to the prolonged business slump, and the issue of defense spending. See Asahi Shimbun. (March 15, 1982; and September 10, 1982). 442 Hashlmoto, Abe, and Nakagava behind**. On the following day, he was automatically elected 71th Prime Minister. Because Nakasone had maintained his resolution for administrative reform since his stint as AHA Director-General, he expressed his opinion again In his policy speeches.*? He guaranteed that the government could definitely respect the PCAR's third report. Meanwhile, the Diet was too busy In dealing with the former Prime Minister Tanaka Kakuel's Lockheed scandal to take care of the JNR related laws. It was not until May 13, 1983 that the establishment law of the JNR Restructuring Supervisory Council was passed In the Diet. As expected. Communist and Socialist parties opposed the clauses, citing the need to respect the PCAR reports and the concept of "an effective management type." They supposed that If the PCAR's **. Nakasone Yasuhiro, Director-General of the AMA, won a landslide victory In the LDP presidential primary. He garnered 559,673 votes against the total of 411,561 votes collected by the other three candidates. Director General of the Economic Planning Agency, Komoto Toshlo, Minister of International Trade and Industry, Abe Shlntaro, and Director-General of the Science and Technology Agency, Nakagawa Ichiro. The two runners-up In the primary, Komoto and Abe, decided to withdraw from the presidential election to be carried out by all LDP members in both houses of the Diet on November 25. See Asahi Shimbun. (November 25, 1982). *?. Prime Minister Nakasone delivered policy speeches to both houses of the Diet In the 98th regular Diet session. Arguing that Japan was at a postwar turning point, he stressed the need for new diplomatic initiatives, with the U.S. to be given top priority, to Improve Japan's defense capabilities and for administrative reform. See Asahi Shimbun. (December 25, 1982). 443 reports. Including the Idea of sectionalizing privatization, vere respected, it would mean an automatic acceptance of any change in the existing management structure. However, in spite of the opposition parties' disagreement, on May 13, 1983, the law was safely passed by the majority of the LDP members in the Diet. On March 14, 1983, Doko Toshio, the head of the reformist headquarters, presented Prime Minister Nakasone Yasuhiro with a 212 page report compiled by the PCAR over the previous two years. The report recommended that the government restructure itself and balance the budget without effecting any major tax increases. On March IS, the commission disbanded. On March 18, the cabinet agreed to follow the commission's recommendations to set up the government-planned Extraordinary Administrative Reform Promotion Council. Doko Toshio, the honorary President of the Federation of Economic Organizations, agreed, on May 20, to head the new council which was expected to be inaugurated by June. Meanwhile, given the complicated political circumstances, legislative action on the other ^controversial topics had to be postponed until 1984. The Cabinet put the less controversial measures on the Diet's fall agenda. Because of the opposition's boycott of proceedings following the Tanaka verdict in mid-October, even those bills barely passed the Diet. In late November, Nakasone declared 444 dissolution of the Diet for the general election.* * 3.4.2. Inauguration of the New Council On June 10, 1983, the JNR Restructuring Supervisory Council launched Its activities; It was composed of Kato Hiroshi, Sumida Shyozl, Yoshlse Shlgeya and Sumlya Mlchlo, under the chairmanship of Kamel (President of the Osaka- based Sumitomo Electric Industries). Kamel was also a member of the Extraordinary Council for the Promotion of Administrative Reforms. Kamel was highly recommended to be the chairman by Nakasone's acquaintances. At first, Kamel refused to accept the proposal, but eventually did at the urging of friends such as Inayama (President of the Federation of Economic Organization) and Ootsukl (President of the Japanese Business Chamber)*'. Kamel hoped to Include persons with a great deal of knowledge and experience on the JNR matter In the council so that It would succeed. Consequently, Kato and Sumida, who had worked for the JNR reform since the Fourth Subcommittee era, were considered. At the same time, Sumlya was selected for his specialty in labor relations, and Yoshlse for his ' E. S. Krauss, "Japan In 1983: Altering the Status- Quo?" Aslan Survey. 24:1 (January 1984), pp.81-99. **. Interview with a former PCAR Executive Office staff. 4 4 5 bureaucratie experience in the MOF.** Even though public opinion favored any change in the JNR, it was unclear that their preference meant precisely privatization. With some exceptional reformist, such as Hayash, the MOT kept its functional division plan (a dual system of a managing company and a holding company under the existing public corporation structure) until it accepted the privatization plan on October 19, 1984. The LDP was also dominated by the inactive mood following the "Exit Theory," which was set up a year before according to the party line of the Mitsuzuka Subcommittee. The LDP, focusing on the decreasing work discipline, claimed that if labor-managemernt problems were solved, the present JNR public corporation system would be rehabilitated without privatization. Perceiving such persistent strong antagonism. Chairman Kamei mapped out a strategy for the Council's effective investigation. Although the Council was established based on the presupposition of JNR privatization (following the PCAR's third report), Kamei declared that the Council would to begin discussing its agenda with a clean slate. By doing so, he expected to lead step by step to the examination of specific policies without close and tough fighting with the opposition. In addition, Kamei realized that Yoshise and Sumiya Interview with a former JNR Restructuring Supervisory Council member. 4 4 6 were new to the JNR reform discussion, and thus they were not ready to deliver their opinions Immediately. He allowed them have time to consider the basic agenda for the JNR reform problem. By arranging frequent meetings, he Induced the members to speak out about what they thought best regardless of political considerations.*' Nevertheless, one obstacle consisted of the Internal conflict among the Council members on the timing of the Implementation of the breakup and privatization plan. Sumlya, as a specialist In labor relations, was amenable to the speedy Implementation of that plan because he looked cautiously at the future of the JNR laborers in the post- prlvatlzatlon period. Other Impediments were the unsolved confrontation with the JNR, as well as the LDP's lukewarm attitude. Even after Nlsugl, who was thought In favor of the JNR reform to privatization, was appointed as the new JNR president following Takagl, the discussion between the Council and the JNR moved no farther toward an agreement. Focusing on how to clear up the accumulated deficits, the JNR asserted that any management rationalization effort could not rehabilitate the JNR situation unless the long-term Indebtedness were cleaned up. Sustaining the Management Improvement Plan, the JNR *‘. Interview with a former JNR Restructuring Supervisory Council member. *•. Interviews with a former JNR Restructuring Supervisory Council member and a former PCAR member. 4 4 7 asked the government to provide enough subsidies to pay off them. Needless to say, the Council criticized the JNR's dependency on government financial support. Meeting with these difficulties, the JNR Restructuring Supervisory Council tried to cultivate communication with JNR reformist officers, such as Ide, Matsuda, and Kasai. 3.4.3. The Council's Reports On August 10, 1984, the Council delivered the Second Emergency Report, clarifying the points of the First Report of May 1964. The report specifically touched on the long term debt problem that had been raised as a hot Issue by the JNR as well as the LDP. The Council clarified Its position to separate the two problems, which were an effective management and a solution for the long-term indebtedness. It negated settling the debt problem under the existing system. However, It promised to handle a certain amount of JNR's liabilities by depending on taxation of the people. Besides these, the report also presented measures for surplus personnel and deficit local lines, as well as the sale of the JNR-owned land. In a cabinet meeting on August 14, the government endorsed the report, encouraging the Council to specifically Investigate necessary policies as soon as possible. After that, the Council went on to write the next report, examining In detail problematic points such as the 4 4 8 Shinkansen holding company, the break-up method of main and local lines, and the business provinces of the special companies. The Council held meetings quite frequently, about 5 times in September and 7 times in October, 1964. The Council worried that its discussion process would be impeded by the opposition, if its information were released. Therefore, it was careful to not leak its agendas to the media as well as to the public. 3.4.4. Dismissal of the JNR President Hisugi The JNR Restructuring Supervisory Council was troubled about preparing the final report. Without the corporation of the JNR, no matter how good its recommendations would be, the process of implementation would not be carried on smoothly. Indeed, at that time, the JNR mainstream distributed printed matter arguing about the demerits of the sectionalization plan in terms of fare, freight, labor- management relations, and finance. In order to discuss the specific matters more practically and technically, the Council consolidated its relationship with the JNR reformist officials. At the same time, the Council reminded the government that under the JNR's opposition, its final report, which was expected to be written by July, would be meaningless and impractical. The Prime Minister also noticed the JNR status-quo group's blockading of the Council's investigation process. 449 On February 6, 1985, in the House of Representative Budget Committee meeting. Prime Minister Nakasone urged the JNR officers, vho opposed the Council's reform plan, to resign immediately. To make the situation worse, there was a report that a company of JNR president Nisugi's relative unjustly received a construction order from the JNR. In order to show a resolution for reform, the government rigorously handled this matter. Clearly, because of these events, this was a moment of political drama. Shortly before the Council finished its final report, the JNR mainstream insisted that only a unified nationwide rail system could serve the public and the national interest. Prime Minister Nakasone thought such confrontation was an undesirable element in the realization of the JNR’s sectionalizing privatization. On June 1985, he fired JNR President Nisugi and Vice-President Nawada, and named a cooperative MOT's Administrative Vice-Minister, Sugiura Takaya, to the top post. In truth. Prime Minister's speedy disposal suited the request of the JNR Restructuring Supervisory Council. After this historic event, all key leadership positions in the JNR reform were occupied by those in favor of splitting the deficit-ridden JNR into private local companies.=' ** * . See Asahi Shimbun. (June 21, 1985). 450 3.4.5. Finis to the JNR In July 1985, a month after this purge, the Council presented its final report to the Prime Minister**. The restructuring of the JNR was based on this very influential report which, in a set of drastic suggestions, recommended that the JNR public corporation be broken up into 6 private companies* *. The Cabinet endorsed the recommendations, and announced that it would make efforts to implement them. The government began to draft implementing legislation based on the Council's report, and submitted more than 100 such bills to the Diet in 1986.** The Diet spent a long time discussing and arguing extensively the Council's proposals. Among those issues under debate, the Diet intensively focused on the following controversial issues: 1>. Cooperation of different companies after break-up; Could the JNR, which had run the national railroad since the latter part of the 19th century, be split into 6 regional companies of optimum scale and actually operate efficiently? Would the different companies be able to cooperate and mesh their systems? 2). Publicity after privatization; If the system were *♦. See Asahi Shimbun. (July 27, 1985) * * Kamitsuka Akihiro, "Reform of the Red-Ink Railroad,” Japan Quarterly. 33:1 *‘. See Asahi Shimbun. (September 29, 1986). 451 privatized, there would be a sudden emphasis on efficiency and profit, and the public service function the JNR assumed would be probably be abandoned. On the grounds that they are unprofitable, men of the local lines may be dismissed and cargo service may also be discontinued. What, if anything, had to be done about this elimination of service? 3). Settlement of the accumulated debt; The plan called for the public to pay off 16.7 trillion yen of the JNR debt, but government incompetence and inaction caused this deficit. Wasn't the government responsible, rather than the taxpayers? 4). Residual employees after privatization; What would happen to the 93,000 employees who were fired or retired? In Hokkaido, half the JNR employees would be laid off. With the economy in such a poor state, would there be work for so many people? On September 28, 1986, 8 bills related to the privatization of the JNR were passed despite the opposition of the Japan Socialist and Japan Communist Parties. Although general agreement was held among people on the need of reform, there were still strong opposing opinions on details. The stake were high for Prime Minister Nakasone, but one factor in his favor was the conservative mood of the 452 times.*7 Opinion polls continuously showed strong support for his administration. In short, from the beginning, the Nakasone administration had made administrative reform its watchword, and worked on revamping the JNR.** Nakasone had virtually crossed the Rubicon. Following the new law, the JNR was eventually split into 6 passenger railways and 1 freight company in April 1987, ending its 115 years as a state-run corporation. At the same time, the government established a committee to prepare for the privatization of the state-owned railway corporation under the chairman, Sato Eishiro, 74 (President of the powerful economic organization Keidanren)** . Additionally, on January 29, 1987, the government * For instance, the elections held on July 6, 1986 for both houses of the Diet (the House of Representatives and the House of Councillors) confirmed the general conservative mood of people. With 71.4% voter turnout, the ruling LDP scored a landslide victory, winning 300 seats in the 512-seat Lower House, the largest number the conservative party had ever won, and 72 seats in the Upper House. At stake in the Upper House were half of the 252 seats. Moreover, the crushing defeat in the July elections promoted the dissolution of the New Liberal Club. The conservative NLC was formed 10 years before with a call for purified politics. Six of the 7 Diet members of the NLC returned to the LDP. After that, the LDP's power became more consolidated. *" In hia policy speech at the opening of the 107th extraordinary Diet session, the Prime Minister expressed his determination to privatize the deficit-ridden JNR and boost the recession-hit domestic economy. See Asahi Shimbun. (September 12, 1980). **. See Asahi Shimbun. (September 30, 1986). 453 tentatively named Otsukl Bumpei, 83, as the chairman of the Ad Hoc Council for the Promotion of Admlnletrative Reform, which was expected to apply final touches to the general administrative reform that the Nakasone government had advocated**. 4. SYSTEMS OF LAWS RELATED TO THE JNR RESTRUCTURING 4.1. Setting Environment The creation of various legislation for the JNR restructuring was significant. The legislation framed the overall Institutional conditions for the Implementation of the JNR break-up and privatization plan, and other deregulations of railways. Main laws regarding the JNR reform consisted of the 8 Acts of the JNR Restructuring, the Railway Business Act, and the Application Act of the Restructuring Act. On November 28, 1986, the National Diet discussed and passed the legislation. Figure 5.2 outlines main laws and their contents. During the public corporation era, the JNR Act had been effective In controlling the JNR. The JNR Act defined the JNR'8 role as Improving the welfare of general public, equating the nation with the JNR. Similarly, the Railway Nationalization Act assumed railways as the property of See Asahi Shimbun. (January 31, 1987). 4 5 4 JNR Restructuring Law 1) Basic policies Concerning JNR Restructuring 2> Disposition of Liabilities of the Japan Railway Construction Public Corporation, etc. at the Time of JNR Restructuring 3) Takeover of JNR Business 4) Repeal of the Japanese National Railways Law, etc. Law Concerning Passenger Railway Companl and the Japan Freight Railway Company Shlnkansen Holding Corporation Law JNR Settlement Corporation Law Law Concerning the Promotion of Reemployment of the JNR Personnel Who Want to Leave the Surplus Personnel Who Belong to the JNR Settlement Corporation Railway Business Law Enforcement Law for the JNR Restructuring Law and Related Laws 1) Repeal and partial amendment of related laws consequent to the JNR Restructuring Law 2) Measures concerning enforcement of the JNR Restructuring Law a. Transient measures consequent to the succession of JNR rights and duties b. Transient measures consequent to the repeal of the JNR law and other laws c. Transient measures concerning the opening of business by the new companies Railway Business Operation Ferry Service Operation Bus Service Operation Other Subjects Figure 5.2.Outline of Laws Related to the JNR Restructuring. Source: Complied from the East JR Annual Report of 1989. 455 nation. In short, although the JNR was switched to a special corporation (tokushu hojln) established by the government In 1949, It was recognized In essence, as the government Itself or Its alter ego under the old system.*' In contrast, the transformation of the JNR following the new laws abolished this peculiar nature of the JNR. In other words, the fact of Its being a national railroad system was diminished by the new law. 4.2. Objectives and Basic Policies of the Law 4.2.1. Objectives The new legislation proposed to establish the framework for basic restructuring of the JNR organization to cope with the problems that the JNR, as a gigantic public corporation with nationwide centralized management, could not manage adequately. It provided new rules under which the JNR could perform as a major transporting company on a sound basis. Under the new law, the JNR became private and fractionalized on April 1, 1987.*" * ‘ . Yamaguchl Masahlro, Study of Transportation Laws and Application. (Tokyo: Kotsu Kyoryoku Kal, 1985), pp. 245- 248. *". Japan National Railways, Facts and Figures. (1986), pp. 50-51. 4 5 6 4 .2 .2 . Bmmic Policiea Based upon these objectives, the new legislation specified 9 areas of detailed policies concerning the JNR restructuring. The new form of administrations recommended by the JNR Restructuring Supervisory Council has the features seen in Figure 5.3. Japan National Railways Passenger Railway Companies L Shlnkansen Holding Corp. JNR Settlement Corporation Japan Freight Railway Company Railway Telecommunication Co Ltd. Railway Information Systems Co Ltd. Railway Technical Research Institute Figure 5.3. Outline of New JR Administrations. Source: Compiled from the JNR annual report (1986) 1) Division and privatization of the JNR. For the passenger railway operation, 6 passenger railway companies are to be established with each company managed independently. Each company has a proper size for Hokkaido Railway Company East Japan Railway Company -4 Kyu&liu Railway Cunipaii) [sitiaWAOM-ki] [ ï î a i * i a Central japan Railway Company Shikoku Railway Company Figure 5.4. Outline of Division of Railway Lines and Regions A Ul vj Source: Compiled from the JNR annual report (1986) 458 management and definite responsibilities, specializing in the roles of medium-distance transportation connecting major cities and urban area transportation in and around major and regional cities. The companies and their tentative names are (see Figure 5.4): Hokkaido Passenger Railway Company Eastern Japan Passenger Railway Company Tokai Passenger Railway Company Western Japan Passenger Railway Company Shikoku Passenger Railway Company Kyushu Passenger Railway Company. 2) Establishment of the Shinkansen Railway Holding Organization. The Shinkansen Railway Holding Organization is established to own the Shinkansen lines as a unit, and to lease them to the corresponding passenger railway companies. It intends to balance the financial basis of the companies, and equalizing the burden imposed on passengers who would be subject to different fare policies of these companies without this organization. 3) Separation and privatization of freight railway operation. For the freight railway operations of the JNR, the Japan Freight Railway Company is to be established with a proper financial system. It manages long-distance and high- volume nationwide freight transportation as a unit with definite responsibilities. 4) Transfer of ferry and other operations. 4 5 9 Ferry and bus services of the JNR are to be transferred to the passenger railway companies concerned. Operations related to telecommunications. Information management, and research and development are to be transferred to corporations designated by the MOT. 5) Establishment of funds for three Islands. For the purpose of establishing stable financial management of the three passenger companies located on Hokkaido, Kyushu, and Shikoku Islands, ald-funds are to be established. The total amount Is one trillion yen, and the capital cannot be liquidated without the approval of the MOT. 6) Transfer of the long-term liabilities of the JNR. Assets and liabilities of the JNR (Including those transferred from the Japan Railway Construction Corporation) are to be transferred to the successor companies such as the passenger companies. 7) Reorganization as the Settlement Corporation. The JNR Is to be reorganized as the Japanese National Railways Settlement Corporation at the time of the reform. It will retain all the assets and liabilities that are not transferred to successor companies (Including the Japan Railway Construction Corporation). The JNR Settlement Corporation Is to acquire and dispose of those assets and liabilities concerning the railway facilities of the Honshu- Shlkoku Bridge Authority, as well as to promote the re 4 6 0 employment of surplus personnel. 8) Assured and reliable reimbursement of liabilities of the JNR Settlement Corporation. The government is to establish a basic policy concerning reimbursement of the liabilities and payment of interest by the JNR Settlement Corporation on an assured and reliable basis, taking necessary actions such as partial financing, arbitrations, and other measures. 9) Special measures to promote the re-employment of surplus personnel. The government is to take special action to seek opportunities for re-employment for surplus personnel who will lose their jobs at the time of the JNR reform.*' 4. 3. Implications of Key Laws The essence of this plan for the JNR systematic change can be outlined below. The huge size of the present JNR organization was seen to be beyond the possible scope of control. The JNR's management system was likely to lead to uniform operation through the nation, regardless of the actual transportation needs, the wage levels, and the economic conditions at local areas. Therefore, the reformist government considered dividing the JNR into several **. Japan National Railways, Facts and Figure. (1986), pp.51-53. 461 privatized regional companies (see Figure 5.4). Under the new system, government regulations should be minimized to the extent that private railway companies are regulated. At the same time, the range of business activities has to be left to the direction of each company. However, principal payments to the remaining liabilities should be covered by the government through a liquidation company. At the first stage, the stocks of the divided companies will be held by the government, specifically by the MOF. However, later on these can be opened to the public to pay principal liabilities and Interest when the situation becomes suitable to do so. 4.3.1. The JNR Restructuring Law The 6 Acts of the JNR Restructuring define the terms of break-up and privatization of the JNR, providing deregulation of the entire railroad system Including private railways.** Among the 8 Acts, the JNR Restructuring Act (the 89th Law) forms the basis of the JNR reform toward break-up and privatization, and mandates the realization of the JNR restructuring. The law alms at accomplishing the following purpose: **. See Imashlro Mltsuhlde, "Restructuring of JNR and Its Problems," (1989). 462 Railroad and related operations of the JNR are out of control. The current unified national management system under a public corporation Is no longer able to ensure the appropriate and healthy operation of the business. Thus, It Is vital to establish a new management system capable of responding to the need in the area of transportation. An urgent requisite for the JNR is to contribute to stabilizing the life and economy of the people. Under a new management system, the JNR will be able to effectively fulfill the role of the basic means of transportation In Japan. Upon such understanding, the new law defines sweeping restructuring of the JNR's present management structure toward a more effective one that can respond to the needs of the country (the first clause). Another notable act among the 6 Acts Is the Application Act of the JNR Restructuring Act (the 93rd Law). These new acts replaced the previous laws, Including the JNR Act, the Railway Construction Act and the JNR Fare Act. The new laws not only denied the notion that railroads belonged to the government, but also the government's responsibility for the construction of new networks. (In fact, the budget for the local line construction was already frozen, following the Railroad Construction Act of 1980.) Under the old law, the JNR had to obtain the approval of the MOT for fare Increases. At any given time, there was a certain gap between their proposals for the fares. In December 1977, the revised JNR Fare Act relaxed somewhat the fare decision process to the extent that for the time being, the JNR Initiated fare prices at Its own discretion. Under the new law, the fare decision procedure was completely free from the legislature's approval. 4 6 3 4 . 3 .2 . The Railway Buainea# Law The new legislation also forms the Railway Business Law to govern both the former JNR and the private railways. This lav repeals the Local Railway Act, which governs private railways only. By legally separating the track cost, which is part of the infrastructure, and operation, this law expands the possibility of business.'" The Railroad Business Act also drastically simplifies the rules of the Local Railroad Act. Only submission or confirmation become enough to conduct railway-related business, which required approval in procedures before. Under the establishment of the Plan Manager system, not only the government or the JR companies, but also other qualified business actors are able to assume responsibility or do inspections. In the new composition of laws, railways are basically governed by the Railway Marketing Act (Tetsudo Eigyo Hou) and the Railroad Business Act. In short, the new system of laws is based on a market oriented perspective in operating railways. Thus, publicity The Railway Business Act defines those who do business with railways constructed or owned by themselves, as a first-class entity; those who do business with railways owned by a third party, as the second-class; and those who construct railways with the purpose of selling them or providing the right of their proprietary use as the third- class. Thus, the new law classifies most railways of the past as first-class entities; Japan Freight Railroad, which is a spin-off from the JNR by the sectionalizing privatization, as a second-class entity; and Railroad Construction Corporation and Bridge Construction Corporation as third-class entities. See Imashiro Mitsuhide, "Restructuring the JNR and Its Problems," (Tokyo: Institute of Business Research, Daito Bunka University, Research Paper No. 5, 1989), p. 2. 464 Is no longer emphasized. Given the above legislation, JNR division and privatization were scheduled for April 1, 1987. As planned, the JNR's management was transformed into private hands, closing its centennial history as a state-sponsored firm. 5. REMAINING PROBLEMS AND THE FUTURE OF THE POLICY*• 5.1. Prospectus of the New JR System In the JNR privatization case, the ownership has not changed yet. Although the new JR companies will become complete private companies when their shares are offered to the public, they are government companies for the time being. All the shares of new railway companies have been owned by the JNR Settlement Corporation. As the proxy of the government, the JNR Settlement Corporation is assigned as a temporary shareholder. It also carries a total of 14.5 trillion yen in debt, a carry-over from the parent company. In the future, the government promises that the shares will be sold on the open market when the shares meet the listing requirement. **. This section consulted materials provided by the new JR companies and the National Railways Restructuring Promotion Department of the HOT. It is also based upon Imashiro Mitsuhide, "Restructuring of JNR and Its Problems," (1988); and Okano Yukihide, "The Privatization of the Japanese National Railways: The Early Experience," (1989). 4 6 5 The JNR Settlement Corporation substituted the old principals, including the National Diet and the HOT. It came to be the principal that operates the agents, the new JR companies. Under the old public corporation system, political intervention, due to the principals' power and stringent regulations, confined the scope of discretion of JNR management. Under the pre-privatization scheme, the National Diet acted to interfere in the decision-making of the JNR management. The National Diet decided the aims, the scope, and the requirements of the JNR management depending on the JNR Laws and the JNR Fares Law. At the same time, as with other ministries, the HOT acted as an agent on behalf of the legislative body. The MOT not only executed the laws but also carried out administrative guidance more or less beyond the laws. In this sense, the HOT legally acted as the principal supervising the JNR, and the JNR became the agent being administered.'? Such complexity shows the extent of political intervention and regulations the JNR experienced. The JNR privatization policy changed the old principal- agent relation. The privatized JR companies were freed from political intervention. Restrictions are relaxed because regulation and control of the public enterprises are subject to the same law as are the existing private railways despite some additional provisions on the JR companies. This change A principal-agent perspective was applied to the analysis of the JNR privatization process in an interesting way by Okano Yukihide. See ibid. 4 6 6 relaxed external forces' control on the JR companies in the post-privatization era. It also brought in the change of internal prime concern of the JR companies. Under the public corporation system, because profit, if any, was absorbed into the National Treasury, the JNR as a public firm had no incentives to increase efficiency and profit. Instead, the JNR increased expenditures to reduce profit to the minimum required by the government. The set of business strategies that were actually available to the JNR was a subset of strategies permitted by the law and the government regulation. The JNR management was always afraid of being prevented by the government or politics from adopting some sort of strategies. Accordingly, regulation of public corporation system made both management and laborers unwilling to work hard. Needless to say, privatization had a great impact on the management. The JR after privatization became eager to maximize profit without damaging public interests. First of all, in a privatized enterprise, deregulation extends the possible set of its business strategies. Additionally, market competition stimulates the efforts to increase revenue and motivates the management to remove inefficiency. In truth, this change reflects the new administrative philosophy of the second PCAR. The reform headquarters' new line of thought did not depend on the bureaucracy-dominant ideology or the catch-all perspective of the positive 467 government. It offered Instead a formula for privatization and deregulation. This privatization formula Included such means as the termination of various administrative services, the lowering of their benefits, the curtailment of certification and approval requirements, and putting public enterprises In private hands. In order to broaden the realm subject 'to market forces, stricter enforcement of "the beneficiary pays principle" Is put forward. In other words, with this new administrative Xdea, the reformists hoped to encourage competition, and to enhance Individual responsibility of the new JR companies. 5.2. Beyond the Reform's Reach: Unsolved Problems 5.2.1. Regional Disparity The overall assessment of the JNR reform has been positive; the new privatized railways companies made a good start In business. Nevertheless, several problems are left unsolved even after the Implementation of the JNR privatization policy. The first Is the regional disparity In the management of the 6 passenger companies. In Japan, transportation demand differs from one region to another quite drastically. The railways of the mainland have quite a big market. If we consider only the railways In the mainland, the Japanese railway business faces a much more favorable market In 468 comparison with European railways. In 1984, the railways In Japan carried more than three times as much as did French railways and more than five times as much as British railways did In terms of passengers per kilometer.* * This was the main reason why the advocates of a free market supported the JNR'a privatization. According to them, the current Japan railway market condition has been good enough for the privatized JR to become competitive. However, the railroad operations In the 3 Islands are In markets that have extreme difficulty In turning out profits. For fiscal 1987, 3 Islands companies were expected to show an operating loss, compared to the 3 JR's Honshu Island, which was expected to make a sizable profit.** In order to help the railroad operation of the 3 Islands, the * * Japan National Railways, Facts and Figures (1985). **. In the middle of the 1980s, most private railroads recorded about a 20 billion yen operating profit. The new JR companies, Tokal JR (Central JR) and Nlshl-Nlppon JR (West JR), also turned out profits for fiscal 1987. In particular, Hlgashl-Nlppon JR (East JR) made twice as much profit, amounting to 248 billion yen. In terms of size, Hlgashl- Nlppon JR Is the largest, with operating revenue In the first year projected at 1472.2 billion yen. The amount represented twice the revenue of Takaldo JR or Nlshl-Nlppon JR. Compared to other corporations, Hlgashl-Nlppon JR's projected revenue for fiscal 1987 was lower than Shin Nippon Seltetsu (New Nippon Steel)'s 2,200 billion yen, but was close to Mitsubishi Heavy Industry's 1,600 billion yen. It was considerably larger than Japan Air Line's 870 billion yen. In terms of assets. It was about the same as the Shin Nippon Seltetsu'8 3,560 billion yen for fiscal 1985. However, the three Island Companies had only 2% to 8% of the amount of Hlgashl-Nlppon JR's revenue for fiscal 1987. The above figures are based on the materials provided by the Hlgashl-Nlppon JR, Takaldo JR, and Nlshl-Nlppon JR. 469 Three Islands Companies Fund vas designed with the fund's Investment profit. Local railways would be maintained with profits of main-line railways after some of them were converted to bus service. Those local lines, which escaped being abolished because of politicians' support, have to be financed by other sources of Income. This plan was based on the Idea that the establishment of a fund would be advantageous to a subsidy. On a net basis, the 3 Islands companies would break even with the support from the fund. Basically, the fund Is nothing more than consolation money, and might not be enough no matter how much it Increased. However, although the 3 Islands companies were unprofitable, they would no longer assume long-term liability, because there would be no more liability under the new system. At the same time, another measure was set up as well to offset the regional discrepancy. The Shlnkansen leasing system, aimed at merging the whole Shlnkansen system, was to be transferred to an Independent special corporation from which all JR companies were going to lease Shlnkansen. The losses of unprofitable JR lines, such as Tohoku or Joetsu, could be compensated with the cash flow of profitable Tokaldo Shlnkansen. Because of the fluctuating demand of transportation In Japan from region to region, Tokaldo Is definitely the busiest route, whereas other lines have completely different demands. Specifically, whereas the 470 Tokaldo and Sanyo Shlnkansen had carried 35,200,000 passengers per kilometer In fiscal 1984, Joetsu Shlnkansen had carried only about one-fifth of that number of passengers. Even within the same line, Sanln-Honsen carried a mere 1/15 of Takasaklsen's passengers. Certainly such the differential market conditions result In different profitability of railways. However, whether offsetting the regional discrepancy In such a manner as using the Three Islands Companies Funds and the Shinkansen Leasing Company Is good or not remains to be seen. The functional effectiveness of this Internal subsidy system needs to have a more precise examination before evaluating It. In particular, because the construction of Selbl Shlnkansen (Shlnkansen reconstruction) has been getting political support, the function of the Shlnkansen leasing system may cause a future controversy. ^ * 5.2.2. Settlement of Liability The second problem left on the shoulder of the new JR system Is relating to money, 1.e., liability. The JNR left over 37.3 trillion yen, of which 25.9 trillion yen was transferred to the JNR Settlement Corporation (see Figure 5.5). For effective debt management, the corporation planned ^ *. Imashiro Mitsuhide, "Restructuring of JNR and Its Problems," (1988). For more details of the Shlnkansen Issue as a cause of political controversy, see Asahi Shimbun Kokutetsu Mondai Chosahan, Kokutetsu Kaikaku; Kosha Kara Mlnel e (1982), pp. 42-49. 471 to repay the debts by selling succeeded properties which were not used for the JNR railway operation and the shares of the new companies. However, even when the recent rise in land prices is taken into account, the JNR Settlement Corporation would not be able to repay all debts. The only possible way to sweep away it might be with tax revenue from the people. Total Long-term Liabilities: 37.3 (trillion yen) — JNR long-term bond: 25.4 Liabilities of the Railway Construction Corporation: 4.6 Pension obligation: 4.9 Fund for Passenger Railway Companies in the islands: 0.9 Cost of measures for surplus personnel: 0.9 Liabilities from Honshu-Shikoku - Bridge Authority: 0.6 Who Accounts How Much?: 37.3 JNR Settlement Corporation: 25.9 Shinkansen Railway Holding Company: 5.7 ENew JR Companies: 5.7 Who Pays Back?: 37. 3 — People's Burden: 16.7 Income from sale of Real Estate: 5.8 Income from sale of Stock: 0.6 Lease payments for Shinkansen: 8.5 — Operating Profit: 5.7 Figure 5.5. The JNR's Long-Term Liabilities end Their Disposition. Source: Compiled from the JNR Annual Report of 1986. 472 Nonetheless, it has not been decided yet how to levy taxes on the people. Therefore, the argument of how to deal with liability remains to be discussed in depth. 5. 2. 3. Handling Excessive Personnel Finally, the JNR restructuring process met the most significant issue, how to handle excess workers. In part, the JNR privatization was motivated by the need to improve deteriorated labor-management relations and to resolve the problem of too many workers, which resulted from rationalization and technical renovation. It was often reported that several trade unions within the JNR struggled for power. On the one hand, such infighting In the labor unions occupied the workers' attention and led them to disregard the people's need for service. It worsened Industrial relations. Because of the vicious circle of labor-management relations and strike- oriented labor unions, the reform-minded conservative government stuck to splitting up the JNR Into 6 regional passenger companies and 1 freight company. Indeed, the power of the largest and most militant union, the Kokuro, was dramatically reduced after the new policy was Implemented. This result coincided with the resolve of the conservative camp to block any increase of socialist backers. The government expected to reduce total employees from 277,020, as of April 1, 1986, to 200,650, when the new 473 companies started on April 1, 1987. Among the remaining 76,370, who were not reemployed by the new JR companies, voluntarily retiring employees numbered about 52,710. Finally, about 23,660 surplus personnel were transferred to the JNR Settlement Corporation The problem is how to deal with this group of workers. Even after various measures were taken for tackling the surplus labor problem, 1047 personnel had to be discharged on April 1, 1990. The management of the JNR Settlement Corporation said that they were those who rejected job offers and persistently requested to be re-employed only in the JR companies. The new JR companies considered this request nonsense. Labor unions, particularly the Kokuro, proclaimed that the personnel liquidating decision was dominated by the ongoing anti-Kokuro ideas of the new JR authority. According to them, the dismissal of laborers was no more than an example of the continuance of the "strategy to tear Kokuro into pieces." No matter what it may be, the dislocated laborers became quite miserable economically as well as psychologically in Japan, where the lifetime employment system has been generally respected. 4 7 4 JNR employees at the beginning of fiscal 1986: 277,020 No. taken over by new JR companies: 200,650 No. retired by the need of fiscal 1986: 52,710 — No. of voluntary retirement: 39,090 — Employed by affiliated companies: 10,450 Employed by private companies: 12,400 — Employed In own business: 16,240 No. of employed by public organizations: 7,320 No. of others: 6,300 -No. transferred to the JNR Settlement Corporation: (As of April 1, 1987); 23,660 — No. required for the business of JNR Settlement Corporation: 2,507 — No. of active service on condition of retirement In near future: 2,276 No. finding new employment and to begin working soon: 11,249 -No. who have not yet found new employment: 7,628 - No. retired by March 31 1990: 6,581 No. who found new employment by March 31, 1990: 5,737 No. who have not yet found new employment by April 1, 1990: 844 No. who have discharged on April 1, 1990: 1,047 Figure 5.6. Reemployment of the JNR Employees and the Number of the JNR Settlement Corporation Employees. Source: Compiled with materials provided by the MOT. 4 7 5 6. CONCLUSION The above analysis of the JNR reform policy-making is be summarized in Table 5.2. Table 5.2. Summary Phases of the JNR Restructuring Policy Process. Phases of Stage I Stage II Stage III Change Year -1981 1981-1983 1983- Subject Government, PCAR JNR Restructuring the JNR Supervisory Commission Focus Identify Problems Dealing with Dealing with Context Contents of Problems of Problems Direction Problem Major Change of Review & Changes the System Minor Within itself Changes the System Solutions Restructuring for Deficits of the System; and Labor Transforming Management Management Type Relations Character Status- Transitional Drastic istic quo Increasing recognition of the issue stake Manner of Proceeding Timing becomes pertinent. 476 First of all, the focus of problem recognition shifted throughout the process from identifying and dealing vith the contents of problem to touching on the context of the problem. Accordingly, the ways of problem handling also changed distinctively, from reviewing and contriving minor changes to conducting major changes within the system, and further, to restructuring the system itself. Therefore, the movement was characterized, first, as status-quo, then as transitional, and finally as drastic. The debate process gradually focused on the structural reform as inevitable, as participants started to realize the issue at stake, which was calculated by the impact of the policy considered. Their increasing issue recognition led the process to a final decision. Second, the general discussion process also went along with the shift of the initiative force. Before the government conducted an administrative reform, JHR recovery plans were set up mainly by the JNR management and its supervising agency, the HOT. Their plans were based on changes within the existing management structure. After the FCAR launched its business, the reformist force, which based its power on the conservative center coalition of the government, extended its influence. Obviously, conflicts occurred between the status-quo and reformist groups because of their policy distance. In the end, the JHR reform policy making was eventually settled down with the conservative 477 reformist coalition's wish for a revolutionary change. Third, the JNR sectlonallzlng privatization policy making process was not simply a decision relative to the transportation policy arena. The structure and process of the JNR restructuring policy-making had general Implications for Japanese politics and society. Indeed, the process revealed Implications for coalltlonal patterns of the politicized actors' Interrelationships, shoving various participants' needs and the organizations voicing them as veil. Thus, It could be related to a broader question: hov a political system catered to the multiple Interests that competed against each other on the policy Involved. This point vlll be dealt vlth again In the conclusion. CHAPTER VI CONCLUSION Although composing only 3 per cent of the world's population, Japan has become one of the super powers of the world. It is well recognized that Japan now controls over 10 per cent of the world's output of goods and services. In becoming a major economic power, Japan has apparently met great change both at home and abroad since the end of 1970s. Former Prime Minister Suzuki Zenko has pointed out that Japan, having achieved economic strength, must conduct the reform of its public administration and politics in an way independent of any foreign models. In the same vein, his successor, Nakasone Yasuhiro, stood for the slogan of "Sengo Seiji no Sokeesan” (A General Settlement of Accounts in Post-War Politics) to take further steps for reform. According to his theme, the post-war reforms included the changes of the 1947 Constitution and the political and administrative systems, as well as the maintenance of a strictly defensive military posture. He asserted that these things had to be revised because they depended upon Western thought and concepts and had been imposed upon Japan by the Occupation Authority. 478 4 7 9 Indeed, Nakasone was fond of saying that his overall program settled accounts with the post-war period. Along with this reform policy, the JNR restructuring plan intended to settle accounts with the old JNR public corporation system, which arose from foreign influence after the war. Certainly, a rehabilitated and denationalized railroad system was the centerpiece of the Nakasone Cabinet's administrative reforms. It would also be a crowning accomplishment for his political career. This study has strived to understand the JNR reform policy-making structure and process and policy outputs. It is based on the view that policy change occurs following a series of short, creative intervals and tranquility. Over the past decade or so, information regarding the details of both Japanese politics and Japanese policy formulation has accumulated rapidly. However, few systematic efforts have been made to clarify the dynamic relationship between Japanese politics and policy-making. In addition, the fact that politics in Japan actually drives the policy process has not yet been persuasively explained. Considering this limitation, this study have suggested that the two are related, and that policy studies may be an important vehicle for understanding Japanese politics. Variations in the process and structure of political systems are the ultimate result of the policy responsiveness of that system to the demands of its members and clients. Likewise, 4 8 0 policy change is the basis for the broader phenomenon of political change. Based upon the analyses undertaken in previous chapters, this chapter makes several concluding remarks and relates them to the conceptual framework set up in Chapter I. The conceptual framework focuses on the importance of two factors: the environment (the institutional arrangement and overall organizational atmosphere), and the policy-making process, in which various actors participated in an issue arena. In order to understand the unusual priorities of Japanese public policy, this study has considered non static, structural perspectives and tried to explain the policy change by dividing the JNR reform process into several time frames. For some periods, such as the early 1960s and early 1970s, the macroeconomic orientation of Japan was significantly biased toward expansion, and the government policy was similar to that of the European Left. By contrast, even with low inflation and rising unemployment, the mid-1950s and the mid-1980s determined that retrenchment was the order of the day. In the case of Japan, these complex policy nuances cannot be explained by a change of administrative ideological characteristics, such as a swing from left- to right- oriented administrations because there have been no such transitions since late 1948. This is the 481 reason why Japanese policy profiles often defy the conventional knowledge of Japanese political analysis as well as standard comparative paradigms. First of all, the JNR break-up and privatization was designed under the general scheme of administrative financial reform, which followed the worldwide conservative trend In the 1980s (see Table 6.1). As seen In Table 6.1, the way the Japanese government perceived the problems It met In the 1980s reflected the changes of the International and domestic environments toward conservatism. This conservative political mood of those days definitely brought about the administrative reform as well as the JNR reconstruction, rejuvenating private vitality for the set-up of a small (or at least medium-sized) government. In order to effectively cope with the changing atmosphere, the government proposed restructuring the existing political system with the help of extra Institutions, such as commissions and councils. Along along such a movement, the ruling conservative camp made political strategies for the Japanese government administrative reform. During the time between 1982 and 1987 under Prime Minister Nakasone, the conservative center coalition of the government succeeded In re-establishing Its basis of support, depending on the long-time ruling party and the effective bureaucratic tradition. More Important, the business society strongly supported the retrenchment 482 Table 6.1. The Overall Scheme of The Administrative- Financial Reform and the Japan National Railways Restructuring In the 1980s. Administrative-Financial Reform Purposes Promoters Long- Structural transformation of political Nakasone, term system; Consciousness Reform; Private PCAR, sector leading society; Realization of Business medlum-slze government; Consolidating community, Japan's role In the International Doko, and community; and Maintenance of liberal Sejlma. trade system. Mid- Escape from defIclt-bonds financing Suzuki, term national budget; New Idea of welfare MOF, policies emphasizing self-reliance; Various Retrenchment of government subsidies; business Solutions for the 3 K s ' deficit; entitles, and Privatization of public corporations; Subcommittees Administrative effectiveness; and of PCAR. Reducing the central government's authorization and licensing functions. Short- Zero-celling national budget; MOF, term Holdback of tax Increase; and Keldanren, Control of public enterprises. and Nlssho. JNR Reconstruction Purposes Methods Actors Change of consciousness Privatization ; Prime Minister (Getting out of "Oyakata Regional division; PCAR, Business hlnomaru” spirit); Finan and Work force society, MOF, cial rehabilitation; control. MOT, JNR, LDP, Management effectiveness; Opposition and Rationalization of parties. personnel system. Labor unions, and the Media. 483 policy of public organizations. Thus, In an effort to create effective Institutional arrangement for reform, the government used a tactics to bring Into play "the third force," the PCAR. In doing so. It Intended to consolidate Its conservative power stance. Second, Japanese politics, as do others, operate largely through Institutionalized networks of players engaged in special reciprocal relationships (I.e., obligation and compensation) with the dominant power, such as the government and the ruling party. The ruling conservative public authority ever extend what Calder calls "circles of compensation,"* which consist of Its political allies. On behalf of consistent political support, the government provides benefits to them, not universally to all the people of Japan. The political system, particularly the ruling party, has been under constant pressure from the demands of voters. Under a condition of economic affluence, the LDP could effectively fulfill Its catch-all efforts for the Interest coordination of persistent constituency-level pressure. Such aspects of pressure group politics, particularly revolving around the ruling party, were seen clearly throughout the 1970s. With the economic stagnation, the conservative camp has faced a serious challenge. In Japan, the ruling coalition ‘. Kent Calder, Circle and Compensation; Public Policy and Political Stability In Japan. 1949-1986 (1988). 4 8 4 depends on diverse social interests, and the bureaucracy has been highly active in managing social interests. Thus, the government was hard-pressed to prioritize overall goals and to decide which groups should receive or lose benefits. It could barely continue its "so-fai— effective pattern of parapolitical nexus.In truth, the government did not want to undermine the ruling coalition under any circumstance. In such an atmosphere, the government launched a political solution with a total-scale-control approach to deal with the problems it had in the 1960s. This method was intended to bring about new distributive rule of political resources. It had a uniform guideline under which all had to be sacrifice a little. According to Murakami, this approach relegates to the ministerial level the decisions on restraining expenditures by prioritizing government activities.' However, even this equal-denying approach also inevitably caused some groups to keep their interests, and others to lose their. In such a way, the reform efforts encountered various established interest sectors during the reform period. In the meantime, because the total-scale approach planned to cut the size of budget, salaries, subsidies, and '. Murakami Yasusuke, "Japanese Model of Political Economy," in Yamamura Kozo and Yasuba Yasukichi, eds., Political Economy of Japan; Domestic Transformation (Vol.l) (1987), p. 70. '. Muramatsu Michio, "Administrative Reform in a Pluralist System," Japan Echo. 10:3 (Autumn 1983). 485 staffs of government and quasi-government organs, the JNR, a financially ill gigantic public corporation, was targeted more by the reformist force than were other agendas. In fact, the JNR was always a political tool during its 100- year existence, causing confrontation among politicians. Such conflicts sometimes reached political crises. When the PCAR introduced a set of reform concepts for the JNR problem, a situation arose where various groups with different political interests expressed their own opinions. Even within the ruling conservative camp, different positions revealed different thoughts. The so-called "Hosoda plan," "Murata plan," "Tamura plan,” "Mitsuzuka Subcommittee's plan," the "Transportation Ministry's plan," and the "PCAR's plan" all displayed the existence of plurality among participants concerned with the JNR reform. The conflicts might have been caused by a stiff factional strife among various LDP factions or intra-bureaucratic fighting. The situation got fierce when the opposition camp (the JSP, the JCP, and JNR labor unions) became involved in this battle by stating their reform ideas. Consequently, the JNR reform policy discussion and formation processes showed a high degree of politicization with the involvement of multiple participants. In defining the characteristics of policy-making, the term "politicization" refers to the degree of political sensitivity and controversiality of a certain issue. 486 Regarding the JNR reform, participants knew that alternative outcomes could have substantial impacts on the politics and the government system. Because the issue at stake was important, it became controversial. believing that the JNR reform agenda was significant, a variety of participants, both within and outside the government, developed intertwining relationships (coalition or confrontation), presenting complicated modes of interaction (see Figure 6.1). Sufficient decision time was available for some of them to build up and to mobilize public opinion with the help of the media. 1981, 1983...... 1985. 1986 Prime Minister JNR 1 Reformers, LDP LDP PCAR i- Tetsuro, Mitsuzuka, + unyuzoku, I I MOF. MOT, JSP. Business I Doro. society Mass media. Public opinion JNR Status-quo group, Kokuro, and JCP Figure 6.1. The Modes of Actors' Interaction and Their Shift during the JNR Reform Dispute. 487 Throughout this period, the business community enjoyed a privileged position in defining and implementing the JNR reform policy. In contrast, the strength of the state bureaucracy differed from time to time. In fact, the roles and significance of bureaucratic experts were relatively weakened and decreased in the process. However, even an entrenched bureaucracy remains impressively influential. In the political parties, particularly the LDP, opinion coalesced around the top officers, the political factions, the back benchers, and zoku politicians as well. Various opposing views were also expressed by the opposition side, including the JNR labor unions, the JSP, and the JCP. Meanwhile, the crystallizing of opinion in the ruling party level clearly demonstrated the presence of factional politics. Factional infighting and extra governmental pressure added sources of conflict to the politics of the JNR reform dispute. Indeed, because of the political nature of issue, the activities of zoku Diet members were more highly visible in the process discussed than were any other actors. However, a notable point is that the unyuzoku, in the case of JNR reform dispute, should not be treated as a single united force. Their influence and interrelationships are difficult to understand. Because of their lack of unity, the degree of politicization in regard to the agenda increased. 4 8 8 Nevertheless, the general tendency during the 1980b was continuously rising political stability, which reinforced the strength of the conservative camp. Given this favorable atmosphere, key members of the government, the ruling party, the business community, and the media tended to advocate the transformation of the JNR. In addition, the government even went so far as to set up a new institutional scheme (the PCAR scheme); that, it expected, would quickly lead to a final decision. The public advisory bodies generally fulfilled this anticipation throughout the JNR privatization process. From the findings of this study, it is possible to re examine many existing generalizations about Japanese policy making. First, factionalism is allegedly inevitable in Japan generally, as well as in the particular case discussed. However, what had more impact on the JNR reform process was zoku politicians. Nevertheless, one should not treat the informal group of unyuzoku as a united group. Regarding the JNR case, two leading unyuzoku visibly competed with each other. Because of the lack of unity of unyuzoku, the pattern of their activities for the JNR reform hardly fits the conventional understanding of zoku: an emerging counter force to the bureaucracy or a rising influential group alleviating factional importance. According to the findings of this study, it is more appropriate to examine their roles and approaches according to issues or the policy arena. 489 Second, the JNR reform dispute developed in various ways: quasi-public bargaining structures in the interplay of ministries, interest groups including labor unions, and the government represented by the PCAR. The debate process contained wide differences of opinion and continuous changes of political cleavage. This interest groups' pressure makes it hard to assume that policy-making in Japan involves largely harmonious interactions between the government and society. Without any doubt, these diversifying trends are well explained by pluralist models of Japanese political decision. This perspective contributes to proving that Japan, particularly in the early and mid-1970s, was pluralist at the level of basic political representation. Indeed, the process of the JNR dispute also shows multiple interests' interaction, supporting a pluralist argument. Third, however, the progress towards pluralism In Japan has met obstacles partly because of limited resources since the end of 1970s. The government thought that the existing patterns of politics were inappropriate to break this deadlock of the times. The prevailing methods were utilizing legislative functions or appealing the ruling party's catch-all effect. Realizing that those methods could not be effective anymore under the atmosphere of 1980s Japan in particular, the government tried to take a somewhat new path. The new method depended on the creation of intermediary commissions and councils: the Provisional 4 9 0 Commission of Administrative Reform and the JNR Restructuring Supervisory Council. These public advisory bodies were fully backed up by political leaderships: Suzuki, who bet his political career, prestigious Doko, who played a determinant role, and more Importantly, Nakasone, who exercised splendid political management skills. By doing this, the conservative reformist headquarters could continue to hold the Initiative to conduct administrative reform and the JNR reconstruction. Fourth, looking at Japanese political origins, one can find the long-term pattern of a government closely Identified with powerful, strategically-oriented bureaucracies and well-organized big business. With the lack of labor-affiliated parties' participation In government, the political system has shown distinctively a kind of corporatlst feature. Including a long tradition of hierarchically ordered. Intensely Informal declslon-maklng behind closed doors. Even In the JNR dispute process, such aspects were observed on both sides: the pros and cons for the JNR breakup and privatization policy. In this respect, one may develop an argument that such a structure had, so far, kept labor federations at a distance In the real policy-making process. Thus, the view "corporatism without full-scale participation by labor" may seem to be an accurate way to understand the structure and process of the JNR reform policy dispute. However, the labor 4 9 1 unions' activities were also highly visible practically, connecting them with influential politicians. Also, most of them voluntarily went along with the conservative mood of the time. In this sense, the "corporatism without labor" perspective is not appropriate to the JNR reform dispute. In addition, the opposition force (labor unions and opposition parties) was not tightly united to confront the conservative reformist force throughout this period. Thus, the opposition did not act as a counter-force to the conservative reformist ruling coalition, but accommodated the conservative environment. In this respect, the dispute process was not well suited to "a camp conflict pattern," either. From the above discussion, various participants' involvement displayed a mixture of corporatlst and pluralist aspects. The JNR reform discussion process showed a generally pluralistic trend. However, the key elements at the center have remained unchanged in their ideologically conservative and institutionally corporatlst nature. Moreover, no matter how pluralistic the composition and activities of the public advisory bodies, they basically cooperated with and endorsed the government policy line. In return, the conservative government decisively backed up their deliberation process. In addition, there was still inequality of access among interest groups associated with the institutionalization of some groups in the ruling power 4 9 2 coalition. Thus, the structure and process of the JNR reform dispute and decision showed "a somewhat mixed form of pluralism with its counter-evidence. " Finally, some prospective words need to be said about the function and roleof the new JR system. Although railroads are no longer the supreme transportation method in Japan these days, they are still the leader in the market of urban transit and inter-city transportation, which is in high demand. In particular, Japanese society is calling for more capacity and greater versatility of railroads. 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Appendix A: Chronology 1980 12/27 (month/day) The Lav Providing Special Measures for Promotion of JNR Rehabilitation enacted. 1981 3/6 The Second Provisional Commission of Administrative Reform (PCAR) under Suzuki Cabinet Inaugurated. 5/21 Management Improvement Plan approved by the Transport Minister. 6/22 A Report of the Second Special Subcommittee of the PCAR. 7/10 The First Report of the PCAR (Emergency Report). 9/9 The Fourth Subcommittee of the PCAR Inaugurated. 11/9 Open hearing by Kakumoto Ryohel (Traffic Affairs Critics) in the Fourth Subcommittee of the PCAR. 11/30 The Second Suzuki Cabinet. 1982 2/5 The JNR Restructuring Subcommittee (Mltsuzuka Subcommittee) In the JNR Basic Problems Investigation Committee of the PARC's Transportation Affairs Investigation Section under the LDP launched. 2/10 The Second Report of the PCAR. 3/23 JNR Blue train accident In Nagoya. 4/23 The Ministry of Transportation's JNR reform plan (functional division) carried In the Asahl Shimbun. 5/17 The PCAR'a Fourth Subcommittee report on the three public corporations. 6/23 Tohoku Shlnkansen opened to traffic. 6/25 The Exit Theory of the Mltsuzuka Subcommittee presented. 7/30 The Third Report of the PCAR (Basic Report) Including the plan of JNR breakup and privatization. 9/24 "The Emergency Measures For the Rehabilitation of JNR Business Operations" decided by the Cabinet. 10/12 Prime Minister Suzuki resigned. 11/27 Nakasone Cabinet; Minister of Transportation, Hasegawa Shun. 530 531 1983 3/14 The Final Report of the PCAR. 5/ The Special Measures Law Concerning Promotion of JNR Business Rehabilitation. 6/10 JNR Restructuring Supervisory Council set up. 8/2 The First Emergency Report of the JNR Restructuring Supervisory Council; "Basic Policies for Emergency Measures for the Management Improvement of JNR Business Operation." 12/1 JNR President Takagl Fumlo replaced by Nlsugl Ivao. 12/27 The Second Nakasone Cabinet; Minister of Transportation, Hosoda Klchlzo. 1984 4/20 JNR Tariff Revision Incorporated two levels of fare: trunk lines and local lines. 5/17 JNR Management Improvement Plan were partly revised. 6/21 JNR President Nlsugl'a Press Club Interview; agreement with the sectionalizing privatization. 6/ Mltsuzuka Hiroshi published Kokutetsu Kaikaku wa Koreshlka Nal (This Is the Only Way to Restructure JNR). 8/9 Japan Socialist Party Introduced Its own JNR reform plan. 8/10 The Second Emergency Report of the JNR Restructuring Supervisory Council: "Basic Policies of Emergency Measures for Management of JNR Business Operation," which clearly expressed the direction of privatization and break up. 10/16 JNR officers' meeting for the formation of an independent reform plan. 10/19 Ministry of Transportation agreed with the break up and privatization plan. 11/1 The Third Nakasone Cabinet; Transportation Minister, Yamashlta Tokuo. 1985 1/10 The Basic Measures for JNR Management Reconstructurlng declared by the JNR. 2/6 Prime Minister Nakasone presented a report "Those JNR Officers Résistent to the Sectionalizing Privatization Plan, Do Take a Responsibility." 2/27 The former Prime Minister Tanaka Kakuel was stricken with a cerebral hemorrhage. 3/14 Tohoku Shlnkansen extension to Ueno station. 5/15 The JNR Restructuring Supervisory Council Chairman, Kamel, delivered a report "For the Need of Replacing the JNR President Who does not Follow the Wake of the Government Policy of Sectionalizing Privatization." 532 6/24 A New JNR President, Sugiura Takaya. 7/26 JNR Restructuring Supervisory Council's report "Opinions on JNR Restructuring; For Exploring the Future of Railways" submitted to Prime Minister. 7/ Cabinet Meeting endorsed the implementation of the "Opinions". JNR Restructuring Cabinet Ministers Meeting set up. 7/ The Restructuring Implementation Promotion Headquarter set up in the JNR. 10/11 Basic Policies Concerning JNR Restructuring set up by the Cabinet. 12/26 The Fourth Nakasone Cabinet; Minister of Transportation, Hitsuzuka Hiroshi. 1986 1/10 A Joint Declaration by Tetsuro, Doro and Zenshiro, "For the Reform in the United Way of Labor and Management". 1/28 The Measures of Disposition for the JNR Long-Term Liabilities set up by the Cabinet. 5/21 Bills for Emergency Measures for JNR Management Improvement approved by the Diet. 7/22 Fifth Nakasone Cabinet; Minister of Transportation, Hashimoto Ryutaro. 9/11 JNR tariff was revised. 11/1 JNR train schedules were revised to meet needs of restructuring. 11/28 Eight Bills relating to JNR restructuring passed in the Diet. 1987 3/ Business Takeover Implementation Plan approved. The Government and Ministerial Ordinance established and promulgated. Articles of the New Companies approved. 4/1 Inauguration of New Companies: from JNR to JR. 533 Appendix B: On Interview As a main method, this study depends on the analysis of the results of in-depth interviews with persons involved with the Japanese National Railways. The following is an analysis of those interviews. 1. Method All interviews were conducted during the period between June and July 1990 in Japan. Japanese was used in all interviews which were tape recorded with the permission of the interviewees. Host of interviews were held in the offices of the interviewees in various places mainly around Tokyo and Osaka. Because this study aims at qualitatively analyzing the JNR reform policy-making process, open questionnaires (not a formally structured- multiple choice type) were designed During the interviewing, the interviewees were allowed to address whatever he or she wanted to mention on short-guided questions. By doing so, an intensive as well as extensive communication was held with most of the interviewees. The time spend for each interview ranged from 50 minutes to one and a half hours. 2. Preparation for the Interview 2.1. Listing of Possible Interviewees For approximately six months between October 1989 and March 1990, a list of relevant interviewees was established through intensive readings on the JNR sectionalizing privatization policy-making process and other related areas. The major purpose of this study is to clarify the JNR break up and privatization policy-making process itself. However, three broad criteria were set up for organizing a list of possible interviewees. The first standard was to include persons who had some relation to the Japanese railways (private or national), as a policy maker, politician, or researcher. Second, a somewhat stricter criterion was employed to select persons who were primarily concerned with the JNR, such as the JNR officers and staff, the JNR labor union leaders, and the LDP unyuzoku (transportation specialists). Third, the list included persons who were directly or indirectly involved in the JNR sectionalizing privatization policy- making process. The above criteria produced a list of 100 persons: 534 approximately 35 from the first category, 45 from the second, and 20 from the third. The criteria used are, of course, not mutually exclusive. Thus, the list was not highly systematic, but quite rough. 2.2. Subject Selection and Obtaining of Addresses As materials were reviewed further, the above three groups were subcategorized Into politicians, bureaucrats, members of public advisory organizations, media men, labor union leaders, and railway researchers. Identified as follows : a. Members of the Second Provisional Commission of Administrative Reform (PCAR, or Rincho In Japanese abbreviation), b. Members of the Second Special Subcommittee and the Fourth Subcommittee of the PCAR, c. Members of the JNR Restructuring Supervisory Council, d. Former Prime Minister Suzuki Zenko, e. Former Prime Minister Nakasone Yasuhlro, f. Political parties (I.e., LDP, JSP, DSP, and JCP) g. Members of the JNR Restructuring Subcommittee (Mltsuzuka Subcommittee) of the JNR Basic Problems Investigation Committee under the LDP's PARC, h. Japan National Railways' officers and staffs, 1. Leaders of JNR's main labor unions, j. Scholars concerned with JNR matters, and k. The Mass media (or public opinion leaders). Based on these groupings, the next step was to search for ways to contact them (addresses and/or telephone numbers). First of all, the following materials were reviewed: various versions of the Japanese Who's Who? (In Japanese or In English), the name lists of Japanese professors (Nihon Daloaku Kvo1u Jlnmelbu). handbooks on politicians and bureaucrats (I.e., Kokkai Blnran. and Selkan Binran). and directories of main organizations such as government Institutions, universities, and research foundations. Some of the materials were provided by the Libraries of the Ohio State University and Arizona State University. The Libraries of East Aslan Studies at the University of Washington, the University of Arizona and the University of California at Berkeley, and the Japanese Consulate In Los Angeles also partly assisted In providing sources. Another method was to depend on personal Introduction and Information gathering In Japan. Through this procedure, 73 out of the 100 listed persons' addresses and/or telephone numbers were obtained: 67 In the United States by using available materials, and 6 In Japan throughout personal connections. 535 2.3. Structure of Tentative Questionnaire Along with the selection of interviewees, a tentative interview questionnaire was devised. Initially, it was structured, based on the following seven points which were considered necessary for the understanding of the JNR break up and privatization policy. a. An interviewee's general assessment on the JNR before the reform debate. b. Financial structure of the JNR. c. The JNR under the change of the transportation structure. d. The ability of the JNR to implement reform. e. Labor-management relations. f. The role of media. g. The role that the interviewee played in the reform process. In a preliminary step, two professors in the Department of Political Science at the Ohio State University reviewed the tentative (unrevised) questionnaire. Simultaneously, a pilot test was conducted with the help of a librarian of East Asian Studies and a graduate student majoring In Japanese politics at Arizona State University. Based upon the results, the content, order, and inaccurate terms of questions were revised and corrected. The revised tentative questionnaire was a product of this process (see Appendix C-1, 2). 2.4. Correspondence with the Selected Subjects As mentioned earlier, addresses were available for 73 persons out of the 100 listed. In the beginning, this study planned to select possible interviewees from among residents in the Tokyo metropolitan area and its vicinity. Thus, requesting letters were preliminarily sent to 63 persons who reside in Tokyo. Each cover letter included a copy of the revised tentative questionnaire hoping to persuade receivers to be more responsive to the request. An addressed return envelope was also attached with an international postage coupon. During the interviewing process, most of interviewees said that two things helped them to endorse the interview request. One was that they received the request letter ahead of time enabling them to fit it into their busy schedule. Another was that they could think about whether or not they would respond to the questions, having the revised tentative questionnaire sent along with the cover letter. In addition to sending the request letters, two telephone calls were made, also. Therefore, the total number of initial contacts was 65, 26 out of which responded (25 responses to the letters and one to the telephone calls). 5 3 6 Besides these, four letters were returned because of wrong address. A second attempt was made to recontact the persons who were considered important, but who had not answered yet. Three more letters and four phov.e calls were made to them again. Only three out of those who were contacted over the phone responded. In consequence, the total number of responses was 29. Out of the 29, 23 accepted interview requests, and six rejected. Table B.1 briefly summarizes this result. Table B. 1. Summary of Correspondence. First Second L F T L P T # 63(-4) 2 61 3 4 7 R 25 1 42. 6% 0 3 42.8% L (letter); P (telephone); R (response); T (total) Response Yes 23 29 No 6 Dead 1 Sick 1 Old 1 Busy 1 Don't Know As seen from the table, the response rate was about 42.6% (26/61) for the first attempt, and 42.8% (3/7) for the second. Thus, the total rate of response roughly represented about 43%. An investigation of why the remaining 57% did not reply would be presumably interesting. However, it is beyond the scope of this study. The interviews actually conducted were with 33 persons, including one person who initially rejected (because of a lack of knowledge: categorized into DK above) but later accepted, and nine other persons who were not on the list but were introduced by other interviewees. 3. Interview Questionnaire Design The scope of the tentative questionnaire was found to be too broad, not accurately centering on the reform policy making process itself and on the roles of key participants in the process. Interviews using it would not provide sufficient knowledge on the subject being considered. Thus, although it had already been sent to the interviewees-to-be. 5 3 7 it was revised in two ways. On the one hand, the new questionnaire concentrated on the investigation of the process and the actors involved by reducing the number of questions and reorganizing their content. Because the purpose of the interview was to understand the perspective of each interviewee, and to compare it with other interviewees' and the author's own perspective, several key questions were asked of all interviewees. On the other hand, depending on the position of the respective interviewee, each interview used a slightly different questionnaire simplifying or elaborating on some questions. In other words, questions were weighted to reflect the interviewees' various experiences regarding the JNR reform policy. By doing this, the final questionnaire was composed of four parts of questions. The first part emphasized the general background of the JNR issue. Specific questions were asked about the interviewees' recognition of the political and social atmosphere, and the government policy orientation during the JNR reform dispute, and the indentification of the most difficult JNR problem. The second part focused on the identification of key participants and their interrelationships (coalition or confrontation) in the JNR reform policy dispute process. Concrete questions included the evaluation of key actors in the policy process, their behavioral patterns in the policy making process, and the political devices they depended on to lead the policy the way they preferred. To be specific, the questions asked were, "Who were the main participants in the process concerned? Who led the process, if any one? What was the manner of leadership? What were the interactions among key actors? On what basis did they develop relationships? Was it based on a ideology, political interest, policy orientation, or occupational background? How did they communicate with each other? What kind of political organization did they use to pursue their purpose?" This information was significant to understand the whole policy process. Comparing different observations of the same process with the different persons involved would be a more reliable examination. Thus, information and knowledge of direct and indirect influencing actors, and outside observers were all considered. The third part stimulated each interviewee to suggest his or her own evaluation of the policy and the policy making process. Interviewees were given freedom to interpret the whole policy-making process themselves. The final part was concerned with how interviewees' viewed the consequences of the policy-making, and the benefits (or demerits) of the new JR system. This study does not intend to cover the evaluation of the policy implementation process, limiting its focus to the 538 examination of the policy-making process. However, It Included the question assessing the current system or outcomes of the policy, based on the following thought. First, the division between policy formulation and policy Implementation Is quite analytical. In a real system, they can hardly be differentiated In a clear manner. In the long-run, they are mingled with each other through a feedback process. Thus, the policy Implementation process should be reviewed for a correct understanding of the policy formulation process, though In a sketchy way. Second, In truth, the recent JNR privatization policy making can be explored only tentatively because the new JR system Is still In the process of moving toward complete privatization. The JNR was privatized In terms of management, but not In terms of ownership. This Implies that It awaits the next round for the realization of complete privatization, which will be brought about by opening stocks to the public or Implementing new ways of management. In this regard, the evaluation of the new JR system gives clues to understanding the direction the privatization policy will take In the future. 4. Interview Results Using unstructured questionnaires, 27 Interviews were conducted. There were In fact, actually 33 Interviewees, however, 6 of the interviews were held with two Interviewees together. Of the 27 Interviews, some were qualitatively strong, but several were weak with the Interviewee not providing appropriate answers to questions. However, It can hardly be mentioned that any interview was Invalid, because basically no Interviewee refused to answer any question. Because the number of Interviews was not large, reliability on the results of the Interviews can be questioned. At the same time, because the Interviews were conducted with open questionnaires, the interpretation of the Information produced by the Interviews Is also open to debate. Nonetheless, the Interviews undoubtedly provided valuable Information for the analysis of the political environment and the policy-making process of the JNR policy dispute. Table B.2 summarizes the list of Interviewees. The list specifies their status at the time of the policy discussed, and their present occupations, owing to the fact that where they sat previously and now sit probably has Influence on the way in which they answered Interview questions. In addition, because the JNR sectionalizing privatization policy-making was a relatively recent event, any occupational changes might have resulted from the policy change. However, this Is simply an unsupported conjecture and not the major argument of this study. (In the following list, the numerical ordering does not have any Implication. 539 Table B.2. A List of Interviewees by Status at the Time of the Policy Debate and Showing Present Occupation. Status at the time of Present occupation the policy debate 1. Researcher of labor unions Professor 2. Researcher on railway policies Professor 3. Researcher on railway policies Professor 4. Vice-chief of PCAR's Executive Vice-minister of Office Ministry of Transportation 5. JNR top officer Vice-president of West JR 6. Researcher on railway policies Professor 7. Kokuro leader President of Kokuro 8. JNR top officer Vice-president of Central JR 9. PCAR and JNR Restructuring Professor Supervisory Council member 10. JNR officer A railway-related company's president 11. Researcher on JNR Professor 12. JNR staff East JR staff 13. MOT officer Counselor in Promoting Bureau for JNR Reconstruction in MOT 14. Former Minister of LDP HR Dietmember Transportation 15. JNR staff Section chief of Promoting Bureau for JNR Reconstruction in MOT 16. Advisor of government railway Professor policies and researcher on JNR 17. JNR top officer Deputy-general of East JR 18. Chief of staff of Japan Secretary to a JCP Diet Communist Party's JNR Problems member Investigation Committee 19. PCAR member Senior managing director of a research foundation 540 Table B.2 (continued), 20. JNR staff Manager of Management Administration Department of West JR 21. Secretary to Minister of Chief of staff of LDP's Transportation Political Affairs Research Council 22. PCAR and JNR Restructuring President of East JR Supervisory Council member 23. JNR Restructuring Supervisory Director of a research Council member foundation 24. PCAR member Special Advisory for Japanese Chamber of Commerce and Industry; Advisor of a business company 25. President of JNR Lawyer 26. Chief of Staff of Deputy director general PCAR's Executive of Administrative Office Inspection Bureau 27. Researcher on railway policies Advisory director of Japan Railway Construction Public Corporation 28. Advisor on government railway Professor policies and researcher on JNR 29. Journalist Professor 30. Assistant to PCAR member Senior managing director of a research foundation 31. Kokuro president Managing director of a company 32. PCAR member Journalist 33. JNR Restructuring Supervisory President of a trustee Council member foundation 541 Appendix C.l: A Tentative Questionnaire (in Japanese) A. C. JNR t. 1960Jpft t 1970$ftOai#M)iÊ(OA%Ù H. * A ( 0 % # A.i //% z(DEmiib'ztzh'^fz<7)X't LTBX<^^iàLA7i'. 8.2 I96#w*. lil^ü:gJül®ï)S’Sri:' C.3 i96oJf-ftt 0A«OJ5^^r€/S]|iî^fimt--S.*i6(ca9iSÎ:BX»5i L*7&‘. D.5 JNR(7j^$#(=|S]ai));ÿ;6g:^a L/::AA tfiüA #:ÙV(ck"3 c t Tf 7)% D.6 ± (0(%]ggC-OV^T 8 * 0 ^ 1 1 . L)t:. Kc-^X'lfz^\ t i98oJpj^^^(D-gg t LrzJ^Rcoÿi^mit'ôhtt-^Xèti'/]^ 5 4 2 E.8 19824^JgEh I983fp;gISL 3 F.9 f}m-^-t LTUWmA'^R^Cf^&ChT^^CrgS^Etc^oA'^C k O^^co^mtSt^JoKti-. W±&;Ê:%t=5v\>::%^. b'vLxm f}^ t'^<^PlKn'itlz^t^ F.io jNR^Ek3ïîa@t:7X3$/,f|gK:tm(:jNR(^f3]j0*r;2m$-iFyt:%M Ifz^K t o A ( : ^ v \ T G .n mmzMi-iJS^îùcDin-A(it'coJ:dKcmvf>i^hh.t IfziJK G.12 U :^. tfz ^comÂlzMLX. B*OR%5ae{:LR%f7##oim(04'*=$7ci±*< j: <Æ4fi& k± $ g f 6A L wi L^. JNROttm‘cOiam?^îë3â^{cPaL X n.lt bÔTi':ü'. G.13 fâuij. mmè'iû. ^^t'(ofamumrL fzi}\ ±X>J: :&r%RIA'4(On6v\6^m&#(ORfèWm#kmRaiiMÔ X 'ti\ G.] 4 jNRco^iz^intnmèü^tcm a rf *' . G.is ûm''nzm^^-^t'fs%±^(^mmmx'Ltzi]-. H .16 & ( & ( : _____ Lfzttüff. ^hliMXL/z^\ 543 Appendix C.2: A Tentative Questionnaire (In English) A. The general assessment of Interviewees on the JNR. B. The financial structure of the JNR Including management, long-term Indebtedness, and Investment. C. The JNR under the change of the transportation structure. D. The ability of the JNR In terms of finances, personnel, and policy-making on key matters. E. JNR's reform plans since 1965 and their failures. F. Labor-management relations and the role of the media. G. Political factors and the Impact of their Involvement in JNR management. H. The role that the Interviewee played In the JNR reform policy debate process. A.1. What was the most difficult problem In the JNR? Where do you find the causes for the problem? Why was the break-up and privatization plan taken the method to restructure the JNR in the 1980s? B.2. Since 1964, the JNR had experienced financial difficulties, such as long-term debt, which was getting gradually worse. What was the financial situation of the JNR before privatization? C.3. In your opinion, was the overall shift of the transportation structure In the 1960s and 1970s a crucial environmental factor leading to the JNR privatization? B.C.4. After the 1960s, other Western countries also went through the same changes of National Railways as Japan did. However, Japan took a different way In coping with the changes. Why was that the case? D.5. It was said that JNR authority was unable to handle the problems It faced. What did that mean concretely? D.6. How do you explain the peculiar structural characteristics of the public corporation system Including the JNR? How did they relate to the JNR 's management system? 5 4 4 E.7. Since 1964, the JNR had been operating in the red. After that, it tried various plans, but failed. What were the reasons for the failure? How different was the recent break up and privatization policy from the previous reform plans? E.8. In the beginning of the 1980s, the people generally consented to the need of structural reform of the JNR. However, various opinions suggested different plans. What kinds of conflict did you observe among them? E.9. The labor-management relations of th? JNR had been considered an obstacle to the structural reform of the JNR. Particularly, Kokuro continued to oppose any change. As the JNR transformed into private companies, labor unions could obtain the right to strike, which was not guaranteed under the public corporation system. If so, some labor unions' opposition to the privatization plan was not understandable. Were there other reasons for their opposition to any systematic change? F. 10. It is said that, in the JNR yeform debate process, the mass media played a significant role, such as mobilizing the public to pay attention to the JNR matter. How did the media play such a role? G.11. To the JNR management, what kind of political factors were involved? G.12. Generally speaking, some scholars analyzed the consensual triad of politics, business and bureaucracy as a conspicuous aspect of the Japanese political tradition. Others find plurality among the major actors with conflicting interests. Based on your answer to question #G.11, how do you explain the interrelationships between major participants in the JNR reform policy-making process? G.13. Specifically, what were the roles of various public advisory bodies (the PCAR, its subcommittees, and the JNR Restructuring Supervisory Council) in the political process of the JNR reform? G.14. In the construction of the new JNR lines, what did the so-called "political lines” mean? G.15. To the administrative reform as a whole, how important was the JNR reform agenda? H.16. Finally, if you took any part in the JNR reform policy debate (or policy-making) process, what was it? 545 Appendix D: A Revised Questionnaire (In Japanese) 2. fztm w i f 4. #*oq(=R)6i§a#. tm. t'comtmt'7X‘ifzi}\ 5. KîgtlOV^TlT-fiLTTèV'. 6. h*'*^)iUfl5LTT?V\