FROM THE TELEGRAPH OF 6 SEPTEMBER 2005
The modern
Samurai
Next Sunday,
Japan goes to the polls. Junichiro Koizumi, the Prime Minister, called an early
election - an unusual move in a compromise-loving country where politicians
paper over differences and keep governments going. But it is typical of this
untypical Japanese who has a lot of hair for his age (63) and keeps it tousled.
He recently danced a tango with Richard Gere and joined Tom Cruise in singing
an Elvis Presley song.
He was the first
postwar Prime Minister who had the courage to go and pray at the Yakusuni
shrine for the Japanese war dead, including General Hideki Tojo, Prime Minister
in World War II, and 13 others whom the Allies convicted as war criminals. The
temple was originally founded to commemorate the victims of a civil war in
1868-69 that ended the rule of the Shoguns and restored the power of the
Emperor. As Japan fought other wars, those who died in them were added to the
pantheon. Yakusuni means the peaceful country. The Japanese believe that when
people die, they become gods, and live in a tranquil place within sight of
their descendants; the living go to Yakusuni to pay homage to their dead
ancestors and relatives. The names of 2½ million little gods are recorded at
the shrine. When Koizumi went to Yakusuni in 2001, 700 people filed suits
charging him with breach of the Japanese Constitution (adopted when General
MacArthur ruled a defeated Japan, it prohibits Japan from waging war). And yet,
this supposedly chauvinistic Prime Minister is an admirer of Winston Churchill
who fought Japan.
For a politician
(he has been an undefeated member of Parliament since 1972), Koizumi has a
strange taste for learning. One of the maxims he treasures is that of a
19th-century Confucian scholar: “"One who studies in youth will accomplish
things in maturity. One who studies in maturity will not become feeble in old
age. One who studies in old age will not decay with death."
The election was
precipitated by a rejection in Japan’s upper house of a bill to privatize Japan
Post, Japan’s post office bank. Japanese politicians disliked its privatization
for the same reason as Indian politicians: the government bank was the source
of lucrative patronage. It lent to politicians’ nominees, and financed
infrastructure projects whose contracts went to politicians’ favourites, with
material returns flowing back.
The post office
started taking deposits soon after it was started in 1871. It was the common
man’s bank; in those days, one could set up an account with an initial deposit
of a fiftieth of a yen. The Japanese, like Indian savers, are extremely timid.
They love their post office savings bank because they think it cannot fail. As
a result, the post office holds a third of the country’s personal savings –
$3.1 trillion, or five times India’s GDP. A third of Japan’s life insurance
funds are invested in it.
After World War
II, Japan set up factories using the latest technology, kept the yen low, and
achieved the world’s lowest costs in industry after industry. When the oil
crisis struck in the early 1970s, Japan was the most energy-efficient country
in the world; in the next ten years, the Japanese increased their energy
efficiency by a third. With sustained low-cost production, they kept a boom
going for almost forty years. At its end, they were rich, and their economy
emerged the world’s third largest.
But by the
1980s, their payments surpluses were so huge that they found it difficult to
find investments abroad. They bought up and financed much urban real estate.
Once they owned Rockefeller Plaza, the most expensive property in New York.
When I went to Melbourne in 1989, its entire city center was owned by Japanese
banks – and most of it was empty for want of tenants. The Japanese lost much
money on their investments abroad.
Their technology-driven
boom also came to an end when they reached the frontier of world technology.
There was no one left to imitate. They did not lack inventiveness. In Osaka, I
was once waiting for a local train. When it arrived, I saw a child sitting in
the driver’s seat. A bit dismayed, I entered and walked up to the front of the
train. It had no driver; it was fully automatic.
But even such
spectacular innovations could not keep up growth; by the end of the 1990s,
production was declining. To revive it, the Japanese government tried out
classical Keynesian solutions. It reduced interest rates to close to zero; but
investment failed to revive. So it started itself to invest in infrastructure.
On that trip, I found that the government was scooping out an entire mountain
and dumping it into the sea to create a new port. Such profligacy has left
Japan with a debt that is one-and-a-half times its GDP – twice India’s
proportion, and India is pretty bankrupt itself.
Such huge
infrastructure projects were funded by Japan Post. But they did not bring any
returns; there was no income to pay interest. The only people it enriched were
borrowers, contractors and their political patrons. It was a racket, which
Koizumi is determined to end. But by doing so, he has not only thrown a
gauntlet to the politicians. He has also antagonized government servants. The
post office employs 262,000 workers – a third of bureaucracy. Even Japan’s army
is smaller – only 239,000 men. Those post office workers are often the closest
friends of people living in aging rural communities; so they can influence a
lot of votes. They have traditionally helped Liberal Democratic Party –
Koizumi’s party – but may not do so this time.
Koizumi is
unpopular amongst the old guard of his Liberal Democratic Party. He has thrown
out those who voted against his post office bill, and put up unconventional
candidates against them – amongst them, a number of women in a male-dominated
country. The most famous is Koizumi’s comely environment minister, Yuriko
Koike, who was a reporter in the 1990 Iraq war and amongst whose books is one
entitled Climbing the Pyramid in a Kimono. About his transport minister,
the former film actress Chikage Ogi, Koizumi once said, “Her voice carries very
well.” He has put up Makiko Fujino, author of many cookbooks, Satsuki Katayama,
a former model who became a budget examiner in the finance ministry, and Kuniko
Inoguchi, a Sophia University professor who represented Japan in the UN
Disarmament Conference. One of the candidates running in support of Koizumi is
a businessman named Takafumi Horie. He dropped out of school, but today is the
millionaire owner of an Internet company called Livedoor. Even his failures are
sensational. He made a bid for Fuji Television. He would buy its shares during off-hours;
his rising stake was watched by millions. He failed, but managed to work out a
partnership between his firms and Fuji Television.
Koizumi has
split the LDP, the faction-ridden coalition that has ruled Japan since the war.
That does not bode well. But polls suggest strong popular support for him. I
hope he will win, for without him, Japan would be a terribly dull place.
