Here's a modest proposal for Japan: create a new ministry. Call it the Ministry of Japan Bashing. Its job would be to criticize the sacred cows and pet projects of Japanese interest groups and other government ministries. These are the policies that hamper Japan in reducing its massive trade surplus and assuming greater international responsibility.
The Japanese constantly issue reports emphasizing the need for economic and social change without ever saying what those changes should be. Typical was a recent foreign ministry report. It decried "strident" protectionism abroad. It said Japan must act "boldly" to shift its economy from the "old export-dependent structure to a domestic-demand-powered structure." It urges the Japanese to be more open to foreign products and ideas even if that means "short-term sacrifices" by some groups.
Great. But how are these wonderful things to be achieved? The report contains hardly a clue. The Japanese so value maintaining "harmony," avoiding conflicts and building consensus that no one can say openly what specifically needs to be done. Enter now our Ministry of Japan Bashing. It isn't so reticent. Here -- among other things -- is what it recommends:
Food imports: End restrictions on beef, rice and other products. Import quotas keep retail food prices outrageously high. Beef costs as much as $30 a pound. High food prices dampen consumer spending on other goods and reduce Japan's economic growth.
Taxes: Raise real estate taxes. Along with high farm subsidies, low real estate taxes make it easier to keep land in farming. Land scarcity increases Japan's astronomical real estate prices and contributes to congested housing conditions. Greater availability of land would spur construction and economic growth.
Jet fighters: Don't develop Japan's next fighter in Japan, as the domestic aerospace industry wants. Buy an existing plane abroad, probably in the United States. The cost would be less (maybe half as much), allowing Japan's limited defense budget to go further. Buying abroad would also cut the trade surplus.
Oil stocks: Build a bigger strategic petroleum reserve. Japan's reserve is much smaller than that of its U.S. counterpart -- both in absolute size and in relation to imports -- although Japan depends almost entirely on foreign oil.
Sound impossible? Well, maybe. But the suggestion for a Ministry of Japan Bashing is offered only half in jest. Change comes from specific policies, not platitudes. But Japanese politics frustrates the most essential policy changes.
One myth about Japan is that it's an especially farsighted society, blessed with brilliant bureaucrats who wisely plan for the future. The reality is that Japanese bureaucrats, like those elsewhere, protect their turf. The agriculture ministry protects the farmers, the finance ministry protects the bankers and the defense ministry protects the military contractors. It's the strength and legitimacy of these alliances that stifle criticism and make Japanese politics so resistant to change.
The trouble is that all these individual interests don't necessarily coincide with Japan's national interest. What's good for the farmers is not necessarily good for Japan. The great problem for Japan today is not economic, but political. It's finding a way out of this straitjacket. Political paralysis at home abets the strident criticism abroad that the Japanese now so deplore. Strangely, though, the Japanese actually encourage overseas criticism as a way of influencing domestic politics.
Foreigners are assigned the job of advocating controversial social and economic changes that the Japanese consider taboo. In Japan the habit of responding only to foreign pressures is strong. Witness the recent Toshiba affair. As is well known, a Toshiba subsidiary illegally sold machinery to the Soviets that allowed them to make quieter submarine propellers. The Japanese aggressively investigated the security breach only after the United States insisted. And when the incident triggered a congressional outcry, Japanese leaders made profuse apologies.
Maybe relying on foreign pressure was once a viable approach to politics. It no longer is. Shifting onto foreigners the burden of unpopular ideas fosters the illusion that these proposals are anti-Japanese. This is often wrong. Of course, liberalizing food imports will hurt some Japanese farmers. But the costs of inaction are greater. Unless Japan finds ways to raise its imports -- either through fewer restrictions, faster economic growth or both -- the yen will appreciate further and reduce Japan's exports. Unemployment will rise. The conflicts are real and aren't contrived by foreigners.
Consigning the dirty work of Japanese politics to foreigners also explains Japan's deteriorating relations with the rest of the world. Foreigners feel the only way to get anywhere with the Japanese is to keep the pressure on. From Americans and others, there's a constant chorus of criticism, abuse and threats. The result is a spiraling cycle of acrimony. The Japanese feel increasingly persecuted. They think -- sometimes correctly -- that they're unfairly criticized and made the scapegoat for other countries' problems. Foreign criticism is often no more discriminating than the Japanese reaction to it.
Unfortunately, the cycle can't be broken simply by deploring it. Increasingly frustrated by their disputes with Japan, foreigners overlook the benefits -- high-quality products and competitive prices -- of trade with Japan. There's a convenient forgetfulness of the genuine changes Japan has made. For years the Japanese were pressured to raise their defense spending. They have. The Japanese Navy now has more destroyers than the British Navy. Meanwhile, the Japanese feel sorry for themselves and sink into a customary sulk: woe is us, we are so misunderstood.
Somehow the Japanese have got to shake their self-defeating habit of relying on foreign pressures as a primary mechanism to make controversial social and economic changes. There will be less criticism abroad if there's more change at home. Maybe a Ministry for Japan Bashing sounds awkward. But does anyone in Japan have a better idea?