Japan's caboose faces cut
■"As Japan Votes, Aid to Countryside Hangs in Balance: Mr. Koziumi Aims to Remove Crutches for Rural Areas; An Airport With 4 Flights," by Sebastian Moffett and Ginny Parker Woods, Wall Street Journal, 7 September 2005, p. A1.
The vote on privatizing Japan's huge financial giant and social welfare funnel postal system occurs on Sunday, and what this article highlights is that Japan's government (or more to the point, the long-time single-party system known as the Liberal Democrat Party) has long used this entity as a way to make sure it's caboose (least advanced, least rich, typically most rural citizens) don't get left too far behind in the country's ever-upward economic advance. The postal system is thus a giant, nation-wide Tennessee Valley Authority-like funnel for infrastructural investment, so any messing with it is akin to the mother-of-all base closure proposals in the U.S. Plus, given its huge asset pool of personal savings, you're not just talking the break-up of Ma Bell (Koziumi wants to break it up into four big chunks), you're suggesting the privatizing of Social Security.
You sense the reaching for analogies here: it's almost impossible to capture the breadth and depth of this change for Japan. It's like the Party giving up control of the military in China, that's how identified the LDP is with the postal system: it's a fundamental basis for regime legitimacy and control. Neither party in the U.S. has anything like it, which is why we're legitimately described as that most rare of beast: a functioning two-party state where neither side is locked into power thanks to its profound control of state assets. It would be like the Democrats "owning" DHHS or the Republicans "owning" Defense-and I mean never giving up control even if administrations changed.
So when Koziumi says the government needs to privatize the post office banking system, he's doing more than what's necessary to make Japan a far more competitive economy, he's really altering the political trajectory of the country in a big, big way. And why it's so controversial is because he's threatening the existence of a quasi-governmental entity that's long played the key role in keeping Japan from becoming too much of a have-have not society despite its meteoric economic climb. For the EU to try and do something similar, we'd be talking a serious dismantling of their workers' social welfare rights.
By doing this, Japan would become a lot more like America-with all the attendant risks. But I think the real driver here is the sense of competition from China over the long run.
And that's what's interesting to me about this push by Koziumi: it's the flip side of China's efforts and the related fears of its Fourth Generation of leadership (Hu, Wen, etc.). Japan is saying, "we've got to lengthen the train a bit in order to get competitive," whereas China's leadership is saying, "we've got to shorten our snaking train a bit or we'll end up with unmanageable political unrest in the interior provinces."
My point with the whole "The Train's Engine Can Travel No Faster Than the Caboose" theory in Blueprint for Action is that there's an optimal speed level associated with successful integration with the global economy. The earlier you are in the process-historically speaking-the more you'll want to let your caboose "brake" your pace (lest you suffer social unrest), but the more mature you become, the more you'll going to have to allow a certain amount of income equality in order to remain competitive and efficient (i.e., you're going to have to let the market move your labor for you). Otherwise, you find yourself funding ghost towns that correspond to no economic logic, making your economy as a whole more uncompetitive.
No magic standard for all countries, as the sense of sequencing trumps all calculations. Development is a lot like aging: to shrink the Gap is to age it upward demographically, along with all that entails economically and politically and-best of all-militarily.