The White Peril 白禍

If you're wondering what Prime Minister Koizumi meant by that comment about Japan's opposition parties yesterday, here's an example:

Debate remained stalled in the Diet on 24 May, as the Democratic (DPJ) and Social Democratic (SDP) Parties, both of which opposed the establishment of a special lower house committee on Japan Post reform, failed to consent to the discussion of any bills. The ruling parties plan to begin debate on the Japan Post privatization bill in the lower house plenary session on 26 May whether the opposition parties agree or not. Ruling and opposition parties will open talks between the chairmen of their Diet committees, but there is little hope that they will find a way out of the impasse.

Koizumi and other higher-ups in the LDP are, of course, taking the opportunity to warn the opposition that the citizenry will not look kindly on this kind of stonewalling. Katsuya Okada of the DPJ has shot back that voters will understand the party's motivations because the bill does not provide a premise for adequate debate. I would say "here we go again," but that would imply that we'd had a respite from this at some point.

Prime Minister Koizumi delivered a few soundbites at a special meeting of the Lower House budgetary committee this morning. (I think he said these things this morning; the meeting is on NHK now, and I think it's a simulcast.)

About Chinese and Korean criticism of visits by Japanese officials to the Yasukuni Shrine, he said, "Any nation will feel the desire to pay respects to its war dead. Other nations should not be interfering based on whether they believe our ways of doing so are desirable."

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Also, regarding the enshrinement of Class A war criminals at the shrine, Koizumi indicated that his view is that there is no problem because "'one abhores the offense; one does not abhore the person' are the words of China's own Confucius."

I don't think I've ever heard him trot out that one before. It'll be interesting to hear the PRC's reaction.

Other remarks revolved around the proposal to privatize Japan Post. Koizumi stressed that "if the bill is rejected, it is impossible to know what will happen." Regarding who would be held politically responsible if the bill were shot down, he remarked, "Is there any reason that (the cabinet) should resign en bloc? We will fulfill our responsibilities by seeing the bill through to approval; we have no expectation of its rejection."

So that's that, for now. One reason questions about the privatization bill may carry something of a sting right now is that Koizumi has been criticized for giving the heave to two high-ranking bureaucrats who oppose it:

Prime Minister Junichiro Koizumi's decision to remove two top bureaucrats who are vocal opponents of his postal services privatization plan has met with criticism from within the ruling Liberal Democratic Party on Friday, with party members accusing Koizumi of acting like a tyrant.

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Koizumi, according to the sources, instructed Internal Affairs and Communications Minister Taro Aso to remove Hiroshi Matsui, the ministry's vice minister for policy coordination, and Hideo Shimizu, director of the postal services policy planning bureau.

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Another source revealed an incident in winter that foreshadowed the two officials' removal.

"Mr. Matsui, Mr. Shimizu, I'm counting on you both," Koizumi told the two men, who were summoned to the Prime Minister's Office on Feb. 18. The prime minister's exhortation, while sounding like a request for cooperation, was actually a warning that meant "Don't dare stand in my way, you guys," according to an interpretation by a government source.

One LDP member, a former official in the erstwhile Ministry of Posts and Telecommunications, which is now part of the Ministry of Internal Affairs and Communications, reacted strongly: "This is a reign of terror. Does anybody have the right to throw people out because they weren't 100 percent behind their master?"

Well, it's true that one doesn't want heads of state in democratic countries ramming through their pet little proposals against the will of the people. But let's not forget that these two are bureaucrats--that is, appointees, and not elected officials. Enforcing accountability on bureaucrats in the various federal ministries and their entourage of semi-public corporations has been one of the biggest problems for reform-minded politicians, let alone their long-suffering constituents.

Whether and how to privatize Japan Post have been debated up, down, around, and through by this point. It doesn't seem unreasonable that, now that a proposal has gelled, two administrators who are staunchly against it should be told that there's no role for them in implementing it. I understand the questions about morale, but I don't think it's possible to take control of a set of wide-ranging and lucrative services away from an organization without making it feel somewhat unloved.

By the way, don't feel too sorry for the two demoted men:

Matsui is expected to remain a vice ministerial-level official, with his former post allocated to Kozo Takahara, vice minister for policy coordination and director of the international affairs department.

Meanwhile, Shimizu will be demoted to director general for policy planning in charge of communications. Yasuo Suzuki, director general for policy planning, will take over the post.

This will not help either's career, of course, but given the power of bureaucrats in Japan--still, for all the noises about reform--both of them have decades of connections and influence to capitalize on.

While my attention has been diverted elsewhere, the Yomiuri has been following the Japan Post privatization proposal through its most recent travails (part 1, part 2, part 3). I'm remiss in not having drawn your attention to it earlier, because it's a very good, accessible summary of where things are at this point. Predictable problems have been cropping up, since the bills have been submitted but have yet to go through the Diet.

Part 2 in the series is the one that has the most concrete information about what's being haggled over. Interestingly, if not exactly surprisingly given the political delicacy of the issue, Heizo Takenaka, who was hand-picked by PM Koizumi to be the minister in charge of orchestrating the Japan Post privatization, has dropped his usual habit of bluntness and bombthrowing and is taking a more oblique line.

One contentious issue is how long the semi-governmental holding company will retain its shares in the four new companies that actually render services (package handling, savings, insurance, and window services). From Koizumi's perspective, the idea is that the holding company is supposed to sell all its shares by 2017. The possibility that has now been raised is that it can buy them back the next year:

LDP Policy Research Council Chairman Kaoru Yosano also said Monday, "The important thing is that the holding company will be a shareholder in 2017 and in 2018 as well."

Once the holding company sells all its shares in the postal savings and insurance companies, they will be considered as private entities, with no restrictions on their operations. If the sale is completed during the early years of the privatization process--which begins in 2007--the firms could take up new profitable businesses, such as lending.

However, such a compromise may have a detrimental impact on existing private operators.

Yes, they might actually have to compete for customers, and, sakes alive, we would NOT WANT THAT.

Personally, I'm kind of wondering what reason a holding company that was incorporated for the express purpose of tiding the four new service companies over during the transition would have for existing after the transition was completed. You can tell I'm not a bureaucrat.

Another, related problem (if you think in terms of free markets) is this:

Also, the government and the LDP have been divided over a fund to be managed by the holding company with the aim of ensuring the uniform provision of postal savings and life insurance services nationwide.

As the relevant bill submitted to the Diet stipulates the holding company can establish a fund of up to 1 trillion yen, the amount of the fund is unchanged from the initial government plan. But the government and the LDP agreed that the company could keep up to 2 trillion yen in the fund.

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The fund is intended to allow unprofitable post offices to continue providing financial services. The LDP's request to increase its size is aimed at protecting the network of post offices by ensuring the universal service obligation applies not only to mail delivery, but also to banking.

So now we're going to pony up for banking services in every municipality from Chiyoda Ward to darkest Hokkaido, and we're going to insulate the providers from feeling the heat for their bad investment decisions. I doubt it's meant that way, of course; the idea is probably just to help far-flung outlets cover operations costs. But we're talking about a large pile of government-guaranteed money here. You can bet the urn full of grandma's ashes that it won't take long for savvy operators to figure out how to make bad debt and money-pit investments look like the necessary ineffiencies of being the only post office at the top of an underpopulated mountain.

Takenaka, as noted above, is waving all this away:

Heizo Takenaka, the minister responsible for postal privatization, reportedly said he had no intention of revising the bill, and the issue of the fund would be a business decision to be made in the future.

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The issue could determine the basic scheme of privatization. Takenaka's remark that the issue will be a business decision does not seem to reflect his real intention. Instead, he has just postponed dealing with the issue.

Well, we all know how well it goes when you "privatize" a critical service by creating a soup of government guarantees and nebulous divisions of accountability and just kind of figure that logistics aren't going to interfere, don't we?