The Political Economy of Japan Bradley M. RICHARDSON

cleavage, plus conservative rule, was also one of several factors allowing theJapanese state to postpone some of the costs of a modem social welfare systemuntil after high growth was well on its way. The enormous social and political costs ofan American-style under-class have also obviously been avoided.i) Economic models of Japan's growth recognize that Japan's high literacyand education levels at the end of World War II were themselves important inputs ininitial postwar growth. Later, as households became more affluent, greater numbersof sons and daughters were able to finish high school and/or college, which furtherenhanced the skiff potentials of the labor force (92).Unanticipated Consequences: Subversion, Non-Compliance and “Irrational”Outcomes. Japanese government economic policies sometimes had unintendedconsequences. Business cycles intervened to upset the calculations of particularplans and industrial policy frameworks (93). Furthermore, despite high levels ofbusiness-government communication and an asserted corporatist consensus oneconomic policy, case studies indicate frequent private sector resistance togovernment policy proposals and programs, Private firms also exploited andmanipulated government policies in ways that were not congenial to governmentintentions. Companies in some instances totally evaded government policydirectives. As a result, many of the Japanese government's industrial supportscannot be seen as fully successful from the point of view of government intentions.Examples of private sector exploitation of government programs are easy tofind in the cases where detailed policy analysis has been conducted. For example,subsidies provided coal companies under the 1947 Priority Production Program didlittle to improve mine efficiency, which was one of the goals of the program. Coalfirms mined marginal fields because the higher production costs there were paid bythe government under the existing programs. Mining firms saved their better fields forfuture use when costs would not to be subsidized (94). Under the same program,government funds to encourage coal firms to install productivity enhancingequipment were diverted to stockpile new equipment until after cost-basedrenumeration ended (95). Later, the 1955 coal rationalization plan goal of retiringinefficient mines was subverted when firms sold old, depleted mines to thegovernment while simultaneously opening new facilities without regard to theirefficiency (96). Moreover, in some periods, large mining companies even bought coalfrom small-scale, less efficient firms in order to take advantage of high prices whilesimultaneously receiving government supports designed to enhance their ownefficiency (97).Other industries displayed similar patterns to those in coal. In the textileindustry, government programs set up to purchase old equipment for the purpose ofcurtailing capacity were subverted in much the same way as in the coal industry.