Reflections on the Human Condition - Api-fellowships.org

390 SESSION VI
The true nature of the Japanese crisis in the 1990s was
the financial system, not the production system, which
remained fundamentally sound and healthy. (Kikkawa:
2005, 3-4)
Prof. Kikkawa’s hypothesis is an interesting one. For
instance, the jusen crisis was caused by mismanagement
in the financial sector in lending money to Housing-
Loan Specialty Corporations or jusen in the late 1980s.
Jusen or housing lenders were established in the early
1970s to provide housing loans to Japanese individuals.
In the 1980s, the Japanese business environment
changed. Jusen were forced to provide loans to real
estate developers instead of individuals. In 1975, nearly
100 percent of industry loans went to home owners;
by 1990 only 22 percent went to individuals and 78
percent went to speculative projects. (Otsuma: 1996, 1)
One of several causes of the 1990s crisis in Japan was that
wealth was used for speculation by the business sector.
Property prices jumped higher without reasonable value
added. If any speculation made a profit, the speculator
received the reward. However, if the speculation failed,
who took the loss? Sometimes, in order to protect the
whole economy, public money absorbed such losses.
Speculation was not the only cause. Another cause of
the crisis, in my opinion, was unreasonable construction
projects. Both causes were assisted, or organized in the
worst case, by the so-called “vicious triangle” or “the
Iron Triangle”, the relationship among three parties—
business, bureaucracy and politicians.
The Iron Triangle
In Japan, the “Iron Triangle”, the network and
relationships among big business, bureaucracy and
political parties to control Japan during the post war
period, has contributed to both good and bad sides of
economic development. For many decades, the Iron
Triangle was considered the symbol of the country’s
economic prosperity until a series of major corruption
scandals during 1988-1993 were disclosed. (Feldhoff:
2002, 37) The vast majority of post war prime ministers
have been implicated in corruption scandals and every
decade has featured at least one major scandal—
beginning with the Showa Denko scandal in the 1940s,
a shipbuiding scandal in the 1950s, a series of scandals
in the 1960s known as the “black mist”, the Lockheed
scandal of the 1970s, the Recruit bankruptcy in June
1988, and the Sagawa Kyubin scandals in the summer
of 1992. (Kingston: 2004, 22-5)
Ref lections on the Human Condition: Change, Conflict and Modernity
The Work of the 2004/2005 API Fellows
Feldhoff described Japan’s “clientelist state” as having
three elements:
1) Particularism is the consistent granting of priority
to a small set of special interests at the public expense.
Legislators channel distributive policy expenditures
into their electoral districts, thereby enhancing their
prospects for reelection.
2) Political corruption is a second by-product of political
clientelism. The informal alliance between central actors
is upheld by means of financial contributions, such as
illegal political contributions, bribery, and influence
peddling.
3) Economic inefficiency is the last product. In order
to provide kickbacks to politicians as well as bureaucrats
and keep the industry alive, public contruction spending
is overpriced. (Feldhoff: 2002, 36-37)
Certainly, trade partners of Japan, especially the USA,
were unsatisfied and criticized this system. The USA
negotiated for and forced reform. A weary and wary
public criticized such wasteful projects and corruption
and gradually understood the hidden agendas. The
1990s can be seen as a period of reform and were a
decade of intense questioning about the merits and
flaws of Japan’s government, business practices and
principles. (Kingston: 2004, 71)
It can be claimed that social change in Japan arises from
outside pushes and inside growth.
How can the members of the Iron Triangle support
each other? Wolferen (1993, 150) explains that the
unwritten spirit among politicians, bureaucrats and
businessmen is:
• bureaucrats support politicians by buying off the
public with subsidies and public works,
• politicians support bureaucrats by not making the
slightest attempt to change the policies of industrial
expansion that emerged in the immediate post-war
period, and
• bureaucrats and politicians support businessmen by
protecting their business against foreign competition
and underwriting their expansionist programs.
(Wolferen: 1993, 150)
This spirit means that each of them gives and takes.
Thus, they must each keep their own power in order to
be useful or necessary for the other partners.
Politicians want to be re-elected, thereby requiring
money and support for election campaign. Kinken seiji
or money politics is analogous with the mother’s milk