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.

…

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.

…

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?

You know how the Japan Post privatization proposal was presented to the LDP last week? It’s still, not unpredictably, stuck there:

A group of 101 Liberal Democratic Party lawmakers met Wednesday to reiterate their opposition to the government’s postal privatization plan and ruled out any compromise on the issue.
Prime Minister Junichiro Koizumi meanwhile renewed his pledge not to change the postal reform framework adopted by his Cabinet earlier this month.

The standoff between Koizumi and his opponents in the LDP, of which he is president, is making it increasingly difficult for the government to meet its goal of submitting its postal privatization bills to the Diet by the end of the month.

At Wednesday’s meeting, organized and chaired by former House of Representatives Speaker Tamisuke Watanuki, the lawmakers adopted a resolution opposing the government’s plan and released their own outline to reform Japan Post while keeping it a semigovernmental corporation.

Someday when my stomach is less on edge, we’ll talk about Japanese semi-governmental corporations in all their resource-hoovering glory. Suffice it to say that, while “semi-governmental” sounds like a nice, friendly compromise, in execution it ends up increasing the number of people who have access to the goodies and decreasing the number of people who feel compelled to husband them. The Sankei did report that not everyone who went to Watanuki’s “study session” last week symptathized with his anti-privatization position (one is cited as saying that because he’d received his invitation from the leaders of his faction, he felt unable to refuse it). But there were 96 Diet attendees there, and 101 who joined him in his resolution this week, so maybe he was pretty persuasive.

In any case, Prime Minister Koizumi has been adamant that the proposal not be doctored before officially becoming a Diet bill. The deadline he set was the end of April, so there’s still plenty of time for fun.

The editorial in this morning’s Nikkei was about Japan Post reform and addresses several sticking points:

Prior [to the release of the plan] the LDP compiled a document called “Modes of Thinking for Japan Post Reform.” In it, there were several problems with the government’s proposal indicated, including (1) the corporation that will be financed by the government will be state-owned and privately-managed, and so there are fears that its projects will fall prey to corruption, (2) the division of Japan Post into four companies simply increases the number of positions available for 天下り (amakudari: lit., “descent from the heavens”), (3) it has not been proven that the four new companies (posts, savings accounts, insurance, and counter services) will really be independent.

Amakudari is similar to what we’d call a revolving door: the system in which high government officials retire to semi-public management or “consulting” jobs in which they can use their accumulated connections and influence to manage resources. Civil servants make less than they could with equivalent credentials in the private sector because the assumption that they’ll retire in their mid-50s and take more-lucrative jobs related to their fields. Government officials have complained about attempts to reform the system because–and it’s hard not to sympathize with them to some degree–they’ve all gone through their entire careers with the understanding that things would work this way. On the other hand, the number of redundant positions boggles the imagination, and attempts at reform are seen as suspect by the Japanese people.

Those planning the privatization of Japan Post talked this weekend about selling off in stages the remaining government-held stake in the two new firms that will handle postal savings and life insurance. Some were still balking at the idea of offloading the entire government stake in ten years, but an agreement appears to have been reached: all government shares are to be sold by the end of March 2017. The government will unveil its basic proposal tomorrow after presenting it to the leaders of the LDP and Shin-Komeito.

BTW, people occasionally ask me how much money we’re talking about here. The answer: a WHOLE LOT OF MONEY. There are about ¥230 trillion (US $1.9 trillion) in postal savings accounts. That’s between one-third and one-half of the personal savings in Japan, and the “bankers” that manage it are in a special department of the Ministry of Finance. Much of it has been invested in government bonds that no one else is buying, much of the remainder serves as a sort of slush fund for favored government projects, and the rest is invested elsewhere. This Q&A-style piece from The Japan Times last fall gives some of the figures and major problems (consider that I haven’t discussed the insurance money). I’m in favor of privatization, but–like bank, pension, health care, and social insurance reforms–it’s going to be painful.


Added at 19:20: PM Koizumi has announced his joy over the completion of the proposal. Something I’ve kept forgetting to mention, though it’s at the bottom of most articles about the issue: if the new computer systems aren’t ready in time, the beginning of the switchover will be delayed by up to six months.



Added on 5 April: The Ministry of Internal Affairs and Communications, naturally, was not looking forward to the loss of control–its objections are not surprising. The somewhat thornier issues involve how to ensure that mail delivery continues to isolated communities, and they’ve been around for months. There are still questions about the plan that raise California-energy-fiasco-type worries. From the Yomiuri :

After the two units are fully privatized, the holding company will be allowed to buy back some of the shares it sells. In addition, the outline includes a provision that allows the four postal entities to hold shares in each other after the privatization process ends in 2017.



The outline also stipulates the creation of a 1 trillion yen fund to cover the privatized entities’ potential losses in providing postal savings and life insurance services in less populated areas as part of their universal service obligations.

So they’re being privatized but only partially deregulated. From what I can tell, the opening is also made for a version of 持ち合い (mochiai: “mutual-shareholding“), a Japanese business practice that may, as that page states, “[create] a sense of shared responsibilities and obligations of each other’s business success” but also makes you wonder what the point of having four separate companies would be.

Japan Post reform is still in process. Yesterday morning, the big news was of PM Koizumi’s growing impatience with the reform panel:

The outline is based on a plan to place the postal services under a holding company in April 2007 after dividing them into four units–mail delivery, counter services, postal banking, and postal insurance.

Government shares in the postal bank and the postal insurance firm would be sold by the end of March 2017.

The outline also includes the following points to gain LDP support in the negotiations:

— The related bills will spell out that post offices will be established around the country to provide nationwide services and a ministerial ordinance will be issued to require post offices in remote areas not to close.

— To maintain financial services, the postal bank and the postal insurance firm will be required to contract the counter services firm as their agent for the time being as a condition for receiving a license. After 2017, a fund to cover deficits in provincial areas will be established.

— A system will be introduced to select postmasters for special post offices.

How to divide up Japan Post’s current services has been one of the major remaining sticking points. The proposal is supposed to be submitted to the LDP on Monday.

I thought going to Kyushu to visit Atsushi would be a break from the news cycle. It was not. Saturday and Sunday, especially, were big days, so for anyone who hasn’t gotten the rundown:

There aren’t many serious earthquakes in northern Kyushu, but there was one when I was there (go figure). We felt it at level 4 in Atsushi’s city–quite a lot of shaking, but nothing disturbed. The quake was centered just off Fukuoka, a city of about 2 million, where it registered a weak 6. There was an island with about 700 inhabitants, I think, that had bad damage. The houses were built into a hillside, so they slid on top of each other. The greater part of the population has had to be evacuated. There were also a few Fukuoka downtown buildings that had windows that broke and dropped out onto the street. A few water mains burst–things like that. Of course several hundred people were injured, though there was only one death. All things considered, the damage was minimal. There are still, however, lots of evacuees who can’t return to their houses.

*******

20 March was exactly ten years after the sarin gas attacks on the Tokyo subway system. Last year, NHK (I think it was NHK) ran a documentary that dramatized the network of rescue workers, civil engineers, police investigators, and chemical analysts that springs into action when something like this happens. This year being the tenth, the coverage largely consisted of short interviews with the wives of a few of the commuters who died. (There were 12 deaths out of thousands injured.) In most Japanese Buddhist sects, the tenth year after a death isn’t considered significant. Most have special rites on the seventh anniversary, and the focus on Sunday was on Western-style laying of wreaths. There was also a statement of apology from Aum Shinrikyo, which has renamed itself Aleph and changed leadership since conducting the attacks.

*******

Talks during Condoleezza Rice’s visit were focused mostly on the ban on US beef imports, the tiresome back-and-forth over which is going to turn all our brains to mush even if we never eat a morsel of the stuff again. The ban may be lifted…it may not be lifted…our two great nations cherish their close allegience but that’s not contingent on it’s being lifted…we’re considering lifting it…you said that before but you still haven’t lifted it. Et c., et c. Condoleezza Rice and Jun’ichiro Koizumi have the exact same hair, which made them look comically symmetrical in their poses together for the press. That’s about the most interesting thing that seems to have come out of her being here. It was certainly more interesting than the beef and rice jokes.

If you want to find out what Rice said about non-cow issues, you’ll have to see the reports of her visit to Seoul after she left Tokyo. (She and President Roh agreed that the DPRK should return to the suspended six-party talks, for instance. Of course, South Korea has also imposed a ban on US beef imports, so it was a topic there, too.)

*******

Three crewmembers of a Japanese tugboat were released by their pirate captors yesterday. (Okay, that didn’t happen on Saturday or Sunday, but it’s a story I’ve been following.) The Asahi article has pretty much all the details that were being reported yesterday. Well, it leaves out the fact that the chief-engineer guy is gorgeous, but I assume that was a question of column-inch restrictions.

*******

There’s also been more about Japan Post reform and shifts in the SDF structure, but I’ve been busy since arriving back and haven’t really had a chance to look closely at what’s going on.

Added at 22:20:

Joel at Far Outliers posted about the anniversary of the subway attacks here, with fascinating information about the angles the media used when covering them at the time and, further, about whether Aum Shinrikyo’s nature and motives were adequately understood.

I got my hair cut today, and just in time, too. It had grown to the point that I could feel it touching my ears. Hate that! I feel much better, though it’s still chilly enough that I felt kind of mentholated up there when I walked outside. It surprised me, since my hair guy had, as always, put styling wax into it. I would have thought that would be nice and heat-retaining. What is it that makes people who work in hair places, BTW, think that they’re doing a disservice if they send you back out into the great wide world without glopping something onto your head? I’ve been getting my hair cut by the same man for eight years; as he is well aware, there isn’t a strand longer than an inch or so when he’s finished. It’s not going to flop anywhere, for pity’s sake.



It’s a three-day weekend, so I’m flying down to see Atushi tomorrow. I was all ready to gloat about what a risk-taking adventure type I am, since JAL was just warned by the Ministry of Land, Transportation, and Infrastructure that the only reason none of its string of mishaps has resulted in serious embarrassment or tragedy is that it’s been darned lucky. But check out Ghost of a Flea: he may be about to take a trip in an Airbus 310 (with EZ-Detach rudder and tailfin) on the same airline that had the frightening incident a few Sundays ago. I feel much less butch now.



On the upside, in 12 hours, I will be in Kyushu with Atsushi, and in 24 hours, I will go to sleep smelling his hair. (I’m working on sort of a hair theme for the weekend.) I probably won’t post much, unless the Diet passes a resolution to have Japan Post privatized and the SDF deployed for combat abroad starting Sunday.



Oh, yeah–almost forgot the reason I’m posting this (you may have noticed it’s not exactly heavy on content). The URL www.seorookie.net will start showing my new site this weekend; I will retain iwamatodjishi.com, but it will still take you to this MT page for another week or so before switching over to the new place. The design won’t change a whole lot; though, thanks to Chris as PowerBlogs, the subtle differences are improvements. This is probably also a good opportunity to thank publicly Christine and her crew at Verve Hosting, who will not have my inane questions to deal with after the end of this month but who have been unremittingly helpful over the past year. (Trust me–the flue is open, but I can be kind of slow on the uptake when it comes to tech stuff.)

Ghost of a Flea has yet another Kylie picture up, but what caught my attention even more was a link to this site, which gives animated instructions for Westerners about to go to Japan to work. You have a sequence about navigating the office, one about visiting people at home, and one about going out drinking with colleagues. If you can stand to watch the Beavis and Butthead-ish characters (I mean, they don’t act like them, obviously, they’re just drawn like them), the information is pretty good. Telling points:

• Like a lot of explanations of tricky Japanese ceremonial maneuvers for Westerners, the one for exchanging business cards on this site doesn’t tell you about the little parts that can get you in trouble–in this case, how you’re supposed to hold two at one time. I mean, obviously, there’s nothing difficult about it physically, but if you’ve just received your visitor’s card, is there a certain set of fingers you’re supposed to hold it between while proffering yours? If you get it wrong, you could make it hard for your visitor to take your card from you. Or someone could get a nasty paper cut. Theoretically speaking, you understand.
  
• The house depicted in the home entertainment section is of the traditional Japanese kind with shutter-type front door, tatami rooms, side garden with stone lantern, and tokonoma (display alcove). What do the animators put right next to the front door to let you know you’re looking at the exterior of a realistic Japanese house? A beer vending machine.
  
• The proprietress of the bar in the sequence about drinking looks like Barbara Hale.
  
• The writer of the text keeps saying that Japan doesn’t differentiate between right and wrong. I think that’s a bad way to put an excellent point. What she’s talking about is the idea that Japan believes in extremes of behavior rather than moderation. In the West (sweeping generalization alert!), we like to get a sense of people’s real, essential personalities even in formal circumstances. If you know someone who acts one way at work and 180 degrees the opposite way outside it, you regard him as untrustworthy. In Japan, the opposite is true. You defer utterly to the group and the demands of ceremony at work, and then you let off all the resulting stress by being sloppily demonstrative while getting drunk later. Being too honest about your actual opinions in formal circumstances makes you look, paradoxically, untrustworthy–because what you need to be trusted to do is cooperate, and you may not attend to other people’s needs if you’re busy articulating your own.
  
• On the same token, those of us who were ruthlessly schooled in most of these little rules are often told, after we arrive in Japan, “You sound like an old man–no one acts like that anymore!” Years ago, a friend of mine presented a gift of sweets to her middle-aged host mother and that lady’s friends with the respectful words, “お口に合うかどうか分かりませんが” (o-kuchi ni au ka dou ka wakarimasen ga: “I’m not sure this will [be good enough to] suit your exalted palate, but [please take it]”). The assembled ladies were silent for a few beats and then burst out laughing. “You’re talking as if you were about to be interviewed! We’d be more likely to say, ‘Hey, I think you’ll like this!'” True, meeting a group of elder friends for lunch isn’t the same as doing a presentation at a prospective client’s place, but friends who are around my age and older are always complaining when we get together that they’ve had to drop a lot of the etiquette with which they were brought up. The last half-decade’s worth of hires at work don’t understand them.
  
• I think my favorite sequence is when the guy’s in the bathroom and there’s an excursus on windchimes in the middle of the directions for using the Asian-style toilet. What might have been more useful was a warning that there may not be soap or a guest towel at the hand-sink, so you need to be satisfied with splashing your hands very thoroughly and having a handkerchief in your pocket to dry them on. I can’t imagine how they missed that, since it’s one of the first things people express shock over on arriving here. If you want to give yourself a fighting chance of avoiding nasty germs, you can get alcohol-soaked wet handwipes at any convenience store. Not soap and hot water with a clean, soft towel to follow, but better than nothing.
  

Oh, and while we’re on this topic, I would just like to point out that in the months that Simon World has generously linked my little pieces on Japan Post privatization, Social Insurance reform, and Japanese views of the WOT, the link that has gotten me the most traffic from his site is my post about a musical toilet. I’m pretty sure there’s a life lesson there, but I’d prefer not to know what it is.



Added on 12 February: And, as Atushi just reminded me, I forgot to congratulate Japan on its Founding Day. But, congratulations on Founding Day, Japan!

Plans for the privatization of Japan Post are moving right along–and in predictable directions. Heizo Takenaka announced some of his team’s new proposals last week; the Yomiuri has an English version:

It also proposed requiring the companies that will manage postal savings and life insurance services to entrust their business to the network management company for a 10-year transition period from April 2007 to guarantee universal service.



…



The government plans to restrict the new status to employees of the network management company and another company that will provide delivery services, including that for delivery of certified mail and court documents.



Takenaka did not say whether the new status would be quasi-government employee status, which would ensure employees are subject to the same anticorruption rules as government employees. [I feel better already.–SRK]



He said the government would consider a system to continue universal service, as a contribution to regional communities, of postal savings and life insurance after full privatization in 2017.



In addition, the government would stipulate that there should be more than one post office in each municipality. It will pledge under the postal privatization bills to secure residents’ convenience and consider providing services in underpopulated areas.

Mail pickup and delivery is a public service, so I can see why maintaining universal access is a theoretical worry. Practically speaking, though, is there any area to which private courier or freight services refuse to deliver?



What the committee appears to be talking about is not just a one-line condition that the new corporation that handles the mails not restrict delivery by location. That bit about at least two post offices in every municipality, for example, is nice but arbitrary. If you’re familiar with rural areas, you can imagine some of the municipalities we may be talking about. Recall also that Japan is essentially one long volcanic range poked above the Pacific; there are twisty, hard-to-traverse mountain and ravine roads all over. The Kanto (Tokyo-Yokohama-Kawasaki) and Kansai (Osaka-Kyoto-Kobe) megalopolitan areas may house an unusually high proportion of the Japanese population, but the outlying areas are still outlying. I’m not aware of any regulation that says every municipality must have at least two rice-sellers or general stores, though you never know in Japan. Is it necessary (or wise) to be reforming Japan Post so that it maintains universal service by mimicking its current, drag-prone structure as much as possible–while piling on the number of corporations and rule-making bodies involved?



Can’t wait to see what they come up with for the savings and insurance divisions!

Japan changed the design and composition of its ¥500 (about US $4.50) coins a few years ago, and a few months ago, it released new bills, too. The Japanese economy being huge and having a fair number of disgruntled unemployed people, it’s a target for counterfeiters, and they’ve sunk to the challenge:

After a large number of counterfeit ¥500 coins were discovered in Postal Savings ATMs, Japan Post announced on 3 January that [its machines] would stop handling all coins at post offices in Tokyo Metro and in Fukuoka and Kumamoto Prefectures.

The fakes they’re finding correctly use an alloy of nickel and zinc (the Sinitic compound for which is 亜鉛 [aen: “sub-lead”], which I’ve always found kind of cute), but the composition is different from that in real coins. They also have misaligned stamping and leave off some marks, but according to the authorities, you do have to look closely to see the problems.



There’s also been a rash of fraudulent withdrawals of cash using faked cash cards. I believe it’s the iC system (comfortingly, the one my JAL card is allied with) that’s had the most problems, though I haven’t paid close enough attention to understand where the chink is that makes it easy to trick. Anyway, they’re still trying to determine whether the legal fault lies with banks or depositors. Koizumi says his financial team is working on it.



As far as the bills go, this is as good an explanation as I’ve seen of the new technology and the reasoning behind it–mostly, as I say, that Japan has a huge consumer economy and is a target for counterfeiters. Of course, counterfeiters have already started making funny-money versions of the new bills–as industrious and clever as these people are, couldn’t they find a way to make their fortunes honestly?–and the fact that the old notes are still in circulation means that the tricky holograms aren’t yet having much effect. After the New Year, it was discovered that large numbers of false bills had been used to buy fortunes and souvenirs at temples.