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    Money changes everything

    There’s this plan for three-pronged economic reform, the overall aim of which is to put more tax revenue directly in the hands of the local governments that ultimately use it. In the existing system, much of the money only gets back to them after going through federal ministries and their attendant agencies, public corporations, semi-public corporations, and various hangers-on. The reforms would change that by giving local governments the rights to collect more of the tax money and use it as they see fit.

    This means a significant loss of control and influence for the federal-level ministries, so they’ve come up with their own three-pronged resistance.

    Some are hoping that, if they loudly proclaim what a good idea they think the subsidy cuts are, no one will notice if they quietly work to keep a few key ones unchanged:

    Only the Cabinet Office and the Internal Affairs and Communications Ministry wholeheartedly supported the subsidy-cut plan put forward by the six organizations. But even within the Cabinet Office, rumblings were evident, with its demand that special consideration be given to the 33.9 billion yen in subsidies Okinawa Prefecture receives from the central government.

    Others are brazenly refusing to play along–not out of self-interest, but rather because (never heard this one before, huh?) it would be irresponsible to the children:

    The six organizations’ proposal called for a cut in state subsidies for services provided by local governments under the compulsory education system by 1.13 trillion yen, but the education ministry flatly refused to play ball. “The subsidies are essential from the standpoint of preserving the equal opportunities for and standards of education, as guaranteed by the Constitution,” the ministry said.

    For anyone reading from the US, bear in mind that this is not quite as bad as hearing the same thing at home would be. The Japanese public education system has plenty of flaws, but it is working better overall than its American counterpart. Still, you have to wonder whether the Monbusho has been studying the NEA playbook.

    Sadly, not all the other ministries have an obvious it’s-for-the-children angle to work, so they’re forced to get craftier. They’ll agree to the cut subsidies, all right, but somehow the money thus “freed” will end up being even more firmly under their control. This, too, could have been modeled on some NEA or AFT proposal, whereby competency standards for schools somehow ultimately mean that we’re paying the non-performers more in funding:

    Although the construction ministry came up with a plan to reduce subsidies for repairing and improving rivers by 7.4 billion yen, and the agriculture ministry proposed slashing donations to agricultural committees by 2.8 billion yen, the savings will fall outside tax revenue to be transferred to local governments under the reform plan.

    Instead, the two ministries want the bulk of the proposed savings to be transformed into grants that can be spent at their discretion for any purpose deemed suitable.

    Don’t you just love it?

    9 Responses to “Money changes everything”

    1. John says:

      The middlemen are going to be cut out only when they die off in the coming demographic implosion.
      Speaking of middlemen, don’t you love the naga-negi with the ANA tape around the bunch? With what they charge for some vegetables, I think they’re flying on a first class ticket.

    2. Sean Kinsell says:

      LOL. For those who don’t live here, what John’s talking about is the way the cargo divisions of All Nippon Airways and Japan Airlines put label tape on some of the vegetables they ship. Presumably the idea is that, if your spring onions are shipped by one of the world’s least crash-prone airlines, the safety rubs off on their edibility, too. Or something. And yes, considering what you pay for them, you get the impression that they got the whole champagne-and-flat-reclinable-seat treatment.
      Re. your first paragraph, readers outside Japan may also need reminding that there was a major restructuring of the ministries four years ago, designed to increase efficiency and streamline operations. It probably did result in the hiring of fewer entry-level bureaucrats (one of the ways middlemen “die off,” of course), but there are still…um…many strides to be made.

    3. John says:

      I was also talking about the distribtion middlemen. One of the reasons things are so expensive in Japan is that there are about 4 layers of distribution more than in the States. A lot of this is due to political pressure from the small business owners. They don’t want efficiant distribution systems that favor big box discount stores. They also keep the zoning laws from letting those stores enter the big cities. You don’t see many Daiei or Ito Yokado’s in Tokyo proper (although I used to shop at the Daiei in Shimo Kitazawa, it was almost walking distance frmo my apartment).
      The restructuring of the Ministries might have eliminated some secretarial staff, but how can ex-Labor Ministry officials know or do anything about hospital fee reforms and drug approvals? I don’t think many mid-level managers from either Labor or Health and Welfare got the boot. The combinations just didn’t make a whole lot of sense.

    4. Sean Kinsell says:

      Ah. I got sidetracked into thinking about grocery shopping, which I will clearly not have time to do today.
      You’re right; it’s only in the last few years that we’ve had the sudden efflorescence of discount stores like Don Quixote, and even they aren’t built on the big-box model. (I don’t think; maybe they do the clustered-around-warehouses thing even if the individual outlets aren’t very big, though.)
      My understanding is that the combinations were less extensive than might have been projected. That is, I don’t think they literally took people from the Ministry of Labor and just shoved them onto Social Insurance teams, though I guess anything’s possible. You’d know better than I. The point about finding ways to keep hiring people who will protect the ladder you’re halfway up is a good one. (It applies to college professors with outmoded theories and such, also.)
      Distribution is Byzantine at both ends here (that is, both the supply chain to manufacturers and the pipeline from them to consumers). That’s one of the reasons that the mere 30% of the economy that competes internationally has to carry the rest. I think what Japan has ahead of it is a long period of muddling through as patronage and keiretsu is slowly replaced by contract. As you say, there’s no incentive for people who are benefiting from the current sclerotic system to move.

    5. John says:

      I started digging into the distribution system when my wife bought an EOS-3. It was 30% cheaper buying from B&H in Manhattan than Yodobashi in Shinjuku. My only reaction was: WTF? After learning the root casues, my reaction was still: WTF? But in their defense, Japanese firms see employment of large numbers of people as one of their corporate goals. US firms dont’ give a rodent’s rear end about their employees. I’m not advocating Japan-like sclerosis in the US, but managers with a little more sense of the human cost of their actions might be nice. But you can’t legislate morality. I spent 2 years in a country that tried that.

    6. Sean Kinsell says:

      Yeah, part of Japan’s solution to it’s post-War economic collapse was, of course, to create as many jobs as possible, even at risk of redundancy. And it’s not surprising that they kept it up indefinitely; it seemed to be a good working policy, given the boom that followed.
      At the same time, as you say, forcing consumers to shell out for goods at inflated prices is just as much a “human cost” as putting someone out of work. Not an easy balance to strike, but then, what in life is perfectable?

    7. John says:

      “forcing consumers to shell out for goods at inflated prices”
      Not to mention 0 – 0.25% interest rates on savings accounts, and rules that force you to buy stock in bundles of 1000 shares. Kind of hard to mitigate risk with diversification, there. Japanese people save more than Americans because their money doesn’t work for them, it just sits there in stunned silence for 30 years.
      “but then, what in life is perfectable?”
      Nothing. Except perhaps the Grand Unified Theory.

    8. Sean Kinsell says:

      Don’t forget the milennium-long mortgages if you actually expect to own your house.

    9. John says:

      Is anyone buying? A few years ago my company was looking for a new building, no one was buying new property because they knew that with the population decrease coming in 15 years, the investment’s value will decline significantly. Paradoxically, because no one is buying, the dual problems of lack of market fluidity and lack of substitutes in the housing market keep the rents at insane prices.