Dogs and Demons

Because of the paradox of control versus regulation, the world of rules in Japan has a Through the Looking-Glass quality. A store must wait three years after getting a liquor license before it can sell domestic beer – but vending machines sell beer freely, even to minors, everywhere. The supermarket chain Daiei had to apply for two separate licenses to sell hamburgers and hot dogs if it displayed these products in different sections of the same store – but meat-processing standards for food manufacturers had not changed since 1904. If a supermarket sells aspirin, a pharmacist must be present and have medical tools on hand – yet nowhere else in the developed world are physicians free to dispense drugs themselves, and as a result the Japanese use far more drugs, of dubious efficacy, than any other people on earth. The Through the Looking-Glass nature of Japanese regulations goes a long way toward explaining such preposterous prices as $100 melons and $10 cups of coffee. The aggregate cost to the economy is simply incalculable. These outrageous prices, absurd regulations, weird and inexplicable public works – all the ingredients of a manga-like world – exist for the simple reason that bureaucrats profit from them.

Officials have devised many ingenious ways of cha

While bureaucrats get the lion's share of the profits from construction work, a goodly percentage flows to political parties. The rule of thumb has been that contractors pay 1 to 3 percent of every large public-works project to the politicians who arranged it, in which practice the Tax Office colludes by recognizing «unaccounted-for expenditures» (i.e., bribes to politicians and bureaucrats) as a corporate-expense line item, which in the case of the construction industry amounts to hundreds of millions of dollars a

In Mito Komon, a long-ru

The difference between Edo and modern Japan is that today we have no Lord Mito. The public suffers from chronically expensive goods and services, while bureaucrats and politicians prosper to a degree that verges on the fantastic, nowhere more than in construction, where amakudari reap post-retirement fortunes. With more than 500,000 construction firms in Japan, no ex-official will ever find himself out of a job. Their personal future income at stake, Construction Ministry bureaucrats support and encourage bid-rigging, which is endemic in Japan's construction industry, inflating the cost of public construction by 30 to 50 percent. (According to some estimates, inflated bids provide 16 to 33 percent of the industry's profits, which is between $50 and $100 billion every year.)

Just as leftist writers in the 1930s were so in love with the «dictatorship of the proletariat» that they were unwilling to admit the brutal reality of Stalinism, so mainstream Western commentators have kept up a long love affair with Japan's bureaucracy. As recently as 1997, Ezra Vogel of Harvard University, the author of Japan as Number One, described Japan's «elite bureaucracy» as one of its distinctive strengths, which «compare very favorably around the world.» «Japanese civil servants enjoy the priceless advantage of the moral high ground,» Eamo

In the 1980s, the Ministry of International Trade and Industry (MITI) was the darling of foreign commentators; today, that honor goes to the Ministry of Finance. «MOF men truly are Nobel caliber,» continued Fingleton adoringly. MOF men are «brilliant, creative, tenacious, public spirited.» They have «not only grit and technical brilliance but an uncommon sense in reading people and their needs.» Unlike the «greed-is-good» West, «MOF today is living proof that top officials can be 'rightly oriented in their own minds and hearts.' » This is due to «pride in a distinctive (and distinctively masculine) way of life, a concern to earn the good opinion of comrades, satisfaction in the largely symbolic tokens of professional success.» What could be more attractive, more worth emulating in other countries? Nevertheless, the greedy machi bugyo of the Lord Mito series, sitting in his embroidered kimono eating off fine gold lacquer, represents a cold fact of bureaucratic life: corruption. It's a genteel, smoothly organized, even institutionalized, form of corruption, so endemic as to be called «structural» and thus not usually seen as corruption as we ordinarily understand it.

The sad reality is that the Japanese bureaucracy thrives on shady money: in small ways by cadging extra expenses with falsified travel reports; in larger ways by accepting bribes from businessmen and as favors from organized crime. Shady money is the oil that greases the wheels of Japan's smooth-ru

The bureaucratic scandals that periodically rip through the Japanese media are efforts, as van Wolferen points out, to rectify outrageous excess, but they do nothing to address the structural corruption that is the normal state of affairs. In 1996, for example, newspapers revealed that Izui Jun'ichi, the owner of an Osaka oil wholesaler and a «fixer» in the Japanese oil business, had spent more than ¥75 million on wining and dining government officials, including forty-two from MITI and thirty from MOF, reaching all the way up to MITI's vice minister, Makino Tsutomu, and MOF's vice minister, Ogawa Tadashi. MITI, stung by these fierce press reports, investigated 138 employees and reprimanded six top officials. A former vice minister of the Transport Ministry, Hattori Tsuneharu (in the amakudari position of president of the Kansai International Airport), had received from Izui ¥4.9 million in cash, gift coupons, a bar of gold, and an expensive painting. (Paintings, easy to hide and difficult to value, are gifts of choice.) Izui was also reported to have given a painting worth several thousand dollars to Wakui Yoji, the chief of the MOF Secretariat – in exchange for which favor newspapers speculated that Wakui may have pressured Tax Bureau officials to relax their investigation of Izui's tax evasion.

Part of MOF's admirably «masculine way of life» involves enjoying the fun at hostess bars and other sleazy venues that are paid for by banks' settai budgets. In September 1994, Dai-Ichi Kangyo Bank treated Miyakawa Koichi, the chief of MOF's Inspectors' Office, to an evening at a «no-pants shabu-shabu » restaurant, featuring waitresses in the nude from the waist down. Miyakawa was so grateful that he let the bank people know about a surprise inspection due to take place the next day. A cartoon in a weekly magazine showed a devil at the gates of hell consulting his notebook and commenting, «For a bureaucrat from Japan's Ministry of Finance to sell his soul for no-pants shabu-shabu and yakitori, that's really cheap!»

That these scandals are chronic, not mere flukes in an otherwise honest system, is obvious not only from the sheer number of officials involved but also from their seniority. In the government ministries, a politician takes the largely ritual top position as minister, while true executive power lies with the senior career bureaucrat, the vice minister. Vice ministers from all major ministries have been implicated in recent settai and bribery scandals, and then the takings extend downward in diminishing amounts. For example, Okamitsu Nobuharu, the vice minister of Health and Welfare, was arrested in December 1996 for receiving more than ¥100 million in gifts and favors from Koyama Hiroshi, a developer of nursing homes subsidized by his ministry. At the same time,Wada Masaru, in a lesser position as the ministry's councilor, received ¥1 million from Koyama, and other officials further down the line benefited in various degrees from settai. The MHW, anxious to avoid further public scandal, carried out an in-house investigation and later fined or reprimanded sixteen employees.

Where in the past decade, in Europe, America, Malaysia, or Singapore, could we find a bureaucrat convicted of the ¥100 million garnered by MHW vice minister Okamitsu? Or the $600,000 paid by Takahashi Harunori, the president of real-estate company EIE Corporation, to Nakajima Yoshio, the former vice director of MOF's Budget Bureau in 1991? Such are the takings of those who have the «priceless advantage of the moral high ground» and stand as «living proof that top officials can be 'rightly oriented in their own minds and hearts.' »

One feature of MOF's superior moral quality is its links with organized crime. Under MOF's guidance, gangsters play a large role in Japan's financial system. In 1998, another scandal broke with the news that Dai-Ichi Kangyo Bank, one of Japan's top-ten commercial banks, extended collateral-free loans of ¥30 billion to Koike Ryuichi in 1989 so that he could buy stocks in Nomura Securities and other brokerage firms. Koike was in a business unique to Japan known as sokaiya, which is the disturbance of shareholder meetings by asking difficult questions. In other countries, people who ask hard questions at shareholder meetings are simply stockholders, but in Japan they are usually extortionist gangsters. Most large companies try to conclude their a