Japan since 1980

Cover......Page 1
Half-title......Page 3
Series-title......Page 5
Title......Page 7
Copyright......Page 8
Contents......Page 9
Preface......Page 13
Abbreviations......Page 15
Introduction......Page 17
The Pretransition Period: Developments up to 1980......Page 19
Reindustrialization and Political Stabilization, 1950-1970......Page 20
New Environment, 1970–1980......Page 24
The Transition since 1980 in Broad Perspective......Page 26
The High-Water Mark of Japanese Economy, 1980–1985......Page 27
An Accident Waiting to Happen, 1985–1990......Page 29
Economic, Financial, and Political Distress, 1990 to 2001......Page 31
Koizumi – The Unconventional Politician, April 2001–September 2006......Page 33
Beyond September 2006......Page 36
Outline of the Study......Page 38
Introduction......Page 43
Economic and Political Institutions: Is Japan Special?......Page 45
The Financial System......Page 48
Pretransition Financial Regime, 1868 to World War II......Page 49
Pretransition Financial Regime, 1945–1980......Page 51
Asian Financial System and Japan......Page 53
Corporate Governance......Page 54
Labor Market Institutions......Page 56
Lifetime Employment......Page 57
Wage Coordination and Restraint......Page 58
Company Welfare......Page 59
Life Expectation View......Page 60
LDP Dominance......Page 62
The Bureaucracy......Page 64
Constrained Policy-Making Power of the Prime Minister......Page 65
The Iron Triangle in Sum......Page 69
Introduction......Page 71
Collapse of Bretton Woods......Page 73
Inflationary Monetary Policy......Page 75
Low Transactions Cost of Institutional Change in Finance......Page 77
Advances in Computer and Telecommunication Technology......Page 78
Financial Redesign and Financial Liberalization in Broad Perspective......Page 79
Economic Influences......Page 84
Political Influences......Page 88
Technological Influences......Page 90
Financial Liberalization Becomes Official Policy in Japan......Page 91
Redesign of Japan's Financial System......Page 92
Interest Rate Deregulation......Page 93
Intermediation Finance......Page 94
Internationalization of Finance......Page 95
Japan as a Model of Financial Liberalization and Central Bank Policy......Page 96
Introduction......Page 99
Special Interest-Directed Financial Liberalization......Page 100
Key Elements of the Old Financial Regime Remain in Place......Page 101
Reliance on Administrative Guidance to Monitor Risk......Page 102
Land Prices – Equity Prices – Bank Capital – Bank Lending and Basel I......Page 103
Postal Saving System and Fiscal Investment and Loan Program......Page 104
The Bubble Economy in the Second Half of the 1980s– the Beginning of the End......Page 106
Japan's Bubble and Burst of the Bubble à la Minsky......Page 108
Nonmonetary Displacement......Page 109
Monetary Displacement......Page 110
Irrational Exuberance......Page 113
Speculative Excess and Liquidation......Page 114
The Story up to 1990......Page 115
Introduction......Page 117
Denial, Understatement, and Forgiveness and Forbearance – 1990 to 1994......Page 121
Institutional Change Wedded to the Old Regime – 1995 to October 1996......Page 123
"Recovery," Big Bang, and the Asian Financial Crisis – November 1996 to October 1997......Page 126
Financial Crisis, November 1997......Page 128
Financial Distress and Meaningful Policy Response, 1998 to August 2000......Page 130
Continued Economic and Financial Distress and BOJ Policy – August 2000 to March 2001......Page 133
The Turning Point: Koizumi......Page 135
Introduction......Page 139
Japan-Specific Restraints on Institutional Redesign......Page 141
The Belief That Japan Is Special......Page 143
Social and Cultural Characteristics Imbedded in Japanese Finance......Page 144
General Distrust of Markets and Schumpeterian "Creative Destruction"......Page 146
The Iron Triangle, Lack of Strong Political Leadership, and Lack of Critical Nongovernment Organizations......Page 147
Complacency – Japan Did Not Perceive Itself in Crisis until the Late 1990s......Page 149
Decision Making in the Context of Electoral Reform......Page 151
General Restraints: Bank of Japan Policy......Page 152
Deflation Is a Serious Problem......Page 153
It's Not My Fault Trap......Page 155
Policy Error Trap......Page 156
The Debt Trap......Page 157
Koizumi and the BOJ......Page 158
General Restraints: Japan's Fiscal Program......Page 159
Introduction......Page 164
Political Corruption and Call for Political Reform......Page 166
The LDP's Split and Fall from Power, Electoral Reform, and Party Realignment......Page 167
Economic and Financial Distress and Government Inaction......Page 170
Electoral Reform and Implications for Prime Minister Leadership......Page 173
Administrative Reform and Implications for Prime Minister Leadership......Page 176
Central Bank Reform and Political Implications......Page 179
The Policy-Making Process during the Koizumi Administration......Page 182
Introduction......Page 188
Fiscal Conservatism out the Window in the 1990s, Except in 1997......Page 189
The General Budget: Pre-1990s......Page 192
The General Budget in the 1990s......Page 199
Fiscal Consolidation Debacle of 1997 in Detail......Page 205
The Redesign of Japan's Fiscal Policy: Hashimoto and Koizumi......Page 209
The FILP Budget: Pre-1990s......Page 212
Redesign of the FILP Budget......Page 213
Introduction......Page 217
Reducing Government Spending......Page 219
Reform of Government Programs and Institutions......Page 223
Postal Privatization......Page 232
Restructuring of Government Financial Institutions......Page 233
Privatization of Japan Highway Public Corporations......Page 234
Closure or Privatization of Other Public Corporations......Page 235
Reforming the Relationship between the National and the Local Governments – Devolution......Page 236
FILP Budget Reduction Manifests the Combined Effect of Koizumi's Policies......Page 237
Administrative Reform and Amakudari......Page 238
Other Economic Policy Reforms......Page 239
Accounting for Koizumi's Success......Page 242
Koizumi: Lasting Influence?......Page 245
Introduction......Page 251
What Are Japanese Companies Like Now?......Page 253
Stricter Enforcement of the Antimonopoly Law and Reduced Collusion......Page 258
Breakdown of the Conventional Corporate Group Relationships and Increased Foreign Direct Ownership......Page 260
Increased Transparency and Openness......Page 261
Adverse Consequence of Restructuring for Japanese Workers: Increase of "Nonregular" Workers and Personal Financial Fragility and Instability......Page 262
Increasing Income Inequality and Poverty: Japan Is Not the Egalitarian Society that It Was......Page 265
Decline of Population and Birth Rates, Population Aging, and Their Effects......Page 272
Women, Work, and Birth Rates......Page 275
Immigration is Not an Immediate Solution for Workforce Decline......Page 279
Japan's Welfare Regime: Implications for the Economy and People Today and in the Future......Page 280
Japan's Welfare in Comparative Perspective......Page 281
Expected Economic and Social Difficulties in the New Century......Page 289
Overview......Page 294
Introduction......Page 296
Economic Reform and the Economy......Page 297
Demographic and Socioeconomic Challenges......Page 301
Generational Replacement......Page 302
Power of the Prime Minister: Lasting Influence of Koizumi......Page 304
The Bureaucracy in the New Japan......Page 307
Public Opinion, Policy Competition, and Potential for Change in Government......Page 310
A Final Note......Page 314
References......Page 315
Index......Page 323