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Japan's corrupt politicians bad for its economy

By William Pesek Jr
BLOOMBERG, TOKYO
Wednesday, Mar 27, 2002, Page 19

`For all his assertions to the contrary, Koizumi has proven to be old-style LDP. Sure, he wears nicer suits, has better hair and speaks differently than his comrades, but he's cut from the same cloth.'

It takes just two words to enrage the average Japanese person these days: Muneo Suzuki.

The former political heavyweight, who two weeks ago resigned in disgrace from the ruling Liberal Democratic Party, personifies all that is wrong in the world's second-biggest economy. He reluctantly quit the party amid allegations of bid rigging and influence-peddling to direct lucrative Foreign Ministry aid contracts to companies from his constituency.

Suzuki's sordid tale is just one of many to come to light in the past two weeks. Koichi Kato, who made a run for Japan's top job less than two years ago, resigned from the LDP after a former aide was arrested on tax evasion charges. This week, Social Democratic Party lawmaker Kiyomi Tsujimoto admitted to spending a former aide's salary on personal expenses.

Corruption scandals are hardly new in Japanese politics -- 1970s Prime Minister Kakuei Tanaka was charged with accepting about US$1.7 million in bribes from Lockheed Corp to help the US airplane maker sell 21 jets to a Japanese airline.

Still, the latest rash has captivated public imagination. They have also reminded the world of the corruption that exists at the highest levels of Japanese government -- and undermines it. As the nation's economy crumbles, some politicians are too busy seeking power or lining their pockets to fix the problem.

The events show just how disconnected many politicians are from Japan's electorate. As unemployment climbs to record levels, deflation worsens and bankruptcies soar, politicians are doing nothing to stop the bloodletting. Worse, many spend more time worrying about their own careers -- and bank accounts -- than the people they're meant to represent.

No one's naive enough to believe Japan has a monopoly on corruption -- it's got lots of competition right here in Asia. Yet, as Suzuki's case attests, Tokyo is rich with examples of lawmakers and bureaucrats misusing funds. Look no further than Japan's Foreign Ministry, where bureaucrats used a secret slush fund to wine and dine diplomats, or local governments, where myriad small-town mayors have been charged with bid-rigging offenses.

Things would seem less dire if forces were in place to clean the smear of corruption and cronyism from the LDP. Prime Minister Junichiro Koizumi certainly hasn't lived up to his campaign promise to "Change the LDP, Change Japan!" Now, as Koizumi approaches the end of his first year in office, it's clear that it's business as usual in Japanese politics.

For all his assertions to the contrary, Koizumi has proven to be an old-style LDP apparatchik. Sure, he wears nicer suits, has better hair and speaks differently than his comrades, but he's cut from the same cloth.

Koizumi's all-talk-no-action act has restored the cloud of gloom and uncertainty hanging over Tokyo. That's quite a letdown for this one-party nation of 126 million people, who lack anything approaching a viable opposition. The LDP has ruled for all but 10 months since the US occupation forces pulled out in 1952.

Since the LDP is mostly a network of entrenched politicians looking out for themselves, change is pretty much impossible.

Is it any wonder so many Japanese citizens have disengaged from the political process? That they don't get to vote directly for the Prime Minister is one reason for the lack of grass-roots activism.

Add in the fact that the LDP is the only game in town and you have a perfect recipe for voter apathy.

Even when a candidate sells himself or herself as a maverick -- here Koizumi comes to mind -- they so rarely, if ever, turn out to be the real thing.

All of this gets at the reason Japan's economy is in this mess.

Even when a well-intentioned reformer steps forward, they come up against an impenetrable wall of resistance. Folks of Suzuki's ilk are there to stop change at every turn. For politicians like Suzuki, change means losing power, and their seat on the gravy grain.

One wonders if Japan has any hope unless the LDP is tossed from power for good. Maybe Koizumi should adopt a new slogan of "Destroy the LDP, Save Japan." Does the public want to stop corruption? At first glance, the question seems absurd, says Robert Feldman, chief economist at Morgan Stanley Dean Witter & Co in Tokyo. Yet in recent discussions with investors across Japan, a strange phenomenon emerged.

While discussing the idea of a Newt Gingrich-style "Contract with Japan" with clients in Tokyo, corruption was on top of the agenda. However, discussing the same issues with investors in Sendai -- a city about two hours northeast of the capital -- there was only one vote out of about 50 for putting corruption among the top three items in such a contract.

The implication, Feldman says, is that urban voters want to root out corruption, but rural voters don't, presumably because they benefit most from the public works contracts that are at the heart of corruption. If this implication is true, then prospects for reform are questionable, because the voting districts remain heavily skewed toward rural areas.

This view jibes with others you hear and read. In a recent poll on JapanToday.com about whether Suzuki should have resigned, 44-year old Yoshihiro Nakashima had this to say: "I think he should resign. I would support him if he were from my hometown. It's natural for people to support their local candidate because he can bring them lots of benefits."

In other words, as long as my town is benefiting or I'm getting my slice of the pie, whatever shady things Suzuki does are fine.

If you believe political change happens only when the people want it, Japan may have a ways to go.
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