A year after taking office as Japan's prime minister, Junichiro Koizumi the flim-flam man of little accomplishment is familiar to all of us.
But is it possible that there is another Koizumi we have missed? Could it be that on the dark side of Koizumi's moon, there is an astute administrator advancing a reform program so large and ambitious that we can't see it? It's time to consider this prospect, and whether Japan- watchers have been looking for signs of progress in the wrong places. Time, too, to recognize that the prevailing consensus on Koizumi's Japan reflects the erroneous -- not to say blinding -- assumption that the Anglo-American model is the measure of economic, financial, political, and administrative reform.
The fact is that Japan now has four sweeping reform programs well into their middle years. They include makeovers of the financial services sector, the huge, opaque universe of public sector agencies and corporations, the national tax system, and local government finance. These endeavors have been slow-moving and little publicized. But they're so far along in their timetables that they can't be ignored or dismissed any longer.
"All the talk of `no reform in Japan' is completely off- base," says Stephen Church, the Tokyo representative of Analytica Japan, a financial research consultancy. "It's a question of understanding a Mandarinate administration -- seeing, or not, what is right before our eyes."
Do I join Church in suggesting that Japan is midway in a reform era worthy of its great predecessors -- the Meiji modernization of the late 19th century being the most familiar. Am I suggesting a reinvented Japan will come out the other end of this process? Nothing less.
As to the shape of the Japan to come, it's immensely complicated but easily put. To judge by reform programs now in motion, Japan will emerge over the next 10 years or so looking very like an updated version of Germany's postwar social democracy -- a "social market" system made for the 21st century.
Koizumi has disappointed almost everybody in terms of his ability to meet his promise to advance Japan out of 11 years of sluggish growth, recession, and stasis. Political reform has gone nowhere: At this point, the prime minister appears vulnerable to pressures from anti-reformists in the governing Liberal Democratic Party.
As to the banking mess, it seems to sit there unattended, except for shows of concern that never amount to much, even as the world grows ever more anxious about the consequences of a sudden crisis. "They just don't get it" is the familiar refrain.
These concerns, while justified, reflect a failure of perspective. Outside observers over the past decade have allowed their own preoccupations and preconceptions to obscure some rather large phenomena. It's a form of narcissism, in my view, and it leaves the outsiders as the ones who don't get it.
Consider the following reform programs as an exercise in the restoration of vision:
1. Financial institutions are consolidating to form a universal banking system modeled on Germany's "Allfinanz" institutions. Policy duration: 1985-2010.
2. A shift from a US-style taxation system -- an inappropriate fit with Japan's social welfare burdens -- to a EU-style system based on proportionately higher indirect taxes and a value-added tax. Policy duration: 1985-2020;
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