Dogs and Demons

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 channeling funds into their own pockets. The River Bureau, as we have seen, has made a particularly lucrative franchise of its work.

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 annually.

In Mito Komon, a long-running Japanese television series set in the Edo period, Lord Mito, the uncle of the Shogun, travels around the country incognito righting wrongs done to innocent people. The scene changes with each episode, but the villain is invariably a corrupt samurai machi bugyo, or town administrator, whom we see seated in his spacious mansion before an alcove decorated with rare and expensive art, counting gold from ill-gotten gains. His victims have no recourse against him. Only at the climax of each episode does Lord Mito's attendant raise high his paulownia-flower crest and reveal his true identity, whereupon the administrator falls to the ground in obeisance and is carried off for punishment.

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,» Eamonn Fingleton wrote in his book Blindside, which aimed to show «why Japan is still on track to overtake the U.S. by the year 2000.» «Their actions,» he continued, «will be judged only in terms of how well they serve the overall national interest. Their objective is to achieve the greatest happiness of the greatest number of people. Moreover, they take an extremely long-term view in that they seek to represent the interests not only of today's Japanese but of future generations.»

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-running relationship between the bureaucracy and business, and that features in the expensive practice of settai.

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 annual meetings in less than an hour, so sokaiya is a considerable threat. The answer is to pay the gangsters off. Nomura paid Koike as much as ¥70 million to keep quiet, and later it was revealed that all the other top stockholders and major banks had paid Koike as well.

The fact that officials enrich themselves at public expense is not considered to be more than a minor evil in Japan and the rest of East Asia, because people expect these same officials to manage the resources of the state in a wise and efficient manner. There is an ongoing debate in East Asia over the virtues of open, Western-style bureaucracy versus the paternalistic «crony-capitalism» found in Japan. Apologists for «crony-capitalism» admire the way that officials can easily and freely channel funds to pet industries and projects without having to engage in raucous policy debates in public. However, in this very freedom, lies the source of danger.

The muckraking journalist Lincoln Steffens, who exposed Tammany Hall-style corruption in American cities a century ago, defined «privilege» as the essential problem of corruption. What Steffens meant by «privilege» was that those with money get access to government resources; those who don't pay up go without. This is why corruption has to be taken seriously: privilege skews the way the state assigns its resources. Herein lies the key to modern Japan's mismanagement. Official support doesn't go to those who need it but to the privileged – those who pay bureaucrats the most. Looking forward to amakudari rewards, officials lavish funds on building up massive overproduction in one old-fashioned industry after another, rather than support new business involving services and the Internet. The pachinko industry hires ex-policemen as amakudari, and pachinko parlors overrun the country. River Bureau officials profit from dams, so dams go up by the hundreds. Useless monuments sprout and the seashore disappears under cement because of the privileged position of construction companies. The shady money flowing into officials' pockets is molding the very look of the land.

6. Monuments

Airports for Radishes

Aujourd'jui rien.

– Louis XVI, writing in his diary on the day the Bastille fell (1789)

Information is unreliable, knowledge of new techniques used abroad scarce, and public funds distributed not to the sectors that need them but to those who pay bureaucrats the most – in this dim twilight world, Japanese officials are losing touch with reality. Government agencies feel they should be doing something and, unable to see what the basic problems are or how to address them, they turn to building monuments. Monument construction is profitable, too. Anyone who travels in Japan will be