To see where all the Zaito money went, one must step boldly into the swamp of bureaucratic finance. The breeding habits of tokushu hojin are remarkable: ninety-two tokushu hojin, grouped under various ministries, have spawned thousands of koeki hojin, of which the central government oversees 6,922 and regional governments 19,005. Amakudari run most of the koeki hojin associated with the government, while ex-officials and employee welfare funds of the various ministries own a major portion of their stock. The koeki hojin in turn breed grandchildren, owned by the same people: full-fledged private profit-making enterprises that, without having to make public bids, gain a large share of public-works contracts. The various corporations fall under the jurisdiction of different ministries, which use them like.cattle to be milked. MITI sponsors a herd of 901 hojin, the Ministry of Education 1,778. All these hojin feed on Zaito money. Their breeding ground is the ministries that oversee them. They have no natural predators. Their droppings take the form of huge pellets known as monuments.
At the top of the list is the Highway Public Corporation, Doro Kodan, the largest of all the swamp creatures, king of the jungle. To build and manage Japan's highways, it has an operating budget of ¥4.4 trillion, roughly half of which comes from road tolls and other highway receipts; Zaito borrowings supply the rest. (The Highway PC is in fact Zaito's single largest borrower.) Over the years, the Highway PC has sunk into a quagmire of unrepayable debt; its cumulative red ink had come to well over ¥20 trillion by the end of the century. At this level, it rivaled even the notorious Japan National Railroad debt (¥28 trillion) and by 2002 might even surpass it. This desperate financial situation lies behind the high tolls, such as the ¥1,700 charge to drive for three minutes over the bridge to the New Kansai Airport.
The management of highways has its profitable side, however-the operation of service and parking areas along the freeways, with their attendant food and drink concessions, as well as telephone and car-radio monopolies. These monopolies lend themselves to schemes whereby bureaucrats make money for themselves. Here's how it works: The Highway PC creates a koeki hojin known as the Highway Facilities Association, which owns and manages the thousands of service and parking areas and has annual revenues of ¥73 billion, making it Japan's seventh-largest real-estate company. For this it pays the Highway PC only ¥7 billion in fees (less than 10 percent of revenues); the rest goes to the amakudari who run it. In turn it contracts out the work of operating the service areas and parking areas to agencies whose qualifications are that ex-bureaucrats from the Highway PC and the Construction Ministry employee- welfare funds own most of their stock. These companies have combined sales of ¥545 billion and employ 26,000 people, almost three times more than the number employed by their grandfather, the Highway PC. Add in the sales earned by the Highway Facilities Association, and the earnings of these subsidiaries come to more than ¥600 billion annually, a large part of which is pure profit, since the Highway PC awards cushy bloated contracts with no public bidding.
What all these numbers tell us is that the retired bureaucrats from the Construction and Transport ministries who run the Highway PC have neatly removed the profits in road management from the Highway PC's budget and funneled them into their own pockets. Every time the Highway PC builds a new highway, the public pays high tolls, shouldering the burden of paying off the Zaito debt, while the bureaucrats profit from new service- and parking-area concessions. Therefore it is imperative to build more and more highways.
Everywhere you look, you find parasitic tendrils sucking nourishment from the flow of Zaito money. The favorite technique is marunage, «tossing it on,» by which an agency midway in the food chain receives a contract from the government and then tosses the project on to a subcontractor. The agency receives hefty fees in spite of not having done any work.
An example of marunage is the New Development Materials Company, an enterprise in the purview of the Ministry of Posts and Telecommunications (MPT). Anyone who has been awarded a contract to build a new post office must order materials through this company, although its business is entirely marunage – it simply channels orders to the suppliers that the builder would have used anyway. The contractors who design new post offices do not particularly mind, however, as there are only four of them and MPT employee funds own most of their stock. MPT has dozens of other profitable marunage subsidiaries, such as Japan Post Transport, which subcontracts the job of collecting letters from mailboxes and delivering them to post offices. This explains why the post office charges some of the world's highest postage rates. In recent years, postage rates have risen so steeply that people send letters to Hong Kong in bulk and have them re-posted to Japan one by one. International airmail from Hong Kong is cheaper than the domestic post.
The shell game goes on. Just as MOF found a way, via Zaito borrowings, to remove much of the budget from the overview of the Diet, individual ministries have found ways to raise money on their own account, thus bypassing MOF. A favorite technique is to establish a gambling venue from which the ministry takes a share of the proceeds via a koeki hojin. Thus the Transport Ministry has ¥6.6 billion at its disposal earned from boat racing, while MITI rakes in ¥16 billion from auto and bicycle racing. The police, meanwhile, make sums that dwarf those of all other ministries combined from their involvement with pachinko.
What happens to all this money is a mystery. In the case of MITI, the subsidiaries that handle the gambling earnings do not publish the names of the agencies to which they distribute the money. The official reason is that the United States might sue Japan at the World Trade Organization if it learned that MITI was subsidizing certain industries. The real reason is that most of the money flows to comfortable amakudari nests, such as the Industrial Research Center – the recipient of roughly $1 million a year for each of its twenty-three amakudari employees – for no work that anyone has been able to discover. A disgruntled MOF official remarked, «[Racing money] is not checked by MOF. It's MITI's pocket money. It's a warm bed of privilege that MITI will guard to the death.»
On the day the Bastille fell in 1789, Louis XVI went hunting and had a rather nice day; the news of the fall of the Bastille meant very little to him. In hindsight, we know that it was one of the pivotal events in world history and that it cost the king his head. But on that day hunting took priority, and in the evening the king wrote in his diary: «Aujourd'hui rien,» 'Today, nothing.'
The Japanese bureaucracy does not realize that the Bastille has fallen. When a reporter from the Nikkei Weekly pointed out that the value of the collateral on which banks granted their bad loans – mostly land – had dropped to the point that the banks can never recover the principal, a senior official at the Banking Bureau scoffed that it was, after all, «just collateral.» He went on to say, «There is enough cash flow for most companies to make payments on these loans, especially with current low interest rates.»
As we have seen, corruption in MOF is widespread and well documented. Scandals in 1997 and early 1998 resulted in a public raid of MOF's offices by police investigators, and two suicides, not to mention lots of salacious details about no-pants shabu-shabu. Yet, in an interview by the Mainichi Daily News in February 1997 concerning the bribery scandal of Nakajima Yoshio, the recipient some years earlier of $600,000 from the EIE Corporation, Sakakibara Eisuke (then vice minister of MOF) responded that this had been «emotionally magnified,» «an anomaly.» In February 1999, as the government was about to infuse ¥7 trillion into the failing banking system, he claimed that the financial crisis would end «in a week or two.» This despite the fact that admitted bad loans (at that time) amounted to ¥49 trillion, seven times the amount of the government bailout.
Alas, the crisis will not end in a week or two, because the world has changed. For MOF, no harkening after the old days of protected local markets will save Japan's depressed stock market, bankrupt pension funds, banks submerged in red ink-and a national debt that is the highest in the world. Fundamental problems beset other ministries as well. And yet the bureaucrats have still not been called to account. When the official at the Environment Agency remarked, «Even if underground water in Kobe is contaminated by chemicals, few people drink the water,» he was essentially responding, «Rien.» Dioxin in the water table? Not to worry. As for the destruction of Japan's last great wetlands at Isahaya, well, said the chief of the Ministry of Agriculture, Forestry, and Fisheries, «The current ecosystem may disappear, but nature will create a new one.»
For those looking to what the future is likely to bring to Japan during the next few decades, the answer 'Rien' is an important one to understand. It rules for a simple reason: the Zaito piggy bank is still flush with postal savings. No force on earth can stop the forward march of Japan's bureaucracy for the simple reason that there is ample money to support it.
«Rien» does not mean just business as usual. As we have seen earlier from the Law of Bureaucratic Inertia, it means gradual acceleration: more of the same business, and faster. Most readers will be familiar with Dukas's music for The Sorcerer's Apprentice, which was featured in a famous animation sequence in Walt Disney's Fantasia. The story is that a sorcerer asks his apprentice to fetch water while he is away, but the boy is too lazy to do it himself. He uses a bit of magic stolen from his master by which he empowers a broom to fetch the water for him. For a while, all goes well. But the water keeps accumulating, and the apprentice realizes that he doesn't know the spell that will make the broom stop. The broom multiplies. Soon hundreds of brooms are pouring torrents of water. The music builds to a climax – there is no stemming the flood now – but finally the sorcerer returns, and in an instant the brooms stop and the waters recede.
Japan's bureaucracy is like this. Before World War II, the bureaucrats had already consolidated power but had to share it with the armed forces and the big zaibatsu business cartels. After the war, with the army and the zaibatsu discredited, politicians, the press, and the public consigned their fate to bureaucrats, allowing them near-dictatorial powers and asking no questions. For a while, the system worked reasonably well. But in the 1970s, things started to get out of hand. Government agencies began to bury cities and countryside under ever more aggressive building schemes, piling dam on top of dam and landfill on top of landfill. The tempo of the music sped up. Agencies started multiplying. First there were tokushu hojin, then there were koeki hojin, and finally there were companies like Friends of the Waters – all dedicated to building more dams, more roads, more museums, more harbor landfill, more airports for vegetables. By the end of the 1990s, there were thousands of brooms fetching water, most of it the color of red ink.
In Japan's case, unlike that of the sorcerer's apprentice, there is no wizard who knows the charm that will stop the brooms. The scale of public works on the drawing board for the next two or three decades is mind-boggling: 500 dams planned, beyond the more than 2,800 already built; 6,000 kilometers of expressways beyond the 6,000 already managed by the Highway PC; another 150,000 kilometers of mountain roads on top of the 130,000 kilometers already built by the Forestry Bureau. Nagara Dam, which resulted in three large river systems being concreted, was just for openers. «Why not go and connect those systems to Lake Biwa?» asks Takasue Hidenobu, the chairman of the Water Resources Public Corporation. For yet another Lovecraftian thrill, one need only look at a map of Japan to see what he is suggesting – nothing less than the demolition of a mountain range, as Lake Biwa sits on the far side of one, in a completely different prefecture from that of the Nagara Dam river systems. Meanwhile, Osaka Prefecture has plans to fill in all of Osaka Bay to a depth of fifteen meters. The music is building to a crescendo.
The process has the insistent quality of Japan's march to war in the 1930s. Inose Naoki writes:
At the moment, our citizens are waiting again for the 'End of the War.' Before World War II, when Japan advanced deeply into the continent, it was like the expansion of bad debts [today], and unable to deal with the consequences, we plunged into war with the United States. We should have been able to halt at some stage, yet even though we were headed for disaster, nobody could prevent it. At this point, lacking an «Imperial Decree,» there is absolutely nothing we can do to stop what is going on.
