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2 août 2012 4 02 /08 /août /2012 01:33

Osaka Mayor Hashimoto's Dramatic Reform Agenda Moves Forward in the Diet


Whither Japan has not before posted thoughts on Osaka mayor Hashimoto Tooru and his variously translated (or untranslated) “Osaka One” Japanese Prime Minister Kakuei Tanaka during a... Japanese Prime Minister Kakuei Tanaka during a visit to the White House in 1973 (Photo credit: Wikipedia) (Osaka Ishin no Kai) reformist movement, except to note that last month he lauded PM Noda Yoshihiko as a “man who gets decisions.” Recent events confirm that Hashimoto and, perhaps more importantly, his movement are likely to bring big—perhaps epochal— and needed changes in Japan’s political economy. This week the ruling Democratic Party of Japan (DPJ) and the main opposition Liberal Democratic Party (LDP) joined with five lesser parties to begin drafting legislation to realize Hashimoto’s vision of Osaka on the same administrative level (to, 都, translated as “metropolitan prefecture” or metropolis) as Tokyo and with the same autonomy. The goal is to pass the bill in the lower Diet chamber this month, and passage into law by both Diet chambers is a possibility. Importantly, the concept being promoted is not only to elevate the status and autonomy of Osaka, but of all municipalities with populations over two million, of which there are some ten immediate candidates, including Yokohama, Sapporo, and Nagoya. It is an iron rule of political economy that centralization stifles initiative and innovation (witness Obamacare in the U.S.), and decentralization nurtures initiative and innovation. Decentralization and local autonomy is the administrative equivalent and agency of free (or freer) markets and is pro-competitive, while centralization is the equivalent and agency of restrictively regulated (unfree) markets and is anti-competitive. Ever since the premiership of Tanaka Kakuei (1972-74) who instituted a Napoleanic all-Japan administrative structure and centralizing ethos, Japan’s regions have been increasingly dispirited and debilitated by arrogation of authority by central government bureaucracies and the extension of these bureaucracies to local levels. A habit of looking for permission, and money, from Tokyo is the norm in Japan’s regions, and is responsible for stifling innovation and growth. The huge financial and societal opportunity costs of this system have long been apparent—and have been seen is stark relief in the barriers that have stood in the way of rapid recovery and reconstruction of the Tohoku earthquake/tsunami disaster areas; but vested interests as always have resisted change. Hashimoto and his Osaka One movement are demanding a “reset” of this system. The Nihon Keizai Shimbun—which tends to straddle reformist, free market advocacy and big business, vested interests conservatism in matters like this– calls out in an August 1 editorial for clarification of the many issues that remain vaguely understood about Hashimoto’s Osaka to concept. The concept includes enacting new legislation permitting the newly to be elevated metropolises to establish “special districts” as Tokyo does now. To make administrative devolution viable, it must be accompanied by revenue sources, which means changes to Japan national and local tax systems: not something to expect or necessarily want during the next month. The Nikkei notes that the proposal now before a Diet committee no longer uses the term “to” for the new metropolitan designations, and is no longer only about Osaka. Also, it is pointed out that the general public is still vague about what Hashimoto’s concept really entails. Notwithstanding these questions and reservations, it is surely a sign of progress that the reform agenda of the Osaka One movement is now being advanced. Japan desperately needs deregulation and locally incentivizing reforms in government administration at all levels. In the next post I will present key points of the truly fascinating “Eight Policy Restoration” (維新八策) reform manifesto of Hashimoto’s movement, published on July 5. Also, a bit of bio on Hashimoto Tooru himself who breaks the mold for Japanese politicians.


This article is available online at: http://www.forbes.com/sites/stephenharner/2012/08/01/osaka-mayor-hashimotos-dramatic-reform-agenda-moves-forward-in-the-diet/

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