Developments in Japanese Public Administration after World War II

Prof. Akira Morita

University of Tokyo

I would like to begin by thanking the organizers for inviting me to attend this auspicious event. It is both an honor and a pleasure to be here and to have the opportunity to deliver a keynote speech at this International Conference on “Korean Public Administration, 1948 – 2008” to commemorate the 60^th anniversary of the founding of the Republic of Korea.

I have been asked to speak on “Developments in Japanese Public Administration after World War II”. My focus will be on the actual processes of public administrative evolution in Japan, not on an academic review of the history of public administration studies in Japan. Bearing in mind time limitations, I will strive to cover the “Past,” “Present,” and “Future” of post-World War II public administration in Japan. Then, I will offer my perspective on the implications of the Japan story for public administration in Korea.

1. The Past

By the past, I refer to the period after World War 2 up to 1990 which is essentially a period in which Japan enjoyed unprecedented economic growth. During this period some extraordinary developments took place in public administration. Notably, it was during this period that brilliant bureaucrats enabled the government to take on the lead role in modernization of the country.

Changes in industrial policy were exemplary of such reforms. During this period, the government adopted systems and regulations for supporting increasingly proactive leadership in promoting technological development in Japan and in nurturing industries that had the capabilities to compete overseas. In the process, enterprises that would assume dominant roles in global markets in industries such as automobile manufacturing and information services were cultivated. On the other hand, for the agriculture that was deemed ill-equipped to compete in international markets, stringent policies were enacted to insulate farmers from the threat of international competition.

In addition to these steering programs for industry, elaborate financial equalization system among local governments contributed greatly to Japan’s post-war development. In order to facilitate rapid economic growth, Japan adopted measures to encourage the concentration of population to urban areas and bolstered measures to expand the affluence of major cities. Meanwhile, in order to address the emerging economic disparity between urban and rural areas, “balanced national growth” measures were adopted to prevent further widening of the economic gap by adopting reforms designed to redistribute tax revenues back to rural areas. I feel that the success of these economic redistribution policies was the critical force behind Japan’s capacity to sustain such an extended period of growth. As we have seen in many other emerging economies, the emergent disparity between urban and rural development exhibits a dampening effect on economic growth.

It should also be noted that one of the key factors behind the exemplary performance of public administration at this time was that continued population growth led to a proliferation of young workers who enhanced levels of productivity. This development served as a perfect complement to plans for promoting economic growth. In fact, in many fields, the efforts of these laborers carried the day. One of the defining characteristics of the public administration structure in Japan is its strong vertical division of power. Under the extended period of stable administration by the Liberal Democratic Party, each Ministry competed to receive their piece of the expanding budgetary pie. It can perhaps be said that in a period of expansion, such competitiveness produces the most efficient allocation of resources.

2. The Present

This era of expansion came to a halt in the 1990’s with the collapse of the bubble economy. Since the collapse, the conditions influencing public administration have differed markedly from the high growth period.

The cause of economic stagnation in the 1990’s has been attributed to a backlash from overinvestment during the pre-1990 growth period and to the migration of industry to overseas locations in response to forces of economic globalization. Continued growth in Japan was hindered by a burden of excessive national debt and the economy experienced a reversal of fortunes. Accordingly, the strategies which supported economic growth in the past were rendered ineffective and a high level of disconnect emerged between the demands of the era and the administrative systems that existed.

Although tax revenues declined significantly, the government was resolute in its desire to ensure that public administrative services were not entrenched. With insufficient funds to cover national debt payments and a policy to maintain current levels of government services, financial conditions worsened. Amidst these deteriorating conditions, the political landscape also changed. In 1993, the 38-year continuous rule of the Liberal Democratic Party came to an end and the country entered a period of political instability. Consequently, in the mid-1990’s, in response to rising public discontent, the ruling Cabinet moved to enact a series of reforms of the public administration system.

The first set of reforms were directed at decentralization of authority. The aim was to harness national vitality by loosening centralized control of the public administration structure and delegating a higher degree of administrative independence to the local governments. The second set of reforms made under the Hashimoto Cabinet included repositioning of the Prime Minister’s office at the core of government activities in order to establish a degree of leadership control over the reforms. This was carried out in conjunction with initiatives to reorganize and downsize administrative activities in order to respond to severe budgetary constraints. In the process, the number of Ministries was reduced and responsibilities were reshuffled. An “executive agency” model structured on the English approach was adopted wherein administrative activities were outsourced to “Independent Administrative Organizations”. Further reforms followed. These included judicial system reform and corporatization of the national universities. Today the trend continues as reform of the civil service is underway.

The vast majority of these reforms were based on the fundamentals of New Public Management (NPM) that guided public policy reforms throughout Europe in the 1990s. Under the Koizumi Cabinet which was established in 2001, the NPM approach was particularly evident. Illustrative of this was postal reform which privatized the Postal Service in an attempt to reduce government expenditure and hasten recovery of the eroded public financial base.

I believe that it is too early to evaluate the effectiveness of these reforms. On one hand, opposition to reforms to curtail profiteering of vested interests has been evident through resistance shown by politicians, special interest groups and bureaucrats. On the other hand, it cannot be denied that it will be difficult to enact the reforms as planned in this new century, amidst the sudden escalation of costs related to maintenance of the social welfare system.

3. The Future

As one considers the future development of public administration and public policy in Japan, the rapid decline in population which in turn is giving rise to an aging society is a requisite point of emphasis. The Japanese population reached its peak of 127 million in 2005 and has been declining since then. It is projected that by 2050, the population will be less than 100 million in Japan. This population decline which is attributed to a falling birthrate, will in turn increase the proportion of aged in the population. In the final outcome, it is projected that over 30% of the population will be elderly. In such a case, two young workers will be required to support one elderly pensioner.

Amidst such a trend, a progressive deterioration of national and regional public finances can be expected. On one hand, a reduction in workforce numbers portends a reduction in tax revenues. On the other hand, an aging society exacerbates demands for the provision of health and welfare support services.

The challenge for Japan’s public administrators is how to cope with this social structure change. It is anticipated that from this point on, the aging of the urban population which has until now been supporting rural subsistence will quickly escalate. It will be a difficult challenge to continue to maintain existing governmental services while at the same time ensuring that the burden of supporting such services is equitably distributed across regions and across generations. In addition to confronting the added burden of high taxes, policies must be developed and implemented to ensure that the universally high standard of social welfare services that Japanese citizens have become accustomed to can be maintained.

On the issue of changing population demographics, the essence of Japan’s aging population problem stems from the population boom of the late 1940’s. Accordingly, it is expected that when this generation finally passes through the system, a balance in the population structure will be restored. Therefore, the challenge for policy makers going forward is to respond accordingly to this long-term trend by recognizing that the next 20 to 30 year period will be a time for riding out the storm. To do so, excessive infrastructure and human capital will have to be pared down and a suitably reduced level of services will have to be put in place in order to ensure fiscal balance. In actuality, due to the reduced number of 18 year olds in Japan, the supply of further higher education institutions in Japan is progressively outpacing demand.

With all that I have said in regard to the challenges facing Japanese public administrators, it begs the question “How will Japan’s public administrative organizations manage these issues?” Although personally, I hold the proficiency of Japan’s bureaucrats in high regard, I also harbor a sense of trepidation.

Japan’s bureaucrats have demonstrated in the past the ability to draw on their specialized skills to effectively cope with environmental changes. These abilities have over time become systematically entrenched. Therefore, I optimistically expect that we will see a repeat performance of these coping capabilities in regard to these future challenges.

Regarding my feelings of trepidation, the first concern I have is that the system in which these highly competent bureaucrats work is outdated and calcified. To this point in time, public administrative reforms have been driven by external pressures. The question is can bold, proactive reform be initiated from inside government circles?

The second concern I have pertains to the extensive amount of discontent directed at public administrators which emerged on the heels of the slump in the 1990’s. In reality, one cannot deny that the public administration system has had its share of problems. However, if public criticism of the public administrators continues to the point that it begins to adversely affect the morale of bureaucrats, in the end, it will be the citizens who will bear the loss. The public administration system is indeed in need of reform in order to improve transparency. In supporting this, it is also imperative for academic enquiry within the field of public administration studies to investigate these issues.

4. Regarding Public Administration in Korea

In closing, I would like to say a few words in regard to the relevance these developments have in respect to public administration in Korea. The differences which exist in regard to the structure of governance and the administrative cultures render a simplified comparison between Japanese and Korean systems both difficult and risqué. Nevertheless, as a general impression, I think that some of the characteristics between the countries are remarkably similar. In particular, during the latter half of the 20^th century, Korea followed the model established by Japan in realizing tremendous economic growth achievements. I believe that as the government faced the issues it encountered during this growth process, it developed its administrative activities by studying Japan’s policies and adapting them to work in a Korean context.

However, as one turns to the future, it appears that even this pattern will change. In regard to many thematic issues, perhaps Korea will lead and Japan will be forced to play catch up. The biggest factor supporting this contention relates to the issues of declining birthrates and aging populations that I touched upon earlier. For the time being, the rate at which the population is aging is still higher in Japan. However, the birthrate in Korea is even lower than the birthrate in Japan and so Korea is potentially entering an era of declining population and societal aging that could surpass even the pace in Japan. Interestingly, during the 1990’s when the Japanese economy was stagnating, Korea managed to accomplish levels of growth that far surpassed Japan. However, like in the Japan experience, this growth is what has given rise to the impending demographic transformation. Accordingly, from this time onward we are entering an era in which Japan will be able to study Korea’s policies, and adopt the best of the bunch for its own.

It is worth noting that the issues of declining population and societal aging have become commonly held problems in all the countries in the Asian region that have recently experienced rapid economic growth. However, I feel that as it stands now there is a high possibility that Korea will continue to lead the pack in this regard. In confronting such a trend, what type of administrative system and policy response will be desirable? This is a challenge that scholars in public administration studies must endeavor to resolve, for this is a problem that is relevant to all Asian nations. As such, from this point on, it is vital to cooperate in order to advance research in this regard.