A Primer for Japan’s Latest Political Scandal

Japan’s political pundits are agreed: The days of Noboru Takeshita’s government are numbered. Rocked by almost daily revelations of influence-peddling at the heart of Japan’s ruling elite, less than 15% of the Japanese public now supports the Takeshita Cabinet. If the Recruit scandal had not cast a shadow over his most likely successors, the man would surely be out of office already.

The Takeshita government is therefore doomed. The struggle to find a successor within the ruling Liberal Democratic Party, the progress of the investigations of the public prosecutor’s office and the mass media’s uncovering of another spectacular wrong-doing will determine when and how the end comes for Takeshita. A comeback is almost unthinkable.

The whole idea of governments falling makes headline writers drool. There is no doubt that it creates a tingle of excitement in Americans, schooled in the constitutional regularities of four-year terms.

But the U.S. system baffles foreigners just as their systems bemuse us. Italians and Belgians, for example, whose prime ministers often go under, never understood why Americans made such a fuss over Richard M. Nixon’s resignation.

In other words, we can describe another country as a “democracy,” and still not have a clue as to how its politics work. Case in point: the Recruit scandal, yet another example of the kind of Establishment corruption that has been the hallmark of modern Japanese party politics.

Its most recent rival was the 1976 Lockheed scandal, which turned on bribery involving the sale of Tristar aircraft to various Japanese airlines. For his role in this affair, former Prime Minister Kakuei Tanaka went to jail.

The Recruit scandal is about insider trading on Tokyo’s buoyant stock market. At the center of this web of corruption is Hiromasa Ezoe, founder and former chairman of the Recruit Co., the huge Japanese employment-services firm.

Ezoe is from the margins of Japanese society. To enter the tightknit world of Japan Inc., he used the only wedge available to him: undervalued and then unlisted stocks in the Recruit-Cosmos Co., his real-estate subsidiary.

When the stocks were eventually listed, their value quadrupled, thus enriching nearly 200 politicians, businessmen and--most serious of all in Japanese eyes--high-ranking bureaucrats, who took advantage of Ezoe’s desire for influence.

Like Watergate, Recruit is a classic newspaper story and Japan’s often reticent press corps has spent the last 10 months chasing scoops. This in turn has made the ultra-right furious with the conservative ruling party, which was forced to launder its dirty linen in public while Emperor Hirohito lay dying.

Dozens of arrests by the Tokyo public prosecutor--who acts only when the case is watertight--have humbled the Japanese elite. Public anger over government liberalization of farm product imports (to appease Washington), a new consumption tax and now a major scandal will almost certainly bring the government down. If former Prime Minister Yasuhiro Nakasone is arrested, the shock will be great.

In response to this, an American reader might ask: If Japanese economics is so successful, why is Japanese politics such a mess? This question has bite because so many have stressed the role of government policy in Japan’s economic miracle.

The success of Japan Inc. has been underwritten by ideological consensus, institutional stability and closed-door decision-making.

The closed nature of elite policy-making has frustrated U.S. officials and businessmen who have tried to penetrate the Japanese market. But Japanese insiders are adamant about the need for administrative discretion. Furthermore, the Ezoe saga shows not only foreigners are excluded. His firm spent millions--in stock and other gifts--to win access to Japan’s corridors of power.

Japan Inc. can be seen as unashamedly elitist in its approach to foreigners and Japanese alike outside the magic circle of Japanese big business, the higher bureaucracy and the ruling LDP.

Within this magic circle, politicians are the late arrivals. Since the founding of Japan’s political parties a century ago, the public has viewed politicians as venal and self-serving. Only a foreigner--Shogun Douglas MacArthur and his postwar constitution--would have tried to thrust such people into the center of decision-making.

The higher civil service, not Japan’s grasping politicians, forms the bedrock of Japan’s political system. It is the bureaucracy--old as the nation itself--that orchestrated the postwar economic miracle. With few exceptions, Japan’s best politicians are ex-bureaucrats.

This explains why the Japanese public is more concerned by Ezoe’s ability to penetrate the Ministry of Education, for example, than by his bribing of the ruling party. Politicians are always suspected of being on the take; bureaucrats are expected to be incorruptible.

Rightly or wrongly, the Japanese ruling elite has concluded that closed decision-making is the only way a resource-poor capitalist democracy can insulate the strategic sectors of its public policy from the ravages of pork-barrel politics.

This means that the Japanese share neither the residual American fear of centralized power nor the U.S. belief that interest-group politics can be controlled by the governmental stalemate that results from our famous system of checks and balances.

In fact some Japanese wonder if the U.S. occupation made the perennial corruption of Japanese party politics more dangerous by making elected representatives so much more powerful. Did MacArthur, therefore, lead to Ezoe?

A Princeton historian, Kent Calder, is now arguing that Japan’s “money politics” and weakness for pork-barrel generosity are rooted in MacArthur’s reforms of 1945-52. The occupation abolished the Japanese armed forces, disciplined the zaibatsu that had profited from the war, left the economic bureaucracy untouched and gave new life to the political parties.

When MacArthur broke the back of prewar rural landlordism, he created the conditions for a daunting electoral battle for power in the Japanese Diet, or Parliament. Thrown on the defensive, conservative politicians resorted to agricultural subsidies and other forms of redistributive welfare programs to blunt left-wing gains in rural constituencies.

Pork-barrel politics saved the conservatives’ bacon. But at a price. In Takeshita’s home prefecture--Shimane--government largess accounts for 15% of all income. In 1984, $2,000 was spent on public works for every man, woman and child there. This is part of an extraordinary effort to prop up rural constituencies for conservative politicians.

Special-interest politics involves greasing the palms of politicians so they in turn “buy” support from each other or the voter. To be fair, such political bribery in Japan tends to be rather white-glove--unlike many other places in Asia.

In turn, Japanese Dietmen spend up to $3 million on so-called “political activity” annually, and this figure triples in an election year. The money for this has to come from somewhere. Enter Ezoe.