Asia Times: With economy down, soul-searching on the rise



	February 06, 1999	atimes.com

Japan Economy

With economy down, soul-searching on the rise
By Suvendrini Kakuchi

TOKYO - They are suffering their country's worst post-war recession yet, but many Japanese say economic reforms are no longer enough to make things right again.

From the prime minister to the local press, among school officials and even on housewives' talk shows, the call is for deep-rooted change that many hope will result in a new Japan to welcome the new millenium.

While there is still much discussion on how to do that, theemerging consensus is that Japan needs to learn to look lesstoward the West and instead rediscover its rich history and uniqueculture.

'The toll taken by preoccupation with economic growth during the three-decade postwar economic miracle was ''quite heavy,'' noted a recent editorial in the daily newspaper Mainichi. ''The new-found wealth was accompanied by a decline in moral standards,breakdown in the education system and a dearth of capable leaders."

''These are the consequences of ignoring historical and culturaltraditions and are symptoms of a country whose intellectual andemotional development have been unable to keep up with itseconomic growth,'' it added.

The harsh observation is but an echo of what many Japanese arenow saying in the face of a myriad of problems, includingrising juvenile crime and political corruption.

A bestselling book, ''Japan Controlled by AmericanGlobalists,'' argues that the country's economic woes can be tracedto the overt dependence of Japanese leaders on the United States.

Moves to rewrite the Japanese Constitution, which was composed bythe occupying U.S. forces in 1946 following Japan's defeat inWorld War II, are seen as an extension of the rising sentiment thatJapan should start thinking for itself.

Respected commentators such as Tokyo Institute of TechnologyProfessor Kiroku Hanai have also called on the government todevelop ties with Europe and reduce economicdependence on the United States.

At the same time, though, analysts observe that Japaneseofficials are starting to realise they must also pay moreattention to strengthening ties with Asian governments.

In his book ''Globalists'', author Takahiko Soejima argues thatJapan must be less dependent on the U.S. security alliance andmust pursue a more balanced foreign policy. Put another way, thenew Japan should be a true global leader that is nobody's stooge.

''As a society, we must change our very consciousness,'' PrimeMinister Keizo Obuchi said last month in a cabinet speech on whathe called ''the national crisis''.

Likewise, the government is emerging as a strong proponent ofreforms that take into account not so much the technologicalinnovations that propelled Japan into becoming an economicpowerhouse decades ago, but also the social and cultural aspectsof such changes.

Still, only a few argue against the need for Japan to firstuntangle its economic mess at home before the country''recreates'' itself.

Some long-awaited steps have already been taken toward economicreforms. For instance, an independent financial supervision bodywas launched late last year to clean up Japan's banks saddled with bad loans.

The panel, an interesting mix of businessmen and formerbureaucrats, will order banks to either clear their debts or justdeclare bankruptcy.

According to Finance Minister Kiichi Miyazawa, the body is''independent and has nothing to do with the Finance Ministry''and was created to ''restore Japan's international credibility.''Economists say the bank cleanup would make credit availableagain, reviving industry and investment.

Japan's efforts to reassert itself are also behind recent, boldercriticism of unfettered capitalism and louder calls for financialreforms.

Finance Vice Minister Eisuke Sakakibara has warned of the evilsof market fundamentalism, questioning the rationality of themarket economy.

In a recent speech, he noted that five Asian countries-South Korea, Indonesia, Malaysia, Thailand and Philippines-suffered badly as a result of the sudden reversal of privatecapital flows out of the region.

According to Sakakibara, the money that drained out of EastAsia in 1997 reached some 100 billion dollars. ''No country orregion can tolerate this kind of sudden shift in market sentimentfrom euphoria to panic causing a huge reversal of private capitalflows,'' he said.

He said there should be a world government or a grouping ofstates that can restrain global capitalism through commoninternational rules.

At home, Sakakibara says the Japanese government should take amore active role. ''Government is needed to ensure faircompetition,'' he said, ''and only with appropriate supervisioncan financial markets function well and deliver socially desirablemarket outcomes."

He also said that U.S. leadership in the world is on the wane.Washington may not agree with this, but Japanese and Europeanleaders have made common calls in recent months for a morebalanced currency system and controls on financial volatility.

Japan's newfound boldness is not unrelated to growing economicfriction with the United States, which has been criticizing Tokyofor dragging its heels in helping Asia out of its crisis.

(Inter Press Service)

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