Asia Times: EDITORIAL: Sayonara, Mr. Yen



	July 03, 1999	atimes.com

Japan

EDITORIAL: Sayonara, Mr. Yen

In a press conference following his loss of the 1962 California governor's race to Pat Brown, Richard Nixon berated the media for giving him a hard time, urged greater fairness in political coverage, and claimed that this would be his last encounter with the press, muttering, ''You don't have Nixon to kick around anymore.'' Well, it turned out differently, and what fun it was!

It's not official yet, but in July when his second term as Japan's vice-minister of finance for international affairs is up, Eisuke Sakakibara, a.k.a Mr. Yen, will retire and likely take up a teaching job somewhere. And we feel about that pretty much the way many in the U.S. press did about Nixon: We didn't care much for his policies, but what fun it was to have him around as a foil for caustic commentaries.

Sakakibara is an unusually outspoken Japanese bureaucrat, was always good for a quotable pronouncement, and, yes, he DID move markets - though not always in the intended direction.

Probably his most lasting and important achievement was his central role in drafting and helping push through the Japanese financial markets reform legislation (Tokyo ''Big Bang'') announced in the fall of 1997 by then prime minister Ryutaro Hashimoto. It stands out at present as the only truly comprehensive and successful piece of Japanese reform legislation and dwarfs in significance the half-hearted business reform and restructuring efforts in other sectors.

Sakakibara is an outspoken Asianist and was never shy about extolling the virtues of the Japanese system - as in his book, Beyond Capitalism: The Japanese Model of Market Economics, published in English in 1993 - even when that system (no longer a model) was already tottering on the brink. But as the Big Bang initiative shows, he was also flexible enough to change his mind and tough and persuasive enough to change others' minds when circumstances required. In that regard, his actions were in the same mold as those of the samurai Meiji reformers who a century and a half ago brought Japan into the modern industrial era - and to whom he recently referrred, saying that Japan today is confronting the same challenge of reform and modernization they successfully tackled.

The times when we most vehemently disagreed with Mr. Yen were whenever he espoused the virtues of and need for stepped-up government intervention in financial markets or showed himself dismissive of the entrepreneurial spirit that built the present-day American economy, which he has dubbed ''bubble.com."

One such interventionist move came early this year when, in concert with then German finance minister Oskar Lafontaine, he proposed target zones for the dollar/yen/euro exchange rates, an idea of which MIT economist Ruediger Dornbusch said (to our heart-felt agreement):

''If Japan likes it [target zones], then it must be a bad idea. Let the German finance minister Lafontaine work out a target zone with Japan; then we can watch and see. The Japanese are the same sort of control freaks as Lafontaine . . . ."

Sakakibara probably wouldn't deny that he is an elitist ''control freak,'' one who doesn't trust the markets and free-wheeling entrepreneurs to know better and do better in guiding an economy than Todai graduates - though he might explain himself in different terms.

Sakakibara will be replaced by his close confidant and years-long collaborator, the current director-general of the MOF International Bureau, Haruhiko Kuroda. A graduate of the University of Tokyo's law faculty, Kuroda studied finance and financial policy at Oxford's postgraduate school, then spent three years at the IMF; h is rated MOF's top theoretician.

Such background suggests there will be little change in policy attitude when Mr. Yen bows out and hands over to his successor-designate. But Kuroda is hardly known for his ebullience or hard-hitting talk. For that Sakakibara is not easily replaced and will be sorely missed.

back to the top

©1999 Asia Times Online Co., Ltd.