Chapter 16. Revelation

Chapter 16: Revelation

The articles in the Nikkei and in the subsequent book supported my views concerning the government administration and how the ministries’ Special Status Corporations, their subsidiaries and amakudari served to maintain the Japan Inc system.

Special Status Corporations:  too hot to handle

Until the book was published there was little detail about these opaque entities. Tokushu Houjin or Special Status Corporations were off-limits and considered politically contentious and protected by the ministries. During his interview Bill Whittaker commented on the difficulties involved in accessing information from government agencies:

I do think that the bureaucracy controls the information, not that they manipulate the story but what they choose to reveal and when they choose to reveal it. They play it close to the vest. If they do not want it to get out, it pretty well won’t get out. I think that if the bureaucracy decides that the information stays within the bureaucracy, my god, that’s where it stays!

There was little information regarding the operations of Special Status Corporations which were initially established after the Second World War to aid in the reconstruction of infrastructure destroyed during the war to resuscitate Japan’s industrial complex. The ministries began to establish their corporations in 1947 during the Occupation at the encouragement of the Supreme Commander of the Allied Powers (SCAP). SCAP permitted the formation of the first public corporation to support the development of the match industry. The industry’s representatives, fearing tight controls over their sector, issued a petition on August 10, 1947 to SCAP in protest. The protest claimed that the corporation was being formed not to support the industry but to provide jobs for bureaucrats. SCAP rejected the petition.

Four more corporations were designated for foreign trade, eight supported domestic distribution, one served to control price adjustment and two were for economic rehabilitation.  Later reflecting on its decision, SCAP became concerned that the support of the ministries’ corporations could serve to resuscitate Japan’s war-time system of autocratic controls.

The government had difficulty defining the exact characteristics of Special Status Corporations other than that they assisted the government in promoting national interests. Nevertheless, they can be viewed as corporations that were based on a national law, which had been approved by the National Diet. The corporations were established according to certain establishing procedures through a special law, the Law of Establishment Act, Article 4-11 subject to the Ministry of General Affairs (renamed in 2001 the Ministry of Public Management, Home Affairs, Post and Telecommunications). The law was neither civil nor corporate.

The corporations were linked to the industrial sectors under the administrative jurisdiction of each ministry. Throughout the post-war era numerous subsidiaries (“children corporations”) and subsidiaries of these subsidiaries (“grandchildren corporations”) were established by ministry officials. It was a simple procedure because all that was needed to establish a new one was the writing of an “establish law” in the name of the corporation and a request to an obliging Diet to sanction it.

The MOC initially established ten corporations. By 1955 there were twenty-six. During Japan’s period of rapid economic growth, ten further corporations were established annually by the MOC. By 1960, the number had increased to fifty-two and by 1970 there were 144.

The largest corporation was the Japan Highway Corporation (JH) which was established by MOC in 1956 to award contracts through bidding procedures to construction companies to rebuild highway networks throughout Japan. Japan has been cynically referred to as the “construction country” because of the massive construction of infrastructure and public works since the early 1960s. The MOC established the Hanshin Expressway Corporation in 1959 to construct highways to connect Osaka and Kobe and the Metropolitan Expressway Corporation in 1962.

The MOC established the Government Housing and Loan Guarantee Corporation (GHLC) as a Special Status Corporation in 1950 to provide finance for the rebuilding of homes devastated by the Second World War. Until the last decade it was the biggest home lender, financing 30 percent of all houses built since the end of the war. Retail banks were unable to compete with the GHLC because of asset liability risks. The MOC established the Urban Development Corporation (UDC) in 1955 to engage in the supply and maintenance of housing.

Another forty corporations were added to the list by 1975. By 1980 the total was 240 and by 1990 the number had grown to 326. Special Status Corporations, their “children” and “grandchildren” corporations and branch offices served to place officials from the national ministries throughout Japan. As an example, among 322 of the corporations MOC had established, 34 percent employed fewer than five people, 54 percent employed fewer than ten people, and only 9 percent had more than one hundred staff.

Nevertheless, there was one corporation employing over 700 employees. The Japan Highway Corporation (JH) had over sixty subsidiaries with such names as New Japan Highway Patrol, Sapporo Engineer, Hokkaido Highway Service, Sendai Highway Service, Number One Highway Service, Western Japan Highway Service, Highway Service Research, Japan High Car, and Highway Toll System.

MITI established the Electric Power Development Company (EPDC) in 1952 to provide electricity nationally. The Metal Mining Agency of Japan (MMAJ) was established in 1963 to manage the mining of non-ferrous metals. MITI established corporations to support the construction of nuclear power plants and the reprocessing of spent nuclear fuel.

Japan imports about 90 percent of its fossil fuel. MITI established the Japan National Oil Corporation (JNOC) in 1967 to oversee the energy-producing industries and managed imports and refining through federations of importers. JNOC assisted Japanese oil companies with exploration and drilling for oil. The federations connected MITI to the oil refiners, who distributed to the retailers. The domestic companies cooperated with foreign firms, such as Indonesia Oil, Mobile, Shell and Dhabi Oil, usually holding the larger share of the investment.

Special Status Corporations received funds from the Fiscal Investment and Loan Program (FILP), otherwise known as “Japan’s secondary budget,” through FILP Agency Bonds for contracts to corporations for the construction of public works, for infrastructure, for housing, loans to small and medium-size companies, mortgages and life insurance. FILP was established in 1953 as a huge financial organ operated by the public sector to channel funds to key industries through newly established institutions known as FILP institutions. FILP received its capital from the Trust Fund Bureau (TFB) funded by the deposits from the Postal Savings System (PSS) and by the premiums from the public pension scheme. FILP designated institutions were state banks such as EXIM and the Development Bank of Japan and Special Status Corporations. However, I was unable to find out how the corporations distributed the FILP funds.

Creaking Giant Power’s foreword began with the contention of a former MOF administrative vice-minister that elite bureaucrats were motivated by their belief in democracy. His conviction reflected the mentality of bureaucrats who served with him during Japan’s post-war period of rapid economic growth. The book also related the views of young officials in the MOF and MITI who felt that their ministries must become more egalitarian and that the relationship between the bureaucracy and politicians should be made more transparent.

The Nikkei Shimbun conducted another survey at the end of October 1993 of 200 bureaucrats on their views of the governing system; 147 officers answered questions ranging from devolution, and the deregulation of markets to amakudari. The questions about devolution brought negative replies concerning the ability of local government civil servants to plan policies. The respondents insisted that the national ministries must always bear the responsibility of governing the regions.

As for the loosening of regulations and opening of Japan’s markets, 63 percent of the respondents in their twenties wanted deregulation. Fifty percent of the respondents in their fifties were also in favor of more deregulation.

The results of a public survey conducted by the newspaper in 1993 regarding how the electorate felt about their bureaucracy were included in the book. A significant percentage of people questioned revealed their discontent with elite civil servants, reflecting their reaction to the disclosures of scandals involving the ministries. The perception of bureaucrats was: (i) they had a strong elitist mentality; (ii) they were irresponsible; and (iii) they were clever and shrewd. Twenty-two percent answered that bureaucrats were cold and uncaring. Only 3 percent believed that bureaucrats should be entrusted to plan policy independently, and an overwhelming 70 percent agreed that bureaucrats should join forces with politicians to plan policy.

Amakudari and all that Jazz


Until I worked at JETRO I was ignorant about how the amakudari system actually worked in terms of providing post-retirement employment for civil servants through the ministries’ corporations.

Amakudari is the reemployment of retired or incumbent civil servants in private and public sector corporations or in government-affiliated entities. The literal translation of the term is “descent from heaven,” which refers to the ministries’ elite career officials who parachute into upper management positions in the private sector. Amakudari and interpersonal networks between the civil service and the private sector can be traced to the Meiji period (1868-1912) when the bureaucracy collaborated closely with large family-owned conglomerates to develop a feudal Japan into an industrialized country in the same league as the western powers by 1928. The collaboration intensified during the Second World War when the government started to strictly regulate the economy for the war effort. Business owners would employ bureaucrats in order to determine future government directives and to also lobby interests.

Amakudari became a formalized institutional arrangement as a part of the post-war civil service system. The system benefitted officials who retired earlier than staff in the private sector, usually between the ages of 55 and 60, stepping aside for the younger officials who are intent on promotion. Although the retirement age has recently been extended to 60-65, the system remains in place.

The ministries want to provide retiring officials with a source of income that supplements their pensions, which can be lower than for employees in the private sector. Ostensibly the arrangement serves as an incentive for university graduates who would otherwise seek employment in the private sector rather than the civil service. Originally, the elite bureaucrats were the main beneficiaries of amakudari but, gradually, officers in middle management as well as non-career officers have come to be included in the arrangement.

The system serves the interests of the ministries and their former colleagues throughout the public and private sectors and enhances the bureaucracy’s power to control the implementation of economic and industrial policies. Amakudari expedites ministerial guidance over the businesses that are within a ministry’s administrative jurisdiction. The relationship between bureaucrats and former colleagues who have migrated to businesses in a sector under their ministry’s administrative jurisdiction automatically tightens the ministry’s grip on that sector.

The system has served as a mutual back-scratching mechanism because the companies which hire bureaucrats have a direct pipeline to the ministries and accept officials with the anticipation that they will be treated favourably and receive useful information and subsidies, public works contracts as well as swift approval of such applications as licenses and patents. Even though companies may be reluctant to employ officials they will acquiesce to pressure from the ministries because of concerns that they will not be able to compete with businesses who have hired officials.

The editorial staff of the Mainichi Shimbun entered the fray as well in 1994 with a book focusing on amakudari in both private and public corporations. Kasumigaseki Syndrome (Kasumigaseki Shindoromu) was a surprisingly frank account of the deterioration of values among bureaucrats in terms of their objectives in establishing corporations and research institutes for the sole purpose of providing post-retirement positions for the elite retirees.

The book’s most significant contribution was the reporting of how amakudari and the temporary posting of elite officials in branch offices of Special Status Corporations in the prefectures (shukko) helped the ministries to monitor local government policies. Since the bureaucratic hierarchy places officers from the national ministries above local government officers, the positioning of ministry officials at the local government level automatically induced acquiescence by local government to ministerial guidance. The book was also critical of temporary postings because there was every likelihood that the positions would become permanent.

The Mainichi staff detailed how the ministries maintained control over their sectors by placing conservative retirees into management in both private and public corporations. In addition, they revealed how the ministries used their Special Status Corporations to distribute contracts to companies for public works and how amakudari not only tied ministries to businesses but also facilitated connections between businesses and former bureaucrats, who moved first to public corporations before moving onto the private sector.

The book included a December 1993 public survey. Although 77 percent of the subjects questioned credited bureaucrats with Japan’s rapid economic growth, 41 percent of the respondents regarded them in the 1990s as being greedy for power. Thirty-one percent asserted that bureaucrats worked for the benefit of their ministries, but only 18 percent felt that they worked for the good of their industrial sectors. A mere 3 percent felt that bureaucrats were hard working, and only 3 percent considered bureaucrats to be honest and sincere.

Of the people surveyed, 60 percent wanted amakudari abolished while only 12 percent wanted the system maintained; 38 percent wanted the system abolished for political office and 43 percent of the people polled wanted the companies that hired bureaucrats to be subjected to strict regulations.

Variations of Amakudari

The National Public Service Law stipulates that bureaucrats cannot, for a period of two years, legally move directly to positions in private companies attached to the sectors their ministries regulate. However, they can move immediately to their ministries’ corporations, industrial associations or research institutes supported by their ministries or by the other ministries where they linger for two years with pay before going on to the private sector. Most officials will wait out the two-year period of grace in public corporations and then slip into higher management positions in private companies although some officials may elect to remain if there are no offers from the private sector.

The variations of amakudari have evolved over a fifty-year period and were regarded as the norm and not as corrupt practice by ministry officials. The system has continued for many years and, although the Japanese do not condone the system, they are inured to it.

The ministries can cleverly manipulate the system to provide jobs for their staff in their public entities:

  1. Bureaucrats can be sent by their ministries to work in their ministries’ entities while they are still engaged by their ministries (and drawing salary). This practice is known as “on loan to another company” (shukko). Although the officials are still connected to their ministries they are identified as officers of the organizations where they have been transferred. And while the posts are considered to be temporary, they can develop into permanent positions. Essentially, shukko can be the catalyst for amakudari in the public corporations.
  2. The ministries are not required to apply to the National Personnel Authority (NPA) in order to “loan” an official to an organization. Officials who are “on loan” to an organization can then migrate to the private sector without waiting out the two-year period of grace.
  3. Bureaucrats can remain attached in some way to their ministries’ public entities through their subsidiaries (as advisers or members of boards) while working for private businesses, receiving salaries simultaneously from both public and private sectors without waiting out the two-year period of grace.
  4. The ministries operate research institutes where officials are “loaned” for a two-year period of grace before migrating to the private sector.
  5. Positions may be given to elite bureaucrats who have not reached retirement age, but are considered to be nearing the end of their careers. The “gift” is actually a signal to officials that they will not be promoted much higher in their ministries, but that their loyalty is appreciated.

The American part-time assistant in the JETRO management section confirmed this when she told me that the presidents were considered figure heads and that MITI offered the posts at JETRO as “gifts.”

 The Nikkei Shimbun also conducted a survey in 1994 of 1,780 employees in seven Special Status Corporations that had been established by the MOC. The employees were questioned about the amakudari of staff members, who comprised 80 percent of the staff. The 7 percent of the employees who answered that amakudari was necessary were in the minority; 38 percent felt that the system was a bad influence and should be abolished; 29 percent felt that nothing much could be done about the situation because of the recession; 33 percent claimed that the former bureaucrats were useless; and 50 percent answered that the retired officials were helpful to some extent. Again, a minority of 3 percent maintained that the former officers performed their duties well.

Nice Work if You Can Get It

MITI officials who are posted abroad at JETRO overseas offices promote Japan’s economic and trade policies to governments, businesses, media and educators. The officials lobby governments on behalf of Japan’s government international policies such as security and concerns regarding East Asia. They also promote engagement with Japanese businesses, search for patents considered applicable to Japanese business interests and for small businesses with technologies which are in need of capital investment for R&D. Most countries post commercial attachés from the ministries of commerce and industry in embassies and consulates. However, even though they serve as commercial attachés, MITI officials’ interfacing duties give them the semblance of foreign attachés. JETRO overseas offices also dispense to the public both commercial and cultural information, some of it duplicating the information released by the MOFA.

When officers from the ministries’ corporations were pressuring the Kyoto Prefecture representative to terminate my participation in the paper the MITI officer who searched for US patents, appalled by their behavior, confided that, although he himself worked hard, most of the officers at JETRO New York were “on sabbatical,” implying that they were enjoying 2-3 years of R&R with their families.

The wife who accompanied her husband, a MITI official, to New York during his secondment told me that New York was considered the “Golden Apple” for a secondment.   They could attend opera, Broadway shows and classical music performances at Carnegie Hall and Lincoln Center, which were located near JETRO’s office. The tickets were far less expensive than in Japan and season tickets were purchased in advanced. I shared a box seat at Carnegie Hall with a MITI officer. The ticket per performance was $25.

The posting of representatives overseas in the ministries’ public corporations like JETRO may not be based entirely on merit. Civil servants from both prefecture governments and the national ministries, who have displayed loyalty through their work and to their superiors, are sent abroad. Civil servants may be sent because a family member is an elite official in government or whose father-in-law is an elite ministry official. But officers may also be chosen for duty abroad because their behaviour is considered outside the norm and disruptive on the workplace. The officers could be suffering from a mental disorder, or, in some cases, alcoholism, and posting them overseas serves to conveniently remove them from their colleagues.

In general, the officers’ workload was far less strenuous compared to their responsibilities in Japan and they enjoyed a 2-3 year hiatus from the pressures of the home office where there is no remuneration for overtime. For the majority of the officials, a posting in the United States was an opportunity afforded to a minority of Japanese civil servants and supported by tax revenue. Similar to foreign corporate executives who are sent abroad by their firms and officials from foreign government agencies, the bureaucrats who were married were relocated with their families and they enjoyed a standard of living they would never experience in Japan. Homes can be spacious, often with gardens, a phenomenon in Japan where land is at a premium, especially in the metropolitan areas. The officers also received allowances for their children’s educational needs.

Ironically, despite their concerns about safety in the United States, and, in some cases, ambiguous attitudes regarding US-Japan relations and American mores, they recognized that America offered a physically easier and mentally calmer life-style than the Japanese civil service. Some of the other officers, including JETRO staff, and representatives from prefecture governments coveted Green Cards and used their stay at JETRO USA offices to apply for work permits.

The MITI director of EID/MITI wanted to return to MITI and forge his career internally, which was a tough route to the top. He told me:

There are many people in this office who say that they do not want to return to Japan. I am very glad to go.  I think that I will enjoy Japan again. I know the good points of Japan. Of course, I could live here for a long time. Staying at JETRO for business is a unique experience for many reasons, including income. People can enjoy a high standard of life-style so maybe this is the reason they don’t want to go back to Japan.

However, the majority of elite MITI officers seemed satisfied with their status, knowing that upon their return to their ministries they would receive a promotion and after their retirement they would migrate to a MITI corporation and then to the private sector. The officer stated the general view of bureaucrats regarding the post-retirement system:

The Japanese bureaucratic system is unique. Our management system is different from the typical corporate management system. We retire earlier. Official X entered MITI in 1965 so he has retired. He worked 25 years in MITI. Of course, he got a new job in another organization [a public entity]. I have already worked for 15 years and I am sure that I’ll work for ten years at least, but no more than 15 years.

The interviews in the Nikkei Shimbun book with politicians and bureaucrats illustrated the ministries’ struggle to maintain power. Susumu Takahashi, a former administrative vice-minister in the Ministry of Construction (MOC), was interviewed about his views on amakudari. Takahashi admitted that there was an alliance between politicians and the MOC and that there was indeed a relationship between the ministries and industry. However, he emphasized that denying bureaucrats post-retirement positions in industry was unrealistic because bureaucrats had to retire earlier than corporate executives and they needed supplementary income. He professed that elite officials, who were commonly referred in the press as “Old Boys” or “OBs,” received benefits while they were working in post-retirement positions. Takahashi, who became the president of the Government Housing Loan Corporation (GHLC), a MOC Special Status Corporation, in 1990 after he retired from the MOC, claimed that the number of positions in Special Status Corporations was limited. However, he omitted to mention the number of positions available in the subsidiaries of Special Status Corporations or in other institutions operated by the ministries.

For the Record

If I was an official in Japan’s national ministries where I would be required to work until midnight without overtime pay and where secretarial staff is usually available to only the officials holding high level posts, I would embrace a transfer to a Special Status Corporation overseas that would allow me to escape to a more relaxed environment with my family. I would also welcome an upper management job in one of my ministry’s corporations and subsequently a job in the private sector for additional income. The Kyoto Prefecture officer remarked: “The bureaucracy controls and operates Japan. I haven’t thought much about the politicians but the bureaucracy controls everything and makes sure that things go smoothly.”

Politicians Bash the Bureaucrats:  The Naitoh Masahisa Affair

After the revelations of collusion between ministry officials and the construction industry, the bureaucracy became fair game for Japanese journalists and for politicians who were trying to wrest power from the bureaucracy.

Towards the end of March the secretary for the two MITI directors in Industrial Research presented me with a hand-written manuscript in Japanese which she had been asked to translate into English. She asked me to translate it quickly because she was too busy with other work. It was a speech to be given in early April at Georgetown University. I was also busy but took the script promising to return it to her soon.

The speech reflected on the motivations of ministry officials who worked during Japan’s rapid economic growth period and who seemed inspired by their roles as the administrators of Japan’s economic rebirth. The author lamented the changes in attitudes of current bureaucrats, who, he felt, had become inward and “turf-conscious,” working to protect their ministry’s territory rather than making policy to deregulate markets.

The address explained to the audience that the Japanese people, who had relied for centuries on either an emperor or a military to govern them, did not want to take the initiative to plan their own destiny but preferred to entrust responsibility to a bureaucracy. This submission to bureaucratic rule gave the ministries much power which was further enhanced by the close contact between bureaucrats and businessmen, who feared retribution if they did not comply with guidance. It was a significant speech and I made a copy for future reference.

While I was tussling with the script, a well-dressed Japanese gentleman in his fifties strolled through the library and peered at me. The following day he passed through again. The man seemed to know MITI officials but there was no indication of who he was. If it had not been for a chance encounter with a resident in my apartment building I would never have guessed that the gentleman was Naitoh Masahisa, a senior MITI official who, under pressure, had resigned rather than be dismissed from MITI.

One morning when I got on the elevator in my apartment building the other passenger was a Japanese gentleman in his mid-fifties. I happened to be carrying a Japanese newspaper and he struck up a conversation, identifying himself as the president of the North American headquarters of a Japanese trading company. When I told him where I worked he offered to give me back issues of the monthly magazine Sentaku (“Choice”) which is a political economic magazine with articles reporting the latest domestic and international news and which most Japanese corporations subscribed to. A few days later he left the December, January and the February issues of the magazine with the concierge.

When I perused the February issue I recognized the man in a photograph as the man strolling around JETRO New York. He was Naitoh Masahisa. The dismissal had occurred in December and rocked the halls of MITI. It was only the second time in the history of the ministry that a high-ranking official was dismissed (the first was in 1952). Naitoh’s loyal subordinates were vehemently opposed to Naitoh’s resignation.

The magazine printed a four-page spread with photographs of Naitoh and Hiroshi Kumagai who was a career officer in MITI and who was serving as director-general of the Small and Medium-Size Enterprise Agency when he left in 1976 to run for political office on the LDP ticket. He won a seat in the Upper House of the Diet in 1977 and then took a seat in the Lower House in 1983. In 1991 he served for one year as the Parliamentary Vice-Minister of the Economic Planning Agency before assuming several high-ranking positions in the LDP. He was one of the founders of the New Japan Party with Hosokawa in 1992 and after serving as MITI Minister in Prime Minister Hosokawa’s cabinet he served as Minister of State in 1994.

Kumagai’s and Ozawa’s political objectives were similar, especially in regards to wresting regulatory powers from ministry officials and bringing more power to the executive office. Naitoh’s dismissal was a classic example of efforts by politicians to poke holes in the bureaucracy by further inflaming public opinion against elite ministerial guidance. Although Kumagai was the front-man in instigating the incident, Ozawa was rumored to be involved as well.

When Kumagai was serving as MITI Minister in Hosokawa’s cabinet he demanded the resignation of Naitoh who was said to be in line for the post of MITI International Administrative Vice-Minister. Ostensibly, Kumagai’s reason for demanding the resignation was that Naitoh had arranged a promotion in MITI for the son of his close friend and patron, Yuji Tanahashi, MITI International Vice-Minister. The son, Yasufumi, had entered MITI in 1987. The promotion was intended to enhance his image, thus improving his chances of winning a seat in the Diet when he entered the election as an LDP candidate of Gifu Prefecture, a seat that his grandfather, a former governor of Gifu, had occupied for many years. Despite his newly polished image, Yasufumi lost the election.

Kumagai, who reportedly wanted to stop favoritism in the ministries, accused Naitoh, a civil servant, of failing to abide by the principle of non-partisan politics but realistically the affair was related to the power struggle between factions within MITI and between special interest groups in the LDP and the New Japan Party. There was also the possibility that Kumagai’s ulterior motives were personal because during his time in MITI his relationship with Naitoh was said to be fractious.

Hideaki Kumano, the Administrative Vice-Minister and the head of MITI, was responsible for implementing the dismissal. Although he was against Naitoh’s resignation, in order to maintain calm among MITI officials, he pleaded with Naitoh to resign quietly. Initially Naitoh refused, calling the stand-off a test of the independence of the bureaucracy. However, on 23 December he resigned without apology at a news conference, telling reporters that he had simply followed the long-established custom of giving titles to ministry officials who ran for office. Although Naitoh’s admission was not welcomed among the general public, who were questioning the integrity of ministry officials, it also illustrated that many ministry officials opted for political careers (as did Kumagai in 1976) and that the ties between bureaucrats and politicians could be very close.

Naitoh was well connected in the United States because he had been posted as a director of the Industrial Research Division at JETRO New York in the mid-1980s while he was negotiating with the USTR on behalf of the Japanese semiconductor industry.

When Naitoh formally resigned on April 1, 1994 he moved to Georgetown University as the Marks & Murase professor in the Asia Law and Policy Institute (ALPS) program. On April 7, 1994, Naitoh gave the speech at the Georgetown University Law Center. Marks& Murase was a law firm whose clients included Japanese businesses and government agencies.

A Creaking Giant Power carried an interview with Naitoh before his dismissal. When he asserted that bureaucrats operated independently of politicians he was asked if he thought that bureaucrats could work together with politicians to forge policies. Naitoh felt that it might prove feasible if politicians could plan strategies and the bureaucrats did the legwork, implying that administrators knew more about managing industry and economy than did politicians. He expressed disappointment that, although bureaucrats were the servants of their country, they had become isolated from society and had forgotten their mission.

Naitoh claimed that the multitude of rules and regulations did not act to effectively support MITI’s control of industrial policy but, rather, the trust between bureaucrats and private businesses facilitated the implementation of policy.

Despite his frank rhetoric, Naitoh did not mention the fact that the ministries had extended power over the political economy through their Special Status Corporations and the amakudari system which served MITI and the other ministries to persuade businesses to accommodate their policies. Indeed, Naitoh participated in this very system. Naitoh’s post-MITI career, although more prolific, represents the post-retirement careers of ministry officials, who have found upper management and directorships in corporations linked to their ministries’ administrative jurisdiction. The following June, Naitoh was reinstated by MITI as a consultant before migrating to positions on the boards of various Japanese corporations.

Kumano, who had been caught in the middle of the dispute, submitted his resignation from MITI in June to take responsibility for the upheaval in the ministry. The director of the EID/MITI division remarked that Kumano’s resignation was unnecessary and unfortunate.  Upon his retirement Kumano moved to MITI’s Industrial Policy Research Institution (IPRI) where, in 1993, Yuji Tanahasi had also migrated upon his retirement.

The book also carried an interview with Kumano. He vigorously objected to the interviewer’s suggestion that MITI the “Number Two Ministry of Finance” (Dai-niji Okurasho) which implied that MITI was taking over MOF’s territory by executing duties that usually fell within MOF’s remit.

The US-Japan trade negotiations were becoming the hot topic in both the American and Japanese press. 1994 was going to be a bumpy year for US-Japan relations and for Japanese politics.

Although Japan was in political turmoil and although the economy was in difficulty, I knew that the system would be difficult to crack and that there was no political process in place to implement change. I disagreed with the majority of the international business community who naively assumed that the government together with the private sector would sort out Japan’s economic woes.