September 9, 2005

SAVINGS WON'T SAVE THEM:

Japan post office's rural redoubt (Chris Hogg, 9/08/05, BBC News)

Part of the post office's importance stems from the fact that money handed over by savers at its branches is added to a huge pile of yen which for years has been used by LDP politicians to bankroll public spending projects.

When times were good, they saw this as a way of sharing the benefits of Japanese growth with poorer areas. So in Onomichi they have built three huge bridges in the last 10 years. So far they are running at a loss of 1 trillion yen because the tolls are so expensive, few locals use them.

But this is why some local politicians are so attached to the present system.

It offers a pot of gold they don't want to lose.

Mr Okada's post office is not the only one in Onomichi. There's another one five minutes' walk down the road; there's a larger one slightly further down next to the railway station; and then another small one just beyond that.

Those who believe Japan Post should remain a state owned company argue that this kind of coverage provides customers with the level of service they have become accustomed to and need.

After all, the post office is more than just a mail delivery service. In rural areas especially, it is often the only place that offers banking and sells insurance. By some measures it's the world's biggest bank.

But Japan's Prime Minister Junichiro Koizumi asks why the state needs to employ 260,000 post office workers.

He says he wants to bring the disciplines of the market to this bloated institution. So much money is deposited at small offices like the one in Onomichi that the Post Office is just too big and powerful, preventing proper competition.


For twenty something years now business writers and politicians have chided us about how much more the Japanese save than us, without ever once recognizing that they turn their savings over to the political machine rather than investing it in homes and businesses the way we do.


MORE:
Japan's LDP in lead ahead of poll (BBC, 9/09/05)

Japan's ruling Liberal Democratic Party (LDP) has opened up a comfortable lead ahead of Sunday's lower house election, opinion polls suggest.

According to polls in three Japanese papers, the LDP has a lead of around 20 percentage points over its main rival, the Democratic Party of Japan (DPJ).

The Asahi Shimbun said the LDP would win at least 241 seats, giving it and its coalition partner a clear majority.

Prime Minister Junichiro Koizumi said he felt a "good response" from voters.

Mr Koizumi sees the election as a referendum on his reform programme, which was blocked by rebels within his own party.


Helps to be the only charismatic leader in the country.

Posted by Orrin Judd at September 9, 2005 7:24 AM
Comments

It gets better. Talked with the wife a couple of days ago and many post office branches (especially in the small towns and villages) are privately owned.
Ownership was granted to leading families in each area on the establishment of the new post office and I believe it helped Japan enter the modern world. The problem is now that Japan is in the modern world the old system of feudal licenses is still in effect, many "managers" have inherited their position.
There are literally thousands of families (varied like the post offices themselves: rich,small,poor)
that have supported the LDP and have a stake in the status quo.

Posted by: Scott at September 9, 2005 8:28 AM

On my way to work and don't have time to research The Wife's statement but if interested link to a .pdf on the subject:

http://www.ssc.upenn.edu/polisci/faculty/bios/Pubs/Amyx-AP.pdf

Posted by: Scott at September 9, 2005 8:36 AM

OJ: You understand, of course, that the Japanese use of post office savings is just another version of your broken window ravings. "Hey, here's a pile of money. Let's build a bridge." You're just a piker because you insist on waiting until the old bridge gets blown down.

Posted by: David Cohen at September 9, 2005 9:34 AM

David:

Exactly the opposite. What Japan very much needs is roving gangs to do a considerable amount of damage so that they stop saving money in these unproductive accounts and spend it on something productive. Right now they are Bastiat's unproductive shopkeepers.

Posted by: oj at September 9, 2005 9:44 AM

To the extent that you even have a theory, it is that businesses underinvest as a result of negative externalities. As a result, you argue, a catastrophic loss of business infrastructure is good because it pushes investment that, based upon economy-wide return-on-investment, should have been made anyway. But the catastrophic loss isn't at the heart of the theory, the underinvestment is. So you should welcome forced investment regardless of the impetus behind the force. New double pane windows are new double pane windows regardless if the old windows are being replaced because of Katrina or government dictat.

In any event, given what you think about the future of Japan, it's hard to see that there could be a positive roi from new forced investment.

Posted by: David Cohen at September 9, 2005 10:07 AM

David:

Except that allowing a single government bureaucrat to make the decision robs us of the unique mechanism of the ,market, wherein many different people try many solutions and the better ones will tend to survive better than the worse. Government should create problems, not try to solve them.

Posted by: oj at September 9, 2005 10:57 AM

But if the market works, we don't need the catastrophic loss.

Posted by: David Cohen at September 9, 2005 11:08 AM

Yes, the market doesn't work.

Posted by: oj at September 9, 2005 11:12 AM

It's his magic hair.

Posted by: Sandy P at September 9, 2005 11:40 AM

Yes, now we're making progress. Your whole theory depends on the market not working at all pre-catastrophe (or businesses would invest at the economically correct levels), but working perfectly post-catastrophe (so that the forced investment is not misspent).

Posted by: David Cohen at September 9, 2005 11:47 AM

No. Markets are human, so they'll never work perfectly. But they are means, the market itself is not an end. So if the end you seek is investment in a more modern and efficient infrastructure it will take some external motivator to get there. People won't do something just because it makes economic sense.

Posted by: oj at September 9, 2005 12:24 PM

David, you are thinking way too much if you credit him with an actual theory. One thing we know from a lifetime of eavesdropping on the Left is that when they say "for the good of the economy, the government must do X", what they actually mean is "I just really, really, really want to see the government do X." This is often frightening because the Left bears such malice towards its enemies, but that doesn't apply to oj. He's just bored, and so he wants to see the government go break stuff.

Posted by: joe shropshire at September 9, 2005 12:58 PM

joe:

Yes, the Left's great error was the belief that the State could achieve ends effectively by itself. The Right's great error was to think that the Market could.

Posted by: oj at September 9, 2005 1:03 PM

Yes, but most of us have enough sense to send the government off to break other people's stuff. That's what our fine military is for. There's also NASCAR and WWF wrestling -- market alternatives! -- if you're still not satisfied.

Posted by: joe shropshire at September 9, 2005 1:06 PM

No we don't. SS reform is just a way of having the government breal the retirement system and force all of us to use markets to fix our own.

NASCAR and the WWF aren't markets--go see if they'll let you drive in the race this weekend.

Posted by: oj at September 9, 2005 1:14 PM

Well, at least I am not the only one who thinks Koizumi should get a hair cut.

Posted by: Robert Schwartz [TypeKey Profile Page] at September 9, 2005 1:54 PM

Actually, what you seem to be saying is that markets are fine, we're imperfect.

Joe: What, and leave showbusiness?

Posted by: David Cohen at September 9, 2005 2:01 PM

David:
Yes, and belief in the Market assumes we're perfect, that's whyit fails, as do all Rationalisms.

Posted by: oj at September 9, 2005 2:09 PM

I meant watching them, on his TV. If he has a TV. By all means he should keep his day job.

Posted by: joe shropshire at September 9, 2005 2:16 PM

joe:

You are aware that the WWF is fixed, right?

Posted by: oj at September 9, 2005 2:22 PM

WWF is a real-life struggle between the forces of good and the forces of evil. Anybody says otherwise gets a folding chair right to the kisser.

Posted by: joe shropshire at September 9, 2005 2:25 PM

Ah, that would explain why you believe in the free market fairy.

Posted by: oj at September 9, 2005 2:31 PM

But you explicitly state that the forced investment must be guided by the market in order to be useful.

Posted by: David Cohen at September 9, 2005 3:40 PM

But if the market really were guiding investment...

Posted by: joe shropshire at September 9, 2005 3:53 PM

the investment must be forced by something--then the market forces will achieve a relatively useful ordering of the investments.

Posted by: oj at September 9, 2005 4:40 PM

So we just need to give the invisible hand a rock.

Posted by: David Cohen at September 9, 2005 5:47 PM

The hand that rocks the window rules the kingdom.

Posted by: oj at September 9, 2005 6:03 PM

Japan needs to forget about delivering mail, banking, and insurance, and start working on composite metals instead.

Posted by: AllenS at September 9, 2005 6:36 PM
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