[paper] Prime Minister Koizumi, please strategically reconstruct the structural reform!

Hiroshi Kato: President, Chiba Commerce University

Born in 1926. Graduated from Keio University, Economics Dept. Professor of Economics Dept. of Keio University in 1966. Professor and Dean of Comprehensive Policy Dept. of Keio University. Honorary Professor in 1994. He has been assuming President of Chiba Junior College and Chiba Commerce University sine 1995. He is a Doctor of Economics, majoring in comparative economics and public economics analysis. His main works are "Rules leading to ruining a nation","The idea of administration ruins the nation" etc.

In Mr. Kato's Essay "There is no way for Japan but to be controlled by the IMF", he mentioned that Japan cannot be expected to do self-reform, so he proposed to utilize external pressures for the time being in order to overcome the crisis at hand and proceed with reform. His recognition of the situation does not change very much, but he has expectations for Prime Minister Koizumi to take decisive actions.

However, since the end of last year, there has been some faltering in the direction of the Koizumi Reform. Mr. Kato points out the Prime Minister's carelessness” as a cause of this faltering. In other words, although Koizumi forcefully pushes reform ahead, he makes mistakes in the final finishing steps.

Prime Minister Koizumi, who is simultaneously targeting the LDP for destruction, yet still remains within the Party and tries to proceed with reform, is naturally self-contradictory. If he wants to stay within the Party and proceed with reform, he needs strategies. For one thing, he should not take the resisting powers as his enemies but should try to make them his allies. As one of the successful examples of such a strategy, Mr.Kato introduces the privatization process of the National Railway which he himself was involved in deeply. Initially about 80% of the members of the Diet were against this, but by persuading one by one with nationwide support, this big reform of privatization was finally attained.

Also, he sees some strategic mistakes in the preferential order of the policy package. He asserts that, for structural reform, measures which speed up recovery of the economy should be done first, and that measures which delay the recovery of the economy should be left to be done later. For example, reform of governmental corporations that increase participation by the private sector should be done first, and reform of finances that naturally would be attained when economies achieve recovery, should be left to be done later.

Koizumi Reform will face its climax by April. Mr. Kato Points out the following 3 subjects that should be quickly decided: first, to cope with reform of the Ministry of Foreign Affairs by means of strong leadership by the Prime Minister. Secondly, to input public money into major banks as a defensive means against pay-offs in April. Thirdly to firmly declare the privatization of postal savings. These will clearly encourage transformation from a socialistic system to free system. If we carry out these 3 measures, the Japanese economy must begin to move towards recovery, Mr. Kato states.