They sit on the boards of directors of almost 30 percent of big companies. . .. and 58 percent of the one hundred largest private firms, so they make all the money. They occupy 40-50 percent of the board positions in large and powerful tokushu hojin (government-run corporations),which don’t have to reveal anything about their finances and no-bid contracts to the public (although they’re funded by tax money!). They account for 20 percent of Liberal Democratic Party seats in the lower house of congress, and 33 percent of cabinet positions, so the government can’t outlaw them. They sit on the board of directors of all the media companies, so you won’t be seeing any exposes about them.
They’re not aliens or communist spies. They’re not even Jews (shame on you)!
They’re . . . amakudari! Japan’s hidden ruling class.
Amakudari – literally “descended from heaven” – are ex-bureaucrats that retire at around 50 and then spend the next 20 years working for the companies that they used to regulate.
If you want to build houses for a million dollars each , LIKE A SUCKER, go ahead. But if you want to build houses FOR THE GOVERNMENT at THREE million each, you got to hire one or two retired bureaucrats. Ditto government subsidies: If your company makes a product no one wants, will you go bankrupt? Not if you hire one or two retired bureaucrats. Tired of your $15 shoes winding up costing over $30 because it’s so expensive to “comply with all the regulations?” No problem – just hire one or two retired bureaucrats to “explain to you” the regulations. Sure they cost money, and you’re not allowed to ever fire them, and they don’t even necessarily know what the fuck they are talking about , but who cares? They get you that free money.
This kind of systematic yet informal corruption excites me! And that’s why I decided to read AMAKUDARI, by Colignon and Usui.
Colignon and Usui make a good point : Amakudari is not just the individual ex-bureaucrats running all the elite institutions. Amakudari is the network itself, which keeps voters/women/minorities/foreigners out of power. Amakudari is their shared outlook on life which allows them to work together, despite the fact that business, bureaucrats, and politicians usually fight each other. And most importantly, it’s the complex set of unwritten rules and procedures that dictate HOW and WHEN and WHERE and WHO amakudari takes place, which all the guys in the network agree on through a sort of telepathy.
Colignon and Usui go so far as to suggest that the amakudari are the real government, and the stuff that the public sees: the flags, the big patriotic ceremonies, the kabuki debates in the Diet on TV, the scandals with disgraced CEOs hiding their head under their coat. . . all that is just window dressing designed to make the whole process look legitimate, while distracting people from the real government.
Even the idea that the bureaucracy, business, tokushu hojin (government-run corporations), academia, and elected officials are all “separate things” is part of the ruse.
Of course, all of those things have competing interests and kind of fight among each other over little things. And the various ministries also compete a little to gain more territory and regulate more things. But basically they all work together: the real government is a web of individual pod-people who have common goals and whose only loyalty is to the web itself.
This gives it the major power in Japan. But it’s Not loud power like winning debates or fighting the other side to win the election with lots of attack ads. Amakudari have Quiet Power : like stopping debates from happening in the first place, from making sure “inside guys” are the only guys running for election in the first place.
In other words, instead of being run by one charismatic dictator, with medals and eaptulets and shiny boots, Japan is run by 10,000 very drab, non-charismatic civil servants, who sort of Voltron together to form a web of power which is more , uh. . . .powerful, than any single leader.
As Colignon and Usui say,
The repeated movement of ex-officials to specific positions in private and public corporations through the different paths, represents one feature of amakudari.
Repeated movement? Paths? Sounds a lot like pachinko!
Picture the vice-minister of Human Resources twiddling the knob of the pachinko machine, and the retiring bureaucrats as the little balls (which, like casino chips = $$$) that are launched from the top and “descend” along “paths” determined by the little pins (the various corporations, tokushu hojin, think tanks, political offices, etc.) until they either hit a prize (board of directors of Bank of Japan! Kaching!) or sink to the bottom (unpaid directorship of some non-profit “raising awareness of bonsai trees.”) Plus, just like amakudari, releasing one ball to descend sets in motion the next ball – they descend in a chain, until fate or strategy shunts them into different slots.
This book is really frustrating.
Colignon and Usui explain well about a lot of the secret processes and rules that govern the retirement process. Who decides when Mr. X retires, who decides where he goes to afterwards, who decides how much he makes at the new company, and how do these unwritten rules change over time.
But instead of mentioning even one word about corruption, they waste a huge amount of time with mind-numbing charts and graphs that “prove” really obscure useless points like “Between 1982 and 1994, Ministry A’s amakudari declined 23% compared to Ministry B!” . . . as if it was some sort of baseball trivia contest:
“Barry Bonds’ Bunting ratio went up 19% after he was transferred to the Phillies, but his APB went down by 4%. Now Darryl Strawberry on the other hand. . .” Tedious.
“Why did I have to sit next to this guy at the party? Fuck! Should I get up and say I have to go to the bathroom? Or is that too obvious?”
And then there is no shortage of this kind of sentence:
And although amakudari has cultural mechanisms that motivate individual effort to reproduce the institution, it also manifests structural patterns among a matrix of organizations and formal institutions.
Oh really? You don’t say!
But most of the book is spent dealing with one single issue: which ministries place the most amakudari and how the ratio changes over the years. A tangent of a tangent of a tangent.
It’s crazy that this is the ONLY English-language book on the subject.
It’s as if there was only one book on heavy metal EVER, and that book ONLY dealt with the distinction between German death-thrash and wigger slam. And used statistics to prove mathematically that these were two distinct categories. No mention of black Sabbath, motorhead, slayer, or judas priest. But . . .just check out table 2b. WHO CAN ARGUE WITH TABLE 2B? NO ONE! EDUCATION WINS AGAIN! WE’RE HELPING PEOPLE!!
It’s like . . .huh? Hey, book publisher: is this the best starting point you could think of? Why not just pay some grad student fifty bucks to translate all the good scandals from Japanese newspapers into English? You wouldn’t even have to hire a writer! Wouldn’t that be a better place to start?!? Fucking gaijin, man.
I understand the authors of AMAKUDARI base their career on working with and interviewing beuracrats, and they don’t want to burn their sources by printing anything unflattering, but talking about amakudari only as “a way of developing networks” is like talking about tornadoes only as “a way air moves.”
Grow some stones, dude and lady. At least mention some scandals that were in newspapers and thus common knowledge in Japan.
Compare this to DOGS AND DEMONS, the classic book by Alex Kerr. It’s not even ABOUT amakudari, but in one random paragraph Kerr dishes more dirt than Colignon and Usui do in THEIR WHOLE BOOK.
I like Dogs and Demons so much, let’s see if I can recite Kerr’s example of amakudari corruption from memory:
Take the case of freeways. Instead of Ministry of Transportation directly hiring a construction company to make a new freeway, and paying for that with a bond (that voters would have to vote to authorize the passing of), the Ministry of Transportation will make a tokushu hojin called the “New Freeway Company,” which has no workers and no equipment. Just a few amakudari. Then The Ministry of Transportation will borrow a billion dollars from the ministry of finance (without asking/telling the voters OR the legislators), and give it all to New Freeway Company. And New Freeway Company will then use most of that money to hire an actual construction firm to do the actual work. A lot of that money will go missing. Thus, New Freeway Company serves two functions: to allow Ministry of Transportation to siphon money from the zaito (instead of a bond), to provide a safe “nest” for amakudari to “descend” into, and to facilitate the bribes and kickbacks so the Ministry doesn’t get its hands dirty.
Anyone at home with a copy of DOGS AND DEMONS, tell me: how’d I do?
Instead of juicy conflict-of-interest scandals, corporate kickbacks, bribery, rigged bidding, no-bid contracts, government waste, backroom deals made in brothels, what do Colignon and Usui give me?
Page after page of one-sentence summaries of other academics’ papers. Some of the papers sound interesting, scandalous even, but we never get more than one sentence to sum up the whole paper – just enough to tease, never enough to inform. It’s like Colignon and Usui just want to cover their ass by saying, “Yes, Professor, we are familiar with the literature on the subject, we have done our homework.” But they don’t care about actually informing US, THE READERS. Well, fuck you too, buddy! Haven’t you heard of footnotes? If you’re going to mention something, explain what the fuck you’re talking about.
Not only do they not mention any cool scandals, but they don’t even mention any specific GOOD incidents where the government and the corporations worked together to solve an economic emergency. The book INSIDE THE KAISHA gives way more examples, despite that not really being the main point of INSIDE THE KAISHA.
A final word of warning:
The nomenclature is annoying as fuck. Amakudari is a noun AND a verb. And to make matters worse, the authors identify 4 different types of amakudari – and one of those 4 types is ALSO called “amakudari”, so you’re never sure if they’re talking about that one specific type or amakudari in general, WTF man.
Because I actually care that you understand what I write, I’m going to refer to amakudari-in-general as “amakudari” and the amakudari-the-category as “amakudari classic.”
Here’s the difference between the gaijin style corruption and Japanese style:
All countries have their “back-room fixers” – the “men behind the curtain” who make the real decisions in politics. Basically if you’re on earth and you’re allowed to vote, you’re choosing between options that the back-room fixers have laid down.
Each country has its own system of backroom fixers. And in japan the fixers are NOT a few Putin / Marcos / Mr.Burns-like overlords; instead there’s a wide network of thousands of unremarkable middle-aged drones, who gain power by collectively belonging to a big group which spans the upper echelons of politics, business, academia, media, and the federal bureaucracy.
And in japan the backroom fixer system has lots of (unwritten) rules.
Why? Since they have waaaay more guys doing the fixing, they need waaay more rules to keep the various fixers from forming mini-cliques which would war among each other and derail the whole process. Whereas if you just have one banana-republic dictator calling the shots, he can decide whatever.
Like, of course, the dictator of Kalmykia, who built a whole small city to play chess in, while his people starved. This would not happen in Japan.
In America, some of our fixers are like George Soros and the Koch brothers. They were never politicians, never spent time in the federal bureaucracy. Although rich business men, They don’t even try to get power by joining the existing “business associations” of their industries.
Even those guys aren’t connected in the usual sense, they just woke up one day and said, “Hey, I’m rich, bitch! What is stopping me from starting a bunch of think tanks, PACs, and fake grass-roots pressure groups, and buying and selling politicians? Nothing, that’s what!” . This would never happen in japan.
Or even within “the system” of America, . . . say there’s five democratic mayors that all want to run for governor of the same state. The DNC (Democratic National Council) will gather in some smoke-filled back-room and decide who gets to run, and the other four will be told, “You can sit down, or you can LAY down.” But even these decisions from within the system are usually arbitrary, case-by-case, and not following a protocol. “I like this guy.” “You like this guy, Harry?” “Yeah, he seems ok.” “OK then. Bill?” “I like that lady more, but whatever, it’s only Nebraska. Let’s nominate that first guy and then get martinis.”
And the example that Colignon and Usui give: Dick Motherfucking Cheney! My man started as Secretary of Defense, then moved to a private oil company, and then went back to government work as the President, uh, I mean Vice President. This is what we call the “revolving door:” From public to private to public service and back again.
And, since in America, we DO have a powerful legislature, corporations have to persuade the legislature (rather than the buracrats and ministries).
Also, our retired corrupt guys become lobbyists, (who can represent a dozen clients at the same time), rather than salaried employees of one particular industry.
IN CONTRAST, HERE IS HOW IT WORKS IN JAPAN:
Unlike Dick Cheney and friends, makudari only goes one way: from the beuracracy outwards, and typically downwards. And they don’t try to influence legislators; they influence their former beuracratic colleagues. Also, they function as spies, passing inside knowledge of that company to the ministry.
In this regard, amakudari maybe more like Russian ex-KGB than American lobbyists: In Russia, former KGB (now FSB) agents laid off after the collapse of communism got high-ranking corporate jobs providing their spy services to their new capitalist overlords (and in return, spying on the capitalists, and reporting back to FSB central!)
It’s only in Japan that back-room deals are done by elaborate rules. Precedents are set, and then followed as if a binding legal decision had been made. People who have never met, in radically different industries, make the same exact choices, for reasons that are unclear even to them. Because That’s the Way of Amakudari. Things are not decided in the whimsical manner of the bannnna republic, or the contentious, chaotic, case-by-case basis of the United States. It’s not some American lobbyist who last week was working for a middle eastern tyrant and is now working on deregulating asbestos.
The Japanese rules for doing back-room deals get complicated and they get very firm/unchangeable. Why? Because there are so many players in the game, and it only works if all players feel that it’s fair.
Rules ensure fairness (for everybody who matters). In other words, amakudari is not JUST mutual benefit for the corporations and ministries. It’s taking people with opposing vested interests and knitting it into a single vested-interest. (what some call “reciprocal patronage”). Even notorious rivals like the Finance ministry and the MITI ministry can agree to get together to shut out everyone else: foreign businesses, special interest groups, uppity women, minorities, and especially the fucking voters.
Jesus, we’re barely getting the big corporations, the bureaucrats, the politicians, and the academics to agree on things. . . now you want to get voters involved? Do you think we can please everybody? We’d never get any work done! Grow up, son.
Another fun difference: a lot of companies are forced to take amakudari they don’t particularly want. (but the ministries need cushy landing spots for their retirees, so oopsy daisy). Can you picture the US government – for all its corruption – forcing lobbyists on big business?
WHY DOES AMAKUDARI ALWAYS START WITH MINISTRIES?
WHY ARE THE MINISTRIES (BUREAUCRACY) THE MOST POWERFUL BRANCH OF GOVERNMENT?
And, although Macarthur saddled it with a USA-style constitution, in practice, Japan doesn’t have separation of powers: usually the bureacrats write the laws and the politicians just vote on them.
Also Japan does not have a strong judiciary who will reign in the federal agencies. “Japan’s judiciary is not independent and dares not rule against the government, and 95 percent of suits against the government end in rulings against the plaintiffs. Unlike US judges, who begin their careers as lawyers representing varying interests, Japanese judges enter the judiciary at the outset of their careers, are trined together, and remain within thei institution until retirement. Thus the quality of the Japanese judiciary is even and its out look is unform.”
“Japan lacks the basic legal mechanisms for non-elite influence: class-action lawsuits, non-profit advocacy groups. . .. . .a lack of laws to protect citizens’ rights. There are no environmental assessment regulations, no product liability laws, no lender liability law, few rules on insider trading or other forms of market manipulation, few testing protocols for new medicines, and no cost-benefit analysis of gigantic building schemes”
As you can guess by now, local (state) government is also too weak to put the central bureaucracy in check. (See my report on STRAITJACKET SOCIETY for details). In Japan, bureaucracy is very centralized. Not only do the “provinces” have almost no authority, but even the bureaucrats mostly come from one single department (law) of one single central university (tokyo university, or Todai).
Then, after retirement, they filter out and down, taking positions of power at smaller regional companies and city governments out in the boondocks. Less powerful companies are more likely going to ask for an amakudari to join them. Larger companies consult with the ministry as equals and plan the economic policy of that industry jointly, so they don’t need amakudari as much.
The amakudari process is also repeated elsewhere in society :
“high ranking employees of large corporations retire to important positions in their smaller counterparts, and local governments, in turn, move their high-ranking officials to lucrative jobs in affiliated companies. High-ranking public university professors retire to senior positions at less prestigious private universities, and Tokyo government has more than seventy affiliated organizations where it places its own city-level bureaucrats after retirement.”
So! Keeping all this in mind, Colignon and Usui constantly remind us: it’s not fair to think of amakudari as “ FEDERAL BEURACRATS TRYING TO CONTROL THE COUNTRY.” It’s more like amakudari is a way for ALL elites to keep power concentrated between them, and help them work together to solve national economic problems. Or not, as the case may be.
And amakudari is the main part of nationwide elite network, but not the only one. There are also keibatsu (marriage alliances) and school ties (gakubatsu), and industry pressure groups (keiretsu).
Speaking of gakubatsu . . .
IF YOU DIDN’T GO TO TOKYO UNIVERSITY, NO AMAKUDARI FOR YOU: THE IMPORTANCE OF HAVING A COMMON OUTLOOK ON LIFE
Tokyo University (Todai) is the hardest to get into in the whole country, but it’s your ticket to the best jobs: In 1994, 25 percent of todai grads passed the bureaucrat exam, and yet 70 percent of Ministry of Finance hires came from Todai. This “I’d rather hire someone I went to school with than a more qualified guy who might not believe 100% of the same stuff I believe” mentality illustrates the importance of gakubatsu.
The Todai connection makes it easier for Japanese guys to get along and achieve consensus in decisions: even if one guy is working for a private company and the other is a bureaucrat, politician, or think-tank nerd, they share a common set of values. They implicitly trust the other guy. Even if the other guy is, of course, struggling to get the best deal for his own group, they know he’s not going to say some crazy stuff like, “Let the common voters decide! Hey! What if we made all this public just for fun!” or “You know who is rad? Stalin!” That might sound obvious, but in most countries, the private-sector businessmen seriously hate the government guys, and vice versa.
The Todai link gives the bureaucrats a common culture. Students were raised to believe that saving Japan was their job, and all their teachers told them that bureaucracy and status quo was the only way to do that. And that the “common citiczens were too lazy or ignorant to take that responsibility.”
In the ‘30s, the school song of University of Tokyo was:
Common people lead the lazy life, but we despise such attitude
The people are drowning in a sea of international struggles, but we have to save them and steer the ship
Draw the sword at the top of the ship, thedevils now hide, seas are calm.
Which should give you some idea.
“ High levels of competition to enber top universities and then the ministries contribue to the public perception of them as a legitimate elite based on merit.”
The translation “descend from heaven” dates back to the Meiji period, when bureaucrats (mostly ex-samurai) worked directly for the holy emperor. Bureaucrats were seen as being in heaven because they worked for God and the nation, so their work was sacred. . ., but they “descended” in status upon retirement and reemployment into the profane world of material self-interest.
Before WWII, it was considered very bad form for a retired bureaucrat to retire into anything but the legislature – in the House of Peers, of course. No pesky “getting elected” for them. Working for a company was not spiritual enough. But if they did decide to go that route, they would have to look for a post-retirement job on their own.
WHY DID THE MODERN AMAKUDARI SYSTEM DEVELOP?
After WWII, the ministries had to work to rebuild a devastated Japan, but they didn’t have a lot of resources (because of the devastation), so they started using amakudari in order to reach out to businesses (and also local governments). There is a saying: businesses and local governments are the arms and legs of the central ministries. To this day Japan has far fewer federal bureaucrats than other rich countries. Thus, amakudari became routine and institutionalized: each ministry designated a person, known as a secretariat, specifically to find employment for retiring personnel – employment in the most powerful positions possible.
Other reasons amakudari flourished post-war:
The American occupiers, to save money, ordered 30% of all bureacrats fired. This required the Japanese to come up with a system in a hurry to place the laid-off guys in good jobs.
And later, when Japan got back on its feet, the opposite problem: a lot of new guys came INTO the newly revitalized ministries. This put the ministries in a tough spot: they had to keep the old guys employed (lifetime employment, remember?) and at the same time, get rid of the old guys to give the new guys room to move up the ladder. The solution was already there! I hope you can guess what it is.
Mostly the ‘40s and ‘50s guys would go directly into business and finance, but from the ‘60s, they used a new technique: They learned how to create these tokushu hojin (government owned corporations that are unregulated by the legislature AND invisible to the public) and put most of their amakudari in THERE. This helped them to a) deal with the increasing pace of retirement, and b) get around legal restrictions on guys retiring into jobs in the industries they used to regulate.
BENEFITS OF IT:
Besides giving the ministries “arms and legs,” and managing the whole promotion-vs.-lifetime employment issue, amakudari has other benefits:
Amakudari take self-interest (“I want to get paid! I want to be a big man!”) and turns it into decades of 80-hour weeks of kiss-assing, as the guys wait for their eventual payoff. Not only that , but it stops them from doing dirt by pursuing self-interest on their own (embezzlement, crooked stuff), which would reflect badly on the ministry when they get caught. By institutionalizing the corruption it keeps guys from wilding out in unpredictable ways. The same “organized crime is better than dis-organized crime” rationale is used to justify the prominent position of tne Yakuza in society.
Here’s the rub: if you work 80 hours a week, you’ll get a amakudari gig as a vice president of a big company. If you work 60 hours a week, you can count on receiving a consulting gig for a low-level cookie factory. And if you left at 5 PM every day, forget it. Your retirement package consists of a gandam with one arm missing, and a foot in the ass. So the pattern of deferred compensation which started in elementary school is kept up all the way to a dude’s fifties. A lifetime of crippling uncertainty of “What do the teachers/professors/bosses think of me? How can I make sure they help me out when it’s time to go to the next stage?”
Other functions of amakudari: lets the ministry spy on the company.
Lets the company spy on the ministry – insider information, plans or quotas, regulations the ministry is planning for next year, etc.
One problem: you can’t ever fire an amakudari even if he a) turns out to have zero juice at the ministry or b) makes a series of disasterous business decisions for your company.
HOW IT GOES DOWN
From the beginning of their careers, bureaucrats are rotated to different positions within the ministry, giving them a wider perspective and also letting them meet the companies the ministry regulates (the companies where they will work after they retire). After that, they will often be “loaned” to other ministries for 2 years at a time. So the eventual move to private industry just seems like a natural extension of that. In fact, the legal time limit before you can work for an industry you used to regulate is . . . exactly 2 years!
In Japan, as part of the lifetime-employment system, all guys (and they’re all guys!) who are hired on a given year get promotions at the same time, regardless of merit. As long as you don’t stand out in any way, you’re guaranteed to move forward. For about 10 or 15 years. After that, there are only like 7 senior “section chief” type positions open for 15 guys.
And only 4 of those section chiefs will become a bureau chief. That’s why Japanese guys work these insane hours – they’re trying to out-compete the other same-year guys for that vice-president slot.
To make matters worse, there’s a thing called kata-tataki (the tap on the shoulder ) or mabiki (thinning out): when one bureau chief is chosen to become vice-president, ALL THE OTHER CHIEFS get fired, to make sure the new VP has total control. WTF.
So then, how do you keep guys motivated to try their best when 90% guaranteed they will get kata-tataki-ed? Making sure EVERYONE gets cushy post-retirement gigs.
About 3,000 guys retire every year from all the ministries combined.
And each guy has to be amakudari-ed by the HR department of his ministry. That’s right: the HR department places them in OTHER companies. Each retirement placement is as conscious, calculated, strategic and rule-bound as a move in a chess game. And yet it’s all unofficial, informal, and off-the-books. There are no rules, but everyone knows exactly what the rules are.
Japanese bureaucrats don’t decide where they will work after they retire. Their boss or HR department decides that for them. Thus, unlike foreign lobbyists, Amakudari remain loyal to the ministry from which they came, and aren’t just out for themselves.
For some reason, the retirement “season” is in April. Guys move from the ministries to various boards of directors. This sets off a chain reaction, as the ex-ministry guys who are ALREADY on those boards have to be-reshuffled to other boards to make room for the new guys coming in. And, although this shuffling might involve 100 different corporations, tokushu hojin, research facilities, think tanks, universities, and so on . . . this is all coordinated through the HR department of the ministry.
The vice-minister or the HR guy in charge of placing amakudari usually arranges it so that as soon as one guy retires for good, or is rotated to a new company, another retiree from the same ministry get his old job. This way the ministries defend their turf.
Another unwritten rule: the more times you “bounce” from job to job, the worse the pay gets. And of course not only do higher-ranking guys better gigs, they also get bounced less: they might stick with the same gig for 15, 20 years.
Here’s a point that Colignon and Usui make over and over: Ministries do work together to control the politicians, the regional beuracracies, and the corporations, but that doesn’t mean that they like working with EACH OTHER. Turf battles are common.
Ministry of Finance, MITI, Transportation, and Construction are the biggest ones, both in power and in sheer numbers. They have correspondingly more guys retiring, and place those guys in correspondingly higher-ranked positions. In a way, the locations of all the amakudari of a given ministry can be thought of as a map of the influence of that ministry. The other ministries struggle frantically to expand their “territory” by placing amakudari in new or more powerful companies.One ministry guy likened the amakudari to stocks, to a stock portfolio that the ministry had in certain companies.
For example, let’s look at the most powerful ministry: Ministry of Finance! Every July, the Ministry of Finance holds a secret meeting called the tanabatakai, at the finance minister’s residence.
They invite career bureaucrats of the most powerful bureaus in the MOF , plus the most successful amakudari (who now work for big business). The MOF’s HR office has a list of companies and positions, in which they can place amakudari. This list constitutes the “territory” of the ministry. And they look at the list and decide where to place each of the 20 or so retiring guys. Of course the HR weenie has to handle the details later. The details being, placing a phone call to a given company and “suggesting” they hire mr. So-and-so. Since the ministry regulates, liscences, gives subsidies and loans to that company, there is an implied threat.
And if this wasn’t yakuza enough: check out what happens to companies in financial trouble!
The ministry offers to “help out” by sending guys in to “restructure” the company. They usually save the company, but the guys stay on as top-level employees after the crisis passes. And the company is now under the thumb of the ministry.
Anyway, this job-placement thing doesn’t happen once: the ministry is responsible for finding these guys job after job until they turn 70ish! (see WATARIDORI, below)
It’s illegal to place a guy directly into the board of directors of a company he used to regulate- so the ministry places them in a tokushu hojin related to that industry until the legal time limit is up, and then, a couple Julys later, it secretly pops them into the corporate boards. This way, it’s all “off the books:” the guys that took the scenic route don’t show up on official government statistics of amakudari.
For their part, the “ex-civil servants who inherited these positions from their predecessors felt obliged to do good work (for the private firms) so their positions could be handed over in good shape to their successors. The ex-bureaucrats take the role of the stewards of such positions.” Not so different from how the emperor is thought of by Shinto priests – his current physical body is just a temporary stand-in or place-holder for the goddess Amaterasu. I think the religious term for this is 中今 (nakaima), which is to say the eternal now. But that’s a different story. The point is, these guys try to do a good job.
FOUR BASIC PATHS
ONE: amakudari classic: going directly from government to a for-profit corporation. This is the most powerful type, but also the most regulated, so comparatively few guys do this anymore.
TWO: the yokosuberi (side-slip): going from government to a corporation which is owned by the government. . .Examples: railways, national universities, national hospitals, Japan Tobacco (?!?), telephone companies, and airports. Universities and policy-making research institutions. The yokosuberi is now the main type, since it is much less regulated than “classic.”
THREE: wataridori (migratory bird): the ex-bureaucrat moves between corporations and semi-public institutions over and over again. This seems to be the booby prize of the bunch, since every move pops you into a lower-paid position (like a ball, that bounces less high every time it bounces).
FOUR: seikai tenshin (movement to political office). This is for the elite of the elite: beuracrats that had jobs where they’d been getting newspaper exposure for years, and can leverage that exposure into winning public elections. However, since the ‘70s the ruling LDP party prefers to keep most of the good jobs for itself, rather than letting some ministry guy that just retired last July “take cuts” in front of career pols that have been waiting 20 years for a good job. Thus, nowadays seikai tenshin can’t be prime minister, but they can still work in the Lower House of parliament.
Not tedious enough for you? Well, how about if we look at them in more detail?!?
AMAKUDARI CLASSIC: RETIREMENT DIRECTLY TO THE BOARDS OF DIRECTORS OF PRIVATE COMPANIES.
The ministries with the most straight-up amakudari classic guys are:
Ministry of Finance, International Trade (MITI), Construction, Transport, and Telecommunications. These are what is called the “economic ministries.” And of course, they place those guys in more different companies than the other, weaker ministries, since they have bigger turf.
So what industries do the ministries try to place their amakudari in?
NOT agriculture, forestry, or fishery.
Almost never utilities, trade, retail and wholesale.
Mostly: transportation, communications, services, and (top dog) banking and insurance.
The authors say that the motivations for a private company to aquire their very own amakudari are different by industry:
Banking, insurance and transport industries want amakudari to “interpret regulations and provide insurance against uncertainties.”
On the other hand, conscrtuction, agriculture, telecom industries want THEIR amakudari to “help gain strategic information and government grants.”
YOKOSUBERI: “SLIPPING SIDEWAYS” INTO GOVERNMENT-OWNED CORPORATIONS.
Tokushu hojin (literally, ‘special legal entities’) . . . there is no equivalent English term. We just don’t have these things in the West. It’s another manifestation of Japan’s particular communist-capitalism, I suppose!
I’ve heard them called “government owned corporations,” “semi-public entities,” “quasi-private corporations,” “government-y little guys,”, “pseudo-quasi-whachamacallits,” and so on, until it becomes clear that it’s simpler to just use the Japanese words. So: tokushu hojin!
Even the damn book doesn’t say what they are or what they do, despite page after page of eye-glazing charts and corporate reports.
Here’s what I could glean: they’re somewhat analogous to America’s “subcontractors” : doing the jobs that government should do, but at a much greater cost, so the bureaucracy can claim “small government.”
For example, in 1995, there were only 1,160,000 people working for the federal government of the whole country. Waaaay smaller than any other industrialized nation. And yet there were 750,000 people working for tokushu hojin – almost 40% more people than the “official” workforce.
Tokushu hojin don’t make money, they provide services (mostly to industry, not average people) and so they COST money. The money that they cost is not from official tax revenues, but from the ‘zaito’, (Japan’s ‘second budget’ – bureaucrats secretly borrowing from the national bank (where average citizens deposit their money)). Since they’re off the “official” budget, these tokushu hojin don’t require any approval from the legislature . . .but since they’re government-owned they’re totally unaccountable and opaque to the public. Winnerz!
But wait, you say! Didn’t Koizumi and the gang reform the zaito laws way back in 2001? Didn’t he make it way harder for these shady tokushu hojin to raid the zaito funds? Yes this is true. And didn’t his reforms force tokushu hojin who were in financial trouble to borrow money from the private sector at the same interest rates as everyone else? Yes.
Loophole! If your tokushu hojin is in trouble, you can still buy “zaito bonds” at near-zero interest rates. And guess what? By late 2001, 90% of loans to jerkface tokushu hojin were “zaito bonds”, not real bonds.
Did I say 90%? I meant 97%!
Then there’s the tokushu kaisha (‘special companies’), like the railways, the phone company, and the tobacco company. These DO make money, and are run like corporations, it’s just that the government owns majority of stocks in them.
And then there’s the government-owned Bank of Japan, which is a tokushu kaisha that is so huge, that it is basically its own category..
As semi-corporation / semi ministry thingamabobs, Tokushu hojin function as the ministries’ “arms and legs” for manipulating the private companies. It seems the ministry is like the brain, making new policies, and the tokushu hojin enforce them. How? Contracts, loans, subsidies, and regulatory protection. If your company plays ball, you get those four things from your local tokushu hojin. If not, then not!
Another benefit of tokushu hojin: as I said above, they allow the ministries to avoid the publicity and accountability of placing their amakudari directly into the private sector. Often they’ll place them in a tokushu hojin for 2 years (the legal waiting period) and THEN slip them quietly into the private sector. Sadly, this means that guys who have worked 30 years of coming in Saturdays AND Sundays, in the hope that they will get a cushy post-retirement job, have their lifelong dreams deferred AGAIN. Maybe in a few more years, we’ll get you a gig at a real private corporation. Maybe when you’re 67. Jesus.
In 1999, around half of all bureaucrat retirees went into these tokushu hojin.
Tokushu hojin are structured more like a corporation than a government – meaning, not as much bureaucracy, more adaptable, and able to take initiative. They date back to the ‘30s : “Initially they were established to control and coordinate the economy in the war effort.” But they really took off in the ‘60s for two reasons: 1) the bureaucracy came under pressure for doing too much “classic amakudari,” AND at the same time, 2) the government had a lot more new guys coming in, and needed more retirement spots for old guys to land in.
What do they actually do, though? This is not covered in the book. Amazingly. From a few hints, I am able to guess that regular corporations make stuff for citizens to buy: cars, spatulas, porn, etc. But tokushu hojin tend to specialize in making things that the whole country uses (that’s why the central government does it). That means: Infrastructure! Telegraph, telephone, railways, airports, housing, highways. Promotion of small and medium size businesses, promoting imports, exports, and energy development. In other words, making things that are strategic, things that affect the whole nation.
Coligon and Usui explain nicely how tokushu hojin work with the iron triangle:
Ministries give money to tokushu hojin, to distribute to private companies that play ball (i.e. that try to meet the ministry’s economic or policy goals for that year). That’s how the ministries control the companies.
And the companies take that fat government profit and use it to fund politician’s campaigns. That’s how the private companies control politicians.
The politicians band together and form tribes (called ‘zoku’) to prevent anyone from passing laws which would restrict the bureaucracy, defund programs which have long outlived their missions, or make the ministries more accountable / transparent. If the ministries play ball, all efforts at reform are guaranteed to fail: That’s how politicians can control the ministries.
Note that, in classic Japan fashion, “control” is inseparable from “help.” There’s this idea that everyone has the same vested interests.
But look who DOESN’T have the same vested interests: EVERYONE OUTSIDE OF THAT LOOP. The taxpayers who are paying more taxes to fund government waste, and then paying more AGAIN at the store for high-priced commodities (since lower-priced competitors are shut down by bureaucratic regulations). All the companies that could do the job cheaper but don’t get the contracts because they’re “outsiders.” All the industries that DON’T fat subsidies, but are expected to compete against industries that got subsidies they didn’t deserve. All the companies that DON’T get zero-interest loans. All the foreign companies that could offer Japanese a wider range of merchandise at cheaper prices but can’t because the bureaucracy says, “You didn’t follow regulation 203403-b.”
Anyway! Moving along . . .
Then there are zaidan hojin and shadan hojin. These are also semi-private companies, but they’re smaller, there is less money involved, and they tend to focus on more touchy-feely things.
Zaidan hojin focus on education, religion, culture…and shadan hojin “tend to carry out promotional activities for industry, and regional associations.”
I guess you could think of them as non-profit foundations. Except that their policies, personnel, and budgets were totally secret until the fucking ‘90s.
There are over 26,000 of them.
Because zaidan/shadan hojin are smaller and less profitable than tokushu hojin, that’s where you go if you yokosuberi from one of the loser ministries (AKA the ‘social ministries’ : education, health, labor, construction, or foreign affairs). Or if you’re kind of a loser from a more powerful ministry, you might have to slum it in a zaidan/hadan hojin, and sit next to some clown from the education ministry.
In contrast, the top ministries (Finance, Transportation, MITI) put their yokosuberi guys in the tokushu kaisha, because that’s where the money is: for-profit government-run companies.
Several different ministries may be present on the borad of directors of one tokushu hojin. But the ratio is generally agreed upon in some back-room when the tokushu hojin is first founded, and then thereafter never changes.
Colignon and Usui give us exactly one actual, down-to-earth example of how this works. In the whole book. And seem very proud of themselves for going that far.
Oil exploration is a risky and costly business. The probability of finding oil is three in one thousand. JNPC (Japan Deveopment of Petroleum Corporation) was made to conduct oil exploration by giving money to nearly 120 private Japanese companies that have cooperative oil-exploration projects in thirty countries.
JNPC and a private company typically team up to start a MINI, TEMPORARY oil-exploration company and go halvsies on the initial capital. This company explores for oil, and when oil is found, the company imports it to Japan. If they don’t find oil, the company is disbanded and the government eats the loan.
The logic is straightfoward. JPNC is a tokushu hojin controlled by MITI. It funds risky drilling thingies that private companies don’t have the ovaries to undertake. JNPC itself and the private corporations it funds become locations for yokosuberi and amakudari from MITI. In 2001 alone, JNPC had 138 private companies that were affiliated.
That’s 138 places that now have to accept amakudari! But like I just said, the mini companies are temporary, and when the well runs dry, the mini-corp is disbanded. So where do the amakudari go then? They migrate to other temporary mini-companies. And this brings us to . . .
WATARIDORI (THE MIGRATING BIRDS)
This is kind of an extension of what some bureaucrats spend their whole career doing. It’s normal for new guys to be rotated to different departments in their ministry, to gain experience. Then they might get “loaned” to other ministries for years at a time, to share inside information, expertise, and to keep the ministries’ rivalries from spinning out of control. Then even after they retire, they might continue to play musical chairs on the boards of directors of tokushu hojin and private companies.
If tokushu hojin blur the lines between private and public corporations, wataridori blur the lines even further, as they “migrate” between the two regularly.
Will you get a good job after you retire? Or get screwed and wind up a wataridori? Depends on how high-ranking you were in your ministry, and how powerful your ministry is. But then again, the more powerful a ministry is, the more post-retirement jobs they have to scrounge up for their huge staff . . so even if you work for MOF or MITI, you might still wind up being wataridori for a decade if you’re not a hard worker. Better come in Sundays from now on!
Problem is, sometimes, the people who actually worked for that company all along want to get promoted to their own board of directors. The nerve of them! Not only that, but when wataridori leave one job to go to the next, they get huge sums of “severance pay” , much larger than what regular company guys get when THEY retire. And of course wataridori leave their jobs every couple of years. From the perspective of the wataridori, the “severance pay” is only fair because their next job is most likely much lower-paying than the current one. But from the point of view of the company’s regular executives, it’s fucked and unfair.
Not only do the amakudari jump over long-working employees straight to the top, not only do they get better severance, not only do they frequently not even know much about what that company even does. . . but they INTERFERE. They make policy decisions that put their former ministry's priorities over that company's priorities, which causes no end of headaches to the rank-and-file workers.
Also,when one wataridori moves on (retires) , another guy from the same ministry will take his place immediately. It’s like an assembly line. This is another example of how arrangements can be informal and unspoken, but also very regular and institutionalized and strategic. As opposed to informal back-room decisions in other countries which are often made on a case-by-case, what-the-hell basis.
SEIKAI TENSHIN: RETIRING INTO POLITICS
This chapter is the worst, most irrelevant chapter of the whole book . . Basically the whole thing is devoted to settling a dispute between two groups of American teachers – does the rise of zoku politicians equal the demise of seikai tenshin or not? (total number of people who care about this: the 6 teachers involved)
There isn’t even one word of discussion about,say, seikai tenshin guys voting in ways that put their former ministry ahead of their constituents. (total number of people who care about THIS: all the voters in japan, plus everyone who bought this book).
It’s like you had a book about the porn industry with a whole chapter that demonstrated THROUGH MATH AND STATISTICS who was the most popular silicone-implant doctor in the industry, and not a word about fucking. And then the authors were like, “Our job is done here. Another victory for KNOWLEDGE! HIGH FIVE!”
Anyway, here’s the little dribbles of useful information left over:
In the good old days, Seikai Tenshin (politicians who are ex-bureaucrats) used to run the legislature. Remember, in Japan, bureaucrats usually write the laws, and politicians just vote on ‘em. Unlike “regular” pols, the seikai tenshin actually knew how to write laws (from their decades at the ministries), and they had their friends/connections back at the ministry to pressure the other pols into playing ball. Powerful guys! About half the prime ministers were Seikai Tenshin, to say nothing of half the regular cabinet guys. But! Starting in the ‘70s, seikai tenshin went down in power. They still control the lower house of the Diet, but that’s about it.
Here’s how that went down: some financial reforms were, uh, enacted: prominent politicians couldn’t use their warchests to shower unlimited money on the smaller pols in their clique. So the pols had to seek money their little-ass home-towns. From constituents, even! The horror! The Ministries are as central as central can get: the seikai tenshin couldn’t compete with politicians FROM the hick-towns when it comes to raising that hick money.
Also, consider this: after WWII, the LDP ran Japan for 40 years. Like a one-party state. In the beginning of the LDP, anyone who was a big guy in WWII could become prime minister. But over time, their hierarchy solidified, and a sort of seniority system was put into place: you have to spend a good 20-30 years as a rank-and-file pol before you get “promoted” to being a minister or a prime minister. That pretty much rules out amakudari, who – as you’ll remember – are retirement age when they BEGIN their political careers.
Also there’s the issue of Zoku politicians (tribal politicians). These are guys that have the power to make laws that regulate ministries. (usual politicians just pass laws which ministries write themselves!)
People have been saying, “Rise of Zoku politicians = the fall of seikai tenshin.” But that is not the case. Many zoku politicians get their special powers from serving as ministers of the bureaucracy – sort of seikai tenshin in reverse. And of course the pols owe the bureaucrats who taught them everything they know. So instead of zoku guys replacing seikai tenshin guys, it’s more like the zoku guys give the ministries yet ANOTHER tool to control the legislature.
Anyway! Point is, your average seikai tenshin can’t be minister or prime minister anymore , but – if he went to Todai AND his dad was a politician, he has a good shot at winning the election to the lower house of the Diet. The Diet seikai tenshin numbers have not decreased in like 100000 years.
FAILED REFORMS: A GAME OF CAT-AND-MOUSE
First of all, like I mentioned : politicians don’t write the laws here. The bureaucracy writes the laws and politicians vote on it. So picture a politician asking a bureaucrat, “Say buddy, mind writing a law to restrict your own power? No loopholes! Have that on my desk by Monday, will ya? One love!”
Over the years, legislators tried to reduce the size of the bureaucracy. In response, the bureaucrats created tokushu hojin companies, who they would sub-contract their work to.
Legislators tried to limit the amount of time an amakudari could run a tokushu hojin. In response the bureaucrats invented wataridori – switching them back and forth between different companies.
Then legislators limited the number of ex-bureaucrats who could be on the board of directors of a given companies. And the bureaucrats started placing more of their guys in local government posts instead.
Finally, in the ‘60s, reformers privatized the biggest government-run companies: NTT and Japan Rail. But the bureaucrats somehow managed to buy all the stocks of the new privatized companies, turning them into tokushu kaisha, instead of all-the-way-private companies. This actually had the result of INCREASING ministry control over the new companies – since the original “state-owned” NTT had its own bosses, and new, tokushu kaisha NTT had to answer directly to ministry officials.
After the bubble economy burst there was a lot of Japanese criticism of how the ministries helped fuck up the economy, and how a lot of bureaucrats were corrupt. To deal with this, the ministries cut down on “amakudari classic” drastically. They released a graph of it, even! From over 300 retirees a year doing “amakudari classic” in 1984 to under 50 a year in ’99. Yay, problem solved!
But hold on – Colignon and Usui uncovered a less publicized, some may say, hidden graph: showing that, as a percent of people on boards of directors of private companies, former bureaucrats actually INCREASED. WTF?
The secret: first they yokosuberi their guys to non-profit foundations (which jobs pay not very well) , and THEN they pop ‘em into the lucrative private-sector jobs. All perfectly legitimate. Like laundering money.
Here’s another good shenanigan: in the ‘80s, the legislature was sick of tokushu kaisha that kept going on, taking tax money, long after their “project” (i.e. the freeway in the example above) had been completed. So they passed a law requiring the ministries to shut down X amount of tokushu hojin. X amount were duly shut down, but lo and behold, the total number of amakudari employed by tokushu hojin actually went up! The secret: the boards of directors went from 10 dudes to 20 dudes per company! Talk about slipping sideways.
Another fun bureaucratic trick: take 3 companies and merge them, resulting in zero savings to the budget, but take credit for “eliminating” 2 companies anyway.
Winz! Also, a lot of the jobs on the boards of directors of zaidan/shadan are . . . “special”, meaning “unpaid.” So when the ministries want a big headline saying they “reduced the number of amakudari,” guess whose jobs get cut?” the “special” guys’s jobs. Net profit to the taxpayer? exactly zero yen.
This kind of fake-reform is known as Koromogae (literally, ‘changing clothes’)
Also blocks to reform: Ministry of Telecommunications owns NHK, the public tv station, and places a lot of amakudari on the boards of other, private TV stations. You’re not going to see Mike Wallace going all 60 minutes on an amakudari anytime soon.
The futile game of cat-and-mouse resembles nothing so much as the decades-long battle between the vice squad and the prostitution business: the cops ban “no-underpants” coffe-houses, so the pimps open up “turkish baths” . The cops ban the baths, so the pimps set up “image clubs.” The cops ban “image clubs”, so the pimps set up “gal bars.” And so on.
Here is the lesson: you can’t regulate amakudari with written laws, because amakudari is not an official legal procedure – it’s an unwritten, informal protocol and a set of networks. So it’s un-regulatable as long as all these guys are still friends.
The Achilles heel of Japanese institutions is the erosion of public trust. A career as a bureaucrat with its power and prestige is preferred to that of a businessman, even though businessmen make much more money. But that depends on bureaucrats having a good reputation. Change may occure when career incentives (such as amakudari) disappear, where letitimacy of the bureaucratic career is withdrawn, or when the alternative career paths offer more power, prestige, and economic returns than the ministries.
Did you understand that? I don’t. It sounds like the authors needed to put some kind of hopeful happy-ending on their book (Western kata!) but this is all they could come up with. Near as I can tell, what they mean is, if there keep being articles about corruption in the ministries, then parents will tell their kids, “Look, no one will respect you if you work for the government. Get a job at Sony instead.” And the ministries will wind up with the dumbest graduates.
And then what? Doesn’t even say.
Me personally, the only way I can think to deal with the amakudari network is how the FBI dealt with civil rights and black power groups in the ‘60s: turn them against each other. Fight informal networks with informal means. Make them stop being friends.
For example, the FBI would call the Chicago black panther boss and tell him, “Hey your wife is fucking around with the NYC panther boss.” And then call the NYC guy and tell him the same thing. This program of hideous and unconstitutional pranking was called COINTELPRO.
I’m not saying that’s an OK thing to do, even to amakudari. I’m just saying that’s the only way I can see to break up the network.
3 comments Tags: amakudari, books —