Jun 21, 2018

AGI WP: “Introducing Severance Payment Systems in Japan —A Proposal for Vacancy Decontrol—”

Hatta presented an AGI working paper Introducing Severance Payment Systems in Japan —A Proposal for Vacancy Decontrol—.

Abstract  
In Japan, the court requires job restoration rather than a severance payment from a firm after it decides that a dismissal has been abusive. This results in a high settlement cost for termination. 

This paper makes two proposals for introducing severance payments to reduce settlement costs in Japan. The first applies to existing contracts and proposes to specify levels of severance payments that would replace the current job restoration requirement after the court determines that a case is abusive. 

The second applies to new employees either for a recently vacated position or a new position and proposes vacancy decontrol, which allows firms to set the levels of severance payments freely while also honoring the existing contracts. Within this category, this paper proposes government-assisted vacancy decontrol, a transitional measure, where the government sets a minimum level of statutory severance payment, which is equal to six months of wages for a worker who has worked for 20 years, following the Taiwan precedent. After the need for the transitional measure is dissolved, complete vacancy decontrol should be introduced, abolishing the statutory severance payment. We have proposed that even at this stage, the government should publicly set a default level of the severance payment, which a firm should observe unless an explicit agreement or contract stipulates otherwise. The government should immediately introduce some form of vacancy decontrol for senior workers who have already retired from a regular job.

Jun 13, 2018

“Competition policy vs. industrial policy as a growth strategy”

Hatta presented a paper “Competition policy vs. industrial policy as a growth strategy” on China Economic Journal.
Hatta, Tatsuo. (2017). Competition policy vs. industrial policy as a growth strategy. China Economic Journal, 10 (2): pp. 162-174. https://doi.org/10.1080/17538963.2017.1321216

ABSTRACT:
This paper shows that competition policy, rather than industrial policy, generated the rapid economic growth in post-war Japan. It also reveals that Japan’s growth rate was lowered from the mid-1970s due to newly introduced industrial policies and paucity of further competition policy. The current Abe government recognises the need for competition policies in Japan to recover from the low-growth period. The paper describes the types of competition policy carried out under Abenomics, especially in National Strategic Special Zones.

Abbreviations: METI: Ministry of Economy, Trade, and Industry. NSSZ: National Strategic Special Zones.

KEYWORDS: 
Competition policy, industrial policy, growth strategy, trade liberalization, privatization

Mar 26, 2018

“Economic Challenges Facing Japan’s Regional Areas”, Palgrave Macmillan

Hatta published Economic Challenges Facing Japan’s Regional Areas (Tatsuo Hatta Ed.) from Palgrave Macmillan.

About this book
This book analyzes issues related to economic challenges for Japan’s regional revitalization. Japan’s responses to such challenges and to the problem of an aging population are of deep interest to the nations outside of Japan. This book brings together 19 articles contributed by Japan’s leading scholars, originally prepared for an online policy information portal, SPACE NIRA launched by the Nippon Institute for Research Advancement (NIRA) with Dr. Tatsuo Hatta, President of the Asian Growth Research Institute, as its General Editor. This book is a significant and useful reference for all scholars, students, and individuals with an interest in current policy issues in Japan.




Feb 6, 2018

A presentation on the National Strategic Special Zones

Hatta gave a presentation on the National Strategic Special Zones at the American Chamber of Commerce in Japan (ACCJ.)

You can see the presentation material on the next website (my Google Drive):

Sep 4, 2017

Open Letter of Inquiry to Asahi Shimbun on its Reporting on the Kake Gakuen Case

The following is an English translation of the article contributed to “Monthly HANADA” Oct. 2017.



Open Letter of Inquiry to Asahi Shimbun on its Reporting on the Kake Gakuen Case


Tatsuo HATTA
Chairman, Working Group on National Strategic Special Zones
President, Asian Growth Research Institute

Special Zones are Designed to Break Through the Present Impasse


I am currently serving as a private-sector member of the Cabinet Office’s Council on National Strategic Special Zones and also as chairman of the Working Group on National Strategic Special Zones. (The Working Group is responsible for negotiating with related government ministries and agencies, and interviewing persons who have submitted proposals. All final decisions are made by the Council on National Strategic Special Zones.)

In my position, I have had opportunities to observe firsthand the actual process of filing applications for approval of National Strategic Special Zones. In this capacity, I have come to believe in the following truth. “It is impossible for Prime Minister Abe to have given preferential treatment in the Kake Educational Institution (Kake Gakuen) case.” I have repeated this statement in the media and in my appearances before the Diet.

Judging from media reports and public reactions to the commotion that has come to surround the Kake Gakuen case, there are many who continue to believe that preferential treatment was given. It seems to me that this is a reflection of the public’s lack of understanding of the special zones system.

First of all, National Strategic Special Zones are intended to help businesses and operators that are placed in weak positions.

Suppose a new business tries to enter a certain industry. If entry is permitted, the resulting competition works to the disadvantage of existing businesses in the industry. By coming up with some plausible reason, the industry can block the new entrant and protect its vested interests. For this reason, the industry association petitions related members of the Diet to restrict entry. In turn, these members of the Diet pressure government offices with regulatory authority over the industry and achieve the hoped-for barriers to entry. In many instances, the profits and concessionary rights that the industry gains from barriers to entry fund the collusive relations that develop between politicians, bureaucrats, and the business community.

On the other hand, suppose a highly motivated startup company petitions government offices for the easing of regulations and restrictions. Normally what happens is that a subsection head deals with the request and simply dismisses it. Moreover, it should be noted that a new business that is trying to break into the industry usually does not have political connections that it can turn to for help.

The system of National Strategic Special Zones was created in 2013 for the purpose of breaking through this impasse.

The system was created in response to Prime Minister Abe’s order to drill holes into the bedrock regulations in all fields that have long blocked the way. The most potent weapon for breaking through bedrock regulations is to force regulatory ministries and agencies to accept full accountability in justifying existing restrictions and regulations.

When a business files a request for deregulation, the pertinent section chief of the ministry or agency with jurisdiction is invited to appear before the Working Group on National Strategic Special Zones (WG) to explain the justification for the existing regulations. If the explanation is deemed to be unreasonable, the WG arranges to hear from a higher authority by inviting the deputy director-general or director-general of the ministry to appear before it. If the WG remains unconvinced, finally, the minister in charge must appear before the monthly meeting of the Council on National Strategic Special Zones (Council) and defend the regulations in the presence of the prime minister. This is how the process is arranged. Thus, the regulatory ministry or agencies cannot defend their regulations unless their explanation stands on rational grounds.

The special zones system is extremely valuable and helpful for new entrants. This is a system designed for people in weak positions who previously were unable to scale the high barriers that protected their target industries.

Second, the leadership of the prime minister is absolutely necessary for winning the battles against vested interests. Suppose the final decision were left to individual ministers, and not to the prime minister. The ministers would be swayed in the direction of protecting the interests of their own ministry—interests that reflect those of the industries they regulate. By empowering the prime minister to make the final decision, bias can be avoided and decisions can be made based on comprehensive assessments. In this way, the vested interests of individual ministries can be effectively countered.

Holes can now be drilled in bedrock regulations through the prime minister’s determination and decision. That is why businesses thirsting for reform have come to rely on special zones. If those at the top show no gumption and may collapse in the middle of the fight, no one is going to come forward with requests for reform. Proof that local governments and businesses have come to look to special zones with hope and expectation can be found in the fact that more than 240 projects have been approved to date.

On the other hand, government ministries and agencies with regulatory jurisdiction are forced to work very hard under this system. If a regulation is rational and justified, the ministry is given an opportunity to explain itself, and the regulation is allowed to stand. It is not our position that all regulations are bad and all must be abolished. Reasonable regulations obviously should remain in place.

In that sense, this special zones system has been very well thought out and designed. I believe that all important matters should be decided through this type of process.

One Decision Opens the Path for Others


The third point that the public is not aware of is that under the National Strategic Special Zones system, when a reform is approved in one special zone, as a rule, it automatically becomes applicable to all other special zones. Thanks to this principle, when a certain systemic reform has been deliberated upon and adopted, it is not necessary to repeat the same deliberative process in other regions.

When a reform related to special zones requires the revision of existing laws, the following procedure applies. Take, for example, the revision of the Agricultural Land Act. No changes are made in the existing provisions of the Agricultural Land Act. Instead, the following provision is added to the Act on National Strategic Special Zones. “The provisions of Article xx Paragraph xx of the Agricultural Land Act shall not apply to National Strategic Special Zones, which henceforth shall be subject to the following provision.” The important point is that any provision added to the Act on National Strategic Special Zones is equally applicable to all special zones.

The same applies to reforms other than revision of existing laws. For instance, Tokyo’s Arakawa Ward came up with a proposal for establishing nursery centers in parks. Once this proposal was approved, the concept was also implemented in special zones located in Shinagawa Ward, Setagaya Ward, Fukuoka City, and Sendai City.

The issue on hand is the establishment of veterinary science schools. Under the principles of the Act on National Strategic Special Zones, it is impossible to grant an exclusive privilege to Imabari City alone. If reform is implemented in one zone, the same will apply to others. This creates competition. In other words, from our perspective, the critically important thing is the establishment of a special zone. The question of where the first special zone is located is unimportant. It really does not matter whether the first new veterinary science school is established in Kyoto or Niigata or Ehime. As you can see in the minutes of the WG, I have voted in favor of establishment regardless of where a proposal came from.

Under the rules of the special zones system, becoming the first institution to establish a new school of veterinary science does not provide Kake Gakuen with any kind of concessionary advantage. 

Veterinarians Reduced it to One School


The fourth point is this. In the ministerial notification released on January 4, 2017, the number of veterinary science schools to be established was restricted to one zone and one school. It certainly would be a problem if Prime Minister Abe had led the move to adopt this restriction.

The truth of the matter is that the request for limiting the establishment of veterinary science schools to “one zone and one school” came from the Japan Veterinary Medical Association (JVMA). It was the JVMA that petitioned the Minister of State for National Strategic Special Zones. Isao Kurauchi, president of JVMA, has written the following in the JVMA Journal.

“During this period (November 18– December 17, 2016), concerted efforts were made to convey the position of our Association to members of parliament. These efforts were led by myself and Chairman Kitamura of the Japan Veterinary Political Federation, and involved JVMA officers as well. We petitioned for the repeal of the ministerial notification allowing the establishment of new veterinary science schools and argued that if repeal were not possible, then at least approval should be limited to one school only. Among the many members of parliament that we petitioned were Kozo Yamamoto, Minister of State for Regional Revitalization, Hirokazu Matsuno, Minister of Education, Culture, Sports, Science and Technology, Yuji Yamamoto, Minister of Agricultural, Forestry and Fisheries, Taro Aso, Chairman of the Liberal-Democratic Party Federation of Parliamentarians on Veterinarians, and Eisuke Mori, Secretary-General of the Liberal-Democratic Party Federation of Parliamentarians on Veterinarians.
“Thanks to the opposition views released by many of you, and as a result of our persistent lobbying of cabinet ministers and members of parliament, we were finally able to arrive at a revised notification limiting it to ‘one school only.’ The notification was promulgated in the Official Gazette of January 4, 2017 and put into effect.” (Japan Veterinary Medical Association (2017), “President’s Message—the Four Seasons [42], January 30, 2017)

What this means is that JVMA exerted pressure demanding a “one school only” cap. In order to drill the first hole into bedrock regulations, Minister Yamamoto made the political decision to accept this condition. He had no choice. This is the overall picture of what happened in the examination process. Prime Minister Abe did not “grant exclusive concessionary rights to Kake Gakuen.” What really happened was that JVMA eventually forced this concession to be “limited to Kake Gakuen only.” This matter is also not known to the public.

The fifth point is that the special zones system is not based on a theory of deregulation as a panacea. The aim is to eliminate regulations that have no rational basis or justification. The special zones system is based on the assumption that entry into an industry should naturally be restricted if there are any reasonable grounds such as where it may cause environmental pollution or in instances of asymmetric information. The fundamental purpose of the system is to eliminate unjustified barriers to entry whose sole function is to protect vested interests.

For example, consider food, pharmaceuticals, or construction. The average person cannot accurately judge the quality of these products. This necessitates some form of public inspection and assessment. From this perspective, it is perfectly rational to install regulations on supplying the market.

When a university wants to establish a new faculty or department, here again it is difficult for the average person to investigate and determine whether the university or its prospective faculty meets a minimum quality standard, or whether the plan is based on a sound economic foundation. Consequently, in this case also, it is necessary to examine the quality. Responsibility for examining the financial status and quality of education and research is assigned by law to the Council for University Chartering and School Juridical Person (University Chartering Council), which functions under the aegis of the Minister of Education, Culture, Sports, Science and Technology (MEXT). This University Chartering Council has to examine and sign off on a proposal before a university can establish a new faculty of economics or faculty of literature. So, if this is the only regulation on entry, anyone should be able to establish a new school of veterinary science by successfully completing this examination process.

Unjustified Notification


The problem is that MEXT for many years refused to even examine proposals for establishing new veterinary schools. It did not matter how good the proposal was. This was done not by the authority of law, but simply based on a ministerial notification. (MEXT Notification No. 45 dated March 31, 2003) In this way, prospective operators were deprived of the right to examination, let alone entry.

This MEXT notification fails to provide any reasons or justification for the decision, and the ministry itself has not come forward with any explanation.

This barrier to entry suppresses competition and profits existing veterinary schools and the Association of Veterinarians. In other words, these are regulations that MEXT has formulated for the purpose of protecting the interests of the politically powerful Association of Veterinarians. This restriction has no purpose other than to favorably maintain high tuition by controlling the supply. Should this be allowed to continue, the freedom of occupation and the right to own property guaranteed by the Constitution of Japan will be undermined.

Ministerial notifications like this that lack justification should be abolished.

The sixth point is that MEXT failed to justify its notification in hearings held on proposed special zones. The ministry simply could not come up with a convincing explanation.

Regulations barring the establishment of new veterinary schools were well known as constituting a stubbornly entrenched bedrock regulation. Therefore, ever since the system was created in 2013, the WG has thought that “We have to punch a hole in this regulation. Otherwise, the worth of the special zones system will be called into question.”

The first proposal for establishing a new veterinary school was submitted by Niigata City in July 2014. In response to this application, hearings were held on five occasions with the participation of responsible officers from various government ministries. As the reason why they refused even to examine the proposal, MEXT presented a very simple argument. It claimed that there was ample justification for taking the supply-and-demand balance into consideration, and that the existing veterinary schools had ample room to accommodate applicants.

The lack of justification has already been discussed above. The second part of the argument, which was that “ample room already exists, and the establishment of new schools will result in an excess supply of veterinarians,” is equally unjustified.

For the sake of argument, let us assume that an excess supply of clinical veterinarians were to result from the creation of new schools. Clinical veterinarians care for pets and domestic animals. The point is that there are many other jobs that can be filled by veterinarians. Consider graduates from art schools. Very few will become artists and painters. Most will work at jobs such as schoolteachers and designers in a corporate setting. The same can be said for the graduates of veterinary schools. Why not work as a researcher? Bioscience labs and pharmaceutical companies have a real need for graduates of veterinary schools. If you can’t find a job in Japan, what about doing research in foreign universities? Outstanding people don’t need to be told—they will find their own way. Engage in research overseas and come back to Japan with new knowledge. That certainly would benefit Japan’s national interest.

We hear that there are not enough qualified professors to teach on the university level. But that is an excuse. If there is a shortage, why not recruit from abroad. The fact of the matter is that many of Japan’s leading universities are recruiting researchers abroad and hiring them as their teaching staff.

Ultimately, MEXT could not produce any reason for refusing new veterinary schools other than “for the protection of vested interests.” As long as the special zones system remains a policy goal of Prime Minister Abe, it is only natural to expect that efforts will be made to ease the MEXT notification on veterinary schools.

System Provides no Room for Preferential Treatment


There is a sense that the WG chose one school out of three candidates. But this is a misunderstanding. It is not the job of the WG to choose one out of several candidates. Our mission is to eliminate the practice of refusing to examine the quality of new schools that are proposed. As long as certain minimum requirements are met, any institution should be allowed to apply. It does not matter to us who the applicant is. What we are trying to do is to use these applications to abolish the ministerial notification. MEXT was simply unable to justify the continuation of its practice of refusing to examine proposals that had been submitted to it.

The suspicions that have been cast in this case are groundless. Prime Minister Abe had no reason to give preferential treatment to a certain school. Moreover, even if he wanted to, it should be clear that the system is designed so that preferential treatment is not possible.

The seventh point relates to another misunderstanding, which is that Kake Gakuen (in Imabari City, Ehime Prefecture) had applied for creating a new faculty because a close friend of its chairman of the board of trustees had become prime minister. That is simply not the case.

In the past, Kake Gakuen had applied for establishing a faculty of veterinary science on a total of 15 occasions without seeking the support of Shinzo Abe as a politician. Throughout Abe’s first tenure as prime minister, Kake Gakuen never submitted an application for establishing a faculty of veterinary science. Kake Gakuen filed its first application in 2007 when the Fukuda Cabinet was in office. This coincides with a period of time when Abe was in a particularly weak political position. All of the 15 applications filed by Kake Gakuen were turned down by MEXT. The applications continued during the years when the Democratic Party of Japan was in office, at a time when no one expected Abe to return to the office of prime minister. It was under the Hatoyama Cabinet that a decision was made to consider the establishment of new veterinary schools inside Special Zones for Structural Reform.

Then came Abe’s second tenure as prime minister and the introduction of National Strategic Special Zones in 2013.

The first application to be filed under the new system was submitted by Niigata City. Following this application, a number of hearings were held with related ministries. However, it eventually became known that the Niigata proposal was not fully developed and lacked specificity. Then, in early June 2015, a second application was received from Imabari City. This was in response to a general and open invitation for proposals.

Kake Gakuen filed multiple applications going back to the days of the Fukuda Cabinet. Reviewing this history, there is nothing to indicate that the close friendship between the chairman of the board of trustees and the prime minister influenced the outcome.

The eighth point relates to the assertion, “Even if proper procedures were followed, the prime minister should not present his friend with a concession as a result.” This assertion is unjustified.

The point to consider first is that any reform adopted in one special zone becomes applicable to all other special zones. In other words, as previously explained, the designation of a special zone does not provide anyone with an exclusive concessionary right.

On other hand, it is unfair to criticize outcomes produced through proper procedures. In this context, consider Kihei Maekawa, who was serving as vice-minister of MEXT. One of his relatives is affiliated with Mayekawa Manufacturing Company, a manufacturer of freezers. This company supplies freezers to numerous national universities, including the Tokyo University of Agriculture and Technology, and the Tokyo Institute of Technology.

It certainly would be wrongful and unfair to cast aspersions on Mayekawa Manufacturing on the grounds that a relative of the company is a former MEXT bureaucrat as long as the company is following proper procedures in selling its products to national universities.

Kake Gakuen followed proper procedures and is eligible to be examined for establishing a faculty of veterinary science. It is similarly wrongful and unfair to continue harboring suspicions that Kake Gakuen received preferential treatment because the chairman of the board of trustees is a close friend of the prime minister.

It is important to note that Kake Gakuen did not submit its application after Abe became prime minister. Taking this into consideration, it is unfair for the major newspapers and members of the Diet to continue saying that suspicions remain in this case. Most probably, these positions are taken for political reasons.

Breaking Down Unreasonable Regulations


Next, it should be pointed out that regulatory reform constitutes a core element of Japan’s Growth Strategy.

In the past, the trucking industry was protected by rules and regulations that existed under the Road Transportation Act. These regulations effectively benefited the interests of the industry’s established businesses. In 1986, Yamato Transport Company filed suit against the Minister of Transportation, the ministry with jurisdiction over the trucking industry. This lawsuit sought a “declaration of illegality of inaction.” The lawsuit questioned the Ministry of Transportation’s standards for the issuance of operating licenses and showed that Yamato Transport’s application for the expansion of its trucking route had been left untouched for five years.

The case ultimately reached the Supreme Court, where Yamato Transport won the right to choose its own routes and to set its own fares. This ruling made it possible to expand door-to-door delivery services to cover all of Japan, and the industry grew exponentially. This is a classic example of how the elimination of barriers to entry engenders growth.

However, it would take an enormous amount of time and energy if individual businesses or regions had to fight against bedrock regulations and eliminate barriers to entry in each of their own areas.

Prime Minister Abe understands this. It is with this understanding that he confronted the vested interests of the private and public sectors. He created the special zones system as a means to bringing down barriers to entry and creating a competitive environment.

This type of reform involves doing battle against vested political interests, and therefore requires a strong prime minister. Prime ministers Nakasone, Koizumi and Abe successfully battled against vested interests and moved the nation forward on competition policies. The truth of the matter is that the many prime ministers that came to office between these three were for the most part unable to realize any major reforms.

The whole fuss about establishing new veterinary schools is a strange one —perhaps strange enough to merit taking it all the way to the Supreme Court. But fighting it out in the courts takes a lot of time and money. That is where the special zones system comes in. It is designed to break down unreasonable and irrational regulations while saving time, trouble, and expenses.

All these reforms are essential to revitalizing Japan. For this reason, I think the media should support these initiatives.

Rebuttal to Asahi’s “Suspicions”


The first page of the May 17 edition of Asahi Shimbun carried the headline, “Kake Gakuen’s New Faculty: MEXT Document Points to ‘Prime Minister’s Wishes.’” On the following day, May 18, an editorial of Asahi Shimbun outlined the “Suspicions Surrounding the Kake Gakuen Problem.” The arguments made in this editorial can be summarized under the following three points.

(1) MEXT stated that establishing the new school would be difficult because adequate preparations had not been made for hiring teaching staff. It is suspicious that, notwithstanding this statement, the matter was suddenly settled.

(2)  The document obtained by Asahi Shimbun contains the words, “the prime minister’s wishes.”

(3)  The addition of such conditions as “one school only” and “only in areas where no veterinary school currently exists” benefited Kake Gakuen.

Let us start with the first point. It is the function and responsibility of the University Chartering Council to examine the whole question of whether or not a school can recruit qualified teachers. The government’s Growth Strategy addresses a completely different question. Here we have a long-standing situation where the Ministry has refused to even examine applications for the establishment of veterinary school. What the Growth Strategy is saying is that due consideration should be given to eliminating such abnormal restrictions. It is not saying anything more than this.

Therefore, from the very start, MEXT never had a good reason to postpone and protract the process.

What lies in the background is the following. The Revised Japan Revitalization Strategy published at the end of June 2015 contained the following line. “Consideration shall be given to establishing new faculties of veterinary science during fiscal 2015.” This goal was thus included in the Growth Strategy and approved by the Cabinet. What this did was to obligate MEXT to come up with some procedure to deliberate on the establishment of new veterinary schools. The implication was that MEXT did not necessarily have to use the special zones framework.

MEXT promised that it would start considering the establishment of new veterinary schools in fiscal 2015. But it did nothing. Even after the start of fiscal 2016, MEXT gave no indication that it was interested in arriving at a conclusion anytime soon.

By contrast, this is how we work. The prime minister determines the direction of reform and sets a deadline in the Council on National Strategic Special Zones. Armed with this decision, we obligate government ministries to stick to a fixed schedule. In this way, we are able to prevent the bureaucracy from dragging its feet and protracting the process. Finally, after consideration, MEXT belatedly agreed to revise its notification in November 2016.

Regarding the second point in the Asahi Shimbun editorial, it is clear that the words, “the prime minister’s wishes,” has attracted the greatest amount of attention. Needless to say, it would be a very serious matter if a bureaucrat were to attribute to the prime minister these words which he had not uttered.

The government official will be perfectly justified in saying “the prime minister’s wishes” if this refers to statements made by the prime minister in meetings of the Council. The salient feature of the special zones system is that government ministries and agencies are mandated to implement the direction determined by the prime minister in meetings of the Council. The central idea is to speed the process of reform. There is absolutely nothing wrong with this statement in this context. The purpose of the special zones system is to break through bedrock regulations. To build up pressure for realizing this objective, it would be perfectly normal to affirm that the Prime Minister’s Office is playing a leadership role in getting the reform done. 

What Asahi Should Have Done


This brings us to the third point that pertains to conditions that were attached along the way. Why were such conditions as “one school only” and “only in areas with no veterinary schools” added? These resulted from government efforts to move the process one step forward in face of the political pressure that JVMA was exerting.

Regarding the second condition of “areas with no veterinary schools,” Kyoto Sangyo University has stated, “We do not believe we were eliminated only due to considerations of a broader area (where veterinary science schools do not already exist).” The very severe condition of one school only was adopted as a result of JVMA’s lobbying activities targeting politicians other than Prime Minister Abe. It can be clearly discerned from the contents of the JVMA Journal excerpted above that this condition was not introduced by the prime minister.

What should Asahi Shimbun have done? As soon as it became known that the condition of one school only had not come from the prime minister, but rather had been added as a result of JVMA demands and pressure, and as soon as it was shown that a reform adopted in one special zone is automatically applicable to all other special zones, Asahi Shimbun should have reported these facts and admitted that the suspicions outlined in its editorial of May 18 had been dispelled.

Furthermore, if Asahi Shimbun believes that the Growth Strategy is necessary, it should have taken a different approach in critiquing the measures taken by the government to push the process one step forward. Instead of treating it as evidence of preferential treatment, Asahi Shimbun would have done better to examine the matter in the context of policy choice and to advocate the following position. “The Abe Cabinet should go back to the original intent of the special zones system by allowing two, three, or more schools to establish faculties of veterinary science.” It was sometime after the May 18 editorial of Asahi Shimbun that Prime Minister Abe stated, “Two, three, or more schools will be approved regardless of region. Approval will be given at a steady pace to anyone who shows interest and initiative.” Asahi Shimbun should have welcomed this statement and concluded that the issue of policy choice had also been resolved.

What Asahi Shimbun actually did was to double down on its attack in its editorial of June 28. Appearing under the title, “Kake Gakuen Problem: Abe Flips the Table Over in Irritation,” the editorial contained the following criticism.

“How to take the public’s eye away from deepening suspicions that he gave preferential treatment to his close friend who runs Kake Gakuen? The commotion can be silenced by approving applications from competing schools. What a cheap stratagem, and how obvious the irritation that lurks behind it.”

Asahi Shimbun opposes “one school only.” But it seems it also opposes creating more than one school. As extremely unlikely as it sounds, is it possible then that Asahi Shimbun actually favors preserving and protecting the special interests of existing veterinary schools? But this is what the editorial seems to be saying. 

Antithesis to Growth Strategy


On the other hand, this line of thinking is consistent with how Asahi Shimbun has lionized Kihei Maekawa, a firm believer in preserving the interests of MEXT. Maekawa was disciplined for having looked the other way on the practice of amakudari, the golden parachuting of retired members of the ministry. It should also be noted that numerous retired MEXT bureaucrats are now employed by long established veterinary schools. With all these people held as hostage, MEXT is in no position to ignore the wishes of existing veterinary schools. It only has to read between the lines to know that existing veterinary schools want to preserve their vested interests by maintaining high barriers to entry. It should also be mentioned that, since his days as section chief at MEXT, Maekawa was well known for not allowing any criticism of the regulatory regime on the grounds that “All existing regulations and restrictions are desirable.”[1] As a hardcore supporter of bedrock regulations, would it be any surprise if Maekawa simply could not tolerate any erosion in the interests of MEXT? Consistency can also be found in the fact that Maekawa has not unequivocally denied that he instructed the release of internal documents that normally should not have been disclosed. It appears as though Asahi Shimbun was enticed by Maekawa—the antithesis to Growth Strategy—into campaigning for the protection of bedrock regulations.

The Asahi Shimbun editorial of June 28 criticized Prime Minister Abe’s statement on “two, three, or more schools.” This criticism has rendered it impossible to tell what its position is on the whole concept of Growth Strategy. This was an incredible editorial that should indeed elicit the response of “flipping over the table in irritation.”

Aside from the issue of Growth Strategy, the June 28 editorial is impossible to understand from the perspective of what has been the traditional position of Asahi Shimbun.

I believe that most of Asahi Shimbun’s reporters are guardians of the weak, and many are committed to protecting those members of society—both individuals and businesses—who have been wronged and treated unfairly. From this perspective, it would seem Asahi Shimbun’s mission would be to criticize those wielding power and influence to move politicians and to protect their vested interests by shutting out new entrants.

In all likelihood, industries protected by regulations are overjoyed by a series of reports by Asahi Shimbun on this issue. Through its reporting, Asahi Shimbun has been aiding and abetting its traditional foes.

From whichever perspective they are seen, the editorials of Asahi Shimbun have given rise to certain doubts and suspicions. In the interest of removing these doubts and suspicions, I would like to pose the following questions to Asahi Shimbun.

(1)  Is Asahi Shimbun for or against barriers to entry that have been put in place to protect the interests of established businesses?

(2)  Is Asahi Shimbun opposed to the National Strategic Special Zones system itself, a system created to break through bedrock regulations under the leadership of the prime minister’s office?

(3)  Does Asahi Shimbun believe that, ideally, restrictions on the establishment of new veterinary schools should be abolished? Or, is Asahi Shimbun fundamentally opposed to the establishment of new veterinary schools?

If Asahi Shimbun opposes the establishment of new veterinary schools, does it believe it is a desirable to allow existing veterinary schools to continue enjoying the protection of their interests?

(4)  Supposing the MEXT notification had not included the condition of one school only, does Asahi Shimbun believe that even then Kake Gakuen’s plans for establishing a new veterinary school should not be approved, notwithstanding the fact that it has repeatedly applied for approval in the past?

I request that Asahi Shimbun answer on the premise that everyone in Japan had foreknowledge of the close friendship between the chairman of the board of trustees of Kake Gakuen and Prime Minister Abe. If Kake Gakuen’s plans should not have been approved, what would be the reason for non-approval? If Asahi Shimbun believes the plan should not have been approved, what does it think of the relation between Mayekawa Manufacturing Company and national universities?

(5)  Is Asahi Shimbun devoid of any awareness that it has been manipulated by an individual disciplined for protecting special interests, and that it has given comfort to and aided the protection of special interests that pervade the entire country?

In the interest of Japan’s Growth Strategy, I sincerely hope that Asahi Shimbun will respond to my queries, and request that this be done no later than 5:00 p.m. on September 4, 2017 (JST). In publishing its response, any publically accessible medium would be acceptable, including the Internet, magazines, and newspaper.



[1] “MEXT Hearings” (in Japanese). Proceedings of the 14th meeting of WG on Education, Council for the Promotion of Regulatory Reform and Opening Up Government-Driven Markets to Private-Sector Entry, July 12, 2005. Retrieved from http://www8.cao.go.jp/kisei-kaikaku/old/minutes/wg/2005/0712/agenda.html.

AGI WP: “Introducing Severance Payment Systems in Japan —A Proposal for Vacancy Decontrol—”

Hatta presented an AGI working paper “ Introducing Severance Payment Systems in Japan —A Proposal for Vacancy Decontrol— ” . Abstract   ...