PM Suffers Defeat in Privatizing Japan’s Post Office

Junichiro Koizumi has been one of Japan’s more effective prime ministers. After a decade of non-growth, the economy started to move forward under his care. And he has managed to keep demilitarized Japan involved in foreign policy at a time of American adventurism which demands allies put up or shut up. But it seems he went one step too far in trying to privatize the Japanese Post Office. After a defeat in the upper house of parliament, he has dissolved the lower house and called a snap election, inauspiciously for September 11.

For Americans, it is difficult to understand the Japanese attachment to their Post Office. In the US, the postal service exists to make FedEx and UPS look good. In Japan, though, the Post Office is a rather efficient operation. Shoppers have been known to take the goods they bought in the morning to the post office in Tokyo and mail them to their hotel – and upon returning late in the afternoon, they find their treasures awaiting them. But the real issue is the banking operation.

The banking operations of the Post Office in Japan, as has been discussed here earlier, is a Godzilla in the banking industry there. Some 85% of the population have accounts with the Post Office, managing 25% of all personal assets in the country. The privatization fans maintain that their reform would put this money to work for Japan at a time when its economy really needs it. Unfortunately, insufficient capital is not Japan’s problem – too much held in savings is.

Those against Mr. Koizumi’s plan have a list of reasons why change is bad. They fear job losses in rural communities, they expect worse postal services because of cost-cutting capitalism, and change rarely comes in human societies unless it is forced on them by some failure of some kind. The Japanese Post Office is far from a failure.

So, Mr. Koizumi has decided there will be a new election and a new lower house to vote on the matter. Some argue that he simply should have resigned and let another Liberal Democrat leader become PM. That would be the traditional way of muddling through. Mr. Koizumi, though, knows that the privatization of the Post Office needs a full debate and discussion, and that an election will guarantee that. And in the end, the Japanese might be best serve by keeping things as they are at the Post Office to keep the huge government deficit funded after a hard fought election on the issue.


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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