A True Villain?!

This is an excerpt and translated  from a monthly political journal Gekkan Nippon July 2013 issue.

A True Picture of Heizo Takenaka

Minoru Sasaki, journalist

Heizo Takenaka as Seeker of Regulatory Reform in the Field of Labor

NIPPON: In your book Shijo to kenryoku [Markets and Power] (Kodansha), you focus on depicting the real Heizo Takenaka. The book is full of suggestions for people who wonder just how it was that neoliberalism came to be introduced to Japan.

SASAKI: Takenaka said at the first meeting of the Industrial Competitiveness Council (ICC) on January 23, 2013, that “there is no magic wand for growth strategy; regulatory reform that gives corporations freedom and makes them more muscular is the first element of growth strategy.” The following day, Prime Minister Shinzo Abe proclaimed the necessity of regulatory reform using a manner of speaking that followed Takenaka’s statement almost to the letter. It was a scene that was symbolic of the closeness between Prime Minister Abe and Takenaka.

 Takenaka had played a major role during the years of the Koizumi administrations. He was subsequently the subject of various criticisms, and during the years of the Democratic Party of Japan administration it seemed for a moment that he might have become a has-been. However, he survived, was picked up by Prime Minister Abe, and is now the leading neoliberal ideologist.

NIPPON: Regulatory reforms in the field of labor, such as easing regulations on dismissal, are being debated in the ICC and the Council for Regulatory Reform (CRF). Isn’t there an element of blatant pork-barrel politics to this?

 The Koizumi administration took decisive action on regulatory reform in the labor field and brought about an expansion of the market for staffing businesses. After the curtains came down on that administration, Takenaka was brought in by the founder of the temporary staffing service Pasona Group, Yasuyuki Nanbu, to be a special advisor to the group. In 2009 Takenaka was made Pasona’s chairman.

SASAKI: There is no mistaking the fact that Takenaka brought along his interests in regulatory reform for the field of labor. In a conversation with Rakuten Chairman and CEO Hiroshi Mikitani (Bungei Shunju, April 2013), Takenaka said the following: “The fact is that healthy competition does not exist even in the labor market. Owing to a singular judgment that the Tokyo High Court handed down in 1979, Japan’s regular company employees are the most protected in the world.”

NIPPON: Isn’t it odd in itself that the chairman of the Pasona Group is arguing about regulatory reform in the labor field?

SASAKI: It is quite odd. However, the mass media only gives Takenaka’s title as that of “Keio University professor” and fails to take up the conflict-of-interest issue. They should also include his title of “Pasona Group chairman” from the outset. Before discussing the pros and cons of a particular argument, the ICC and the CRF should make an issue of the fact that their members are too heavily weighted in the direction of businesspeople and economists.

NIPPON: It would appear that a section of the elite passes around jobs in the government, major corporations, and academia in the name of an interchange of personnel between the public and private sectors—a phenomenon known as the “revolving door” in the United States—and runs the nation for the benefit of certain powers.

SASAKI: There was an Academy Award–winning documentary film called Inside Job (2010; Charles Ferguson, director) that attracted much attention. It depicted the collusive relationship between economists and the financial world in the United States. Japan appears to be attempting to emulate, in an even more distorted form, this “revolving door,” which one might even call a pathology in American society.

 The fact that there are fewer and fewer politicians who have no bias toward any particular business theory and are capable of making fair and informed comments from the perspective of the public as a whole is also a big issue.

US Influence: The Close Relationship between Takenaka and Calder

NIPPON: The appointment of an economist like Takenaka as a cabinet minister to spearhead the adoption of neoliberalism was made possible by the backing of the United States, wasn’t it? You have reconstructed the things that were happening around Takenaka when the Koizumi administration was launched and written in particular detail about the role of Kent Calder.

SASAKI: The relationship with Calder goes back to when Takenaka was in his twenties. Calder himself describes them as “close friends.” Calder studied Japan’s political economy under Edwin Reischauer and earned his Ph.D. in 1979. He chose to focus his doctoral research on treasury investments and loans. While collecting materials in Japan, he got to know Takenaka, who at the time was working at the Japan Development Bank. The pair gradually grew close. In 1997 Calder became special advisor to the US ambassador to Japan, in which post he provided his services to Ambassadors Walter Mondale, Thomas Foley, and Howard Baker. He served at the US Embassy until the summer of 2001, after which he returned to the United States. He was involved with Japan policy in the Bush administration when the Koizumi administration, which took office that April, was getting underway. Calder not only stressed the importance of “Minister Takenaka” in a Koizumi administration to Ambassador Baker and senior officials in the Bush administration but even passed on information that he had given to Baker to Takenaka.

NIPPON: The role that Calder played was important for Takenaka in creating his special place in the Koizumi administration.

SASAKI: The fact that Takenaka was able to wield such great power within the Koizumi administration cannot be understood without addressing the three-way ties between Takenaka, Junichiro Koizumi, and the Bush administration. For example, Glenn Hubbard, chairman of the President’s Council of Economic Advisors, gave his strong support to Takenaka in October 2002 when Takenaka put together his “Takenaka plan” for the handling of bad debts.

NIPPON: The fact that Calder was already arguing in 1993 that making use of Japan’s postal savings was connected to stimulating the global economy is deeply interesting.

SASAKI: At the end of 1992 the Center for Strategic and International Studies (CSIS) suggested in a proposal to the new Clinton administration that the United States and Japan should consult about joint projects for worker training, care for the elderly, and infrastructure construction by mass transit entities and the like. They indicated that Japan’s postal savings could be used to provide the financing for those infrastructure projects.

 In an article that appeared in the US magazine International Economist (May–June 1993), Calder wrote in his conclusion that the massive amounts of capital in postal savings would likely turn out to be “Japan’s final trump card.” Furthermore, according to an article by journalist Takao Toshikawa in the magazine Shukan Posuto (October 15, 1993), Calder had a conversation with then Prime Minister Morihiro Hosokawa a week before Hosokawa’s summit meeting with President Bill Clinton.

NIPPON: Many parts of the Koizumi administration’s postal privatization efforts are opaque. As you have indicated, the institutional design for postal privatization appeared on the surface to have been determined as a result of discussions in the Council on Economy and Fiscal Policy (CEFP), but in actual fact it was arranged by a “guerrilla band” put together by Takenaka.

SASAKI: “Guerrilla band” is the name given by Takenaka himself. In essence, a small and obscure group of people handled the institutional design of privatization. As yet it remains unclear as to whether or not there were people with interests at stake among those “guerrillas.” There were some efforts to track down how regulatory reform under the Koizumi administration was linked to certain interests, such as with the general assignment of the Kampo no Yado inns to Orix Real Estate Corporation, but those criticisms were consigned to oblivion. Once again with the Abe administration, Takenaka and scholars linked to him are flying the banner of regulatory reform.

Government Administrations Infiltrated by the “Takenaka Network” 

NIPPON: In Shijo to kenryoku, the image of Takenaka promoting neoliberal policies to the next government is depicted repeatedly. Whatever administration is put together, that sort of thing appears like an effort in line with US inclinations toward getting Japan to adopt the policy it wants.

SASAKI: In 2001, when he was serving as a brain for Prime Minister Yoshiro Mori, Takenaka had also proposed to Yukio Hatoyama that Hatoyama’s Democratic Party of Japan, which at the time was in opposition, create its own brain trust. Just before the Koizumi administration took office, Takenaka put together a team of lecturers, including Japan Center for Economic Research President Naohiro Yashiro, to provide Koizumi with an intensive series of policy talks. In short, Takenaka had made the preparations that would enable him to maintain his pipeline to the inner circles of government regardless of who wound up in charge.

 Just before the Liberal Democratic Party’s presidential election in September 2006, which decided Koizumi’s successor, Takenaka presided over a study session for Abe, who was a candidate. The experts who participated in the session included Hiroko Ota and Naohiro Yashiro, both of whom had supported Takenaka in the CEFP, as well as the economist Robert Feldman. Exactly as had been the case when he had approached Koizumi, Takenaka tried to corral Abe, who was a candidate to succeed Koizumi as prime minister, and provide guidance on policy. Having won the LDP presidential election, Abe selected Ota to be minister of state for economic and fiscal policy while installing Yashiro as a private-sector member of the CEFP. Takenaka had been successful in getting his “Takenaka network” into the administration.

NIPPON: At the time of last year’s House of Representatives election, Takenaka chaired the Japan Restoration Party’s candidate selection committee. When the Abe administration took office, he was installed as a member of the Industrial Competitiveness Council. One senses his intention to get whatever government took office to adopt a neoliberal line. There needs to be more debate about the US influence on Japanese economic policy.

SASAKI: At long last, the matter of American influence on Japanese policy is being openly discussed. I think this is also the flipside of Japan becoming relatively unimportant to the United States. Takenaka knows full well just how effective the American card can be when it comes to demonstrating influence in a government administration. However, the question is whether or not it will work as effectively now as it did during the Koizumi years. Of course, there is no mistaking the fact that the Trans-Pacific Partnership, which America is spearheading, is going to provide a tailwind for the adoption of neoliberal policies.

(Interview and editing by Mr. Takahiko Tsubouchi, editor-in-chief, Gekkan Nippon, a monthly political journal published in Tokyo, Japan)