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Nobuo Sasaki

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Regional Revitalization: Another Perspective

Nobuo Sasaki
Professor, Faculty of Economics, Chuo University
Area of Specialization: Political Science

Read in Japanese

In April, Japan will hold nationwide local elections for the eighteenth time since the end of World War II. Now that the general election for the House of Representatives is over, every political party is focused on winning the local elections.

One factor that will influence the results is the concept of “regional revitalization.” Japan’s population decline became a major political issue last summer. Since then, the Abe administration has established a new office for regional revitalization and made promises during the general election to implement various measures to support families raising children, expand the discretionary portion of in the “hometown tax” and local tax allocation systems, and provide incentives in the form of tax cuts and subsidies to companies that return to regions outside the capital.

In January, the Cabinet approved a “comprehensive strategy for regional revitalization,” and now there are calls for the development of “local visions of revitalization” in every region of Japan. The ordinary Diet session that began recently is set to become another “Regional Revitalization Session.”

The Major Blind Spot in “Regional Revitalization”

I see a major blind spot, however, in the “regional revitalization” that has been discussed so far. The “regional revitalization” of the Abe Administration, with its agenda of overcoming deflation, promoting Abenomics, and prioritizing the economy, is completely centered on local economic measures. As an economic policy, “regional revitalization” appears to be centered on the idea that the Japanese economy can overcome deflation if local economies recover.

As a matter of fact, this kind of story seems to be an old trick the Liberal Democratic Party (LDP) reuses every decade in one form or another. To put it more broadly, the LDP has been touting regional revitalization (under different names) as a mainstay of domestic policy for almost 70 years since the end of the war. “Locally-focused” policies have literally been recycled in the form of industrial decentralization, nodal development, relocation of the functions of the capital, decentralization of corporate headquarters, “hometown revitalization,” and the development of “regional core cities” and “wide community areas.”

The Recycling of Regional Development Policies Every Decade

The LDP has recycled these policies once every decade, as we can see over the last quarter century with the Takeshita Cabinet’s “100 million yen grants for hometown revitalization” in 1988, the Obuchi Cabinet’s “regional promotion coupons” in 1999, the Aso Cabinet’s “hometown tax system” in 2008, and now the Abe Cabinet’s “strategy for regional revitalization” and “grants for livelihood support.”

How are the results, though? Unfortunately, regional decline has not been halted—we frequently hear about municipalities disappearing all over Japan. There must be something wrong with this paradigm. People talk about the need to verify the efficacy of individual measures and test local policies spearheaded by the central government, but it seems we already have the answer.

Regional Revitalization and Government Structural Reform

To put it another way, Japan’s regional development policies to date have prioritized the development of hard infrastructure under the banner of shorter commutes and decentralization, while leaving fundamental soft infrastructure in its old, centralized state. This is the root of many of our problems. You can wave the banner of regional revitalization all you like, but such policies are unlikely to create an environment that revitalizes local industry, produces jobs, and retains young people when all the central, higher-order functions of society—politics, administration, economics, information, education, culture—remain concentrated in Tokyo.

Slow and steady wins the race. The formation of a new government structure—starting with a discussion on “a new type of nation” and extending to the 2020 Tokyo Olympics—is the kind of ‘big-boned’ regional revitalization the Abe administration should be working on now.

Some view regional revitalization and government structural reform as separate things, but this is not the case. The two are interconnected. We cannot talk about moving forward when the shackles of centralized decision-making and control are left in place.

Of course, government structural reform requires a great deal of energy. We can get a glimpse of how difficult it is by looking at the political situation in Osaka where politicians are working frantically to realize the Osaka Metropolis plan; it has taken them over a year to bring the plan to a local referendum on May 17. When it comes to changing the structure of government throughout Japan, it requires major reforms that will naturally meet with a lot of resistance. This may be the only trump card at hand, however.

The Wrong Approach to National Revitalization

Over the past 20 years, Japan’s GDP has ground to a halt with zero growth, while its outstanding public debt has rapidly expanded from 300 trillion to over 1,000 trillion yen. While domestic demand continues to be bolstered with significant demand stimulation, Japan’s position in the global economy is heading south as ominous clouds of rapid depopulation gather. Prime Minister Abe portrays the situation as “overcoming deflation,” but this is not about deflation or inflation—Japan’s real economy is actually stalled at zero percent growth. Fifty percent of Japan’s municipalities are expected to disappear by the year 2040. It appears that something is wrong with Japan’s approach to revitalization and we have not yet penetrated to the heart of the problem.

The Key: A Horizontally Competitive Society with Regional Autonomy

A major cause of this failure is the lack of competitive relationships within the country and motivation for regions to revitalize themselves on their own. In other words, the state (central government) has preserved Japan’s vertical government structure, which it has controlled many things and continued its administrative, socialistic management of the economy through government-led stimulation of public demand. As a result, local self-reliance has withered, and regions have come to rely on the central government for everything.

Such an approach does not produce vitality or economic growth. We face the challenge of breaking free from the easy answer of reliance on debt and boldly reforming our government to give it a simpler, more efficient structure. Shall we not create a horizontally competitive society with regional autonomy by shifting to a system of regional blocs (dōshūsei), greatly reducing waste in the process? It will be impossible to revitalize Japan without this transition.

Realizing the “Japanese Regional Bloc Plan”

The scale of the Japanese economy is such that the seven prefectures of Kyushu are comparable to the Netherlands, the six prefectures of Tohoku are comparable to Sweden, and the metropolis and three prefectures of the Greater Tokyo Area are comparable to the UK. We need to build a system that takes this into account. If Kyushu were to operate as a single regional bloc, it could very well achieve a growth rate 1.2 times that of the Netherlands in less than 10 years.

Our 47-prefecture system was set up 140 years ago (when people still traveled by horse, boat and foot) as a scaffolding on which to build a centralized administrative system. There is something fundamentally problematic about fighting to preserve this system as Japan’s economic activity expands.

Decentralization reform in Japan began in 2000. Although it remains stalled, the ultimate form decentralization will take is the shift to a regional bloc system. The 47-prefecture system will be dismantled, and about 10 large regional blocs will take its place. Much of the authority and control over revenue streams associated with domestic policy will be transferred from the central government to these regional blocs, turning them into hubs of domestic policy. The regional governments will compete with one another, and their international connections will foster dynamism throughout Japan, increasing our potential for growth. I call this new kind of nation the realization of the “Japanese regional bloc plan.”

Japan’s Outdated System

Japan—a small country that only covers the area of the American state of California—has retained the same 47 subdivisions made 140 years ago when people traveled by horse, boat, and foot. There have been no reforms to align the administrative sphere with the expansion of the economic sphere. Our government structure has five or six layers that wield public authority: the national government and its local agencies, prefectural governments and their local agencies, and municipal governments and their branch offices. The maintenance of this system alone consumes half of our tax revenue. We cannot keep pace with the dynamism of our times with a rigid, vertical government structure. It is imperative that we construct a Japanese system suitable for the era of globalization.

What Must Be Done Now

The shift to a system of government that generates horizontally competitive relationships—a system where the principle of inter-regional competition is injected into the public sector that occupies about a third of our national life, triggering a kind of market mechanism in which regional governments compete through their policies and regional areas compete in their respective spheres–can be described as a “new type of nation.”

What I refer to as the “Japanese regional bloc plan” would release regions from the existing vertical, centralized system of government and create a more vibrant Japan by activating the mechanism of horizontal inter-regional competition. It aims to revitalize Japan’s regional economies by importing the idea of market mechanisms into our ossified public sector. This may sound like a round-about solution, but slow and steady wins the race! It is a sustainable policy for regional revitalization that breaks free from existing methods rather than providing a quick fix.

A proposal for a basic law on the regional bloc system was shelved during the ordinary Diet session last year due to issues within the ruling parties. The proposal must be re-introduced and a national commission on the regional bloc system created to further an alternative discussion on regional revitalization.

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Nobuo Sasaki
Professor, Faculty of Economics, Chuo University
Area of Specialization: Political Science

Professor Sasaki was born in 1948. He earned a master’s degree from the Graduate School of Political Science, Waseda University and a doctorate in law from Keio University. After serving in the Tokyo Metropolitan Government Office, he became a professor at Seigakuin University in 1989 and a professor at Chuo University in 1994. He was a visiting research fellow at the University of California, Los Angeles (UCLA) in 2000 and has served as a professor in both the Graduate School of Economics and the Faculty of Economics at Chuo University from 2001 onward. He specializes in public administration and regional self-government. He concurrently serves as a member (in the field of political science) of the Science Council of Japan, special advisor to Osaka City and Osaka Prefecture, and a member of the Japanese government’s Local Government System Research Council. His recent publications include The New Shape of Japan [Aratana “Nihon no Katachi”] (Kadokawa SSC Shinsho), The Governor of Tokyo: Power and the Tokyo Metropolitan Government [Tochiji – Kenryoku to Tosei] (Chuko Shinsho), Local Assembly Members [Chihou Giin] (PHP Shinsho), Metropolitan Administration and Governance [Daitoshi Gyousei to Gabanansu] (Chuo University Press), and Public Administration in Japan [Nihon Gyousei Gaku] and Modern Municipal Government [Gendai Chihou Jichi] (Gakuyo Shobo). He has received the NHK Local Broadcast Cultural Award. He appears as a commentator on NHK’s Shiten, Ronten (Point of View, Point at Issue) program and other TV stations like Tokyo MX, TBS and Fuji TV, provides commentary for newspapers and magazines, and gives frequent lectures throughout Japan. His forthcoming book Regional Revitalization in an Era of Depopulation [Jinkou Genshou Jidai no Chihou Sousei Ron] (PHP) will be published soon in March 2015.