RIETI Symposium

Fiscal Reform of Japan: Redesigning the Frame of the State


Session 2: Political and Administrative Systems and Public Finance
"Two Aspects of Japan's Bureaucratic System as Seen in Fiscal Procedures"
IIO Jun (RIETI Faculty Fellow / Professor of Government, National Graduate Institute for Policy Studies)
"Why Does the Government's Budget Balloon and How Can it be Curbed?: Focusing on Incentives for Bureaucrats"
KADONO Nario (RIETI Consulting Fellow / Deputy Director, Macro Economic Affairs Division, Economic and Industrial Policy Bureau, METI)

The first half of the second session saw Faculty Fellow Jun Iio present his report, "Two Aspects of Japan's Bureaucratic System as Seen in Fiscal Procedures." In his paper, Faculty Fellow Iio analyzed the characteristics of Japan's parliamentary Cabinet system, which he described as a political structure whose main component was the bureaucracy and could well be called a "bureaucratic cabinet system," and he explained that as democracy taking root in Japan fiscal discipline had gradually been lost under this system. In order to restore fiscal discipline, he said it was necessary to establish political will through nonpartisan agreements and review the allocation of power within the executive branches.

Consulting Fellow Nario Kadono and Fellow Hirokazu Takizawa presented their paper, "Why Does the Government's Budget Balloon and How can it be Curbed?: Focusing on Bureaucrats' Incentives." The report analyzed how the personnel system of Japanese bureaucracy affects fiscal issues, claiming that the unique bureaucratic personnel system established during the era of high economic growth and characterized by "compartmentalization" and "immobility" was now incongruous with the the current Japanese society and had exacerbated the common pool problem. As the direction that reform might take, the report made suggestions such as overhauling the evaluation system for budget-related work, clarifying responsibility and increasing the mobility of human resources.

Faculty Fellow Sota Kato offered comments in response to these reports. He summed up the two presentations as being close to the general understanding of the issues, and that the Iio report had a macro viewpoint while the Kadono-Takizawa report took a micro perspective. He commented that these reports did not sufficiently lay down the definitions and correlations among national interests, social interests and individual interests, and added that he would have liked to have seen some mention of the incentives at work for bureaucrats in the Ministry of Finance who hold unique positions in these reports. In response to Faculty Fellow Kato, the researchers said that the clear definition of national interests was a grand project that went beyond the analyses undertaken in their papers.

In the discussions that followed, Professor Honma noted that the weak linkage between the state budget and individual citizens was one factor that was leading to the creation of big government. He added that people who actively take part in elections had a strong interest in individual profit, and said issues regarding incentives should also be discussed from a micro perspective. Consulting Fellow Michio Muramatsu, meanwhile, commented that while everyone was well aware of the points cited in the Kadono-Takizawa report, it was significant that an incumbent bureaucrat had reported such a paper, and added that he would have liked to have seen some mention of the relationship between bureaucrats and politics, and the coordination with the Liberal Democratic Party in budgeting process.

(Text compiled and edited by KIMURA Yuji, RIETI Research Staff)