The ravaging of the Japanese countryside – what the writer Alan Booth has called «state-sponsored vandalism» – is not taking place because of mere neglect. «State-sponsored vandalism» is the inexorable result of a systemic addiction to construction. This dependence is one of Japan's separate realities, setting it apart from every other country on earth.
At ¥80 trillion, the construction market in Japan is the largest in the world. Strange that in the dozens of books written about the Japanese economy in the past decades, it is hard to find even a paragraph pointing out the extent to which it depends on construction. And even fewer observers seem to have noticed the most interesting twist: that from an economic point of view the majority of the civil-engineering works do not address real needs. All those dams and bridges are built by the bureaucracy, for the bureaucracy, at public expense. Foreign experts may be fascinated by Sony and Mitsubishi, but construction is not a sexy topic for them, and they have largely ignored it. Here are the statistics: In the early 1990s, construction investment overall in Japan consumed 18.2 percent of the gross national product, versus 12.4 percent in the United Kingdom and only 8.5 percent in the United States. Japan spent about 8 percent of its GDP on public works (versus 2 percent in the United States – proportionally four times more). By 2000 it was estimated that Japan was spending about 9 percent of its GDP on public works (versus only 1 percent in the United States): in a decade, the share of GDP devoted to public works had risen to nearly ten times that of the United States. What these numbers tell us is that the construction market is drastically out of line with that of other developed countries. The situation is completely artificial, for government subsidy, not real infrastructure needs, has bloated the industry to its present size.
The construction industry here is so powerful that Japanese commentators often describe their country as doken kokka, a «construction state.» The colossal subsidies flowing to construction mean that the combined national budget devotes an astounding 40 percent of expenditures to public works (versus 8 to 10 percent in the United States and 4 to 6 percent in Britain and France).
Public works have mushroomed in Japan because they are so profitable to the people in charge. Bid-rigging and handouts are standard practices that feed hundreds of millions of dollars to the major political parties. A good percentage (traditionally about 1 to 3 percent of the budget of each public project) goes to the politicians who arrange it. In 1993, when Kanemaru Shin, a leader of the Construction Ministry supporters in the National Diet, was arrested during a series of bribery scandals, investigators found that he had garnered nearly $50 million in contributions from construction firms.
Construction Ministry bureaucrats share in the takings at various levels: in office, they skim profits through agencies they own, and to which they award lucrative contracts with no bidding; after retirement, they take up sinecures in private firms whose pay packages to ex-bureaucrats can amount to millions of dollars. The system works like this: the River Bureau of the Construction Ministry builds a dam, then hands its operation over to an agency called the Water Resources Public Corporation (WRPC), many of whose directors are retired officials of the River Bureau. The WRPC, in turn, with no open bidding, subcontracts the work to a company called Friends of the Rivers, a very profitable arrangement for the WRPC's directors, since they own 90 percent of the company's stock. Hence the ever-growing appetite at the River Bureau for more dam contracts. When it comes to road building, the four public corporations concerned with highways annually award 80 percent of all contracts to a small group of companies managed by bureaucrats who once worked in these corporations. Similar cozy arrangements exist in every other ministry.
Thus, with the full force of politicians and bureaucracy behind it, the construction industry has grown and grown: by 1998 it employed 6.9 million people, more than 10 percent of Japan's workforce – and more than double the relative numbers in the United States and Europe. Experts estimate that as many as one in five jobs in Japan depends on construction, if one includes work that derives indirectly from public-works contracts.
The secret behind the malaise of the Japanese economy in the 1990s is hidden in these numbers, for the millions of jobs supported by construction are not jobs created by real growth but «make work,» paid for by government handouts. These are filled by people who could have been employed in services, software, and other advanced industries. Not only do my neighbors in Iya valley depend on continued construction but the entire Japanese economy does.
The initial craving for the drug of construction money came from the profits made by politicians and civil servants. But for a craving to develop into a full addiction, there needs to be a reason why the addict cannot stop himself at an early stage – in other words, some weakness that prevents him from exercising self-control. In Japan's case, addiction came about through the existence of a bureaucracy that was on automatic pilot.
Bureaucracy by nature tends toward inertia, for left to themselves bureaucrats will continue to do next year what they did this year. In Japan, where ministries rule with almost no supervision or control by the public, bureaucratic inertia is an irresistible force. The world of official policy functions like a machine that nobody knows how to stop, as if it had only an «On» button, no «Off.»
With essentially no accountability to the public, Japanese ministries know only one higher power: the Ministry of Finance, which determines the national budget. Whatever original purpose each government department may have had, over time its aim has devolved to the very simple goal of preserving its budget. Dr. Miyamoto Masao, a former official in the Ministry of Health and Welfare (MHW), relates the following exchange with a superior in his book Straitjacket Society:
Miyamoto: «You mean that once something is provided for in the budget you can't stop doing it? Why not?»
MHW official: «In the government offices, as long as a certain amount of money has been budgeted for a certain purpose, it has to be used up.»
«Surely it wouldn't matter if there was a little left over.»
«It's not that easy. Returning unused money is taboo.»
«Why is that?»
«Leftover money gives the Finance Ministry the impression that the project in question is not very important, which makes it a target of budget cuts the following year. The loss of even a single project means a smaller budget for the whole department. The director is going to take a dim view of that, since it affects his career prospects.»
True to their reputation for efficiency, Japanese ministries have done an extremely good job of enlarging their budgets by meticulously observing the principle that each ministry should get the same relative share this year that it received last year. The allowance for construction in the general budget for 1999 was thirteen times larger than it was in 1965, around the time of the Tokyo Olympics. Although more than thirty years have passed since that time, when small black-and-white television sets were common and most country roads were still unpaved – years during which Japan's infrastructure and lifestyles have changed radically – each ministry continued to receive almost exactly the same share of construction money it has always had, down to a fraction of a percentage point. «Bureaucrats are very skilled at spending it all. It is a fantastic waste, done in a very systematic way that will never stop,» says Diet member Sato Kenichiro.