Kato Koichi Official Site

Mr. Prime Minister, you started your policy speech with the words, "In thinking about Japan's future and prioritizing the tasks that lie ahead, and being conscious of today's world," thus touching on your sense of the times. Being aware of the current times is a basic requirement that all leaders must constantly strive to meet as they manage their organizations. This applies to the heads of local government bodies, the heads of corporations, and the heads of groups organized beyond national boundaries. It is no exaggeration to say that projecting a precise consciousness of the times on the part of leader is the basis for confidence by members of the organization in their leader and of the leader's own self-confidence.
Particularly in your case, Mr. Prime Minister, you are charged with setting the course for the world's second greatest economic power, and you must constantly make your consciousness of the times clear to people both at home and abroad. The nation's top leader makes it possible for the people of the nation to achieve a vision of their future by setting forth his own views of the past. And both our neighbors and other people around the world can consider how to achieve harmony in their dealings with us if they know where our country is headed.
In this context I would like to reconfirm your view of history, including the statements that you have already made.

Mr. Prime Minister, in explaining your program of Six Reforms, you once stated that it must be a third set of reforms to rank with the Meiji Restoration of the nineteenth century and the post-World War II reforms. This idea of a "third opening" for our country is one to which a variety of hopes and visions have become attached, and now it seems to be taking on a life of its own. Some people take the reforms to be a way of settling the aftermath of the "bubble economy" and restoring rapid economic growth; other people take them as meaning a shift from a system that emphasizes economic growth to one that gives priority to the environment and human welfare. Some think that the reforms must aim toward still greater internationalization; others hope for the recovery of "Japanese-ness." And some people stress the need for a shift from a system led by the bureaucracy to one led by elected politicians or by the people of the nation.
It is certainly not a bad idea for the people of the nation to reexamine the issues they face from a long-term historical perspective on the basis of the points you have raised. Indeed, we should take pride in free and lively debate as evidence of a success of the society that we have built. If, however, people's images and expectations run ahead on their own, and failure to meet unilaterally set expectations should cause them to become disenchanted with politics, this would have to be regarded, in a different sense, as unfortunate.
Japan, which achieved rapid development in the postwar period, is now, I frankly recognize, at something of an impasse. Both of us share the view that our country's postwar systems are now suffering from "systemic fatigue" in many places. But the reforms must not be merely a backward-looking attempt to revive the postwar development process. The countdown toward the twenty-first century has already begun. The set of reforms you seek to accomplish must be accompanied by the creation of values for the new century. I therefore want to ask you first about the significance of the Six Reforms for the twenty-first century. Please give us your frank thoughts on how you envision the future beyond these reforms, a future that will differ from the twentieth century.

I believe that what Japan must carry out now is a third round of liberalization and democratization. With the Meiji Restoration we put feudalism behind us and set out on the path toward becoming a modern state. Elementary education was made compulsory, and the freedom to choose one's occupation expanded dramatically. Awareness of individual rights was also enhanced, and early in the Showa era [1926-89] universal suffrage was introduced, though only for males. If we take this to have been the first round of liberalization and democratization, then the second round was that of the reforms after World War II, when women were enfranchised and a wide range of human rights were recognized. Japan's development in the 130 years since the Meiji Restoration has been called a miracle, but surely few would argue with the idea that one of the driving forces behind it was this movement toward freedom and democracy based fundamentally on the concept of expansion of the rights of the individual. But in order for our country to develop further as we approach the twenty-first century and build a society in which each person in the nation can enjoy a sense of true affluence, we need another round of liberalization and democratization, placing trust on the "independent individuals" to whom you referred.

For example, the program of deregulation that you are tackling with enthusiasm has so far been explained mainly in terms of its economic effects, but it also needs to be considered as a further step on the path of liberalization and democracy.
There were various reasons for the imposition of all sorts of regulations on economic activity, but the most fundamental undercurrent was the deep-rooted mistrust of the market mechanism - the conviction that if all economic activities were left up to market forces, the result would be rampant violations of the law and a widening gap between haves and have-nots.
This conviction is quite similar to the arguments that were advanced in opposition to the introduction of universal suffrage. Opponents of this change asserted that giving the vote equally to uninformed members of the general public would cause the country to go astray and that demagogic candidates would attract voters with their rhetoric, putting an end to the climate of calm deliberation of political affairs. Behind their arguments was a deep-seated mistrust of the people. But ultimately our predecessors decided to trust in the wisdom of the people and to go ahead with universal suffrage. Viewing the subsequent course of Japanese democracy, we find that while there was admittedly some trial and error, overall the level of social tension was reduced, and the interest of the public in political affairs was able at times to prevent the state from embarking on a rash course. Political parties and individual politicians faced the judgment of the voters at the polls, and lively public debate contributed greatly to the formulation of national and social guidelines and the building of national consensus. Britain's former Prime Minister Winston Churchill once declared, "Democracy is the worst form of government except for all of the others." The democratic system of government, based on trust in the collective judgment of the voters, has now become a common principle of humankind.
The market mechanism is similar to this. Even now various arguments are advanced claiming that bad effects will result from entrusting most economic activities to the market. But is it not true that making maximum use of market principles will ultimately benefit the people of the nation through lower prices for goods and services and enhanced quality? The market mechanism is a system that places its trust in the collective judgment of consumers; it should be seen as an extension of the political system of liberal democracy, which places its trust in the collective judgment of the electorate.
Of course placing trust in market principles does not mean abandoning all regulations. Regulations of various sorts are in fact essential to allow the market to function in a sound manner - just as to ensure the sound functioning of democracy, it is necessary to prevent activities like the dissemination of false information, vote buying, and electoral obstruction. The market mechanism cannot operate properly without the active application of the Civil Code, the Commercial Code, the Antimonopoly Law, and laws for consumer protection. What is needed in essence is a shift from regulation aimed at allowing bureaucratic control of the economy to regulation aimed at allowing consumers to make choices freely and fairly.
One requirement that must not be neglected in connection with moves toward greater market freedom and democracy is the building of a system that will provide consumers with accurate information needed to make wise choices. Disclosure is the fundamental element of a free, democratic market. Only in a highly transparent market where consumers are able to make autonomous choices can the advantages of the market mechanism be realized.
As we move toward an economy and society based fundamentally on market principles, one more point that we must heed is the issue of international financial markets. Last year many Asian countries fell into currency crises because of the sudden flight of international capital. In one country, a value equivalent to a whole year's gross national product is said to have disappeared in the space of less than a month. A strong backlash against international finance and capital has therefore occurred among these countries. But if the current trend toward economic globalization continues, events of this sort can be expected to recur frequently. In Japan as well, the revised Foreign Exchange and Foreign Trade Law that comes into effect this April will mean a major deregulation of financial markets. The times demand that we minimize regulation and invigorate economic activity. But in Britain, which carried out financial deregulation before Japan, the major influx of foreign capital has produced a situation where it is said only one domestic securities compnay remains. This has been likened to the tennis at Wimbledon, where the playing courts are on British soil but the prominent players are from abroad. The danger exists that the sudden inflow of foreign capital into Japan will produce a strong negative reaction among the people of the nation. And if this happens, it may lead to the spread of misgivings about market principles themselves.
The famous international investor George Soros of the United States, writing in the

magazine last year [February 1997], made the following warning: "I now fear that the untrammeled intensification of laissez-faire capitalism and the spread of market values into all areas of life is endangering our open and democratic society."
Our country depends on imports for almost all of its oil, iron ore, bauxite, and other energy sources and raw materials, and it produces less than 43 percent of the food it consumes. It exports many products to other countries, and it has become the world's largest creditor nation. Every year almost 17 million Japanese people travel abroad, and Japanese capital holds a share of over 40 percent in the world's capital markets. Japan is truly the biggest beneficiary of the free-trade system. If the ferocity of international capital should cause the spread of misgivings about free trade, our country would surely be the biggest loser.
There is naturally a need to deal with the issues of regulation aimed at achieving the sound functioning of market principles not only at the level of individual countries but also internationally. At the 1996 summit meeting of the major industrial nations in Lyon, the central theme was a consideration of the bright and dark sides of globalization. I have heard that the leaders participating in this summit had extensive discussions of the problem points, but the fact that it was not possible to prevent last year's Asian currency crisis makes it clear that these discussions did not produce major fruits.
The active use of market principles is essential in order to achieve even greater economic liberalization and democracy. But just as the workings of democracy in the political sphere are still a matter of trial and error, the proper method of achieving sound operation of market principles is something that humankind seems not yet to have found. In this connection, Prime Minister, I would ask you the following questions:
What do you think of the opinion that holds that market principles will produce a dog-eat-dog society, resulting in unbearable social tension?
What is your view of the term

that is used by some?
People talk of internationalization of the economy, but some are of the opinion that this means the headlong adoption of foreign systems and foreign culture. What do you think of this opinion?
What is the proper relationship between the operation of market principles and the application of controls and regulations?
Please give us your frank thoughts.

My next set of questions relating to the third round of liberalization and democratization concerns the roles of the government and the individual, or in other words, the new relationship between the government and the people.
At the time of the Meiji Restoration 130 years ago, Japan undertook reforms that were initiated amidst a strong sense of crisis - the fear that unless the country changed, it would be subject to colonization. Sweeping reforms were implemented throughout the country, and in order to confront the foreign powers, it was necessary to concentrate authority in the hands of the national government and gather talented individuals of the center. This was probably the correct choice at the time. Under strong bureaucratic leadership, Japan was able to achieve rapid modernization. As is well known, the powers of the government reached even greater heights around 1940, just before the Pacific War, and Japan embarked on the war under a regime of "national mobilization."
The democratic reforms after the war brought a dramatic expansion of popular rights, but the powers of the bureaucracy were basically allowed to persist. A strong bureaucracy was a useful tool for the achievement of development led from above, including the thorough implementation of the policies of the Allied Occupation, postwar reconstruction, and the subsequent conduct of policies aimed at rapid economic growth. And in fact the system that set the country's course and got the people moving in the same direction worked with great effectiveness in the era when Japan's goal was to catch up with the West.
Along about the time when Japan grew to be the world's second biggest economic power, however, this system came to be seen as a threat by other countries. And analyses have suggested that in the context of today's economic sluggishness, the same system that pushed the entire country positively before has deepened the scars of the bubble economy and delayed recovery. This is clear if we examine the bubble economy and the period since then. During the bubble years, virtually all financial institutions were competing to lend money. And now they are uniformly holding back on lending as they strive to meet the capital adequacy standards of the Bank for International Settlements and the new domestic "prompt corrective action" conditions. Nor is this uniformity limited to the financial sector. For example, when some manufacturers of electrical machinery started producing television sets, all the other manufacturers in the industry followed suit, and when some started producing integrated circuits, again the others quickly followed, competing with each other to produce higher-capacity chips.
In other countries it is said that the purpose of a corporation is to earn profits. But in Japan market share was taken to be more important than profits, and we ended up in a peculiar situation where competition itself was the objective.

The same can be said of our school system. Somewhere along the line the purpose of education turned into that of producing children who would be able to graduate from elite universities and get jobs in top-ranking corporations. Even in the case of children who were talented at sports or art, both parents and teachers devoted their efforts first of all to improving their academic grades. It is probably fair to say that here too competition became its own purpose. Prime Minister, in your policy speech you voiced these words of deep self-reflection: "Education, which is supposed to teach common sense, knowledge, and wisdom, has somewhere become a means for everyone to go to good schools and acquire good jobs in the same way. Have we not become parents and teachers trying to squeeze our children into the mold of what is considered to be a good child?" In fact we must acknowledge that, not just in the field of education but throughout our society, we have become excessively concerned with following norms and have lost the spirit of thinking freely and expressing individuality in our lives.
In a normative society, a person who at some point departs from the norm is subjected to a strong sense of alienation. The children who wave knives around, those who turn to stimulant drugs, the growing number of suicides among the elderly - all these may be said to be products of an excessively normative society. Youth is a time of innocence and of the greatest sensitivity. And long life has been the human dream for ages. If our young people and elderly, who ought properly to be enjoying the most fortunate times of their lives, find themselves feeling strongly alienated, we cannot call our society truly free and democratic.

What I wish to ask about in this connection is the issue of employment of the elderly. Even though they are labeled "elderly," an increasing number of our older people are active and able. But even if they want to work, with the normal retirement age set at 65, they have a hard time finding employment. It is said that people lose the will to live not because they are poor but because they feel unneeded. We are in no position to say that our society is coping with the aging of the Japanese population if we are unable to respond to the wishes of older people who seek work, both to contribute to society and to heighten their sense of being alive. Pay is a totally secondary issue. Apart from the issue of extending the normal retirement age, I believe that the time has come to think up a system of employment for the elderly so that they can feel that life is worth living. Prime Minister, I would like to hear your thoughts on this.

You have spoken of Japan's postwar systems having reached a dead end; another way of putting this is to say that the system of development led from above has reached a dead end. In order to break through this impasse, we need to make a shift away from the "big government" whose bureaucrats direct and control the people. Your efforts to achieve administrative reform and decentralization of authority are truly in keeping with the demands of the times. But to carry out these changes, it is necessary to overcome the resistance of those who have benefited from big government - industry groups, labor organizations, and the bureaucrats themselves. For this purpose I believe that we must seek the cooperation of opposition parties and pool our energies for the sake of the future. I would like to hear your frank thoughts on this.

Prime Minister, in your policy speech you declared one of your goals to be "to build a country in which independent individuals can sufficiently exercise their creativity and boldly face challenges to realize their dreams." The term

will surely be a key phrase for the twenty-first century. This is also the sort of human being for whom the third round of liberalization and democratization is aimed. The problem is how to create these independent individuals. Prime Minister, you have not yet set forth a clear outline for educational reform, which is one of the elements of your program of Six Reforms. If I may be bluntly honest, what you said about education in your policy speech did not go beyond abstractions. This may be because the issues involved are so complex. So I would ask you this: How do you propose to build independent individuals? Please give us your frank thoughts.

In order to carry out the third round of liberalization and democratization, it will not be enough just to make "big government" smaller. Alongside small government, we must hope for the development of nonprofit organizations and nongovernmental organizations in which independent individuals will voluntarily participate.
We have lived under a big government since the Meiji era, which started 130 years ago, and so we feel some confusion about the move to small government. Before the Meiji Restoration, however, in the Edo period [1603-1868], both the central administration of the shogunate and the local administrations of the

[feudal domains of the

] were in fact quite small governments. There were various networks of residents firmly rooted in local communities, and through these networks an advanced level of self-government was realized. One reason the Edo period has recently come in for favorable reappraisal is this aspect - the fact that the Japan of those times had what we might call an "NPO [nonprofit organization] society." The government's bill on nonprofit organizations is now in the final stages of deliberation in the House of Councillors. I would like to hear your views on the subject of nonprofit and nongovernmental organizations.

One more point I should touch on in connection with the third round of liberalization and democratization is the issue of freedom of information. The reason the bureaucracy was able to dominate the nation was that it monopolized information, creating a setup under which only bureaucrats could formulate policy proposals. The principle that "they shall not be informed" was the source of bureaucratic power. But in order to achieve further advances in freedom and democracy, we must build a society in which the people can share the public sector's information. Naturally information concerning individuals and that involving diplomatic affairs and national defense must be managed with even greater thoroughness than heretofore. But openness must be the basic principle. Only by making it possible for the people to share the government's information can we put the people on an equal footing with the bureaucracy, achieve a broadening of debate among the people, and build a society led by the people.
This is an issue on which our own Liberal Democratic Party has cause for self-appraisal. When bureaucrats have whispered into our ears, saying, "We'll tell you this because you're in the ruling party," we have taken it to be a privilege of being in power. In fact, they provided only the bare minimum information even to us, screening it carefully to suit themselves, but even so, did we not allow ourselves to be intoxicated by the idea that we were sharing information that the public did not have?
Henceforth we need to make information readily available and establish the practice of debating openly with the opposition parties on the same playing field. Fortunately our party has a complement of talented individuals unmatched by the opposition. So we can be certain that the more we debate openly on the basis of the same information, the more the public will recognize our party's capabilities and place their trust in us.

In closing I want to question you briefly concerning your basic foreign-policy stance.
In response to the recent Asian currency crisis, many countries and institutions, particularly the United States and the International Monetary Fund, have extended a helping hand, but it goes without saying that Japan has provided the greatest amount of support. In the United States, opposition has been voiced to the idea of using taxpayers' money to deal with the Asian crisis. We also hear the opinion that Japan's attitude will determine whether the crisis recurs or not. But if Japan is to deal with this issue on its own initiative, it will naturally be necessary to build an arrangement under which Japan takes full responsibility for Asia as a "yen currency zone." Heretofore our country has tended to take a negative view of this sort of economic-sphere concept. There have been various reasons for this, such as the desire not to offend the United States and memories of the past war. But we cannot hope to win the true trust of our Asian neighbors unless our country moves to the forefront at this time of crisis. I believe that the time has come for Japan to consider an arrangement under which it takes full responsibility. I would like to hear your views on this.
Prime Minister, the twenty-first century is just ahead. But the opposition forces are merely repeating a cycle of fusion and fragmentation; they are in no way ready to take the reins of government. In the midst of the process of reform, it is understandable that one might at times be tempted to run away from the challenge. But running away is not an option for the LDP. Our mission is to grit our teeth and move the reform program forward, hard though it may be. In concluding my interpellation, I would request you to push on with the third round of liberalization and democratization, supported by your steadfast view of history.