Comments on the Miyauchi, Ohga and Suzuki Paper on Regulatory Reform
Professor, University of London; in Italy
1. I'm afraid I have not seen the January 2000 EPA report which calculated that deregulation in 8 industries had resulted in a consumer surplus of 8.6 trillion yen. I presume this involved a reduction in the producer surplus of the same amount. Was there any calculation of the consequences of this producer surplus reduction for (a) employment, (b) corporate profits, (c) aggregate demand?
2. "The postal savings system distorts financial markets." Mr. Miyauchi works in financial markets, what definition of "undistorted" is he using when he speaks of postal savings distorting them? In a Japan with a 0.25% bank rate, he can hardly mean that it makes producers' capital more expensive than it need be.
3. Mr. Miyauchi stresses the need for regulatory reform. As a leading member of the corporate governance forum he stressed the need to reform corporate governance. Which does he think is more important [regulatory reform or corporate governance reform]? And is either relevant to the demand-deficiency /deflation problems of today's Japanese economy?
One question for Mr. Ohga
Does Keidanren have clear criteria for distinguishing between economic regulation and social regulation? For example, he lists retailing as an area where economic regulation remains. I would say that the restraint of competition in the Daitenho, restricting the growth of supermarkets and hypermarkets, in Japan -- as in France and Italy -- was an economic regulation, but it had as its object: (a), the income-distribution objective of protecting the business of small mom-and-pop retailers, (b) thereby preserving facilities for shoppers who do not have cars to go shopping in, (c) thereby enhancing the quality of life in, keeping traditional sakanaya and yaoya skills within, local neighbourhoods. Surely these are social -- in the case of the last, perhaps aesthetic -- considerations.
Likewise, the duty of universal service imposed on energy companies is a social objective, but it can only be fairly accomplished by economic regulation (partly designed to cover the losses to the company involved in carrying out that social objective).
Where do I find an authoritative statement by Keidanren of the dividing line between social and economic regulation?
I am surprised that someone as realistic as I have always believed Mr. Suzuki to be, should be using the overblown rhetoric of "revolution" about recent advances in information technology -- especially in view of what is currently happening to the American economy.
E-mail is certainly convenient. But so is the telephone. We have had telephones for a hundred years, but I wonder how much of the average Japanese businessman's day -- or Mr. Suzuki's day -- is taken up by meeting other businessmen in order, men to mukatte, to say things which -- as far as the information content exchange is concerned -- could perfectly well be said on the telephone?
And the Internet certainly makes it possible for me, for example, to get hold in minutes of reports of governments and companies that it would otherwise take weeks to get by mail. But it does not increase the number of reports I can read in an hour. Our bottleneck is not information availability, it is information-absorption brain capacity.
That apart, Mr. Suzuki's paper doesn't give me a clear idea of the concrete action which is proposed. I'm baffled, for instance, to know what "fully implementing a system of stockholder representation in lawsuits in order to achieve a more liberal [corporate] governing system" has got to do with the IT revolution.