MIYAO (in Tokyo):

We have received numerous comments and questions on the Miyauchi, Ohga and Suzuki papers, which were posted on the "Opinions" page in January, 2001. Here we would like to focus on Mr. Yoshihiro Suzuki's essay, "The IT Revolution and Regulatory Reform," and take up Professor Koichi Mera's comment, which may be regarded as a representative, mainstream opinion on this issue from the U.S. side (from Canada, Mr. Marc Beliveau's comment, already posted, is also a representative one).

MERA (in Los Angeles):

I understand Mr. Suzuki's argument and have great a deal of sympathy for his proposals. Certainly, IT has a revolutionary force in the present society, and the traditional system is not well suited to this new social system based on this new tool. Certainly we need to have a new legal framework consistent with the functions performed by present IT. Mr. Suzuki proposes reforms in a number of fields such as the fusion of communications and broadcasting, developing conditions of competition for networks of e-commerce operators, and promoting IT in education. These are, I believe, highly useful measures that should be undertaken.

However, what is missing in his argument is a framework for implementation. As a member of the Regulatory Reform Committee, his approach is appropriate. But, from the viewpoint of improving the functioning of society, we need to think of how to implement the proposed reforms. His, and indeed, the Committee's approach is top-down. But, the top-down approach does not necessarily lead to results.

One basic problem of the Regulatory Reform Committee or any other such governmental committee is to find problems, and identify measures that would solve or reduce the severity of the problems. When such measures are supported by stakeholders, the chance of having such measures implemented is high. But, when they are not supported those measures will not be adopted.

As he is very well exposed to IT in his job, he is able to identify the issues associated with IT. But many of the recipients of his proposals, such as politicians and bureaucrats, would not be have been. Indeed, an increasing number of people in Japan have been exposed to IT recently. Still, a large number of influential people do not feel the need to act now. Many may have been using the Internet within Japan with the use of Japanese language software, but only a few would have communicated globally via the Internet. As a result, many do not feel the urgency of the need for reforms.

Mr. Suzuki recommends doing two things now. One is to popularize IT among people in a position to make decisions, such as politicians and bureaucrats. This task cannot be undertaken by Mr. Suzuki alone. The entire Committee should aim at this objective. The second task is to explain more in detail the relationships between IT and his proposals. For example, how is corporate governance, equity finance, or auditing systems related to IT? This needs to be explained in depth. Here he is able to teach Japanese citizens about the relationship between IT and the regulatory reform more thoroughly. The second task can be accomplished soon. The first task will take some time.

MIYAO:

While Mr. Mera suggests that Japanese individuals and corporations should follow their Western model, Mr. Marc Beliveau points out that Mr. Kobayashi's question about "healthy individualism" is relevant not just for Japan but also for many Western countries. He even says that Japanese individuals and corporations can become good citizens in the global community and thus make a contribution to the promotion of healthy individualism.

Hajime YAMADA (in Tokyo):

It is questionable whether the IT revolution is realized by the EVOLUTION of the old regulatory system in Japan, as implied by Mr. Suzuki. What we need is a drastic change in the system so that it will fit the coming information society. I hope that the Regulatory Reform Committee will take revolutionary measures to completely disband the excessive regulatory structure in the government and also in society.

Yoshinobu KUWAHARA:

Mr. Suzuki's paper deals with exciting changes in the IT era. But the word "revolution" should mean much more drastic changes involving a lot of sacrifices and chaos. Reform, on the other hand, sounds too moderate, almost like a counter-revolutionary measure. But why do they talk about reform? Do they really think such moderate, often defensive rather than challenging measures are effective enough in this kind of revolution? Somehow I feel that they understand that revolution is now in an inevitable stage, yet they wish to persuade themselves that they can still "tame" it by using the word "reform."

Deregulation usually takes place as a part of reform. When changes are moderate and long lasting, such reform may be appropriate to avoid unnecessary confusion. But when the situation is at the level of a revolution, such reforms are usually ineffective and possibly mask the necessity of real changes and a new framework needed for the New Regime.

They say that bureaucracy is the power to resist and retard the process of deregulation, but aren't bureaucrats a scapegoat? A hard-landing scenario may not look realistic, but on the other hand, a happy transfer for everybody from the Old Regime to the New Regime can hardly be imagined.

In any case, to put the words, "revolution," "deregulation," and "reform" in the same sentence may well lead to misunderstanding and misbehavior, or in the worst case, mask the real problems. Abolishing the existing system may be too radical and not feasible to implement, but in a revolution radical ideas are needed as a start to predict the future correctly. In the current stage of the revolution in Japan, the existing system has accumulated too much fatigue (notably management systems and other rules and regulations), and cannot bear reform shocks if the reforms are really effective for the revolution.

MIYAO:

While the "radical" viewpoint which is taken by Dr. Yamada and Mr. Kuwahara seems dominant among Japanese scholars and social critics, there is a group of people (a silent majority?) who question the basic premise that deregulation would benefit the economy and society in Japan. Interestingly enough, those who express this kind of view (say, the "social view") tend to be non-native Japanese such as Mr. John de Boer and Professor Donald Dore (his comments are already posted). In order for Japanese business leaders to push regulatory reform further for economic revitalization, they should take this "social view" more seriously and try to answer questions posed by Mr. de Boer and Professor Dore.

DE BOER (in Israel):

Will IT really change the fundamental structure of the socio-economic situation in which Japan and the rest of the world operate? The answer to this question depends on the types of regulatory reforms that are implemented. However, unlike Mr. Suzuki (and for that matter, unlike Mr. Ohga and Mr. Miyauchi), I do not believe that regulatory reforms solely promoting increased competition, a drastic increase in production efficiency and the core principles of globalization and capitalism will lead to a fundamental change in the socio-economic structure of Japan. A private-led society based on self-reliance and self-help will not enrich people's lives. This is because we live in a world where the corporate civilization's desire for growth and profit is insatiable. What we need is not increased competition but increased cooperation.

To be more specific, the deregulation that Japan has witnessed up until this day has not led to increased competition in its true sense. Rather what we are witnessing is competition that has intensified among a smaller number of participants. Japan's small and medium sized businesses have either been pushed aside or have been swallowed up by large transnational corporations creating a world of increasingly homogenized ownership. The rapid concentration of global income in recent years has given birth to a reality which, in 1998 saw Bill Gates, with a net worth of $90 billion, Warren Buffet, with $36 billion, and Microsoft co-founder Paul Allen, with $30 billion, achieve a combined income that was greater than the total combined income of the 600 million that live in the world's 48 least developed countries.

The regulatory reforms most needed are those that promote, as John Gray states, "an arrangement where toleration and diversity are the central principles of economic organization... serving to protect local and national cultures by embodying and sheltering their distinctive practices." (John Gray, False Dawn New York: New Press, 1998, p. 207). I believe that these were the enshrining principles upon which GLOCOM's Community Area Network (CAN-FORUM) was based, essentially strengthening the community through IT based community area networks.

If IT is indeed going to bring about a socio-economic revolution, we need regulatory reforms that, "deemphasize growth and maximize equity, that do not leave strategic economic decisions to the market but make them subject to democratic choice... We are talking about a strategy that consciously subordinates the logic of the market, the pursuit of cost efficiency to the values of security, equity, and social solidarity. We are speaking, in short, about reembedding the economy in society, rather than having society driven by the economy." (Walden Bellow, "From Melbourne to Prague: the struggle for a deglobalized world, 2000 http://www.context.co.nz/135.htm) What we are talking about is encouraging cooperation and fair competition while discouraging and opposing profit-enhancing and monopoly-creating regulation.

Moreover, the legitimacy of deregulation must be put into question in light of the Asian financial crisis and in particular the collapse of the Korean economy, which as Professor Ho-Joon Chang has correctly pointed out was largely caused by governmental deregulation measures leading to excess capacities and the accumulation of non-performing loans, the rapid buildup of debts totalling US $100 billion and a significant over-valuation of the currency.

The conclusion drawn from this discussion must be that we reinvestigate the type of society that we want to live in, whether it be one organized around excesses and large disparities in the distribution of income, information, wealth and freedom or a society based on the principles of cooperation and equity. The type of regulatory reforms necessary and the realizability of the IT revolution will follow from this conclusion.