Posted by ampontan on Monday, September 20, 2010
MONDAY the 20th is Respect for the Aged Day in Japan, which is a national holiday. One manifestation of the custom of Japanese (and other East Asians) to be deferential to the elderly is that all levels of government provide them with generous welfare services, as well as other gratuities that stretch the role of government beyond its legitimate functions and its means.
The Mainichi Shimbun lamented in an op-ed last week the lack of urgency for the restructuring of the health and welfare system for the aged. Everyone is aware of the critical factors: a population in demographic decline with a birth rate well below replacement level is being asked to subsidize services to older citizens, who constitute a larger part of the overall population than in other countries. That’s part of the reason some politicians and bureaucrats favor the low road of sharp increases in the consumption tax. That’s also part of the reason voters are objecting to those increases.
The government estimates that the large number of baby boomers turning 75 in 2025 will require JPY 30 trillion for their health care. As of last year, health insurance premiums brought in roughly JPY 12 trillion in revenue. To deal with this shortfall, the Liberal Democratic Party government created a new category for health care services and payment for those 75 years of age or older (or the bedridden 65 years of age or older), which total roughly 13 million people. That system took effect on 1 April 2008.
Without going into eye-glazing detail, the objective was to have those elderly able to afford it contribute more to their health care costs (though not by an onerous amount) and to equalize premium payments nationwide. Municipal governments pay for part of the system, and the wealthier governments provided greater financial assistance to their residents. The new system also automatically deducted payments from pensions, rather than have individuals be responsible for their own payments. (Japan’s system of convienient bank account transfers meant this was not a burden to begin with.) The revisions also made it easier for younger people to make the financial contributions to their own health care.
Many of the elderly immediately started complaining as soon as the new system was introduced, whining that it was a “hurry up and die” system. Of course the news media made haste to give them a platform. The opposition parties promised to roll back the reforms, but when the Democratic Party took power in a coalition government, they discovered that local governments and medical institutions didn’t want a return to the status quo ante. The new government was also unable to agree on how to modify the new system. That’s not surprising considering the DPJ’s general incompetence and the coalition partner Social Democrats pulling relentlessly to the left. Thus the system introduced two years ago remains in place.
The taxpayer-funded treats for the elderly extend far beyond health care, however, and some governments, particularly at the municipal level, are finding it difficult to face the facts. Here are two examples.
Located next to the Pacific Ocean, the area is famous as one of the three oldest hot springs resorts in Japan. The Kogyoku Tenno (Emperor) bathed there in 658, and it’s still a popular resort today.
The municipality of Shirahama-cho operates four public baths, but the enterprise as a whole has been losing money. Chief municipal officer Mizumoto Yuzo told the Kii Mimpo newspaper:
I’m going to consult with the town council and the committee with jurisdiction (over the business) to see if there are some measures we can take next fiscal year.
The four baths are Sakinoyu, Muronoyu, Shirarayu, and Shirasuna. (The “yu” at the end of the first three means hot water, and is often used in public bath names in Japan.) Shirasuna is a sand bath that is open only from May to September.
The municipality’s tourism department says Sakinoyu earned roughly JPY 10 million in profit last year, but the other three are in the red. The aggregate losses for the Shirahama-cho taxpayers total JPY 9 million.
Everyone pays JPY 300 for admission to Sakinoyu. The admission fees at Muronoyu and Shirarayu are JPY 300 for people 12 and older, JPY 130 for children from six to 12, and JPY 70 for children aged five and younger. It costs JPY 100 to take a sand bath at Shirasuna. These fees were set in 1998 and haven’t been raised since.
The tourism department also says they’ve lengthened the operating hours of the baths to respond to public requests—they open earlier in the morning and close later at night—and have cut operating costs and reduced operating staff to a minimum, but they’ve reached the limits of their ability to finance the operation. This has been an ongoing problem for four years, and the lack of funds has caused the town to scrimp on upkeep. One result has been the visible aging and wear of some of the facilities.
Why is Sakinoyu making money and the others losing money? As the photo shows, the former will never have problems attracting customers. The real reason is that admission is free to Muronoyu and Shirarayu for people aged 65 and older. The age threshold was lowered from 70 and older in 1999. An estimated 240,000 people used those two facilities in FY 2009, and of those, 110,000 were old folks who got in for free. The paid admissions to Sakinoyu, meanwhile, totaled 83,000.
So now the politicos of Shirahama-cho have decided they’re going to talk about it. They might raise the fees, and they might start charging the seniors, but they haven’t decided when the changes will take effect.
What’s to talk about? Emperors are the only people who get to bathe for free. Changes to this system are overdue, but they’re still dithering in Shirahama-cho.
While they’re at it, they should come up with a plan for the immediate privatization of the facilities instead of wasting their time adjusting the fee schedule. As long as people aren’t living in mud huts without a modern water supply system, operating bathhouses is not the business of municipal governments, nor is using Other People’s Money (OPM) to foot the bill for the free baths of one age cohort. It’s no surprise that the taxpayers are subsidizing the admission of 45% of the customers at some facilities.
Also dithering are Mayor Kumagai Toshihito and the government of Chiba City. Neighborhood associations in the city hold different events for Respect for the Aged Day, and the Chiba City government provides financial assistance to those associations to pay for the parties. Starting this fiscal year, Mr. Kumagai says that Chiba City will raise the age limit for the per capita contributions to the neighborhood associations from 70 to 75 and lower the amount of the subsidy. He said the municipal government took the step because of an “unprecedented financial crunch”. This will amount to a saving of about JPY 50 million from the previous year’s budget. That’s a lot of ice cream and cake.
Here it is again: The municipal government of Chiba City is abandoning their fiduciary responsibility to all of its citizens by chipping in for the party favors of one group of them. Or, to be more broad-minded, they have an inadequate awareness of that responsibility to begin with. It is not the business of municipal governments to use OPM to show old people a good time.
Yet all Chiba City can manage to do is raise the age limit for the party and reduce the subsidies. What will it take for them to realize they shouldn’t be spending this money at all—municipal bankruptcy?
Some local government officials get it, however. Yamada Hiroshi, a former national Diet member and chief municipal office of Suginami Ward in Tokyo, and currently the head of the small Spirit of Japan party, is one of the few who realize the party’s over and is trying to do something about it. He is also one of the few politicians in Japan to preach the importance of personal responsibility.
Mr. Yamada often cites as an example the former practice of Suginami Ward to distribute Japanese confections (red and white manju) to meetings of associations for the elderly. The ward was so deeply in debt one of his first steps to put the government’s finances back on a firm footing was to end the free sweets. (He also cut his salary by 10%.) He was roundly criticized for being “cold” to the elderly, but he used that decision in local meetings as a teaching example to promote his efforts to restore fiscal sanity.
In 1999 Suginami Ward’s debt stood at JPY 95 billion with only JPY 1.9 billion in accessible funds. A decade later, after eliminating or privatizing some programs and reducing the municipal workforce, they were JPY 20 billion in debt with JPY 23 billion in accessible funds—in other words, in the black—and were on schedule to repay all the debt by 2011.
Fiscally responsible governments are possible–when they’re led by politicians who understand fiscal responsibility.
The monthly magazine Voice presents a roundtable discussion of Japanese fiscal issues in its current (October) issue with four university professors: Takenaka Heizo of Keio University (formerly of the Koizumi Cabinet), Ikeda Nobuo of Jobu University, Doi Takero of Keio University, and Suzuki Wataru of Gakushuin University.
They’re all in general agreement that the system of governmental largesse for the aged has to be reexamined. Prof. Suzuki said that people are not aware of just how generous the system is, and their awareness needs to be raised. Prof. Takenaka suggested that economic incentives are required, and proposed as one measure raising the fees people pay for the treatment of non-life threatening illnesses. He added:
I already know that people will say that human lives can’t be replaced with money, but the situation will soon be of out of control.
Prof. Ikeda said that he discussed the creation of a voucher system (also applicable for education expenses) with a group of DPJ Diet members, but one of them told him:
I understand what you’re saying, but the word “voucher” is taboo with labor unions.
Unions, of course, are the backbone of DPJ support.
Prof. Doi added that people will deliberately create the misunderstanding that such proposals amount to “market fundamentalism”. The idea, he says, is to stop the discussion of the idea by stopping thought.
The realization is growing among the people of the developed countries, if not their governments, that the Bismarkian welfare state funded with OPM (originally intended to head off the desires of a growing middle class for greater democracy) is no longer viable. If Japanese politicians at all levels and the bureaucracy don’t start to seriously examine more practical ways to provide services, and to reexamine their approach to distributing goodies that shouldn’t be free to begin with, before long the working population might get ready to pull the plug on a lot more than confections and the Japanesque bath time.
Here’s a quick video tour of the Shirahama area, with a scene from the Sakinoyu bath that shows why it is so profitable.