FOR A MAN who’s the head of a splinter party with a mere handful of Diet seats, Kamei Shizuka speaks loudly and carries a big stick in the current Democratic Party of Japan-led government. He’s driving the process to renationalize Japan Post and to enact a measure allowing small and medium-sized businesses to delay their loan repayments. This weekend, he and Fukushima Mizuho of the Social Democratic Party, another junior coalition partner of equally miniscule numbers, called on/told/ordered Prime Minister Hatoyama Yukio to hold off on a decision regarding the disposition of the American Futenma Base in Okinawa until next summer’s upper house election.
What sort of man is Kamei Shizuka? As he granted an interview to the weekly Shukan Gendai that appeared in their 17 October issue, we can consider the source, as it were. Here’s most of it, in English.
– People from throughout the political spectrum are skeptical about the feasibility of the legislation to establish a moratorium for small businesses and others to repay debt. Can that really be achieved?
Of course it can. That goes without saying. We’ll do it. There are no obstacles or anything else in our way. My frame of mind now is that there are no obstructions and it’s clear sailing ahead.
I discussed (the moratorium) with Prime Minister Hatoyama Yukio before the election, and he said, “(Let’s) do it.” If he were opposed to me doing it, he wouldn’t have named me Financial Services Minister.
The average annual income of the ordinary salaried worker has fallen by JPY 76,000 in the past year (about $US 877). Some people are having trouble paying off their mortgages. That’s why we should give them a break from their payments for the time being.
The response from the people has been terrific. As of yesterday, there were about 2,700 to 2,800 e-mails to my website. While some asked whether that policy would lead to a credit squeeze, 99% were encouraging and said, “Go ahead and do it.”
– That’s quite a difference from the critical tone taken by the major mass media outlets.
The newspapers and the rest do nothing but criticize because they don’t know what’s happening in the daily lives of the people. Their criticism includes questions about whether the government should intervene in private sector economic activity, but I want to tell them: Stop talking rubbish!
Take a look at the G20. Now, throughout the world, people are saying that the extremes of laissez-faire economics should be tempered, and governments are keeping a sharp watch on private-sector financial institutions. They’re even calling for oversight on the salaries of bank presidents.
I’m not saying we should go that far. But with bank presidents living high off the hog—financial institutions are supposed to fulfill the social responsibility of nurturing and protecting industry, aren’t they? This isn’t the G20, but where do they get the qualifications for those ridiculously high salaries.
– But the government itself is finding it difficult to reach a consensus within its ranks. Finance Minister Fujii Hirohisa expressed a different opinion, and Otsuka Kohei, a Senior Vice Minister of the Cabinet Office, also has his doubts.
Consensus? That’s not necessary at all. When I met directly with Fujii, he told me, “Mr. Kamei, go ahead and do it.” Even Hirano (Hirofumi, Chief Cabinet Secretary), when I asked him, “It seems as if you’ve been saying something (criticism),” he denied it, saying, “No, no.” They’ve just been taken in by the leading questions of some people in the mass media.
– So, contrary to reports, neither Finance Minister Fujii nor Chief Cabinet Secretary Hirano are critical at all?
“If I say ‘No’, then the Hatoyama administration collapses”
Here’s what it boils down to, for the most part: Don’t make light of Kamei. I may not be much, but I’m still the head of a political party. No one can stop me. Fujii and Hirano have a different standing than I do. If I say “No,” then the Hatoyama administration collapses. Fukushima Mizuho of the Social Democratic Party, Mr. Hatoyama—the three of us determine the course of this Government. No proposal will be submitted to the Cabinet if I reject it. What can the Finance Minister say?
This moratorium is also an employment measure. In my home district (Hiroshima), a lot of presidents of small businesses are foregoing their salary. Even if they take no salary at all, they’re bending over backwards and doing everything they can to employ the people who’ve worked at their company since days their parents were in charge. But you know, if conditions stay this way until yearend, they won’t be able to hang on any longer. They’ll have no choice but to lay those employees off.
SMBs and microenterprises account for most of the employment in Japan. The employees of big companies make up just a fraction of the whole. What do you think will happen if the SMBs and microenterprises have to lay off more employees? Today’s unemployment rate of 5.7% will jump to 7 or 8%. Even if Japan is turned into a vast wasteland, some of the big corporations and city banks will laugh out loud. What do they think they’re doing?
– There is some criticism that the absence of interest income will have serious repercussions on the operation of financial institutions.
At present there is JPY 12 trillion (about $US 139 billion) in funds for financial institution support. Of that…for example, JPY 100 billion in taxpayer funds was poured into the North Pacific Bank. Of this JPY 12 trillion, only JPY 200-300 billion has been used, so there’s plenty left over.
Here’s what banks are doing nowadays. When they, the lenders, get in trouble, they get tax money as relief. But when the borrowers, SMBs and individuals, get in trouble, they couldn’t care less. They say, “You can just collapse and disappear.” Any bank like that which doesn’t fulfill its social obligations isn’t qualified to be a bank.
Also, if we don’t save SMBs and micro-enterprises, it will weaken the operations of local shinkin banks and credit cooperatives. (Shinkin banks are regional cooperative financial institutions for SMBs and area residents. Companies with more than 300 employees cannot join.) The older men (oyaji, also means father), the executives of those SMBs, are important depositors at those institutions. The SMBs are the customers that receive financing. If we do nothing while those customers go bankrupt, the shinkin banks and credit cooperatives will go down with them too. Just how are they supposed to conduct business if all their customers collapse?
“If you don’t like working under me, then quit”
– Isn’t there any opposition from the bureaucrats involved?
We’ve said goodbye to the fiscal policies based on the strong eating the weak philosophy and market fundamentalism of Former Prime Minister Koizumi Jun’ichiro and Financial Services Minister Takenaka Heizo. I’ve decided to do the opposite of what they did. I’ve told the civil servants, “If you don’t like working under me, then quit.” They’d be happier that way, too. I’ve said that to the Financial Services Agency (FSA) employees. But not one of those guys has actually brought me their resignation yet (laughs).
Policies to deal with a credit crunch should be left to the financial institutions to begin with. But the banks are frightened of the FSA’s inspections, so they don’t want to lend to SMBs and micro-enterprises. It’s a fact that even though the manual for those inspections was revised last year to make it less stringent, it didn’t rectify the credit crunch.
So that’s why I’ve said to the FSA employees, “Even though you guys are snickering and objecting that you loosened lending conditions, from the viewpoint of the financial institutions, it’s like the sweet smile of the devil. It just gives everybody the creeps. That’s how much they resent you. That’s why we’ll do the moratorium as a bill put forward by the Financial Services Agency itself.”
If the FSA itself crafts a bill telling financial institutions to institute a moratorium on loan repayment, even the director of a shinkin bank will be able to do it with peace of mind. That’s the truth. Of course, this situation developed not through the fault of individual inspectors, but the fault of Koizumi and Takenaka, who prepared the ground for that to happen.
– Some are saying that in fact, this measure has the danger of creating the reverse effect unless the financial institutions have a better understanding of it. It will exacerbate the credit crunch because they’re concerned they’ll be stuck with bad loans.
As long as I’m in the FSA, I will not let the inspectors cause a credit crunch. I’ve told the inspectors this. I’ve said, “When the bill passes, you guys have to follow-up.”
– Last October, the People’s New Party (of which you are the head) proposed such measures as the indefinite suspension of mark-to-market accounting and dispensing with capital adequacy requirements. Are you going to work to implement these in the future?
They’ve already stopped “mark-to-market” overseas. I don’t know whether it’s a global standard or what, but Japan won’t follow a standard that the rest of the world has ended. Japan’s circumstances are unique to itself. Each country is at a different stage of development and has a different way of life. We should use a yardstick that conforms to actual conditions in every country.
The yuai squad leader
– Have you had any differences of opinion with Prime Minister Hatoyama over the moratorium?
Absolutely not. I’m the squad leader for Prime Minister Hatoyama’s yuai philosophy (of fraternalism). We can’t just mouth the word yuai—we have to consider how to incorporate that spirit in policy. I’m the squad leader for putting that into practice. That’s why the moratorium emerged, as well as the reevaluation of Japan Post.
Japan Post has a capillary-like network stretching from Hokkaido to Okinawa. If we utilize that network—if we wanted it to, it could even have the function, for example, of a matchmaking service by connecting men and women in Hokkaido and Okinawa who are looking for partners. Depending on how we use it, the Japan Post network could link the hearts of all Japanese.
– Going back to when the Cabinet appointments were made, there were reports that you would be named Defense Minister, and there was a bit of turmoil.
Well, that, the major mass media outlets were just terrible. To begin with, I wasn’t internally designated as the Defense Minister at all. On the day the Cabinet was put together, I got a phone call from Mr. Hatoyama when I was surrounded by beat reporters. He told me not to announce the appointments publicly until that evening. Now, I didn’t want to mislead the reporters, so I clearly told them, I’m not the Defense Minister (as had been rumored).
Then, one reporter asked, “Is it Ichigaya? (the name of the Tokyo neighborhood where the Defense Ministry is located)” I said it wasn’t (chigau). But for some reason, the reporters misheard that as “You’re close (chikai).” They all flew out of the room and issued these bulletins saying I was named Defense Minister.
They were even worse after that. One of the reporters who wound up filing the erroneous story asked me if I couldn’t talk about it in such a way that the mistake would be understandable. He asked if I wouldn’t say that Mr. Hatoyama had sounded me out about a Cabinet position twice, and that the first time he asked about the Defense Ministry. He wanted to turn something that didn’t happen into something that did happen, as a means of self-protection and organizational defense.
That’s why the mass media has to change in the future, too. Some reporters are acting as front men for the banking industry and criticizing the moratorium. But what should really happen is that the reporters should also be giving us the benefit of their wisdom. They could offer suggestions on good policy.
* Otsuka Kohei, one of those Mr. Kamei dismissed when speaking of others in the Cabinet who objected to the moratorium, was named the head of the DPJ’s Financial Countermeasure Team on 15 September 2008, when the financial crisis began after the collapse of Lehmann Bros. The team compiled a list of measures and an action plan to encourage a response from the then-ruling LDP and the Government. Some of the suggestions included issuing yen-denominated bonds (samurai bonds) when other countries asked for financial assistance, shifting from the dollar as the base currencies to a basket of currencies, and offering financial assistance as an individual country rather than going through the IMF, to enhance the Japanese presence.
* Here I go again: One of the weaknesses of a multi-party parliamentary system is that tail ends such as Mr. Kamei wag entirely too much of the dog.
* One thing to be said in Mr. Kamei’s favor, however, is that he does seem to have an idea about the income of the average salaried worker. Prime Minister Hatoyama Yukio—the richest man in the Diet—was asked the same question in 2000, and answered JPY 10 million. When his guess became the butt of jokes, he said a few days later, “I don’t remember saying that. It’s about 8 million, isn’t it?”
I couldn’t find the figures for the year 2000 in a brief search, but the Yomiuri Shimbun reported in 2004 that after four straight years of increases, the average salary in the private sector was JPY 4.378 million (about $US 50,500). Yukio wasn’t even in the ballpark.
* In another example of “things they know that aren’t true”, academics and journalists of a certain stripe have for years been sounding false alarms about the lurking hordes of Japanese “right-wing nationalists” lying in wait for the chance to reconstitute the Japanese Empire whenever a likely pretext presented itself. That said more about their comic book vision of the non-left than it did about actual circumstances. Then again, what else can one expect from the source?
But it’s also another example demonstrating Hayek’s assertion that “conservatives” is an inaccurate term to describe those with libertarian/small government leanings (the real progressives) and shouldn’t be lumped in the same category. The “conservatives”, he noted, are usually culturally conservative and are all too willing to accept left-wing, big government premises. In Mr. Kamei’s case, that means renationalizing Japan Post and its banking and insurance businesses, as well as a platform of economic demagoguery standing on a foundation of public funds.
Recently, Mr. Kamei explored the possibility of enlarging his party or forming a new one with another cultural conservative, Hiranuma Takeo. (Both were thrown out of the LDP by Mr. Koizumi over the Japan Post privatization issue.) It came to naught, at least for the time being. It’s easy to identify this species in Japanese politics, by the way, from their birdcalls for creating a “true conservative” party.
Rather than marching into East Asia, Mr. Kamei’s policies are the type of which birds of that feather will likely pursue.