- Japan's Interventionist State: The Role of the MAFF
Anyone with even a cursory knowledge of Japanese politics knows that the nation's farmers have long been coddled by Liberal Democratic Party (LDP) politicians eager to win their votes. Yet I still found it shocking to learn, on the first page of George Mulgan's book, that agricultural market distortions imposed by the Japanese government double the prices farmers are paid [End Page 440] for the products they grow and raise. Government subsidies to farmers are "greater than the entire contribution made by agriculture to the nation's economy" (p. 1). Perhaps there is something going on here that goes beyond the tendency of politicians to redistribute income from taxpayers and consumers to farmers, something that is common in the industrialized world but rarely reaches the proportions seen in Japan.
Indeed, the premise of George Mulgan's new book—the second in a trilogy of books devoted to the topic of agriculture policy in Japan—is that there is more to the story than meddling by politicians. The machinations of the LDP farm caucus were the focus of her first book, The Politics of Agriculture in Japan, released by the same publisher in 2000. In this book, she focuses on the role Ministry of Agriculture, Forestry, and Fisheries (MAFF) bureaucrats play in distorting markets and blocking reform. MAFF protects and subsidizes farmers, she argues, not simply because farmers, through politicians, demand it, but also because the ministry and the bureaucrats working there have an interest in setting up and running programs that protect them. Market distortions are "supply-driven, irrespective of demand" (p. 2).
A few policy details covered in the book illustrate her argument. When Japan was forced to open up its beef market to imports in the 1980s, MAFF officials made sure the imports were channeled through the Livestock Industry Promotion Corporation (LIPC), one of many ministry-affiliated agencies (gaikaku dandai) under the MAFF umbrella. This step protected Japanese farmers because the LIPC was able to use its monopoly on the right to import beef to maintain Japanese beef prices at levels only slightly below those paid to Japanese producers when the market was closed. But the policy also benefited MAFF because the LIPC purchased the imported beef at much lower world-market prices and kept the difference: a sizable profit of ¥40 –50 billion a year in the mid-1980s when the scheme netted the largest sum. The LIPC spent some of this money on "the promotion of the Japanese livestock industry" (p. 147), but these efforts still left the agency with plenty of funds to cover salaries and retirement bonuses for LIPC managers— many of whom were retired (amakudari) MAFF officials.
Similarly, after Japan agreed to move from a ban on imported rice to a system of high tariffs at the conclusion of the Uruguay Round of trade talks in 1994, MAFF officials made sure they were put in charge of a ¥6 trillion pot of money known as the "UR countermeasures fund," appropriated by politicians who wanted to win the forgiveness of offended rice farmers. This sum of money was so large that officials in MAFF's Agriculture Structure Improvement Bureau had trouble finding legitimate ways to spend it. Some, according to investigations reported by George Mulgan, ended up turning to friends and colleagues in farm villages who found ways to spend it and channeled some of the money back to MAFF officials in the form of cash and golf vacations. [End Page 441]
George Mulgan's account, including her thorough analysis of the large number of MAFF bureaucrats retiring into gaikaku dantai and tales of personal corruption, makes it clear that these bureaucrats have been living "high off the hog" for many years. She leaves little doubt that these officials have an interest in maintaining access to well-paid postretirement jobs, ample budgets, and the perquisites of power that come with market intervention.
The author is making a larger claim than this, however. She is...