The biggest challenge for Koizumi may lie in persuading the country to drop its prevailing not-in-my-backyard attitude
The town of Yunotani near the Sea of Japan is a sleepy one. Just how sleepy becomes apparent when you step into city hall and count the number of employees napping. Some on lounge chairs, others at their desks. Faint snores can be heard among the clatter of typewriters.
The scene is an apt metaphor for something else that's snoozing around here, the economy. It too has a bad case of the yawns. As Japan slides into its fourth recession in a decade, it's places like this that are feeling most of the pain. Things will get even worse as Tokyo's reform efforts halt the public works projects that keep rural Japan alive.
Yunotani, after all, is Tanaka country. Former prime minister Kakuei Tanaka, who grew up a few villages from here, was the father of Japan's system of redistributing wealth from cities to rural areas. These government-planned bridge and road projects are the town's lifeblood.
Not any more. You wouldn't know it by looking at this quiet town of 6,655, but it's at ground zero of Japan's efforts to revive its comatose economy. Yunotani is sometimes referred to as public works town. While it's in the heart of Japan's Snow Country, it's also part of the Niigata prefecture, Tanaka's old stomping ground.
Almost single-handedly, Tanaka transformed what many considered a snow-covered wasteland into a vibrant prefecture. He steered a bullet-train line through and drummed up myriad mega-projects to boost the local economy. One example is a massive dam project that generated as much as ¥500bn of local sales for everything from lumber to concrete to wires to transportation equipment, food and lodging. But as Yunotani knows all too well, those were the good old days. Back in Tokyo, prime minister Junichiro Koizumi is working to break Japan's dependency on concrete and channel the money into areas like technology and education. He wants to start with a 10 percent reduction in public works spending. Privatising the government-run companies that allocate the funds is another goal.
Ironically, many of Yunotani's inhabitants, those who'd be hurt most by Koizumi's revolution, are all for Japan's reform plans. There's just one catch: Do it somewhere else. 'We agree with Koizumi's reforms but it's hard for us to accept them when they may hurt us directly,'' explains Tadatsugu Hoshi, deputy mayor of Yunotani village. 'When it comes to my own area, it's hard for us to accept the pain.''
Hoshi personifies Japan's current dilemma. After 11 years of trying to pave, build and dam its way out of recession, Japan's fiscal stimulus efforts are running afoul of rural voters and politicians. Many think Koizumi's no-pain-no-gain plans to fix the economy are exactly what the country needs. Yet, they say, let someone else feel the pain, not us.
Herein lies Koizumi's biggest challenge: Getting Japanese to drop their not-in-my-backyard defence and shoulder some of the pain. To end Japan's malaise, Koizumi has to get banks to write off mountains of bad loans and cut off failing companies. He also must wean rural Japan off its addiction to concrete. Yet the hardest part may be convincing households to sacrifice. Unemployment is sure to rise. Until now, companies have avoided mass layoffs.
At its very core, Koizumi's drive is a rejection of the Liberal Democratic Party's borrow-and-build ways. Japan's public works spending, as a percentage of gross domestic product, has long been the largest among industrialised nations; four times that of the US alone. Hence Japan's reputation as a welfare state.
Before the bubble burst in the early 1990s, few thought twice about Japan's concrete fetish. Economic stimulus from moving mountains, rerouting rivers and paving rice paddies was all part of the Japan Inc model that worked so well after World War II. To revive an economy ruined by war, Tokyo poured concrete everywhere and basked in the economic growth that followed.
Over the years, though, the strategy led to abuse. Politicians steered unnecessary projects to home districts. Roads no one used were expanded. Land no one needed was reclaimed from the sea. Bridges joining towns with a few hundred inhabitants spread through Japan's hinterlands. Amusement parks and sports complexes with little hope of making money went up everywhere.
Walking the streets of Yunotani, it's hard not to sympathise with the locals' not-in-my-backyard mantra. It's a lovely place, surrounded by moderately sized mountains, rivers and myriad traditional Japanese inns built around hot springs, called onsens. The locals are warm and friendly. Trouble is, there's not much doing here. The streets are oddly deserted and noodle shops and restaurants are quiet places at the height of lunchtime. It's a place screaming out for economic revival. The town's hopeful tourist industry isn't a whole lot busier.
Now that things are changing, rural Japan faces a shakeup for which there's little precedent. Construction companies that employ so many here face an uncertain future. Take contractor Reiko Joju, who employs 30 and makes her living paving the roads and pouring the concrete that Tokyo orders up. 'I'm kind of worried about the future,'' she explains. 'We have to think about how we can survive in this environment.''
One cause of concern is a nearby dam project that's been put on hold. Joju's company stood to gain business from its construction. Yet that hasn't stopped her from supporting Koizimi's ambitious reforms, just as long as the pain is felt somewhere else. 'If we don't take the pain, Japan's overall economy will sink,'' Joju says. 'Still, it's harder to go along with changes if you know you will be hurt personally. Then, I might have to reconsider.''
Balancing the tension between the desire for change and fear of it won't be easy. The word 'balance'' comes up often in conversations with rural Japanese. Tokyo needs to change its ways, say folks here and in other small towns but also must find a balance between stopping wasteful public works spending and all projects.
If anything's clear, Japan's not-in-my-backyard troubles will only get worse.
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