Friday, September 30, 2005

Koizumi's electoral victory, part 2

Those unfamiliar about Japan's postal-reform issue may wonder why it was the subject of September 12th's single-issue national election. It's because privatizing Japan's postal system is not just a matter of, say, streamlining the country's mail-delivery system.


It's because Japan's post office is actually the world's largest financial institution, managing a whopping $3 trillion in assets. This money comes primarily from savings accounts that Japan's residents can open at any post office branch. Not only are these accounts insured by the government, but the sheer number of post office locations makes them more convenience than any bank for a lot of folks.


Reformists, however, claim that the central government has made poor use of that money, borrowing against it to fund large, wasteful construction projects that are justified as economic stimulation but criticized as pork. Privatizing the post office, they say, will put that money in the hands of the private sector, which can lend it out to the most deserving businesses.


I'll wrap up this discussion in a 3rd and final posting. I promise!


—Mellow Monk


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