14 Chapter pg. 451-473, Toys R Us 614 to 618 The political Economy of Japan 1. Introductions a. Market strategies are typically adapted to the tastes of local consumers b. Japan in generally homogenous which facilitates the structuring of political and social activity i. Japanese isolation ii. Resistance to immigration iii. The absence of fundamental religious differences iv. Small regional differences v. Uniform national education system c. To understand the political and social status one must look at the cultural and historical explanations d. Interests are the primary driving force of must be the focus of the analysis e. Structured pluralism i. Interests change more rapidly than culture and history ii. Interests motivate the action that shapes business opportunities iii. Institutions intermediate between interests and opportunities 2. Issues a. Deregulation of the economy b. Little success in government efforts to resuscitate the economy i. Principal instrument used was fiscal policy c. Demographic problems: aging population 3. Interests a. Pluralistic as US b. Interactions with government are conducted by peak organizations i. Keidanren: federation of economic organizations ii. Keiretsu: business group iii. Industry associations iv. Individual firms c. No labor movement d. Enterprise unions have evolved the focus on employment specific matters e. Very few activists and public interest groups 4. Institutions a. Modeled after the British parliamentary system i. 47 prefectures each has a governor and government ii. Principal institutions: Diet, the electoral, party systems, and the bureaucracy iii. Constitution: individual rights and a supreme court b. The Diet i. Executive and legislature powers are aligned ii. House of representatives: elects prime minister, a lot of power in legislative activity, 480 members iii. House of Councilors: block legislation, 252 members who serve the prime minister iv. Liberal Democratic Party c. Political Parties and the Electoral System i. Koenkai: a local organization that serves to organize and mobilize support for the members of the Diet. ii. Zoku: the intermediate between interest groups and the bureaucracy. Soku are important to a ministry because they can represent the ministrys interests in the Diet d. Party Organizations
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Policy Affairs Research Committee (PARC): internatONial decision making process that corresponds to the ministries and Diet Committees. e. The Legislative Process i. Most important part is the bureaucratic component The Bureaucracy a. Structure and Power i. Central force in government ii. Respect to bureaucracy iii. The Ministry of Economy, Trade and Industry (METI) it is the lead of international trade negotiations. iv. A ministry is generally headed by a politician from one of the government parties. The ministry is administered by two vice ministers. v. Influence on: expertise in resolving problems and devising effective policies, and its authority to direct resources or control economic activity through guidance, regulation, and the allocation of government funds. b. Career Bureaucrats i. Job rotation is an important part of the career path of a bureaucrat. ii. Amakudari: c. Advisory Committees i. Linkage between bureaucracy and business ii. Communication channels that keep the bureaucracy informed about the issues of concern of interest groups d. Political Reform i. Reform of 2001 ii. Financial Services Agency iii. Privatization of the savings postal system The Judicial System and the Antimonopoly Law a. Antimonopoly Law enforced by the Fair Trade Commission b. Dango Cultural Foundations a. Role of formal and informal hierarchical relationships b. Business had mutual interest supported by reciprocal behavior including that with the government Tying the Components together: A Framework of Political Exchange a. Political Exchange i. Iron Triangle: interest groups, political parties and bureaucracy ii. Interests provide political support and the government provides policies that benefit the interests iii. Categories: clientelistic exchange, reciprocal or pork barrel exchange, unties financial support and generalized voter support b. Reciprocal Exchange i. Involves government regularity policies, licensing, and expenditures that benefit particular interest groups. ii. Interest groups provide support for the governing parties iii. The pint of access for a n interest groups might be through a party, a zoku or a caucus Characteristics of Business a. Business groups are supported by interlocking ownerships, which serves both to facilitate coordination and insulate the group grow outside forces b. Groups compete against each other c. Keiretsu: interlocking networks i. Mitsubishi, Mitsui and Sumitomo ii. Groups formed around major banks iii. Groups formed around major industrial companies d. Compensation in Japanese firms i. An annual bonus
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ii. Pay graduated by seniority iii. A contingent retirement form payment e. Compensations are strong incentives 10. Business- government interactions a. The organization of business for non-market action i. Mutal gains 11. Nonmarket Strategies a. Electoral Strategies i. Electoral, coalition building, relationship building and lobbying ii. Central component of nonmarket strategies b. Coalition Building i. Takes place through industry associations and peak associations that represent business interests on broad public issues ii. Most companies maintain their own relationships with bureaucrats in the relevant ministries and with important politicians rather than relying solely on the activities of the associations to which they belong c. Relationships with the Bureaucracy i. Interaction with ministries and agencies is crucial for many companies because the government has been heavily involved in the economy ii. Companies develop relationships with the bureaucracy and bureaucrats, and these relationships are reciprocal d. Lobbying and Points of Access i. Lobbying is extensive in japan and involves presenting information and representing interests before the bureaucracy, political parties and the Diet. ii. Access to political parties and members of the diet is also important on the issue of requiring bureaucratic action, since parties can act as intermediaries between firms and ministries e. Information f. Corporate Nonmarket Styles 12. Integrative Case: Toys R Us and Globalization a. Introduction i. Market strategy was built on three principles; prices, selection and stock ii. Relied in advertising to get consumers to purchase toys year round, which both increased demand and reduced seasonality b. Globalization i. 169 over 40 states ii. Canada, England iii. Each country posed different hurdles c. Germany i. Law favors employees over consumers ii. Federal laws iii. German law also prohibited lifetime guarantees d. Japan i. Controlled by government regulations ii. Iron Triangle e. Sweden i. Strong unions ii. A lot of strikes