While my attention has been diverted elsewhere, the Yomiuri has been following the Japan Post privatization proposal through its most recent travails (part 1, part 2, part 3). I’m remiss in not having drawn your attention to it earlier, because it’s a very good, accessible summary of where things are at this point. Predictable problems have been cropping up, since the bills have been submitted but have yet to go through the Diet.
Part 2 in the series is the one that has the most concrete information about what’s being haggled over. Interestingly, if not exactly surprisingly given the political delicacy of the issue, Heizo Takenaka, who was hand-picked by PM Koizumi to be the minister in charge of orchestrating the Japan Post privatization, has dropped his usual habit of bluntness and bombthrowing and is taking a more oblique line.
One contentious issue is how long the semi-governmental holding company will retain its shares in the four new companies that actually render services (package handling, savings, insurance, and window services). From Koizumi’s perspective, the idea is that the holding company is supposed to sell all its shares by 2017. The possibility that has now been raised is that it can buy them back the next year:
LDP Policy Research Council Chairman Kaoru Yosano also said Monday, “The important thing is that the holding company will be a shareholder in 2017 and in 2018 as well.”
Once the holding company sells all its shares in the postal savings and insurance companies, they will be considered as private entities, with no restrictions on their operations. If the sale is completed during the early years of the privatization process–which begins in 2007–the firms could take up new profitable businesses, such as lending.
However, such a compromise may have a detrimental impact on existing private operators.
Yes, they might actually have to compete for customers, and, sakes alive, we would NOT WANT THAT.
Personally, I’m kind of wondering what reason a holding company that was incorporated for the express purpose of tiding the four new service companies over during the transition would have for existing after the transition was completed. You can tell I’m not a bureaucrat.
Another, related problem (if you think in terms of free markets) is this:
Also, the government and the LDP have been divided over a fund to be managed by the holding company with the aim of ensuring the uniform provision of postal savings and life insurance services nationwide.
As the relevant bill submitted to the Diet stipulates the holding company can establish a fund of up to 1 trillion yen, the amount of the fund is unchanged from the initial government plan. But the government and the LDP agreed that the company could keep up to 2 trillion yen in the fund.
…
The fund is intended to allow unprofitable post offices to continue providing financial services. The LDP’s request to increase its size is aimed at protecting the network of post offices by ensuring the universal service obligation applies not only to mail delivery, but also to banking.
So now we’re going to pony up for banking services in every municipality from Chiyoda Ward to darkest Hokkaido, and we’re going to insulate the providers from feeling the heat for their bad investment decisions. I doubt it’s meant that way, of course; the idea is probably just to help far-flung outlets cover operations costs. But we’re talking about a large pile of government-guaranteed money here. You can bet the urn full of grandma’s ashes that it won’t take long for savvy operators to figure out how to make bad debt and money-pit investments look like the necessary ineffiencies of being the only post office at the top of an underpopulated mountain.
Takenaka, as noted above, is waving all this away:
Heizo Takenaka, the minister responsible for postal privatization, reportedly said he had no intention of revising the bill, and the issue of the fund would be a business decision to be made in the future.
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The issue could determine the basic scheme of privatization. Takenaka’s remark that the issue will be a business decision does not seem to reflect his real intention. Instead, he has just postponed dealing with the issue.
Well, we all know how well it goes when you “privatize” a critical service by creating a soup of government guarantees and nebulous divisions of accountability and just kind of figure that logistics aren’t going to interfere, don’t we?