Race for the Exits

Race for the Exits: The Unraveling of Japan's System of Social Protection

Copyright Date: 2006
Edition: 1
Published by: Cornell University Press
Pages: 272
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  • Book Info
    Race for the Exits
    Book Description:

    Contrary to all expectations, Japan's long-term recession has provoked no sustained political movement to replace the nation's malfunctioning economic structure. The country's basic social contract has so far proved resistant to reform, even in the face of persistently adverse conditions. In Race for the Exits, Leonard J. Schoppa explains why it has endured and how long it can last. The postwar Japanese system of "convoy capitalism" traded lifetime employment for male workers against government support for industry and the private (female) provision of care for children and the elderly. Two social groups bore a particularly heavy burden in providing for the social protection of the weak and dependent: large firms, which committed to keeping their core workforce on the payroll even in slow times, and women, who stayed home to care for their homes and families.

    Using the exit-voice framework made famous by Albert Hirschman, Schoppa argues that both groups have chosen "exit" rather than "voice," depriving the political process of the energy needed to propel necessary reforms in the system. Instead of fighting for reform, firms slowly shift jobs overseas, and many women abandon hopes of accommodating both family and career. Over time, however, these trends have placed growing economic and demographic pressures on the social contract. As industries reduce their domestic operations, the Japanese economy is further diminished. Japan has also experienced a "baby bust" as women opt out of motherhood. Schoppa suggests that a radical break with the Japanese social contract of the past is becoming inevitable as the system slowly and quietly unravels.

    eISBN: 978-0-8014-6180-4
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. List of Figures and Tables
    (pp. ix-x)
  4. Preface
    (pp. xi-xiv)
  5. Conventions and Abbreviations
    (pp. xv-xviii)
  6. Chapter 1 Exit, Voice, and Japan’s Economic Problems
    (pp. 1-16)

    The setting and the topic of conversation could hardly have been more discordant. The restaurant in which we were dining, on the top floor of a ritzy hotel in central Tokyo, featured white linen tablecloths and black-tie waiters. The presentation of the gourmet Chinese food suggested that the chef had trained in France. Yet my host, Kōno Tarō, the son and grandson of Liberal Democratic Party (LDP) cabinet ministers and now an ambitious politician in his own right, was riffing on Japan’s economic decline. “Japan is the last socialist country on the planet,” he said, “and like the rest of...

  7. Chapter 2 Taking Exit and Voice Seriously
    (pp. 17-35)

    As befits a topic of such importance to the contemporary world, scholars and policymakers have been engaged in a lively debate about the degree to which globalization, declining fertility, and aging threaten the mechanisms through which advanced industrialized nations provide social protection for their citizens. Some tell us we are doomed to see laboriously constructed social programs cut back and dismantled, with the whole world converging on the U.S. model of unfettered capitalism, while others tell us we can expect a diversity of systems—including systems with generous social protection—to survive. Who’s right? What are the implications of these...

  8. Chapter 3 Productive and Protective Elements of Convoy Capitalism
    (pp. 36-66)

    In 1980, Japan devoted just 10 percent of its GDP to public and mandatory private programs designed to protect the nation’s citizens from risks inherent in modern society: the risk they would lose their jobs, that they would outlive their savings in old age, or that they would require expensive medical care due to illness. This level of expenditures placed Japan at the very bottom of the G7, lower even than the United States, which devoted 14 percent of its GDP to social expenditure in that year. Japan’s expenditures were much less than those devoted to these purposes by welfare...

  9. Chapter 4 The Race for the Exits Begins
    (pp. 67-97)

    The Japanese system of convoy capitalism was well adapted to the socioeconomic conditions that were in place through 1980. The system worked because up to this point women and firms were willing and able to carry a hefty share of the load involved in providing society with care and income protection. Firms were willing and able to do their part, in turn, because up through the 1970s the government faced few constraints on its ability to use trade protection and regulations to protect the convoy and keep it moving steadily ahead. Women too were willing to focus their efforts on...

  10. Chapter 5 The Policy Impact of Hollowing Out
    (pp. 98-111)

    The conventional wisdom ascribes powerful influence to those who have the ability to move capital freely across borders. As Henry Laurence writes:

    There are three pathways to regulatory reform where direct influence is used. First, mobile-asset actors can explicitly threaten to leave the country as a bargaining chip when negotiating with policymakers. In this way, the threat of exit simply gives mobile-asset actors a louder voice in the political marketplace and translates into more-favorable lobbying outcomes for these actors. But they do not even have to make threats. The mere fact that they are able to leave will be well...

  11. Chapter 6 Case Studies in Economic Reform
    (pp. 112-149)

    The overall pattern of Japan’s response to hollowing out has been one of limited exit leading to less exercise of voice and little reform. When we look more closely at the policy response to specific areas of high costs, we see that the dynamics of the reform debate followed this pattern closely in several critical areas: labor market reform, electricity market reform, and public sector reform. The high costs borne by firms in each of these areas were all ones that firms were able to escape, but not easily, through the time-consuming process of moving manufacturing facilities overseas. Consequently, there...

  12. Chapter 7 The Policy Impact of Exit by Women
    (pp. 150-182)

    To hear Shimomura Mitsuko, director of the Gender Equity Center in Fukushima Prefecture, tell it, women’s decisions to put off or opt out of having children should be having a profound impact on public policy:

    I think it’s a good thing. The parasites have unintentionally created an interesting movement. Politicians now have to beg women to have babies. Unless they create a society where women feel comfortable having children and working, Japan will be destroyed in a matter of 50 or 100 years. And child subsidies aren’t going to do it. Only equality is.¹

    Politicians now have to “beg women...

  13. Chapter 8 Exceptions That Prove the Rule
    (pp. 183-198)

    The preceding chapters have shown how one Japanese reform project after another has been abandoned or fallen far short of its goals: electricity market liberalization; Fiscal Investment and Loan Program reform; the privatization of the postal finance system and Japan Highway; the bad-loan cleanup; childcare leave; childcare services expansion; and labor market reforms of all kinds. The failure of hollowing out and declining fertility to motivate these reforms is evidence, I have argued, that limited exit has not proved sufficient to bring about needed changes in a Japanese system of social protection that has placed unsustainable burdens on women and...

  14. Chapter 9 Toward a New System of Social Protection in Japan
    (pp. 199-212)

    Is Japan changing . . . or not? Every author and commentator covering Japan’s political economy has taken a stand on this question, and their answers have been all over the map. Some have pointed to the big bang in finance and the rash of mergers in the financial services sector and proclaimed that Japan has turned the corner. It has joined the liberal economic order and will soon see above-average growth and a recovery from its decade of stagnation.¹ Most, emphasizing persistent foot-dragging on bad-loan cleanup and labor market reform by a string of Japanese prime ministers and the...

  15. Notes
    (pp. 213-242)
  16. Index
    (pp. 243-254)