Japan's Post-Disaster Dysfunction

You would expect a nation famed for its efficiency and infrastructure to set the world standard for rebuilding. One year after a giant earthquake and tsunami, Japan’s revival has barely begun. In the days after March 11, economists predicted a powerful rebound as construction crews converged on the earthquake-ravaged northeastern Tohoku region, a replay of what happened following the Kobe temblor in 1995. What’s more, many hoped the disaster—20,000 dead, towns wiped out, the worst nuclear crisis since Chernobyl—would break Tokyo’s political paralysis and catalyze major change.

Politicians have spent the two-plus decades since Japan’s bubble burst doubling down on the strategies of the past: massive borrowing to finance public works, ultra-low interest rates, lifetime employment, negligible immigration, a rigid industrial structure favoring exports from a handful of behemoths, compliant banks, and clubby ties between the political and business worlds. Incestuous links between bureaucrats and management at Tokyo Electric Power enabled years of doctored safety reports and underestimated risks. This set the stage for Japan’s nuclear crisis, which is still unfolding; radiation continues to leak out of the Fukushima nuclear plant and serves as a daily symbol of Japanese dysfunction.