ITune World Is No Place for Scratchy 45’s

Sept. 21 (Bloomberg) -- Director Ridley Scott found a new muse for his next thriller: Japan’s earthquake-devastated northeast.

“Japan in a Day” opens the Tokyo International Film Festival next month, and many anticipate that the documentary charting Japan’s recovery from natural disaster will lift spirits and revive a sense of purpose among the nation’s 127 million people.

Hollywood disaster flicks have nothing on March 11, 2011. Tsunami waves as high as 133 feet left more than 19,000 dead or missing, wiped out whole towns and caused the worst nuclear crisis since Chernobyl. Coastal Japan’s apocalyptic backdrops shame Tinseltown’s best set designers.

Yet the director of “Blade Runner” and “Alien” may be presenting more fiction than science in his portrayal of Japan’s recovery. That isn’t the popular line in the local media -- or Hollywood. Yes, there are notable examples of local leaders trying to revitalize communities, and activists demanding reduced use of nuclear power. What’s most surprising about Japan 18 months after the biggest earthquake ever recorded in the country is how little has changed.

It is worth examining some of the myths about the recovery and explain why so little has come to fruition. Here are five.

One, growth will boom because of reconstruction. Let’s count the ways this one fell flat: rebuilding has been slow; deflation is deepening; debt is rising; interest rates are locked at zero; a strong yen is hammering exporters (exports fell 5.8 percent in August from a year earlier); women are struggling for career advancement; and the health of companies still trumps that of families.

Gone Wrong

What went wrong? To be fair, much of the pain stems from the awful state of the world economy -- Europe’s debt crisis, America’s funk and China’s slowdown (Japan’s shipments to China plunged 9.9 percent last month). Yet blame must go to the absence of new ideas, political will and, most unforgivable of all, urgency from officials in Tokyo.

Two, the earthquake was a political game changer. Last year’s tragedy was supposed to usher in a new era in which lawmakers would be rewarded for decisiveness. The days of the bureaucracy that really runs Japan were said to be over.

Instead, officials in Tokyo preserved the status quo. They failed to decentralize power and let local leaders make big decisions; avoided reductions in red tape that might weaken various political fiefdoms; ensured that bureaucrats kept getting cushy jobs in industries they oversee; torpedoed efforts to make government agencies more accountable; and ignored the weak corporate-governance standards that led to Olympus Corp.’s accounting scandal.

Nor has Japan’s revolving-door politics changed. Japan may soon have its third prime minister since the quake, thanks to Yoshihiko Noda’s dismal approval ratings. Remember the excitement in August 2009 that ended the Liberal Democratic Party’s roughly 54 years in power? Voters are so fed up with the Democratic Party of Japan that they may return the keys to the LDP after just three years. For many voters, Noda’s decision to double consumption taxes amid stagnant growth was unpardonable.

Three, abandon nuclear power. The collective sense of amnesia is breathtaking, especially since former Prime Minister Naoto Kan considered an evacuation of Tokyo as the Fukushima reactors melted down. Tokyo Electric Power Co., whose negligence created the worst crisis since Chernobyl, survived intact. None of its executives has been punished for the failures.

‘Nuclear Village’

Noda is restarting the nuclear reactors even as radiation renders much of the Fukushima region uninhabitable. Worse, Japan’s potent “nuclear village,” the nexus of power companies and pro-nuclear regulators, bureaucrats and researchers, is back on top. Under industry pressure, the government is waffling on its pledge to phase out nuclear power by 2040.

Four, look outward for prosperity. Industry is making some headway here. Top brands such as Fast Retailing Co.’s Uniqlo and convenience-store operator Lawson Inc. are generating much of their growth overseas.

If only the government did its part. Since the earthquake, it has made little progress on free-trade agreements or deregulating key sectors such as transportation and agriculture. Immigrants still clamor in vain to enter Japan to work as nurses, construction workers and factory employees. Relations in Asia are only getting worse as Japan spars with China and South Korea over sovereignty of some tiny rocks in the ocean.

Five, get out of the way of the private sector. If Softbank Corp. billionaire Masayoshi Son thought the government would meet him halfway in efforts to build the nation’s biggest solar-power plants, he was sorely mistaken. Son, whose company sells Apple Inc.’s iPhone in Japan, is still struggling to get the government’s approval. His travails highlight how the political system is akin to a scratchy 45 rpm record in an iTune world.

The trouble is, officials in Tokyo, who still hold the purse strings and call the shots, are standing in the way of such transformations. That is sure to mean that Scott’s film is likely to have a happier ending than the one enjoyed by Japan’s people.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

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