The MOF has political power over and in some cases outright executive control of tax collecting, bank oversight, securities market regulation, tax rates, budget formulation, and monetary policy. This is a heavy load indeed for a single agency and the reason why it is paid so much obeisance by politicians, businessmen, and other bureaucrats.

For purposes of contrast, imagine in the United States that the IRS (Internal Revenue Service), the SEC (Securities and Exchange Commission), the FRB (Federal Reserve Board), the White House OMB (Office of Management and Budget), the CBO (Congressional Budget Office), the Treasury Department, and the three committee chair functions from both houses of Congress of the Finance, Appropriations, and Ways and Means Committees, were all in the same agency.

What might appear to be a simple problem of size, is concealing the even greater problem of lack of democratic political control. Democracy in Japan depends on separating the MOF into a half dozen major functions and acquiring political control over its policies. In theory, Democracy is a system whereby the elected representatives of the people have political control and establish policy. This is not the case with the MOF in Japan. The MOF seems to write the budget and send it to the Diet for rubber stamp ratification.

The MOF has become an international political problem as well, for example its traditionally ineffective response to the problems of Daiwa Bank in the United States. The world economy is not going to put up with the unelected policy making by the mavens at the MOF. In order to continue to play a major role in the world economy, the Japanese system with have to be drawn more into line with what passes for effective democratic political control of financial matters in the rest of the G7 economies. The contrasting sets of moral and ethical standards brought into play in Japan, depending on whether or not one is dealing with a member of one's inside group or someone outside that group, don't export very well.

Japanese politicians, for their own sake as well as the sake of their constituents, may find this problem easier to correct before they have to appear to be bowing to international pressure. The loose cannon of the uncontrolled MOF reminds too many people of the politically uncontrolled freedom of the Kwantung Army, whose activities are correctly said to have lead directly to the Pacific War.

Charles Potts