Fukushima and Amakudari:

A Problem with a Long History

A number of news articles have been published since the Fukushima accident pointing to the sometimes overly close relationship that exists between the nuclear industry in Japan and its regulators. Since I have lived and worked in Japan, I thought I might be able to help shed some light on these relationships and the reasons for them.

Before I even begin to address the specifics, however, I want to caution readers that some of the articles on "TEPCO" misconduct include some non-TEPCO incidents, specifically Monju and the criticality accident at Tokai-Mura, and do not make it clear that these are not TEPCO facilities or incidents. While the issues may be similar, I think TEPCO has enough to answer for at the moment without ascribing to them incidents in which they are not the principals.

But to get back to the issue of the "cozy" relationships between the regulators and regulated in Japan, I would first point out that the kinds of relationships that are being criticized are not unique to the nuclear power sector in Japan. In fact, the same kinds of relationships exist in many industrial/commercial sectors in Japan. Furthermore, they do not exist for nefarious reasons. That is, no industry in Japan deliberately set out to create a system to insulate itself from criticism. Rather, the kinds of relationships that exist today are a consequence of a military style "up or out" personnel system and an inadequate pension system that results in people in their early to mid-50s being retired from their agencies without a sufficient pension income.

In fact, some people suggest that the problem stems from incomplete reforms introduced during the post-WWII US occupation of Japan and the American attempt to transform an industrial system that was mainly government controlled into a market economy. At that time, ministries were responsible for the operation of industrial organizations in their spheres of control, so the movement of personnel "retiring" from the government agencies to the industries they ran was not unlike movements within branches of any large industrial organization. The US successfully privatized the industries, but did not reform the pension system at the same time.

As a result, the traditional movement of personnel from government agencies to the now-private industries they controlled continued. In fact, it is an institutionalized arrangement, and part of the responsibility of the personnel offices of government agencies is to arrange the outplacement of staffers reaching retirement age, with industries under some pressure to accept the individuals being placed.

Sometimes people will observe that individuals in the US and elsewhere may move from government to industry or vice versa and question why that is any different from the Japanese system. The answer is that it is very different. American civil servants leaving the government and getting positions in industry are not helped by their agencies and therefore do not "owe" their agencies anything. (In fact, US Federal government officials often have certain restrictions on their activities for a period of time after their government employment.)

The Japanese system, often called amakudari, or "descent from heaven" has long been criticized by outsiders. In earlier days, it undoubtedly helped foster the image that used to be called "Japan, Inc." At one time, that mode of operation had considerable benefit for Japan, as it seemed conducive to developing unified positions in confronting the global marketplace. Somewhere along the line, however, that benefit seems to have lessened, and people stopped using that term as much. In fact, at that point, some of the disadvantages of amakudari seemed to emerge, particularly the inefficiencies caused by sometimes force-fitting people into positions for which they were not well matched.

Now, perhaps, a more serious shortcoming of amakudari may have reared its head and it may become more imperative to alter the kinds of relationships that have existed between the regulators and the regulated community.

It would be far too simple to say that reform of the government pension system is the solution to any problem in Japan. Amakudari is certainly not the fundamental cause of the Fukushima crisis, and it is unclear at this time whether any of the problems at Fukushima will be traced to repetitions of the previous instances of TEPCO misconduct and regulatory "indulgence" that have been dredged up by the press. In fact, my guess at this time would be that amakudari is not a factor. Furthermore, there are other Japanese government and industry practices that might also merit scrutiny in the face of current events. Perhaps I might address them in a future blog.

However, getting rid of amakudari will be a giant step in the right direction for an industry that is now under siege, and should help restore the faith of the Japanese people and the world that the nuclear industry--as well as other industries in Japan--will be subject to the kind of regulatory scrutiny the world expects from one one of the most advanced countries in the world.

Many people feel that Chernobyl helped to topple the old Soviet Union. It would be fitting for Fukushima to topple amakudari.

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