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Anthony Rausch

Assistant Professor
Hirosaki University

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Introduction

The Great Heisei Mergers of Japan's cities, towns and villages (Heisei Dai-gappei) are now, for the most part, history. Initiated by the Japanese central government in the early 2000s with the stated goal of reducing the number of municipalities to 1,000 in total, as of March 2006, the mergers had yielded 198 villages, 846 towns and 777 cities, for a total of 1,821 municipalities, or a 40 percent reduction from the 3,200-plus of 1999. Provisionally justified by the need to promote decentralization, address suburban sprawl and initiate administrative reform, the intended outcomes were stated to include improved convenience for local residents, increasing specialization and diversification of municipal services, more effective community development and more efficient administrative operations and financial management systems (CLAIR, undated). While the outcomes at levels local and national, and for better or worse, are pending, and will likely not truly be realized for decades to come (see Rausch, 2006), there is discussion of another round of mergers for Japan, undertaken this time at the prefectural level.

Two Japan Times articles published in the fall of 2007 pointed to the debate regarding this additional domestic geo-political realignment, each highlighting the different views of what is termed a dōshū-sei system. One of the articles reported on a speech by Fujio Mitarai, chairman of the Japan Business Federation (Nippon Keidanren) given at a Decentralization Symposium, who asserted that the dōshū system is the ultimate structural reform that will fundamentally change the nation's administrative, fiscal and political systems. Mitarai continued, claiming that the reform, and the system it yields, will redefine the roles of the central government and the regional and local administrative bodies, enabling rural Japan to replace its reliance on support from national authorities with a locally-based autonomous strength. Mitarai's comments in the fall of 2007 reflect Nippon Keidanren's March 2007 proposal calling for the introduction of the dōshū-sei by 2015 (Kitazume, 2007a).

The other of the two Japan Times articles, reflecting comments offered other panelists at the same symposium, reported on the range of views and opinions that exist regarding dōshū-sei. Panelists predicted that public support for the system will depend on whether local residents can realize the benefits of such decentralization. One panelist pointed to a national opinion poll showing less than 30 percent approval for dōshū-sei, less than half of the over-60 percent that reject it. Tomikazu Fukuda, governor of Tochigi Prefecture, asserted that halfhearted reforms toward decentralization, in his words, like the ones implemented under the administration of former Prime Minister Junichiro Koizumi, only leave people disappointed; dōshū-sei can address this uncompleted decentralization agenda. Further complicating the promise of any dōshū-sei reforms is the fact that the intention of Koizumi's Trinity Reforms, to simultaneously devolve the authority of the central government, shift responsibility to local governments and reduce the debt finances of both, was (and is) resisted by the central bureaucracy (Kitazume, 2007b).

The objective of this discussion paper is to present and assess the dōshū-sei debate as it is currently taking place in Japan.

What is Dōshū-sei?

Dōshū-sei is the term that represents the reorganization of Japan's 47 prefectures into a smaller number of larger administrative blocs covering wider regional areas. As outlined in Eguchi (2009), the current 47 to-dō-fu-ken system, which operates largely on a centralized nation-state governing model, would be reorganized into a 12 dōshū system functioning on a multiple, local control model. Hokkaido would remain as Hokkaido (constituting the 'dō' of dō-shū), along with 11 shū (states): Tohoku, Hokuriku-Shineitsu North Kanto, South Kanto, Tokai, Kansai, Chukoku, Shikoku, Kyushu, Okinawa and the Tokyo Special State.

The notion of dōshū-sei emerged in 2003 in a Liberal Democratic Party governing pledge made in the House of Representatives to investigate the possibility of introducing such a system. This was followed by a 2004 stipulation by the Koizumi Cabinet regarding a fundamental policy directive to 'initiate the investigation of the introduction of the dōshū system as a means to promote the future of regional areas through decentralization.' The Abe government followed up with the establishment of a Cabinet Minister Post overseeing the dōshū system and a cabinet level deliberation meeting on the subject in 2006. The Fukuda and Aso governments continued this cabinet level activity, including the organization of dōshū-sei symposiums throughout Japan, such as that referred to above in the Japan Times articles, with various investigatory reports emerging over the period from 2007 to 2008. The Minshuto (Democratic Party of Japan) government, led by Hatoyama Yukio, victorious in the July 2009 election, has announced its intention to continue regional decentralization as a general principle, with a 'Chiiki shuken senryaku kaigi' (Regional Sovereignty Strategy Meeting) held on 14 December 2009 (Dōshū-sei Suishin Renmei; Doshu Promotion Federation, 2010). A two-step schedule was announced, with the first step expected to come in summer 2010 in the form of drafted legislation presented to the National Legislative Diet, with the deliberations and formal planning seen as taking through to the summer of 2013. This was followed by a 7 January 2010 confirmation announcing that the government was planning to take up in earnest a Chiiki shuken senryaku taiko (Regional Sovereignty Strategy Outline) in the summer of 2010. Also included in the statement was admission that the central ministries would oppose the resulting decline in authority (Dōshū-sei Suishin Renmei; Doshu Promotion Federation, 2010).

Why Dōshū-sei?

In the post-war and high economic growth periods, most important Japanese functional resources — personnel, industrial, financial, informational and cultural — whether governmental or private, came to be concentrated in Tokyo. As a result, the national government, centered in Tokyo, now monopolizes much of the administrative power for the country as a whole, with local governments experiencing an accordant loss of independence and initiative. Furthermore, most major corporate concerns continue to center their operations in Tokyo as well, despite its high costs and the compromises it brings to quality of life with its population density, commuting times and lack of space. The proposed dōshū system is viewed as the means to reorganize this imbalance in the national-local relationship, with each state ideally having the resources at its discretion to develop and operate a relatively autonomous local economy and build the necessary infrastructure to attract corporate investment and promote regional industries. A dōshū system would also shift an increasing majority of domestic administrative duties to the local level, thereby bringing balance to the division of labor between national and local governments. As each of the states combines different characteristics but can still generate an economy of scale for products and services, it is anticipated by dōshū advocates that a range of unique, but competitive state commerce profiles will emerge. On this basis, the logic follows, corporations will be more likely to expand in these areas, maximizing the dynamic connection that can be made with a particular area, say in the case of production capability, while minimizing the scale of operation in high-cost Tokyo.

Eguchi (2009) has outlined in detail possible strategic profiles for the newly-created states that would be most affected by such a dramatic change. For Hokkaido, Eguchi sees tourism as its base, with the potential for future growth in upgrading the New Chitose Airport, creating more international tourism tie-ups, and opening up the service sector to cater more specifically to the practical needs of foreigners coming to Hokkaido, through such measures as waiving visa restrictions, allowing use of foreign driving licenses, and so on. The future for Tohoku with adoption of the dōshū system would focus on agriculture and agribusiness through three specific local measures. These include a shift from family farming to corporate farming, a focus on the technology of agriculture in both practice and training, and promotion of the area on the basis of agricultural education undertaken in such a way as to be inviting for foreign students. For Hokuriku-Shinetsu, the key is direct overseas trading of agricultural and industrial goods with northern Asian population centers. This would be made possible through bypassing trade negotiation processes that are centered in Tokyo and allowing for more open credit assistance to local businesses. Shikoku would capitalize on tax reform, public finance reform and education reform as the means to bring about a local economy based on industry and wealth. Given the combination of its proximity to the large industrial and metropolitan areas of Kansai and its relative natural setting, Shikoku could attract both small-scale industry and wealthy retirees on which to base its local economy. Eguchi offers that Kyushu's future would lie in it successfully placing itself in the economic web made up of the countries surrounding the East China Sea. This would involve Kyushu working with China, Taiwan and Korea to develop an overall mutually beneficial regional economic policy, which would include reducing or eliminating trade barriers, loosening restrictions on capital and labor movement, and cooperating on establishing product standards and worker qualifications. Within Kyushu itself, success would entail upgrading Kyushu's airport and in-state transportation infrastructure. Finally, turning to what would become of the Tokyo Special State, Eguchi asserts that the shift of much of the administrative and corporate activity heretofore undertaken in Tokyo to outlying areas would allow it to capitalize on its artistic and cultural base at levels both domestic and international. With the freeing of the infrastructural resources such as office space and commuting infrastructure from these over-priced and over-crowded conditions, Tokyo as a tourism destination, both from outlying areas of Japan and overseas, becomes more attractive.

It bears noting that Eguchi, the author of such a detailed and persuasive work on the dōshū system, is the Representative Director and President of the PHP Research Institute, whose main activities are management of a think tank and publishing related publications. The PHP Institute was founded by Matsushita Konosuke, the founder of Matsushita Electric, known to most as Panasonic, as a way to work for Peace and Happiness through Prosperity, hence the moniker PHP. Matsushita created the PHP Institute in 1946 to study human nature, the result being an institution that publishes approximately 600 volumes per year, including a 'Handbook' series, a 'Business' series, and a 'Science World' series, along with a children's literature series and four monthly magazines.

What would a Dōshū-sei System Mean?

The implications for adopting of a dōshū system are significant for Japan, particularly in such areas as population balance, economic status, administrative role, and tax and finance structure. In terms of population, the ideal city populations under a dōshū system would be between 150,000 and 400,000 residents (as dictated by the Heisei mergers), with state populations ideally between 7 and 10 million. These ideals are based on government finance considerations; specifically the statistical calculation that these ranges yield highest performance of government services at lowest cost. In addition, the dōshū realignment would also configure states with sufficient GDPs to be competitive at appropriate levels.

Looking at these population numbers in detail, the post-dōshū Hokkaido would have a population of 5.6 million, Tohoku 9.6 million, Hokuriku-Shinetsu 7.7 million, Northern Kanto 14 million, Southern Kanto 19.5 million, Tokai 15 million, Chugoku 7.6 million, Shikoku 4 million, Kyushu 14 million, and Okinawa 1.36 million, with Kansai having 20.1 million and the Tokyo Special State just 8.6 million. As for the economic implications, based on 2005 figures, while Japan as a nation ranked second globally behind the U.S.A in GDP, with the dōshū configuration, Eguchi (2009) calculates that the Tokyo Special State, along with Southern Kanto, Kansai and the Tokai States would each rank approximately 10th globally in size of economy, behind China at 7th in rank, but near in rank to Canada, Spain and Korea. The Kyushu and Northern Kanto States would rank approximately 16th, with the Tohoku, Hokuriki-Shinetsu and Chugoku States approximately 20th, near the level of Taiwan. Hokkaido would be around 30th in rank and Shikoku around 35th globally.

As for the separation of administrative duties that adoption of the dōshū system would bring, the guiding principle would ideally be capability at the most local level, with residents undertaking those functions that they can undertake, cities undertaking those functions that cities can, the dōshū undertaking those functions that they as states can, with the national government undertaking only those functions which can not be undertaken at lower levels. In principle, this means that municipalities would be charged with public safety (fire and emergency), social welfare (youth and the aged), waste and recycling services, primary and secondary education and library services, local infrastructure and planning (roads, residences, parks, utilities), residential registration services and local industrial and cultural promotion and support.

The dōshū state would be charged with regional public activities, scientific, technical and cultural promotion, regional economic and industrial planning and trade negotiation, regional resource management, regional employment and training activities, regional environmental management issues, provision of police and disaster services, power generation and information infrastructural services, public finance management and development of basic long term public policy. This would leave to the national government activities related to the Imperial Household, foreign policy, currency and international finance policy, national energy policy, immigration policy, large-scale disaster response, minimum standard of living provisions, national-level projects, civil law, judicial policy and the penal system, and oversight of national-level state finances, elections and records.

However, recalling that the Heisei Gappei, the municipal mergers of the Heisei era, were also promoted on the basis of decentralization and transfer of administrative and finance authority to the local level, questions about effectiveness of dōshū-sei abound. Seiken Sugiura, a former justice minister and one-time head of the Liberal Democratic Party's Dōshū System Research Panel, echoed Tochigi Prefectural Governor Fukuda's comments regarding the half-hearted nature of the Heisei Mergers referred to earlier in acknowledging that the government's long-term decentralization efforts, including the Koizumi reforms that were the basis of the mergers, were “too much of a piecemeal effort to be successful” (Kitazume, 2007b). This clearly reflects the notion that the Koizumi reforms did not go far enough in terms of reform—a controversial notion in contemporary Japan reflected if in no manner than in the election that put the Democratic Party of Japan in power. Indeed, Fukuda conceded that no consensus has been reached on the need for the dōshū system among governors of Japan's 47 prefectures (Kitazume, 2007b).

To say that the Heisei mergers have been insufficient in achieving their aims is also to question whether the mergers have contributed sufficiently to resource equality and functional capability at the broad levels which would be necessary to initiate a dōshū system. As Fukuda points out, as competitiveness is one of the goals of such reform, the blocs must start from approximate parity in terms of economic resources and circumstances, a condition that can likely only be realized on the basis of initial redistribution of resources pushed by the national government above and beyond what has been directed and achieved by the Heisei Mergers. There are also questions as to whether such an approach, whether reified in the mergers or further idealized in a dōshū system, can yield long-term equality, assuming that the decentralization of taxing authority by the central government will lead to a reduction of subsidies to outlying areas. Pessimistic estimates show that only those blocs surrounding Tokyo will see higher revenues, thereby necessitating continued revenue transfers to the prefectures that would under dōshū-sei, be simply consolidated into underperforming states.

The taxation scenario Eguchi (2009) outlines is based on reforms in the existing tax redistribution system for self-governing bodies in Japan, be they prefectures or municipalities, where the tasks that these bodies are faced with are funded largely with budgets originating in the central government. These scenarios are based on a 2007 national and regional public finance figures of 83 trillion yen each. Accounting for necessary national budgets and reforming the national tax authority to allow for a combination of abolishing the tax re-allocation system, reconfiguring national treasury expenditures, and reducing the public debt, would yield a local tax re-allocation figure of 37 trillion yen. With introduction of the dōshū system, this 37 trillion yen re-allocation budget would be apportioned on the basis of a 'government spending apportionment fund' system as follows: Hokkaido would gain a budget of 1.43 trillion yen, Tohoku 2.40 trillion, Hokuriku-Shinetsu 2.16 trillion, Northern Kanto 3.45 trillion, Southern Kanto 5.6 trillion, Tokai 4.76 trillion, Chugoku 2.11 trillion, Shikoku 985 billion, Kyushu 3.21 trillion, and Okinawa 252 billion, with Kansai having 5.85 trillion and the Tokyo Special State 5.34 trillion yen in funding allocations. Additional local financing of government activities would then be based on a clearly demarcated taxing authority at the state and municipal levels to provide for the service provisions demanded at that level, combined with savings which would be gained by reductions in the public debt and reductions of outlays scheduled on the basis of the Heisei mergers. The various taxes which would be combinatively configured at the national, state and municipal levels to account for these figures and provide for the service at the appropriate administrative level include income tax, corporate tax, customs and duty taxes, along with inheritance tax, consumption tax, cigarette tax, gasoline and automobile taxes, property taxes, and fixed assets taxes.

Dōshū-sei: The Heisei Mergers on a Larger Scale?

If the establishment of the dōshū system is viewed as simply a continuation of the Heisei mergers on a larger scale, then serious questions should be raised. As Rausch (2006) pointed out in an initial analysis of the Heisei mergers for an outlying, highly rural prefecture, not only does the literature speak against the effectiveness of municipal mergers overall, the case in rural Japan seems to be subject to question.

Turning to opinions about municipal mergers after the fact, a 2008 report by the Zenkoku Chō-son Kai (2008; National Town and Village Association) outlines the pluses and the minuses of the Heisei mergers. On the positive side, a reduction of public finance expenditures and an increase in civil servants' administrative knowledge and capability has been reported. On the negative side, reports indicate a weakening of the connection between resident and their local government, particularly in outlying areas which are experiencing a decline in services, and a public finance shock at the local levels yielding gaps between both plans and budgets in some locations and between nearby locations overall. Paradoxically, for those municipalities which either chose not to merge with other towns or cities or were unable to attract merger partners due to the severity of their fiscal circumstance, the sense of resident attachment to their municipality and the sense of responsibility among the civil servants of these municipalities seems to have increased. Moreover, a sense of recognizing and accepting one's position as a smaller municipality in the larger scheme of Japan as a country, even while contending with a less than fortunate circumstance, seems to have taken place in some less-favored places. The inherent implications of such terms aside, the notion that not all places can be 'winners' and there must be some that 'muddle along' seems to be acceptable to many such places. That is, of course, not to say the future will entail increasingly difficult choices and the implications of decline will create a harsh reality for such increasingly peripheral locales.

A Higashi Mikawa Regional Council (Higashi Mikawa Kōiki Kyogikai, 2009) Research Report provides an assessment of the merger outcome for Hamamatsu City, located in Shizuoka Prefecture. The population of Hamamatsu City proper increased from 582,000 residents pre-merger to 804,000 residents on the basis of merging with 11 other cities, towns and villages in 2005. Clearly this was a case of outlying cities, towns and villages, the largest of which had a population of 85,000 and the smallest 1,200, merging with a centrally-located core city. The importance of efficiency brought by administrative changes in budget and planning aside, what is telling is the subjective appraisal of the mergers by the residents of these outlying locales. While residents of Hamamatsu City proper reported no change in services, residents of outlying areas reported direct connections between merging and a reduction in civil servant staff, a decrease in quality of administrative services and a lack of now necessary infrastructural connections, in the way of train and bus services, to Hamamatsu City proper. This was compounded by the fact that these residents felt that the tax burden they were asked to bear was increased in order to support activities in Hamamatsu City proper—activities in which they had little interest and little opportunity to participate. Finally, while residents of these outlying cities, towns and villages now merged with the larger city recognized transparency and accountability in administrative services, the response time in terms of planning and action had slowed considerably.

Dōshū-sei: Local Reaction and Public Opinion?

Despite Eguchi and other's optimistic scenarios, sentiments regarding introduction of a dōshū system appear mixed at the local level. A Junior Chamber Committee of the Kyushu Regional Council undertook a preliminary evaluation of the dōshū system, with the results rather pessimistic (Kyushu Chiku Kyōgikai, 2006). While there was no objection outright, 60 percent of the membership responded that they did not understand either the system or the justification for its introduction. Numerous specific concerns were raised: First, if finance and policy authority are not transferred to the degree necessary for local autonomy, it was felt that nothing would change. Second, with the increased distances that would result for certain services, there would be an inevitable decline in service effectiveness, as some areas have experienced with the Heisei mergers. Third, even though the focus would shift from Tokyo to a regional center, the necessity of outlying and less-favored areas having to appeal to a centralized government authority would not fundamentally change. Fourth, citizen consciousness based on the notion of government provision of services would not change, and with the inexperience of regional governing bodies, the focus of dissatisfaction would shift from the central government to the regional governments. Fifth, such a system seems to be a means of shifting the popular notion of accountability to those least able to do anything about their circumstances; regional administration and the local populace. However, in concluding the statement, the Council admitted that in order to avoid the outcomes described above, the local chapters should enthusiastically embrace the dōshū system and work to ensure that the form of the system works for the benefit of the area.

A 2008 survey undertaken by the Keizai Kōhō Center (conducted by Internet; n=1,999) showed that 39 percent of respondents supported continued discussion of the dōshū system, with 12 percent opposed, and the remainder unsure. Regarding making an appraisal of the dōshū system, 44 percent responded that they had sufficient knowledge and understanding to make an evaluation, whereas 17 percent responded that they lacked such knowledge and understanding. Forty-four percent overall responded that they had positive expectations for a dōshū system (8 percent with definite expectations and 36 percent with general expectations), most notably in terms of more innovative local industry promotion and employment policy (64%) and improved medical and welfare services (61%), but also better promotion of local tourist resources, disaster and fire protection and improved education and training policies. Regarding the benefits that a dōshū system would bring nationally, 79 percent responded that such benefits would be suitable (15 percent highly suitable, 64 percent suitable) on the one hand, with 75 percent responding that the benefits to the local governing organs would be suitable (11 percent highly, 64 percent suitable) on the other. Finally, in terms of the necessary reforms, 71 percent of respondents indicated a need for decentralization with the central government transferring autonomy to regional authorities, followed by 50 percent indicating a need to strengthen the public finance knowledge base of local public groups (Keizai Kōhō Center, 2008). A more localized survey undertaken in 2009 in the Shizuoka prefecture city of Numazu (n=972) revealed a much higher level of ignorance about the dōshū system on the one hand, but a somewhat more idealistic and less pragmatic impression regardless. Only one in three residents indicated knowing about the dōshū system (34%), with the highest levels of knowledge found in the 60 to 70 year old age group (47.6%). Responding to reasons for supporting the establishment of a dōshū system and the joining with a larger bloc of municipalities and prefectures, by far the largest response was for the possibility of lifestyle and cultural exchanges (64.3%), followed by justification on the basis of the natural similarity of the places within the broader region (13.9%) along with a unification of the consciousness of the region (10.4%) and unification of the history and culture of the region (6.1%) (Numazu City, 2009).

Conclusion

The question of whether dōshū-sei is in Japan's best interest is complex and a function of multiple factors at various levels and timeframes. There is the fiscal side, where the arguments for undertaking dōshū-sei seem to be valid. While Japan seems relatively well positioned in regard to its ability to deal with the current economic crisis, the government also needs to cope with growing domestic demands for government spending on social infrastructure while dealing with a national debt that is the highest of the advanced industrial economies. Although Japan's banks have better liquidity than those of the U.S. or Europe, the Nikkei stock market has lost value and the highest yen rate in a decade means that consumer exports will suffer. Japanese consumers can do little to stimulate the domestic economy, which remains in recession despite two recent stimulus packages totaling over 150 billion U.S. dollars. Long-term demographic trends point to a future necessity of ever-greater fiscal outlays in order to provide for pensions and health care of a rapidly aging population, with a major restructuring of Japan's tax code needed to meet the soon-to-be increasing fiscal demands on the state for social welfare. If the initial outlays to establish the system are sufficient and appropriate to create parity, the fiscal justification for dōshū-sei would highlight administration fiscal efficiency one side and economic stimulus generated at the local level on the other.

However, the success of the Heisei mergers to achieve their intended outcomes is questionable, if even ascertainable at this early stage. Indeed, the literature on mergers, whether those mergers would be municipal or prefectural, does not inspire confidence and experience tells us that rosy economic scenarios are often grounded by the brutal reality of global economic restructuring and the give and take of governing at the nation-state level. The post-merger opinion of the Heisei Mergers seems divided, as does the pre-dōshū-sei opinion about dōshū-sei itself. If the Internet and search engines can be trusted as today's measure of widespread societal sentiment, then the pessimists rule the day on the dōshū-sei debate, outnumbering the optimists by a notable margin. Using yahoo.co.jp and searching with dōshū-sei (in Japanese), the search software offers the following choice options: merit, demerit, mondai-ten (problems), hantai (opposition) and sansei (agreement). Numerically, the problems option yields 262,000 hits. The merit and agreement options yield 367,000 and 518,000 hits respectively, with the demerits and opposition options yielding 68,900 and 941,000 hits respectively. The true sense of the question of dōshū-sei would appear at present to be more about trends toward decentralizating the national government articulated through broad but rather vaguely conceptualized broad plans rather than addressing the reality of what is necessary to bring realizable and meaningful benefits to local places and recognizing the ever-present potential of unintended consequences that accompany any policy changes. As is usual in such matters, it appears as if politicians will decide and, one way or another, the populace will pay.

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References

Eguchi, Katsuhiko (2009) Chiiki shukenkata dōshū-sei ga yoku wakaru hon, Tokyo: PHP Kenkyujo.

Higashi Mikawa Kōiki Kyōgikai (Higashi Mikawa Regional Council) (2009) Kōiki gappei: dōshū-sei ni kansuru kenkyū (bassui) (Research on the wide area of mergers and dōshū-sei: extracts). Accessed April 2010.

Keizai Kōhō Center (2008) Dōshū-sei ni kansuru ishiki chōsa hōkokusho, Tokyo: Keizai Kōhō Senta.

Kitazume, Takashi (2007a) Revitalizing Japan through 'doshu-sei', The Japan Times, Accessed: November 2009.

Kitazume, Takashi (2007b) Bureaucracy resists change, fight to retain power, The Japan Times, Accessed: November 2009.

Kyushu Chiku Kyōgikai (Kyushu Regional Council) (2006) Kyushu 77LOM kōiki renkei chōsa,, Accessed: April 2010.

Numazu City (2009) Shimin ishiki chōsa kekka (Heisei 21 nendo), City of Numazu. Accessed: Aprilo 2010.

Rausch, Anthony (2006) The Heisei Dai Gappei: A case study for understanding the municipal mergers of the Heisei era, Japan Forum, 18 (1): 133–56.

Zenkoku Chō-son Kai (National Town and Village Association) (2008) 'Heisei no gappei' wo meguru jissai to hyōka (Reality and Assessment of the Heisei Mergers). Accessed: April 2010.

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Copyright: Anthony S. Rausch.
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