Japan Suffers Crisis of Confidence After Quake Reveals Faults at Top

DURING ancient times, Japanese emperors would take responsibility for a major earthquake by abdicating. Disasters were a sign that an emperor had committed some sacrilege against his ancestors and could no longer control nature.

But times have changed.

While Emperor Akihito, who visited quake-stricken Kobe this week, will not step down as a result of the earthquake, the same cannot definitively be said of Prime Minister Tomiichi Murayama.

More than two weeks after the earthquake struck, Mr. Murayama's government is still on the defensive for failing to respond quickly and adequately to the Jan. 17 disaster that left more than 5,000 people dead.

``We did the best we could under the current system,'' was Mr. Murayama's apologetic response to widespread public criticism.

But some political analysts say it was Japan's system of governance, not Murayama's Cabinet, that let down the people of Kobe.

The prime minister was hamstrung by rules, laws, and customs regarding who takes charge after a disaster, they say.

His decisionmaking powers in other areas were also limited, which explains why it took the government in Tokyo so long to respond to offers of help from overseas.

``Those caught in the quake ... fell victim to Japan's bureaucracy, which for reasons of pride and politics rebuffed these goodwill offers,'' stated Tatou Takahama of the Nomura Research Institute.

The debacle goes to the heart of the way in which Japan is governed - not by politicians, but by bureaucrats who often make nebulous decisions and go through a lengthy process of reaching consensus before taking any action.

It is a system that was being challenged even before the quake, as the government tried to deregulate the Japanese economy and eliminate some of the 11,000 rules and regulations governing business.

The fact that red tape and bureaucratic bumbling may have led directly to loss of life in Kobe is likely to increase the pressure on the bureaucracy to reform. The quake may accelerate the pace of deregulation and help change the way Japan is governed.

Engineers have also been engaging in some self-criticism in the aftermath of the earthquake.

The widely-reported failures of large infrastructure, such as railway bridges and elevated highways, caused some red faces in Japan - especially since engineers had dismissed the idea that Japanese highways could suffer the same kind of earthquake damage that San Francisco, in 1989, and Northridge, in 1994, had experienced.

The failures have led to a crisis of confidence, shattering the faith of the Japanese in their technological ability, just as the 1991-92 collapse of a ``bubble'' economy shattered the myth of their financial invincibility four years ago.

But the Japanese may be their own harshest critics. Most ordinary buildings that collapsed were old and built before stricter construction codes came into force. And some of the worst cases of engineering failure may not have been due to design or technological flaws at all, but simply old-fashioned sloppiness and corruption in construction.

After a support for the bullet-train line near Kobe collapsed, pieces of wood were found embedded in the concrete. And reinforcing bars in concrete pillars holding up the HanshinExpressway were found to be welded badly. Both cases of what the Japanese call tenuki (sloppiness) seem to have occurred because it saved the contractor time and money. The Japanese media suspect local officials were given payoffs to approve the work.

Business is drawing its own lessons from the Kobe quake.

Japan's famous ``just-in-time'' system of production, whereby parts are delivered to factories the moment they are needed, suffered a blow when Kobe-based firms could not supply parts to the nation's vehicle-assembly factories, forcing shutdowns. Toyota lost production for at least 24 hours in all its major plants because disc brakes and car radios were no longer being produced in Kobe.

``The loss of production shouldn't affect supplies to consumers,'' says a Toyota spokesman, ``because we have a large inventory that can plug the gap. However, there may be a short delay in getting the most popular four-wheel-drive vehicles.''

Similarly, a spokesman for computermaker NEC said it was not expecting any major disruption to semiconducter supplies, despite the fact that the world's third-largest silicon-wafer manufacturer, Kobe-based Sumitomo Sitix Corporation, had to shut down production. Sumitomo Sitix's Kobe factory accounts for half the company's output.

``Sumitomo Sitix is one of our suppliers,'' says a NEC spokesman, ``but we were quickly able to switch to other sources.''

Economist Robert Feldman of Salomon Brothers Asia Ltd. says the effect of the quake on manufacturing will be limited. ``Kobe is a trading city, not a production city,'' he says. ``Also, most of the factories in the city were not badly damaged. But damage to the infrastructure and the port means distribution has been disrupted.''

Like many other economists, Mr. Feldman believes Japan can cope with the disruption and even the cost of the earthquake damage - estimated at about $60 billion. ``That represents just half of the growth of the Japanese economy for this year,'' he says. ``Put it into proportion: Japan can pay for the quake out of the increase in its foreign reserves for fiscal 1993 alone.''

In fact, many economists are anticipating a miniboom for Japan, as contractors start work on rebuilding and manufacturers begin to replace goods lost in the quake. The cost will be mainly born by the government (or, rather, the taxpayer) in the form of bonds.

The construction companies, most of whom saw their shares buck the trend of the falling stock market, are among the few institutions to come out well from the Kobe disaster.

They shared their good fortune with a more unlikely group of beneficiaries - Kobe's famous crime syndicate, the Yamaguchi-gumi. From day one, the 22,000-strong yakuza gang began distributing aid to earthquake victims while the government and bureaucracy dithered in Tokyo. ``Murayama was far too slow,'' complained one man in the line waiting for a handout from the gang. ``But the Yamaguchi-gumi are showing extreme kindness.''

For a crime syndicate suffering under Japan's recently-enacted antigang legislation, the earthquake was a public-relations dream. The Yamaguchi-gumi now seems to draw more public sympathy and support than elected officials. Further proof that this earthquake has shaken not only the city of Kobe, but Japanese society as a whole.

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