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World financial crisis and rebuilding 'public' systems: a view from Japan

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In Brief

‘The magic is over.’

So said French Foreign Minister, Bernard Kouchner, referring to the financial crisis that originated in Wall Street and the battered global standing of the United States.

Under a formula of low interest rates and financial leverage, the US government and investment banks choreographed an asset-inflated housing-bubble boom, enabling Americans to go on a spending free-for-all on the strength of debt.

That alchemy no longer works.

The credit crunch spread from the financial arena to the automotive sector, along with discount stores and government, eventually hitting family finances hard and dragging the global economy into recession.

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Against this backdrop, Americans elected Barack Obama, a Democratic Senator from Illinois, as the country’s first black president.

‘America is a country where everything is possible again,’ said former British Prime Minister Tony Blair of Obama’s victory.

In this historic outcome, Blair surely must have glimpsed the magic of democracy through ‘choice’ by the people.

Turbulent changes have confronted the United States and elsewhere throughout 2008.

Iceland was part of the story. The crisis facing the Big Three U.S. automakers shows that the very foundation on which the auto industry stands, not only in the United States but elsewhere in the world, has been drastically shaken.

Global climate change and the deepening energy crisis are prodding the world to shift from a petroleum-dependent, automobile-based civilization to low-carbon societies: we see the stirrings of this change through efforts like those to promote solar power generation.

In our neighbourhood, China is on a path to becoming a global power, while burdened by its infringements of human rights, media control, income gaps and environmental degradation. Symbolically, a man dubbed ‘the Olympics prisoner’, a former factory worker, was charged with inciting subversion of state power after protesting alleged medical malpractice and calling for ‘human rights, rather than the Olympics’. The Chinese authorities are also working to control and even formulate ‘public opinion’ on the Internet.

Japan and the rest of the world are becoming inseparably and intricately linked. People’s lives and jobs are affected by developments not just in Wall Street, the City of London or Shanghai but in Dubai, Mumbai, Peshawar, Lagos and even in the Arctic.

The global financial crisis will likely further drive Japanese workers, who are increasingly shifting to non-regular positions, as the traditional Japanese employment system flounders, into a situation where workers become little more than drifting, discrete sand particles.

The reality of the ever-liquefying workplace and the condition of the new working poor is exemplified, for example, by a 39-year-old man who asked an NPO for help with only 100 yen in his pocket after having to hop from one piecemeal job to another. A day in the life of a middle-aged freight trucker involves spending 12 straight nights in the vehicle delivering goods for a lower-echelon subcontractor.

What lies at the root of these problems are the fraying ‘public’ systems.

Public infrastructure is coming apart at the seams as we see the many problems in medical care, pension, education and public safety.

Rebuilding the ‘public sector’ is indispensable to reviving capitalism, even though there is no alternative to capitalism but capitalism itself. Making up for deficiencies in the market requires imposing rules of fairness in the market, maintaining jobs for workers and providing stability for societies.

Robust public systems are essential for that purpose.

The first step to realize it is to give the nation an opportunity to choose a clear policy platform and an administration.

The open seams in public systems can also be seen in the weakening functions of debate (analysis, commentary and proposal) on public policies, despite a flood of information.

The challenge in 2009 is to contribute to the debate on the choices that now have to be made.

Yoichi Funabashi is Editor-in-Chief of the Asahi Shimbun, a leading Japanese daily, and one of Japan’s foremost commentators on foreign affairs and public policy.

Adapted from a column in the Asahi Shimbun on 31 December 2008

This is part of the special feature: Reflections on developments in Asia in 2008 and the year ahead

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