It’s a few weeks old, but this interview with MOF Budget Examiner Makoto Nakagawa is interesting enough for me to translate it in full. Budget examiners in Japan’s postwar bureaucracy historically played a significant role in determining the budgets of the other ministries as they were (and continue to be) the people who investigate each ministry’s budget applications and recommend whether to approve them or not. The struggle for control over budgeting shifted slightly in favor of the Cabinet during the Koizumi years as the PM used the Council for Economic and Fiscal Policy to make numerical budgetary targets for each ministry before they were approved by the MOF. However, nowadays it’s likely that Abe will lose the budgetary process to the bureaucrats once again since he failed to make a bold statement with the CEFP’s general policy outline. Anyway, let’s see just what kind of person holds Japan’s purse strings:
People Talking: MOF Budget Examiner Makoto Nakagawa (age 46): “I want to consider the costs and benefits for Japan”
He joined the Ministry of Finance in 1983 after graduating from Tokyo University’s Faculty of Law. His study abroad, the preferred course for new career officials, was at Cambridge. He had 25 compatriots in his inaugural class. It’s been 23 years since he entered the ministry, but not a single person has left. This is reportedly quite rare.
The MOF’s Budget Bureau, which investigates the nation’s budget distribution, has a Director General, under which are 3 Deputy Director Generals. The Deputy Director Generals, nicknamed “division commanders,” in turn manage 3 Budget Examiners each. The 9 total Budget Examiners are each put in charge of their own ministries and agencies, and Nakagawa’s is the Ministry of Education, Culture, Sports, Science and Technology (MEXT). He handles a total of 5 trillion yen: 4 trillion for education and 1 trillion for science.
Nakagawa is something of a regimental commander within the Budget Bureau, but his gaze upon MEXT is profound. The chaotic Budget Examiners’ Office is located on the first floor of the MOF Building. Here is where a certain Bureau Director General from MEXT paid a visit.
30 minutes after the usual chit-chat that comes after a first meeting, Nakagawa let loose a line very typical of an elite MOF official:
“As a Budget Examiner, you need the feeling that you’re the commander in chief of the combined squadron that is MEXT. That is how I take command. I always have that attitude.” He goes on, prefacing his statement by saying, “If I may be irreverent…” continuing: “I figure out where the people are in MEXT who can bring forward new ideas. Creating relationships with people like that is the best part of putting together the budget.”
Depending on how you take that, that’s a rather bold statement. He doesn’t just speak, he gets his body moving. To get to know people, he brings bottles of sake to MEXT, and makes visits to the field of education and science in earnest. Nakagawa’s footwork is nimble, as befits a man who has stood atop Kilimanjaro, Mont Blanc, and even Mt. Everest.
His father was an employee of New Japan Steel Co. who was involved with the workings of a steel plant in Usiminas, Brazil. From age 3-7 he lived in a village 1,000km away from Rio de Janeiro and acquired survival instincts as a child.
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Nakagawa had the principle of being on the scene drilled into him by former Finance Minister Masajuro Shiokawa. How is the budget being used? Is there any waste? He has the principles of “Shiokawa-ism” firmly in mind that people at the Budget Bureau should not just give the money away, but afterward strictly follow up on it. So, what are the key points of contention in the budget process?
“You need to be your own antithesis toward the side demanding the money. The key point, I think, is how you form that position.”
To that end, he raises his antenna high and collects information. Nakagawa somehow found time to take a business trip to Kyoto. He consulted with Daisaku Kadokawa (Kyoto’s Superintendent of Schools) and visited the Kyoto National Museum. The Museum is seeking to reconstruct its building.
“When negotiating with ministers and vice ministers [political appointees], a Budget Examiner can’t do anything if he doesn’t know what’s happening on the scene.” He has indifferently laid his cards on the table, but as you may know, both MEXT Minister Bunmei Ibuki and Vice Minister Yasuko Ikenobo are from Kyoto. This is a case of the commander directly spying on enemy territory.
There is no end in sight to incidents of misuse of research funds among scientists. Nakagawa worries that this is a “deep-rooted problem.” Japan has not been stingy enough in providing research funds. We were the envy of the world, but our management was unacceptable lazy.
Maybe there are scientists who just can’t use the enormous amount of research funds they receive. When asked that question, Nakagawa replied, “I absolutely think that is the case,” with an emphasis on “absolutely.” It looks as if he has a substantial amount of distrust. Are the funds being distributed properly, and are functions to evaluate the results functioning properly? Nakagawa’s orders are unforgiving, like a sponsor that won’t shut up.
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After about an hour into the interview, Nakagawa said something out of the ordinary. He said he feels there are limits to the Budget Bureau’s work. Those don’t sound like the words of someone who likens Budget Examiners to the commander in chief of a combined squadron. It takes courage to say such a sensitive thing while the tape recorder is rolling, even if you’re not a bureaucrat.
Is he considering making the move into politics? He mentions that he has been approached indirectly by a certain political party.
“Since I know my wife is against it, I have never considered it seriously. If I say I want to run for election, I’ll be threatened with a letter of divorce.”
Azusa Hiraoka, an agriculture and forestry bureaucrat, placed his son Yukio Mishima in the Ministry of Finance because he was attuned to MOF bureaucrat’s dominance. The MOF all but equals the Budget Bureau. Even after administrative reforms in 1998 stripped MOF of its financial regulatory powers (and changed its Japanese name from okura-sho to zaimu-sho) this has not changed. So why does he feel limitations?
“There is no more interesting work for studying policy or getting to know the people involved with it than working at the Budget Bureau. However, There are areas where the skills of Budget Examiners are not all that great.”
There certainly do seem to be a lot of restrictions: the hurdles of politics and the bureaucracy. Drafting the budget is a job that requires perseverance, as the parts are fitted together one at a time in a decided framework, much like a jigsaw puzzle. Nakagawa has been involved with the budget process for 9 years, including his 5 years as a unit chief.
As a unit chief in his 30s, he handed around 17 trillion yen as the person in charge of the entire Social Insurance Agency. That said, if he stepped outside the ministry building, a 5000 yen drink bill is even more serious. This enormous gap has not changed since then. Since he is a social person, he can never have enough spending money. But Budget Examiners do not receive entertainment allowances. But of course, this is not a reason he feels a limitations in the Budget Bureau.
“I feel like higher standards of individual skills are required for a job where you have to consider the costs and benefits to Japan while looking at various economic events.”
It seems as if he has recalled his earlier days working for the IMF.
(article: Shinzo Oshima)
This is a really interesting article since these powerful but mid-career bureaucrats very rarely make media appearances (as this blogger points out and as far as I can tell). Of course, this is glowing coverage, and doesn’t really give off much of a journalist’s “skeptical attitude.”
The Budget Examiner is an elite position in the MOF, and former Examiners have gone on to become very influential leaders of Japan or a life in politics, such as one of the shining stars in the new crop of “Koizumi Children” Lower House Diet members, Satsuki Katayama.
But there are a lot of issues mentioned in this interview that I feel need further explanation. I’ll keep going with this in some future posts, but if you want to take a look at the English and Japanese sources that I’ve found so far, I’ll post them below:
Morgan Stanley’s Alan Feldman complaining about the ineffective financial regulatory regime in Japan and the whack-a-mole approach to dealing with scandals.
My father who just died last year was an employee of New Nippon Steel,新日本製鐵
only he was sent to New York.I think I missed the opportunity for”Survival skills”lessons.