Postal Privatization: Hellagood or Hogwash?

[Big Booger]

Does anyone know what exactly is going on with the Lower-house? I am not particularly political, but I do not know what the "dissolving" issue entails.
Please educate this Random fool.

Every position is now up for grabs. They have to re-"apply" and run for elections. Though any member who didn't vote in favor of privatization and were a member of the LDP, at least according to last night's news, is now in jeopardy of losing LDP support due to Koizumi's staunch support of privatization.

Koizumi is pushing this hard, and he feels if a member of his own party *regardless of their personal decision* voted against privatization, they should no longer garner support from the LDP.

This may lead to a party split and the formation of a party to challenge the LDP.. at least that was some of the hyperbole being spewed from the mouths of several of the LDP members who voted down in the lower house on the privatization issue.

The above is my take on it.. I may be totally off.. it's a bit confusing to me as well.

[Mulboyne]

You are saying a private company is a safer bet than a public one?

Neither is intrinsically safer. The better question is which sector is better left in charge and societies will make different choices. Japan Highway was privatized not so much because public ownership was wrong but that the institution had become corrupt and insolvent. JNR was privatized because it had run up enormous debts. As a bank, Japan Post is not particularly efficient. It administers the tax-exempt maruyu accounts and, as of the last audit, had "lost" roughly $300 million although that is not down to corruption. The institution encourages political corruption, however, which is a heavy burden on the economy.

Japanese were likewise happy to use private institutions until they started to fail spectacularly from the mid-nineties onwards.

That is really the point. The financial system, of which the Post Office is a huge part, was very badly managed and overregulated. A more robust private sector demands a complete overhaul which requires a reassement of Japan Post since it throws the whole market off-balance through its sheer size. People tend to respond to incentives and most of the incentives are currently weighted towards the Post Office. Put that together with a healthy dose of understandable caution on the part of depositors and you end up crowding out the private sector.

so a full rehabilitation of the economy requires greater efficiency at, and trust in, private banks.

How can you trust a private bank that failed a couple of years ago? And all the while the public postal savings service stroked right along without fail?

The same way the rest of the world does. The same way US depositors did after the Savings and Loan crisis left the economy with a bill for $150 billion. No-one saw the need for the creation of a massive public bank to protect depositors.

In the US private banks are guaranteed by the FDIC...

Federal deposit insurance protects the first $100000 of deposits that are payable in the United States.

Japan's deposit insurance scheme, even after being scaled back from March this year, is more comprehensive than the US scheme, covering non-interest bearing accounts in their entirety and time deposits up to 10 million yen including interest. Funnily enough, it was the Carter administration's decision to raise deposit insurance from $40,000 to $100,000 that was a factor in the S&L crisis.

If the experience of other countries is any guide, the privatization of Japan Post won't split up the spoils between existing private companies. ING Group was created out of a merger of insurer Nationale-Nederlanden and the NMB Postbank Group. It is now one of the world's largest private financial institutions.

[Mulboyne]

Morgan Stanley's Feldman has a take on the upcoming election here. He's a bit depressed because he thought Koizumi would win the vote.

Conclusion

Rejection of the bills implies a long period of policy gridlock. This gridlock will occur regardless of who wins any Lower House election.

[Big Booger]

Morgan Stanley's Feldman has a take on the upcoming election here. He's a bit depressed because he thought Koizumi would win the vote.

Conclusion

Rejection of the bills implies a long period of policy gridlock. This gridlock will occur regardless of who wins any Lower House election.

I think it will shake up the political and economic system of Japan. I am curious to see how it plays out.

[Somerandomgaijin]

Thank you.

Does anyone think Koizumi is retalliating against those who thwarted him? From the news broadcast, one politician said he knew the day before the vote; that the bill wouldn't make it through. If the majority were against Koizumi, it would seem like what he did was justifiable revenge.
(I am over my head, and taking a leap of faith on this one!)
Just a thought.
It will indeed be interesting to see how this plays out.



Random

[Mulboyne]

Koizumi is undoubtedly retaliating. He hoped the LDP members would be more fearful of an election than post office privatization but he was mistaken. The hope for anti-reform elements is that they can delay any reform measure long enough for the economy to show more signs of recovery. Regardless of the composition of the new Lower House, any reform bill still has to pass the same Upper House since Koizumi has no power to dissolve the second chamber.

Koizumi is hoping for a mandate from the election for his vision of the LDP and his candidates. Since the next Upper House elections are in 2007, should he win, there could be a stand-off for two years. Unless some of the LDP members who voted down the bill calculate that they risk losing power at their next election and decide to change their affiliations.

The Japanese media groups will have an interesting time over the next month. This election is not the LDP vs the DPJ but LDP vs LDP vs DPJ with Komeito buzzing around the edges so it will be fascinating to see how they frame their editorials and commentaries.

[canman]

What I am really interested to see is how the members who supported Mr. Koizumi will do at home in places like Aomori, where I live. I think that some of these rural prefectures are a little worried about privatization and the after effects, so it will be interesting to see how people vote. Here we have four ridings and of course all four of them are LDP, but I think if Minshuto cranks up the fear factor and threatens the people that a pricate post office will mean lose of serivces and even some closings, it could make some of the races interesting.
On the other hand, what seems like a real conflict, is that Minshuto always calls themselves the reformers. Well at least this time Koizumi can stick that in their face and ask them whey they didn't support his reforms. Of course we all know why, they wanted to bring down the gov't.
I just hope that we don't go back to the mid 90's where there were so many small and powerless political parties. I thought that finally things looked like they were evolving into a two or three party system, but we may be headed back to the old style.

[Taro Toporific]

Japan's Post Offices: Full-Service Political Battlefields
Aug 29 - New York Times
JOETSU, Japan - Koichi Nakashima is the fourth generation of his family to own and run the post office in Maki, a village deep in the mountains near here on Japan's rural west coast and a battleground in the general election in September.
As his forefathers did, Mr. Nakashima, 59, handles the villagers' mail and savings. His workers will even collect money and packages if villagers are too busy to visit the post office. "We know each other and they trust us," Mr. Nakashima said....
...."This was Tanaka's heritage. It is akin to Socialism. Japan is the only Socialist country that worked, it's sometimes said. But Koizumi says it's no longer working and that's why he's serious about privatizing it."

[Big Booger]

"American efficiency has its merits," said Mr. Hinode, the special postmaster. "But I wonder if it is necessary to introduce it to such an extent that we'll end up losing our Japanese culture.'"

So basically he is saying Japanese culture is inefficient... and they should preserve it... WHy? LOL

[Tsuru]

Privatization=degradation of customer service. Simple as that. Not to mention rising prices... what good is privatization when there is no competition? It leads to monopolies!

I've seen it before so many times, and I imagine Japan is no different.

The privatization of the Dutch postal service, telecom and railway companies were fiascos for all of the reasons I explained above... rising prices, monopolization due to lack of competition, degrading services. The only people who profit in the end are the managements of the new incorporated companies and the government. The customer always gets the shit end of the stick.

[dimwit]

If the experience of other countries is any guide, the privatization of Japan Post won't split up the spoils between existing private companies. ING Group was created out of a merger of insurer Nationale-Nederlanden and the NMB Postbank Group. It is now one of the world's largest private financial institutions.

I really appreciate your analysis but I really don't understand what is at stake for the pro-privatization anti-privatization LDP members. I doubt that in the byzantine world of LDP politics things are being done solely for the good of the country, so what do the pro-privatization sharks get out it all? Also, what are the anti-privatization barracudas getting in terms of money or votes from the post offices. Personally, I rather doubt that the opinions of most postmasters make any difference in vote in all but the tiniest of communities.

[Mulboyne]

Asahi: Exec heading Japan Post privatization seeks removal of 10-million-yen cap on savings

Yoshifumi Nishikawa, head of a new company set up to organize the privatization of Japan Post, said he would lobby the government to remove its 10-million-yen cap on postal deposits...Nishikawa, former president of Sumitomo Mitsui Banking Corp., also said he will aim to maintain the current level of funds on deposit, which are collected through postal savings, so as to protect jobs once Japan Post is privatized. His strategy is at odds with government forecasts that suggest the scale of postal savings will shrink. This raises the intriguing possibility that Japan Post may move in a totally different direction from the one the government is pursuing through its privatization of the public corporation, observers said...more...

[L S]

Japan Post is privatized on Monday

From IHT:
Tiny Shirogane post office in a quiet Tokyo neighborhood, with just three clerks and one ATM, might seem far removed from the world of global finance.
But when Japan Post is privatized on Monday, the Shirogane office will become part of the world's biggest commercial bank — with assets of 349.82 trillion yen (US$3.03 trillion, €2.14 trillion) — in a move intended to inject competition into Japan's banking sector...
...Some say far from encouraging open competition, Japan Post will be allowed to encroach on rivals by introducing new investment services and new insurance products before a more level playing field is created.
Another issue is whether foreign firms will have equal footing to sell investment products through the newly privatized bank. So far, they have been granted only a minor role, with Goldman Sachs Asset Management the only foreign firm chosen from a dozen that applied to sell their funds.
Some analysts say the mammoth organization — largely lacking expertise in more sophisticated investments — could struggle to stay profitable. That raises the risk the bank could start selling off its huge government bond holdings, causing a hike in yield and ultimately adding to the government's debt payments.... <Full Article>

[Buraku]

[FG Lurker]

Japan: No Sale of Postal Shares
New York Times, December 4, 2009

Japan passed a law on Friday to stop the privatization of the nation's huge postal service, a symbolic move to roll back the small-government policies of former Prime Minister Junichiro Koizumi earlier this decade. The law halts the planned sale of shares of the postal service, which is also one of the world's largest banks, with $3.4 trillion in assets. The Democratic Party, whose election victory last summer ended a half-century of Liberal Democratic rule, campaigned on canceling the privatization plan, which was widely seen here as depriving Japan's rural areas of banking services, hastening their economic decline.

(Full Story)

Very short blurb so I just posted the whole thing.

While I am generally a small-government low-tax kinda guy I don't think that postal services should be privatized. While one may not consider it an "essential service" it is certainly one of the core services needed for a country & economy to function properly.

[Coligny]

While I am generally a small-government low-tax kinda guy I don't think that postal services should be privatized. While one may not consider it an "essential service" it is certainly one of the core services needed for a country & economy to function properly.

I think here... the top five service needed are

Water (big cities, i'm sure countryside like me we can manage with our wells)
Electricity (again, for big cities... here we got power generators ready to go online)
Trash Pick Up (same... countryside can do without ask mum-inlaw she's the improvisation queen)
postal service... (maybe yamato+combini can come up with something)

maybe police... (it's to fill the 5th spot...)

[FG Lurker]

It's difficult to make a list and it's easy to see how government gets very big very fast. I'd definitely want to include fire services in there, and a city without police would end up in a mess rather quickly I have no doubt.

The current Bush Super-Recession has also demonstrated well that a certain level of financial market oversight is not a bad thing either.

Then you get to things like roads, sewers, water treatment (which you mentioned), defense, education, health care... Beyond that there are things like parks and libraries which most people think are a good idea too.

No one likes high taxes (I sure as hell don't), but a total lack of public services isn't going to help a country move forward either...

[Coligny]

Yeah, my list is indeed pretty bad. But it's more a everyday life -without too much forward thinking- list.

[Taro Toporific]

While I am generally a small-government low-tax kinda guy I don't think that postal services should be privatized...

I vehemently oppose privatization of the Japanese Post since it is perhaps the ONLY Japanese government service that's worth a shit.

[FG Lurker]

I vehemently oppose privatization of the Japanese Post since it is perhaps the ONLY Japanese government service that's worth a shit.

Maybe that's why they want to privatize it -- it makes the rest of the gov't look bad!

[FG Lurker]

Plans to reorganize Japan Post, boost gov't involvement unveiled
Mainichi Daily News, December 31, 2009

A government draft of new plans to convert the Japan Post group into a three-company system and boost the government's involvement in Japan's postal system has been unveiled.

Under the proposal, Japan Post Holdings, Japan Post Service Co. and Japan Post Network will be grouped into one general new company, reducing the current five-company system to three.

The new company will hold more than one-third of the shares of both Japan Post Bank and Japan Post Insurance, giving it the right of veto on important issues at shareholders meetings. The government will possess "over one-third or even over half" of the shares of the new general company, and its involvement in the postal system will become stronger.

(Full Story)

Looks good on the surface, will have to wait and see how it unfolds. Probably better than total privatization though.