Asia Analysis

Leo Lewis of The Times today on Japanese media deregulation:

""84% support standard prices for newspapers" bellowed the front page of a major Japanese newspaper yesterday, before plunging triumphantly into a drawn-out explanation of why monopolies are so important.

"You see, there are some who might think that Japanese newspapers should take their fourth estatey duties seriously.This is, after all, a country where special interest groups, crime syndicates, poorly regulated businesses and authority-ravenous bureacrats have a somewhat chequered relationship with unchecked power and could often do with the odd word of criticism from the ladies and gentlemen of the press."

Such observations could hardly have come at a more prescient time. Had the media in Japan been a little more scrupulous about the hard facts in the 1990's, instead of towing the national line and pandering to the egos of Chief Executives, perhaps it might have unearthed some of the dubious accounting methods their organisations were employing rather earlier on and prevented the economic debacle from which the country is only just beginning to recover.

One of the central issues with development of the Asian economies is that the culture - unlike the United States or Europe - does not encourage criticism of its superiors, which tends to lead to an inefficient regulatory and auditing process: even when such measures are required by law, in practice they are often half-hearted. This is one argument for the centralisation of Beijing's power that few in the western world fully understand: when officials are sent from the highest possible post to regulate ethical practice, the extent of the government's authority often gives such officials the incentive to dig properly into the areas where they would never do so otherwise. Take away the centralisation of power, and corporate CEO's tend to get pretty much what they want, how they want it. This is exactly what happened to Japan in the last decade after she embraced American culture so whole-heartedly in the 1980's.

The challenge now the Far Eastern economy is booming again is to keep this essential centralisation of power in tact whilest supporting competitive anti-trust practices. To do that, governments need to start thinking like economists, and not just as politicians.