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Wednesday, February 4, 2009

World

Japan's Road to Deep Deficit Is Paved With Public Works

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Published: March 1, 1997

When the national and local governments built a $4 million ''agricultural airport'' in this small town in northern Japan, they said it would allow local farmers to get higher prices for their vegetables by flying them to market while still fresh instead of sending them by truck, a three-day trip.

What the officials overlooked was that each flight would cost more than $4,000 but could carry no more than $3,000 in vegetables. Moreover, since the planes are too small to make it all the way to Tokyo or Osaka, trucks are sometimes still needed for part of the journey, and shipping time is cut by only one day. Last year, only 10 flights took off from the airport, and taxpayers are wondering if their money was well spent.

''It may be good for a children's playground,'' said Kayoko Omiyo, the wife of a farmer. The town government is indeed thinking of turning the runway over for in-line skating, and cross-country skiing in the winter, to make greater use of the site.

With their nation facing a severe budget deficit, people in Japan are starting to object to the spending for public works projects that have played an outsized role in Japan's economy and political system. The questioning is part of a broader reassessment of public spending policy and of Japan's once-admired bureaucracy, both of which are now being seen as riddled with waste and corruption.

Japan spends more on public construction, about $300 billion, than the Pentagon spends on defense. Critics call Japan ''doken kokka,'' the ''construction state,'' a reference not only to the magnitude of the activity but also to the cozy relationships between contractors and Government officials that keeps pork-barrel projects coming. Public works have also long been a sore point in trade with the United States, as American companies seeking a share of the huge projects have complained of a bidding system that locks them out of contracts.

''The construction state is in some respects akin to the military-industrial complex in cold-war America (or the Soviet Union), sucking in the country's wealth, consuming it inefficiently, growing like a cancer and bequeathing both fiscal crisis and environmental devastation,'' Gavan McCormack, a professor of Japanese history at Australia National University, wrote in ''The Emptiness of Japanese Affluence,'' a recent book.

In the last few years, public works spending has been stepped up even more to stimulate a languid economy. Everywhere you look, roads are being paved or dug up, rivers dammed, bays filled to make new land, and domed arenas erected. Projects range from the $7.6 billion Akashi Straits Bridge, which is being built near Kobe and which will be the longest bridge in the world, to the art museum for the small town of Ono, completed in 1993, which displays only reproductions because there was no money to buy art.

The statistics alone are staggering. Japan uses as much cement each year as the United States, despite having only half the population and only 4 percent of the land area. Japan's construction industry, with 500,000 companies and 6.6 million workers, accounts for 10 percent of the country's employment compared with 5 to 7 percent in other advanced nations. Public works spending in Japan amounts to about 6.6 percent of gross domestic product compared with 1.6 percent in the United States and 2 to 3 percent for Western European nations, according to the Organization for Economic Cooperation and Development.

But now the Cabinet has formed a task force to cut public construction expenses. Citizens have begun to question Government extravagance in public buildings. And environmentalists have started fighting the construction binge that has left only 3 of Japan's 113 major rivers flowing freely and only 45 percent of the coastline of the four main islands in a natural state.

The press is having a field day digging up white elephants, like the pier at Fukui, a port to which ships rarely come, that is called a ''10 billion yen fishing hole'' by local residents. The pier, sitting empty except for fishermen, actually cost 30 billion yen, or $250 million.