Chapter 2. The Economic and Sociologic Reasons Explaining the Structural Impediments in the Japanese Economy

In this chapter, first we point out the reasons that led to the unsustainable level of Japanese gross public debt. Then, we focus on the power struggles between domestic policymakers, bureaucrats, and businessmen in order to understand why it is difficult to reach quick decisions in Japanese political and economic affairs nowadays. After stressing the recent reform of home administration, we examine the reasons that led to the deregulation waves in the domestic banking industry and that finally resulted in the Big Bang of 1996. We also talk about the problem of the privatization of the state-owned postal savings system, because the latter seems to contain the solution to the structural impediments of domestic banking and policy-making bottlenecks. Furthermore, we discuss the shortcomings of the Japanese education and research systems. Then we mention the time bomb looming in the domestic pension and social security system that is deeply linked to the shortcomings of the domestic labor market and its decade-old hiring and promotion practices. Finally, we point to a very important issue on the labor market, namely, the declining work morale of domestic youth.