Corporate Governance

Japan, the Ministry of Finance, and Bureaucratic Authority (Part 1)

By J. Robert Brown

We include two posts today on a topic that involves governance only tangentially.  Last week, the Upper House refused to approveToshiro Muto as the new Governor of the Bank of Japan.  In the post-war era, it is the first time a candidate for Governor has been rejected by the Diet.  Of course, it is also the first time that a nominee has been submitted when the two chambers of the Diet were controlled by different parties. 

The decision had little to do with Muto's ability.  If anything, reports suggest that he is qualified and consensus oriented in his decision making process.  In many respects, the decision involves a squabble between the Liberal Democratic Party which controls the lower house and the Democratic Party (LDP) which controls the upper house.  But it also represents opposition to the close relationship between the LDP and the Ministry of Finance.  It is this relationship that we discuss in a couple of posts.   For more detail on the subject, take a look at my book on the Ministry of Finance.  It can be foundhere.

Full post as published by The Race to the Bottom on March 19, 2008 (boomark / email).