But the welfare state's imperatives cannot be ignored, and the Japanese will not dismantle that state. So the alternative is to pursue increased revenues from rapid economic growth achieved by sacrificing equity, understood as job security and other entitlements, in the interest of efficiency.
Japan cherishes what Prime Minister Junichiro Koizumi calls, disparagingly, a ``sanctuary'' economy. Also called a ``convoy'' economy, it is one in which many workers enjoy extraordinary job security and benefits. But today, almost one-third of all workers are ``non-regular'' (up from one-fifth in 1990) and have little security and few benefits.
Until the ``lost decade'' of 1990s deflation, Japan seemed to be a rarity, a command economy that worked. But the economy succumbed to the cumulative inefficiencies of government commands. It buckled beneath the ``iron triangle'' of favors-seeking big businesses, the favors-dispensing Liberal Democratic Party, and government bureaucracy. That system produced the ballooning of nonperforming financial assets.
Japan's nominal GDP still is less than it was in 1997; America's GDP has increased more than 50 percent since then. But Japan's economy has been growing since 2002, even though Koizumi, who would be a better member of America's Republican Party than most Republicans are, has cut public works spending -- formerly one of the economy's locomotives -- from 8 percent of GDP to 4 percent.
The Japanese may now re-experience the 1980s -- theirs and America's. Theirs, in a humming economy. America's, in an unpleasant byproduct of that humming -- the super-rich (think of Gordon Gekko in the 1987 movie ``Wall Street'') whose vulgarity and shady dealings shock Japanese sensibilities.
Because of those sensibilities, statements that strike Americans as banalities can startle the Japanese, as when Koizumi told parliament, ``I don't think it's bad that there are social disparities.'' When Abe said, ``It is important to create a society in which losers don't stay losers,'' the news was that Japan, with its centuries of commitment to social harmony, must accept (BEG ITAL)temporary(END ITAL) losers.
About the simultaneous pursuit of equity and efficiency, one official acknowledges that something must give: ``We are chasing two rabbits.'' The rabbits do not run in tandem, so Japan, like other welfare states, must increasingly, if reluctantly, chose efficiency over sanctuary.