A Metropolitan Government for Osaka?

Ambitious proposals for a major shakeup in local government administration have put my hometown of Osaka in the national spotlight recently. It is the first time Osaka has thrown down a challenge like this for many years.

Mayoral elections for the city of Osaka will be held on November 27.(*1) One of the candidates is Hashimoto Tōru, who resigned as governor of Osaka Prefecture in order to run. Whether Hashimoto wins or loses is not so important. What matters more is the stir he has created, and the reasons behind it.

Osaka Awakes

Hashimoto Tōru canvassing for support on the streets of Osaka in the run-up to the city’s mayoral elections. (Photo: Sankei Shimbun)

Hashimoto is running on a pledge to change the way Osaka is governed. He wants to establish a new metropolitan government that would put Osaka on the same administrative level as Tokyo.(*2) He also wants to get rid of the anomalous situation in which Osaka is run both as a prefecture (Osaka-fu, of which Hashimoto was governor until he resigned at the end of October) and as a city (Osaka-shi, of which he is running for mayor at the end of this month).

The city of Osaka represents fully half of the total income of Osaka prefecture. Hashimoto’s aim is to merge city and prefecture and reorganize them into a to (metropolis) like Tokyo, under the authority of a single governor. You could call it a takeover bid. Not surprisingly, the local political establishment has reacted with horror. The mass media have piled on too, kicking up a fuss with a series of stories about so-called scandals involving various members of Hashimoto’s family. Despite this opposition from vested interest groups, Hashimoto has received passionate support from ordinary voters.

Hashimoto is not a career politician but a lawyer who rose to prominence as a TV personality. With support from local business figures and media backing, he became the youngest of Japan’s 47 governors when he won the Osaka gubernatorial elections in January 2008 at the age of just 38. In terms of political stance, he is a hawkish liberal economist. His Spartan budgets and stringent austerity measures have earned him the enmity of local government officials and widespread support from regular voters.

And now he has come out in favor of reorganizing Osaka into a single metropolitan prefecture, similar to Tokyo. His campaign claims that administering the region under a single jurisdiction will boost efficiency, and many local residents are hopeful that Hashimoto’s aggressive budget slashing will cut some of the flab from the city government, which has a reputation as even more of a bureaucrats’ paradise than the prefectural administration. There are also hints that Hashimoto has an eye on laying the foundations for greater decentralization of power to the regions in the future.

In fact, local governments in Japan have very little limited fiscal autonomy, despite being known as “autonomous bodies” (jichitai) in Japanese. They have only limited rights to raise taxes or issue debt, and depend heavily on the national government for support. At present, local governments have no executive power, and the national government lacks responsibility. In an interview last year, Hashimoto suggested that this was the reason for Japan’s current malaise. “I think part of the reason why the country is in such a mess is this lack of clarity about who is responsible for what. Take the huge mountains of debt, for example—it’s impossible to know whether the blame lies with the national government or local authorities.” By protesting against the present system, in which the regions are under the thumb of the national government, Hashimoto has thrown down the gauntlet to Tokyo—or at least that is how it looks to the people of Osaka. Similar concepts have been mooted in other regions but, so far as I am aware, only in Osaka have voters become so enthusiastic about the idea. The reasons are to be found in Osaka’s unique place in Japanese history.

The Osaka Dream and the Climate of Capitalism

Hard as it might be to imagine from its reduced circumstances today, Osaka was the engine room of the Japanese economy as recently as 70 years ago. Historically speaking, the area around Osaka Bay was one of the most important early centers of Japanese civilization, and the original homeland of the Yamato state that eventually came to rule all of Japan. The modern city of Osaka dates back to the late sixteenth century, when a city grew up around the port that served the ancient capitals of Nara and Kyoto. The city soon developed into one of the most important urban centers in Japan—the hub of the nation’s distribution and transportation network, its biggest financial powerhouse, a center of capital, and the birthplace of Japanese manufacturing. Even after the capital was moved to Tokyo following the Meiji Restoration in 1868, Osaka maintained its position as an economic powerhouse and was the birthplace of many of the companies that defined Japan’s leap to modernization.

As far back as the feudal Edo period, a climate conducive to modern capitalism flourished in Osaka. Although Osaka was under the direct control of the shogunal government, there was basic freedom of movement for people, goods, and money. The city’s inhabitants were more interested in profits than the intricacies of the feudal hierarchy, and the local mercantile culture respected innovation above everything else. In 1730, the world’s first futures market opened at the city’s Dōjima Rice Exchange.

People flocked to Osaka with dreams of success. Here it was possible to start a business from scratch and, with application and talent, make a fortune in a single generation. This was the “Osaka Dream,” familiar to everyone in Japan. The spirit of the city was characterized by staunch self-reliance and independence. Businessmen ranked higher than bureaucrats. It was a place where the sky was the limit, so long as the authorities stayed out of the way.

The fire started to go out of Osaka’s mercantile magic when a centralized wartime economy was introduced around 1940. The prosperous rice markets closed, and the various sectors of Osaka’s thriving economy—finance, manufacturing, and media—came under centralized control. The centralized system continued intact after the war, as individuals and companies congregated in Tokyo, the hub of the administrative system. Financial conglomerates such as Nomura, Sumitomo, and Nippon Life all relocated their head offices to Tokyo, along with major media companies like the Mainichi and Asahi Shimbun newspapers.

There was a major slump in the city’s entrepreneurial spirit. In the 1950s, the city was still producing major innovators like Nakauchi Isao, the man responsible for the distribution revolution, and Andō Momofuku, the inventor of Cup Noodle, which remains one of the most popular snacks in Asia to this day. Since then, as far as I know, the city has not produced any major entrepreneurs. The “Osaka Dream” has become a thing of the past, crushed by the centralization of power and economic control in Tokyo.

Despite its relative decline, Osaka (the prefecture) still has a GDP that outstrips nation states like Switzerland or Sweden. But the region is a mess. It is tempting to see Osaka’s straitened circumstances as a reflection of the loss of drive and vitality of Japan as a whole.

Awakening a Sense of Local Pride

Hashimoto comes from a poor background, and got where he is today by hard work. He is a man who thinks for himself and is not afraid to speak his mind. In this, he is reminiscent of the old-fashioned Osaka personality. Probably this is another reason why he has struck such a chord with the people of Osaka. Of course, the jury is still out on Hashimoto’s standing as a politician. Is he a reformer or demagogue? Quite possibly, the latter. But in the wider context, that is of little significance.

The importance of Hashimoto’s performance is this: He has reminded people in Osaka of what they had lost, and has awoken their sense of local pride and identity. (November 7, 2011)

(Originally written in Japanese.)