
Regional Revitalization and the Market: An Interview with Kinoshita Hitoshi
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Demographics as a Red Herring
INTERVIEWER The Japan Policy Council [chaired by Masuda Hiroya] earlier published a rather shocking report predicting that close to half of Japan’s 1,800 regional cities are in danger of extinction by the year 2040. What are your thoughts on the Masuda report?
KINOSHITA The report said that by 2040 many of Japan’s municipalities will be depopulated to the point where they may no longer be viable as municipalities. This was sensationally trumpeted as “the death of the regions,” which has led to a lot of misunderstanding.
Of course, regional communities don’t just vanish overnight. The population dwindles, but people continue to live there. The problem is that, for many communities, the old style of local government and the one-size-fits-all system of local administration are no longer sustainable given today’s demographic and fiscal realities. If that’s the case, then we need to implement some basic organizational and administrative reforms.
The prefecture system itself dates all the way back to the Meiji era. It time to talk seriously about shifting to a state system. There’s still plenty of room for merger and consolidation of municipalities. And many administrative functions could be consolidated and streamlined. Some of the functions being carried out separately by lots of little municipal governments could be accomplished by a single regional call center. There are countless ways to make local government more efficient.
But no one is talking about reducing the cost of government. All of the discussion is focused on the population issue, which is a red herring. The fact is that Japan’s population is in decline, and there’s no way to reverse that trend over the next few decades. We have to accept the fact and figure out a way of keeping local communities viable despite their declining population.
It seems to me that local governments should be coming to grips with the imminent danger of fiscal collapse instead of worrying about population projections for 2040. Quite a few communities are in serious trouble right now. But instead of grappling with spending issues, they’re shifting the blame to things like birthrate and migration, as if we could simply reverse those trends and solve all their problems.
Toward a Philosophy of Self-Reliance
A basic prerequisite for regional revitalization is fiscal sustainability at the local level. Local governments have to shift to an independent, fiscally responsible footing instead of just hatching new plans for using up all the funds they get from the central government. They need to start scrutinizing every public investment they make from the standpoint of economic returns.
Instead, they’re talking about solving their problems by getting young people to move out from the Tokyo metropolitan area or by transferring some of Tokyo’s urban functions to regional cities. It’s all about “give us some of what Tokyo’s got.” This is very divisive, and it’s not in the nation’s best interest, because if you take away Tokyo’s assets and resources, it will lose out to other East Asian cities. It’s time for regional communities to start figuring out how to make the most of their own assets instead of trying to be like Tokyo.
This means setting priorities and focusing on them. A regional community has to decide what it can and can’t do. It can’t be all things to all people, like a big city. This is one of the lessons to be learned from the Ogal project. The mayor opened up the door to a whole new approach when he decided that the municipal government couldn’t afford any more construction projects. Other successful projects were made possible by a decision to invest in renovation and redevelopment of existing assets instead of building big new developments in their place. Moving forward, each region will need to develop its own unique business model leveraging the public and private assets it’s already accumulated.
Ogal Plaza in Shiwa, Iwate Prefecture.
The central government’s budget for this fiscal year includes new subsidies for regional revitalization. Unless local governments use those funds differently than they have in the past, they’re not going to attract new business or investment over the long run. The key is to come up with money-making programs that can support themselves without depending on subsidies. Regional revitalization isn’t about taking what belongs to others. It’s about learning to stand on one’s own two feet.
(Originally published in Japanese on May 7, 2015. Banner photo: Ogal Plaza in Shiwa, Iwate Prefecture, a hybrid public-private facility that offers a promising new model for regional revitalization. Photo courtesy of Kinoshita Hitoshi, Area Innovation Alliance.)