Japan's Pricey Public Works

Japanese infrastructure is in far better shape than that of the U.S., but the country pays an exorbitant price due to pork barrel spending and corruption

by Ian Rowley

For first-time visitors to Japan, it soon becomes apparent this is a country with a rare talent for big infrastructure projects. Its roads, although congested in urban areas, are nearly always billiard-table smooth. Japan's vast rail network, including the bullet trains that criss-cross the country at speeds of up to 200 miles per hour, is a source of national pride, racking up 22 billion passenger-journeys every year. It is among the safest in the world.

And its spectacular bridges, whether the Rainbow Bridge in Tokyo or the Akashi-Kaikyo Bridge, the world's longest suspension bridge, linking the main island of Honshu to Shikoku, are major feats of civil engineering. And all this has been achieved in a country regularly hit by earthquakes, typhoons, and tidal waves.

You'd think Japan could offer some valuable lessons to the U.S., where a fatal bridge collapse in Minneapolis and a steam pipe explosion in Manhattan have cast an unflattering light on the States. Yet as a starting point for how other countries should approach their infrastructure investments, Japan is hardly a good example. For all the glittering bridges and high-speed trains, investment in big projects in Japan has long been poorly directed, costly, and riddled with the worst excesses of pork barrel politics.

Signs of Serious Corruption

"Japan's infrastructure gives you a very mixed impression," says Jun Saito, assistant professor in the government department at Franklin & Marshall College in Lancaster, Pa., and a former member of Japan's House of Representatives. Saito points out that while finished projects are nearly always impressive and well-maintained, there aren't nearly enough of them relative to the huge bill footed by the taxpayer. "The roads are smooth, but the supply is bad, despite a remarkable spending record, which is an indication of serious corruption," he says, adding "sewage systems, parks, and other kinds of infrastructure suggest similar patterns."

For sure, no one could accuse Japan's government authorities of skimping on large public works projects. Despite cutbacks in recent years, Japan spends about 4.5% of gross domestic product on public fixed capital formation. That's down from a peak of more than 10% in the late 1970s but is still significantly higher than other developed economies. In the U.S. and Britain, for example, equivalent spending is around 2.5% and 2% of GDP, respectively.

Japan's huge spending on public infrastructure is also an important factor explaining why its government debt, despite a solid economy and government cutbacks, is expected to weigh in at 148% of GDP at the end of the current fiscal year. That compares unfavorably with all other major developed economies, such as the U.S. (62%) and Britain (49%).

Take The Train

The high price doesn't fall solely on taxpayers. End users also pay a high price. For example, while Japan has numerous well-appointed airports, air travel is still heavily regulated and dominated by two major players, Japan Airlines and All Nippon Airlines. Budget airlines like those that crisscross Europe have yet to make serious inroads and even short flights on busy routes remain expensive.

Car drivers are arguably hit the hardest, though, particularly if they plan on using highways. Toll fees are extraordinarily high. For example, tolls for the journey by car from Tokyo to Hakata in the west (a trip of around 600 miles) run $200. An excursion from Tokyo to a ski resort in Yuzawa, Niigata, barely an hour's drive, once on the highway sets one back $40.