The Railway Policy Debate in Japan and Its Domination by Old Debt

Studies of the 1987 division and privatization of the Japan National Railways Public Corp. show increased internal and allocative efficiency. However, 10 years after the winding up of JNR, the policy debate over the future of the former government railway is dominated not by these factors, nor even by the growing threat of intermodal competition, but by what appears to be essentially a book-keeping problem in the national budget accounts; the method of writing off the remains of the deficits accumulated by JNR in its loss-making years, from fiscal 1964 to 1986. The lack of decision concerning the disposal of the debt remaining on the books of the JNR Settlement Corp. is threatening the partly privatized successors of JNR with additional taxation, debt, or both. The solution of this problem is seen as essential to the completion of the progress in the reform and deregulation not only of transport, but of the Japanese political economy as a whole.