Crony capitalism is one of the reasons for Japan's stagnant economy.
Their economic system is highly structured, and almost feudal in nature, organized around keiretsus. Crony capitalism in the States and the UK is more informal, gang-oriented, and fluid, more beneficial to a few powerful men than entire organizations.
But in both cases what makes it 'work' is the revolving door and mutually beneficial relationships between government and the corporations.
One key difference is that in Japan the power is held more by the organization, and not a narrow personal elite. There is also a much stronger 'safety net' for the public at large. Both societies tend to cover up their financial scandals involving the powerful: the Japanese out of a deep sense of shame, and in the West, out of a deep sense of personal entitlement.
In other words, Japanese crony capitalism it is not as predatory with respect to its own people as is seen in the West. Their policies are designed to procure advantage internationally. That is what makes this AIJ scandal so shocking to the Japanese public.
It has defrauded pensioners and involved western financial firms. We're not in Hokkaido anymore, Toto.
Even with their aging demographics, such protracted stagnation, when not attributable to an exterior force, almost always involves a serious policy error on the part of the fiscal and monetary authorities.
The Japan Times
Ex-insurance official plugged AIJ to pension pals
Saturday, March 3, 2012
Kyodo
A former official of the defunct Social Insurance Agency has revealed he used to recommend troubled AIJ Investment Advisors Co. to pension fund executives.
The former official said Friday that AIJ, which is believed to have lost some ¥210 billion in corporate pension money under its management, invested heavily in his consulting company and also paid fees to it.
He said he recommended AIJ to other former agency officials he met at pension fund seminars. While he denied forcing them into contracts, these former officials may have contributed to AIJ's expansion.
His firm received half its capital from AIJ, as well as some ¥6 million annually in consulting fees for about four years. AIJ also lent employees to his company and paid their salaries.
According to a labor ministry survey, 23 former senior officials of the agency, the predecessor to the Japan Pension Service, landed jobs at pension funds across the country after retiring between August 1999 and September 2010.
A pension fund in Hokkaido where one of the 23 retired officials was offered a post had a pension management contract with AIJ...
