MyVision

No.17 2016.1

Universal
Services at the
Crossroads
The concept of universal services – the provision of a uniform level of public
services to every part of the country – is at a crossroads in Japan. Rural areas arefacing depopulation, and increases in the costs of maintaining previous levels ofservices can no longer be ignored. With declining regional populations and anincreasing number of “marginal villages” (villages in which more than 50% of
the population is aged over 65) expected, what is the appropriate direction for
the future of universal services?

CONTENTS
Expert Opinions

What is the Appropriate Direction for Universal
Services in a Time of Population Decline?
What government agencies must
We must think about the concept
immediately undertake is to encourage of compact cities together
migration from marginal villages
Toshihiro Matsumura
Wataru Kitamura

Professor, Graduate School of Law and Politics,
Osaka University

Professor, Institute of Social Science,
The University of Tokyo

Comparative weighing of burden
and beneﬁt

Towards discussion of sharing theburden in new metropolitan zones Masayuki Nakagawa
Hiroshi Yahagi

Professor, College of Economics, Nihon University

Professor, Faculty of Policy Science, Ryukoku University

We should reconsider the direction
for services from three perspectives
Yuko Kawamoto

Professor, Graduate School of Finance,
Accounting & Law, Waseda University

About this Issue

Reiko Kanda

Expert Opinions

What is the Appropriate Direction for Universal
Services in a Time of Population Decline?
As Japanʼs population decline continues, the provision of universal services in regions experiencing
depopulation is becoming increasingly difficult. How should we consider the maintenance of universal
services in the future? What effect will the situation have on the lives of residents of rural areas from theperspectives of costs and necessary services? In this issue of, we hear opinions from experts inthe fields of urban policy, local administration, corporate governance, industrial organization and urban
economics.

Interviewer: Nao Toyoda, Mari Kawamoto
Editor: Kazuyoshi Harada
Period of interviews: September - October 2015

What government agencies must immediately
undertake is to encourage migration frommarginal villages
Wataru Kitamura
Professor, Graduate School of Law and Politics,
Osaka University
In Japan, citizens are able to receive identical public services nomatter where they live. However, the low birth rate and aging anddeclining population will make it difficult to continue to provide these
services in their present form. The Abe government unveiled a
local revitalization policy, and almost all local authorities are formulating their local revitalization plans.
In the formulating process at the local level, two different policies should be
pursued. One is to “rediscover” strong points in the local community, based on cooperation between the public and private sectors. Local authorities, private companies, and NPOs must talk more
about dream of prosperity.
The other policy to be easily forgotten is to gird their loins, and toreconstruct the system of public services provision. Both prefecturesand municipalities must work together to encourage residents to quit
marginal villages in the rural areas. That is the very policy that only
local government must put into effect. Local government should
specify the areas which universal services can be no longer provided. Confronted with fiscal deficits and depopulation simultaneously, prefectures and municipalities, which are mainly responsible for providing public services in Japan, must consider ahard-line policy including setting “no public services areas.”
In the future, there will be no more resources for the provision ofsmall-scale, across-the-board infrastructural measures for all
marginal villages in which no more than 10 households remain. The
people living in these villages should be encouraged to relocate theirhouseholds to an area which is more convenient. If it is necessary tomaintain the forest commons in the old village, introducing the
public transportation system such as a community bus is one ofsolutions worth considering. We should recognize the constitutional right of citizens to choose where they live, whereas theprinciple should be that the individual concerned recognizes therisks and assumes responsibility.
In considering local revitalization, both government officials andcitizens tend to imagine stories which contain dreams. However, wecannot ignore the fact that there exists something, before us,that only government agencies are capable of realizing, no matter how
difficult it may be politically. ■Professor Kitamura studies central-local governmental relations and its
impact on local government performance. He analyses the Japanese urban government system, focusing particularly on socio-economic issues
faced by Japan’s ordinance-designated cities like Yokohama, Nagoya,
Kyoto, Osaka, Kobe, and so on.

Towards discussion of sharing the burden in
new metropolitan zones
Hiroshi Yahagi
Professor, Faculty of Policy Science, Ryukoku University
Up to the present, municipal administrations have competed toprovide a complete set of universal services against the background ofinter-city rivalry. Each city has constructed the same general
hospitals and cultural facilities as its neighboring cities. Even if
some of these facilities were unused and wasteful, the expense could
be absorbed by the administration during the era of economic
growth.
As Japan’s population declines and rural areas become depopulated, the fiscal underpinnings of municipal administrations are
becoming increasingly fragile, and it is already difficult for them tomaintain the provision of a complete set of universal services.

My Vision No.17

Municipalities must change their mindset from one of competition to
one of cooperation and collaboration, and reconsider the necessary
direction for service provision. The time is coming when it will beessential to move away from the model of ownership of public
services by individual municipal administrations in competition withothers, towards a model of cooperation and shared service provision
by individual municipalities gathered together in larger metropolitan zones.
In order to do so, aggregated structures could be created within thesemetropolitan zones through the establishment of hierarchies of city
functions and the redistribution of public services between cities. It
would be essential to consider a configuration in which municipalities formed an association spread over a broad area, while advanced city functions such as shopping centers and specialized
hospitals were concentrated in the central city.
Because the realization of this vision would change the structureof the allocation of expenses, it would also be necessary to reconsider the form of governance within the urban area. The central
cities would realize the greatest benefits through accumulation of
resources, and it would therefore also be essential to discuss thenature of the redistribution of costs and benefits to be effected, in linewith the division of roles in taxation, financial and administrative
duties among the municipal administrations. It is problematic that theconcentration of city functions has been a subject of discussion
within the government, but there has been almost no discussion of
the burden of costs. ■An expert on city policy, Professor Yahagi has visited a large number ofcities in Japan and internationally. He urges the importance of making
the transition from a “myth of growth,” which assumes that continuing
increase in the scale of cities is a good thing, to a model of “small” and“smart” growth.

We should reconsider the direction for services
from three perspectives
Yuko Kawamoto
Professor, Graduate School of Finance, Accounting & Law,
Waseda University
In today’s Japan, universal services which can be accessed
anywhere in the country are taken for granted. The public’s idea ofregional equality is strong, and the insistence on rights for theservices is deep-seated; there is even the impression that companies
providing services take advantage of their privilege to supply theservices.
In considering the direction for universal services, I believe that it
will be essential to reconsider whether they are a basic right, beginning from the following three perspectives.
First, the definition and scope of universal services should beclarified. Universal services naturally differ depending on the
country, the period, and the people involved. Surely, then, theconcept of universal services should be defined precisely now inJapan, as the nation’s population continues to decline. It will be
important to reconsider the direction for public services from thefundamentals, based on various discussions.
Second, objective evaluation of the cost of providing services isnecessary. We should know the results of cost-benefit analyses, andjudge whether services should be maintained, despite the burden oftaxes and utility charges. The transparency of systems will be very
important in understanding among the public.
Third, we should think about new forms for services. The use of IT

can enable the provision of lower-cost and more convenient services. For
example, it would be cheaper and would enable the maintenance of
closer communication to make it possible for residents of mountainvillages which are difficult to reach, to use Skype rather than delivering mail daily. We should do away with the prejudice that theelderly cannot use IT. We must broaden our perspectives, andprecisely because we are dealing with universal services, havethe courage to take the initiative and improve the quality by innovation. ■Professor Kawamoto’s areas of study include the management of financial institutions and corporate governance. She serves as an independent directors of financial institutions, insurance, manufacturing and soon. She has been a member of government committees, including the
Financial System Council and the National Public Safety Commission.

We must think about the concept ofcompact cities together
Toshihiro Matsumura
Professor, Institute of Social Science, The University of Tokyo
The idea of “universal services” commenced existence as anadvertising catchphrase for companies which offered services
throughout the country. Through its connection with basic rights, it wastransformed into the concept of the minimum level of services whichshould be received by the public no matter where they live. However, the majority of people must now recognize that the decline inJapan’s population will make it impossible to maintain the previous
level of services throughout the country as a whole in the future.
Given this, we will have to reconsider whether the concept ofproviding services for a uniform low cost throughout the country isreasonable based on the minimum content of the services and the costof their provision. Rather than the content of services and the fees
charged for them being uniform throughout the country, one possibility would be for municipal administrations with an understanding of the specific circumstances of their region to choose thecontent of services and the consequent fees. Selections could be made:For example, optic fiber connections necessary for monitoring
services might be prioritized, and other services discarded.
Because it will become impossible to continue to provide services
entailing enormous costs, it will also be necessary to reconsider theregions in which services are provided. The concept of compact
cities will induce movement to regions and cities which will form
centers of population within Japan’s prefectures. It will take aconsiderable amount of time for this movement to actually take place,and therefore it will be essential to begin to present plans immediately. One possible proposal to help encourage people to move awayfrom the areas they are accustomed to might be for the national
government and municipal administrations to provide residencesin the new areas as a trial for potential migrants.
While people would not be prohibited from living in areas other thanthe designated areas, they would have to be aware that the time iscoming when this choice will mean the relinquishment of a certain
degree of services. ■Professor Matsumura analyzes the principles of conduct of public corporations in mixed oligopolistic markets and their relationship with regulatory reforms. With regard to the liberalization of Japan’s power market,
he believes that the ideal outcome would enable consumers to take personal responsibility in freely choosing their sources of energy and power.

Comparative weighing of burden and benefit
Masayuki Nakagawa
Professor, College of Economics, Nihon University
The ability of citizens to receive a minimum level of services nomatter where in the country they reside is considered to be a constitutional right. However, this right does not guarantee the provision of services of unlimited value. For example, it would not be
possible to receive the same services at the top of Mt. Fuji as arereceived down below. Fundamentally, public services have been
provided on the basis of rational decisions following calculation of
costs and benefits, and they should continue to be provided on thisbasis.
The issue is that because Japan’s rural areas are facing population
decline and an increasing number of marginal villages, the circumstances of universal services have changed fundamentally, and thegovernment is being driven by the necessity to adopt new responses. The government needs first to explain to the public that if itmaintains the present level of service provision, the efficiency of theeconomy as a whole will decline. The next step would be to announce
that if the cost of maintaining services in a specific region exceeds apredetermined limit, it will be impossible to maintain services in that
region. In addition, when expenses outweigh benefits, it will benecessary to cease the provision of services, and request the ben-eficiaries of the services to relocate to an area in which they can beprovided. This will be extremely difficult, but the necessity ofnarrowing down the public’s expectations to services that cancontinue to be provided over the medium- to long-term is unavoidable.
Future depopulation and the development of marginal villages arephenomena which can be predicted. Should we continue to bear theburden for service provision in regions which have been aware that theprovision of services would become difficult if their populations
declined, and which have had a sufficient margin of time in which to takeaction? The idea that we should redistribute funds to regions which
could have taken action but have not, because of our sympathy with theirplight, is entirely emotive reasoning. ■Professor Nakagawa’s field of specialization is the study of housing policy and the real estate market. He stresses that in an era in which cities
are shrinking, policies must be formulated to increase the ease of moving residences, and that it will be essential to increase liquidity in thesecond-hand real estate market.

This is a translation of a paper originally published in Japanese.
NIRA bears full responsibility for the translation presented here.
Translated by Michael Faul.

About this Issue

Universal Services at the Crossroads

The concept of “universal services” guarantees essential
lifeline infrastructure including power, postal services, waterand communications to every citizen. Public entities and private companies are required by law to provide these services.
However, Japan’s transition from population increase topopulation decline has significantly changed the environment
for service provision, and the maintenance of these services
is becoming difficult in some rural regions. For example,
there are post offices in every municipality throughout Japan,
which deliver the mail once a day and provide banking services. But as the population of their specific area declines,
their revenues will come under pressure, until ultimately the
public will have to bear the burden of their debt.
Should universal services be maintained in an era of population decline? The experts interviewed in this issue of My
Vision are largely united in their responses to this question. It
has come to be regarded as natural that the same level of services should be provided no matter where an individual lives,and our interviewees believe that we must rethink this attitude. While they may differ with regard to the concrete mea-sures involved – clarifying the costs of service provision, redistributing the expenses of public services between cities,
identifying areas in which it will no longer be possible toprovide services – they all agree that regions in which it will
become difficult to maintain services must take action quickly.
The existence of stable infrastructure has been a foundation supporting Japan’s regional economies. There is a fearthat restructuring universal services would cause us to lose
this foundation. Nevertheless, we will not be able to maintainthe previous level of services. What is demanded of public
service providers is that they increase the quality of services
in order to support citizens’ quality of life and business activity. In order to do so, it will be essential for prefectural andmunicipal administrations to rethink the direction for efficient service provision and to work together with regional
residents and service providers to determine measures tosupport the burden of costs.
Reiko Kanda, NIRA Executive Vice President

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