Over-regulation is widely recognized as Japan's biggest problem. A forest of rules acts as a straitjacket on new enterprise and innovation, and a damper on businesses struggling to stay afloat. Yet the government has dragged its feet on reform for years. Because the bureaucrats have no choice. Monetary and fiscal options for firing up the economy no longer exist.
Deregulation really does seem to be kicking in.
When authorities loosened rules for new entrants to the industry in 1993, they set off a war among cellular-phone providers. The number rose from 2.13 million in April 1994 to 20 million at the end of last year. Though profit margins narrowed, sales have also gone up. The changes have begun to separate efficient service providers from the many inefficient ones. The shakeout extends to other sectors such as transport and air cargo services.