[Viewpoint] Steve Jobs trumps Kan

Things are bad when a world leader quitting registers less than a corporate executive. That’s what Naoto Kan gets for bowing out the same week as Steve Jobs.

Markets reacted immediately to news of Jobs’ departure from Apple; there was barely a ripple after Kan cashed out and paved the way for Japan’s sixth prime minister in five years. Since Jobs returned to Apple’s top spot in 1997, Japan has had nine premiers. Next week, it will have yet another.

It may seem odd to compare the leadership of a company with helming the third-largest economy. Yet what does it say about a nation of 127 million people when Kan stepping down is considered a sideshow internationally to the sexier Apple story?

It says the world is tuning out Japan’s $5 trillion economy. Never mind that Japan is home to some of Asia’s biggest markets and has the region’s most international currency. The place is just too dysfunctional for many investors who can easily find healthier returns elsewhere. It also explains why Japan’s credit rating will continue to grind lower in years ahead.

Yet of all the questions we should be asking today, this one may be most important: Is Japan politically unstable or is it, oddly, too stable for its own good?

Moody’s Investors Service cited the former this week when it cut Japan’s rating one step to Aa3. Japan’s problem, though, is an impenetrable structure that repels the ideas and policies of leader after leader with nary a hiccup.

Japan isn’t really run by prime ministers, and the next one will quickly learn that frustrating fact. The commonly-accepted line on Kan is that his 14-month government was undone by a backlash over his leadership after the March 11 earthquake and tsunami, the nation’s deepest postwar crisis. In truth, Kan was pushed out by Japan’s ever-spinning political revolving door for trying to exact change.

The former activist came in talking big about attacking the group that really runs the nation: Japan’s vast bureaucracy. Kan wanted to pull decision-making out of bureaucrats’ hands, reduce their perks and ban them from the corrupt practice of taking cushy jobs after they leave government at the companies and power utilities they once oversaw. If you want to know why radiation is leaking from nuclear power plants in Fukushima, look no further than this incestuous practice.

The nameless, faceless officials who run Japan resist change of any kind. Anything that might upset the fiefdoms they built up in decades on the job must be thwarted. The result is a system on autopilot with bureaucrats refusing to tell the prime minister how to switch to manual control.

Early in Kan’s tenure, his Cabinet struck fear in the hearts of bureaucrats with public hearings into their bloated budgets. The effort fizzled out when Kan realized he would get absolutely nothing done if Tokyo’s pencil pushers felt embattled.

Kan’s days were numbered for attempting to shake up Nagatacho, Japan’s answer to Capitol Hill. His demise accelerated the moment he set his sights on Japan’s powerful nuclear industry. With Fukushima leaking radiation into the nation’s food and water supplies and seismologists fretting about more big earthquakes, Kan moved to de-emphasize Japan’s reliance on reactors for power. At that point, the knives really came out.

Japan’s revolving door is spinning faster than ever. When a Kan replacement is named next week, the duration of Japanese leadership will fall below a one-a-year average. You can just see the bureaucrats laughing at the Democratic Party of Japan’s promise to break their hold on the country.

It’s an incredible curiosity how Japan pulls it off. It’s a safe, highly literate, well-functioning nation that boasts some of the longest life spans anywhere and a relatively egalitarian socioeconomic structure. Yet the world is changing rapidly around Japan and it won’t wait for Tokyo to finally get serious about raising the economy’s game.

Japan needs to learn how to grow without the artificial stimulants of zero interest rates and the world’s largest public debt. It needs to prepare for an aging workforce and embrace increased immigration to offset that dynamic. It needs to tweak tax laws to encourage entrepreneurship to create new jobs. It must empower its female population to do more than work in supporting roles for men.

None of this is afoot. Since change won’t come from the bureaucrats, it must derive from a visionary leader with the courage and perseverance to take on Japan’s labyrinthine and shadowy power structure. That’s why Jobs’s resignation got more attention than Kan’s: Investors know that, for better or worse, things are about to change at Apple. They can’t say the same about Japan.

*The writer is a Bloomberg View columnist.

By William Pesek