MITI and the Japanese miracle

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on targeted products in order to make them easier for consumers to buy (and for producers to sell). The Ministry of Finance credits itself with nurturing the Sony Corporation through its formative years because it lifted commodity taxes on transistor radios for the first two years after their market appearance and because it levied taxes on television receivers only in two-year stages as mass production brought down their prices (taxes went up as prices, calculated in terms of the price per inch of picture tubes, went down).

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These government policies led to the Japanese phenomenon of all households buying the same goods during a particular periodfor example, the ''three sacred treasures" (television, washing machine, and refrigerator) of the early sixties, and the "three c's" (car, cooler, and color TV) of the late sixties. Annual reductions in the individual income tax rate in proportion to the growth of the economy, plus selective elimination of excises, thus fueled a made-in-Kasumigaseki "consumer revolution."

In its fully elaborated form, the late 1950's MITI system of nurturing (ikusei) a new industry (for example, petrochemicals) included the following types of measures: First, an investigation was made and a basic policy statement was drafted within the ministry on the need for the industry and on its prospectsan example is the Petrochemical Industry Nurturing Policy adopted by a MITI ministerial conference on July 11, 1955. Second, foreign currency allocations were authorized by MITI and funding was provided for the industry by the Development Bank. Third, licenses were granted for the import of foreign technology (every item of petrochemical technology was obtained on license from abroad). Fourth, the nascent industry was designated as "strategic" in order to give it special and accelerated depreciation on its investments. Fifth, it was provided with improved land on which to build its installations, either free of charge or at nominal cost. (In August 1955, MITI Minister Ishibashi approved the sale of the old military fuel facilities at Yokkaichi, Iwakuni, and Tokuyama to four newly created petrochemical companies despite howls in the Diet from two old military officers, Tsuji Masanobu and Hoshina Zenshiro*, in protest against the government's selling to the zaibatsu installations built with military blood). Sixth, the industry was given key tax breaksin the case of petrochemicals, exemption from customs duties on imported catalytic agents and special machinery, the refund of duties collected on refined petroleum products used as raw materials for petrochemicals, and special laws exempting certain users from gasoline taxes. Seventh, MITI created an "administrative guidance cartel" to regulate competition and coordinate in-