For those who hope that Japan is headed in the direction of greater freedom, it is sobering to see how brand-new industries create cartels in the old pattern. The Internet? Providers established the Japan Network Information Center (JPNIC) as the entity that approves new domain addresses. The JPNIC set to work right away, putting up the same barriers to outsiders and upstart businesses that we find in older cartels. For example, the JPNIC does not approve addresses unless they use Japanese Internet providers-despite global guidelines worldwide that say local authorities shall show «no preferential treatment for customers of a particular data network.» It's the old game of using a cartel to keep the foreigners out. Meanwhile, the JPNIC raised registration fees to the point where it costs four times more to list a new domain than it does in the United States. The result of battening down the windows to the Internet- the very room that everyone thought was going to bring fresh air into Japanese industry – is that by 1998 Japan had only 0.3 percent the number of domains in the United States, and ranked twenty-first in the world for domain names per capita. Multiply this cozy cartel by a million, and you'll get a sense of the complexity and power of the system. Seeking to reform the gigantic structure of the bureaucracy is a project overwhelming in its scale, involving nothing less than a radical change in social mores; the entire country would be turned upside down and inside out. That is exactly what Japan's leaders dread: they fear that if they make too many changes the whole jerry-built edifice of bureaucratic management will collapse and the nation will sink into anarchy. This anxiety acts as a powerful brake against change. For the moment, Madame Defarge faces a very long wait.

There has been much talk in recent years of Kaikaku, « reform,» and while the bureaucracy has made a few timid steps toward reform, especially in finance and trade, Kaikaku is hampered by one major flaw: it aims, by and large, to shore up the status quo. Bureaucrats find ways, in classic Dogs and Demons fashion, to make small, nonessential changes, rather than tackle serious structural problems both in the industries they control and in their own systems of management. The phrase Kisei Kanwa, used for «deregulation,» is highly symbolic, for it means «relaxation of the rules.» It does not imply a discarding of the rules.

Here's how it works. Gas prices in Japan average 2.7 times world levels due to a law forbidding direct import. After 1996, deregulation allowed JAL, the national airline, to buy fuel abroad – but JAL cannot use this gas on domestic routes, and sulfur- and lead-content standards are designed to exclude South Korean gas. Contractors, pressured by the cartels they belong to, will not unload shipments bought through newly opened channels. Even after deregulation, foreign gas still cannot enter Japan directly.

In 1997, Japan finally legalized transplants from brain-dead patients. The «legalization» involved so many compromises and restraints that two years later only one liver transplant and one heart transplant had taken place. Although the law has changed, dozens of desperately ill patients continue to raise money to travel abroad for organ transplants, as they have been doing for decades. For all intents and purposes, such transplants remain illegal in Japan.

In response to strong public discontent, the government set gyosei kaikaku, « administrative reform,» as a priority for most of the 1990s, but the real work in dismantling the top-heavy edifice of Japanese officialdom lags. Instead, in a titanic demonstration of tatemae conquering honne, much of the effort has gone into renaming the ministries. As of January 2001, several ministries have changed their names (and some have disappeared, subsumed into larger entities). For example, the Construction and Transport ministries are being combined with the National Land and Hokkaido Development agencies into a Land, Infrastructure, and Transport Ministry. At tremendous expense, these new ministries will shuffle personnel and departments between them, setting up new signs and offices to indicate their new functions-and then will go on to do business more or less as before. Halfhearted reforms such as this are endemic, and highly deceptive, if taken at face value. As for the investigations and scandals in government ministries, once public anger dies away, it's back to business as usual. «Reform» of this nature would be called «stagnation» in any other country.

William Sheldon, famed for his studies in anthropometry, drew a distinction between two fundamental types of human psychology, inspired by the mythical Greek brothers Epimetheus and Prometheus. Epimetheus always faced the past, while Prometheus, who brought fire to mankind, looked to the future. An Epimethean values precedent; a Promethean will steal fire from the gods if necessary in order to advance humanity's progress. In thinking about Japan's future, it's a good idea to briefly step aside from the mechanisms of bureaucracy and politics and look at psychology.

So far, the psychology of reform has been almost exclusively Epimethean: forced by public opinion, bureaucrats make minimal, often purely symbolic changes, while exerting most of their energies to protect the status quo. Reforms look backward, toward shoring up established systems, not forward to a new world. In general, Japan has settled comfortably into an Epimethean mind-set, and this is central not only to reform but to the overall question of how Japan failed to become a modern country. Modernity, if nothing else, surely means a love of the new. However, as we have seen repeatedly in this book, if new technology was not aimed at export manufacture – like cameras or cars – it never took root. Society frowns on people who steal fire from the gods. Too much fire too fast would undermine the role of officials in the Cold Hearth Agency, who tell people what to do with their flameless hearths, and it would bankrupt the powerful Hot Stone Cartel, whose existence depends on a lack of fire.

At the moment, the trend is toward an increasingly Epimethean bent. Change will get harder, not easier, as the population ages. At the very moment when Japan needs adventurous people to drastically revise its way of doing things, the population has already become the world's oldest, with school registrations on a strong downward curve. Older people, by nature, tend to be more conservative than young ones, and as they tip the balance of the population, it will be harder to make changes.

Meanwhile, youths, whom one would ordinarily expect to be full of energy and initiative, have been taught in school to be obedient and never to question the way things are. Young people are thinking about shirts printed with bunnies and kitties – with platform shoes to match, and some really amazing makeup and hairdos – rather than about heavy issues like the environment.

Epimethean nostalgia for the past is a natural reaction in Japan, for many of the systems that now slow the nation down were the source of its success only a decade ago. One cannot underestimate the shock that true globalization would bring to a social system and economy like Japan's, which depends so much on being cut off from the world. Mikuni Akio writes:

Under great economic and political pressure, foreigners have been allowed into certain designated sectors of the economy [such as Nissan Automobiles and Long Term Credit Bank]. The government is finding it an expensive proposition to compensate those hit by this first taste of genuine market forces, and understandably quails at the prospect of pacifying the millions who would suffer in a full-scale opening of the economy. Opposition in Japan to further liberalization, deregulation or globalization is thus steadily gathering momentum.

So strong is the longing for the past that there is a good chance that Japan will turn reactionary. The success of the rightist politician Ishihara Shintaro, the author of the popular Japan That Can Say No series and the mayor of Tokyo, augurs for a political step backward, not forward. Ishihara and his group blame Japan's troubles on evil foreigners, especially the United States. In academia, a quiet sea change is taking place. In the decades after World War II, leftists and rightists argued heatedly over national policy, with leftists often wielding the upper hand in the control of universities. However, by the end of the 1990s the leftists were in full retreat, and nationalist thinking took over the academic vanguard. The new nationalism may prevent Japan from looking inside at what the nation has done to itself.

A popular argument among Japan watchers is that as Japan becomes more international, people's perceptions will gradually come to harmonize with the outside world. There is some truth to this, for while internationalization at the official level has largely been a conspicuous failure, millions of Japanese have traveled and lived abroad. Every organization has at least one, and maybe even dozens of people, with international experience working within its ranks.

On the other hand, it was perhaps naive to imagine that foreign travel would broaden Japanese horizons. One of the most remarkable phenomena of the 1980s and 1990s is the creation of special worlds abroad made just for the Japanese. Most Japanese tourists travel in groups, and their itinerary consists of a «package» – including attractions, hotels, and restaurants that cater only to them. In Thailand, for example, the Japanese have their own entertainment street lined with «Members Only» signs, and even their own crocodile farm, which insulates them from having to deal with Thais and tourists from other countries who visit the ordinary crocodile farms.

Recently, an interviewer questioned veteran Japanologist Donald Richie about a statement in his book Inland Sea (1971) in which he predicted that as the Japanese traveled abroad in greater numbers, they would become more like everybody else. Richie replied, «I meant that when people got out and saw how other people lived and felt, they would not be able to come back with any complacency. I was exactly wrong. I hadn't envisaged Jalpak. The Japanese go abroad in a package; they have their own crocodiles, and their own flags and their own must-see stops. This is the way the vast majority travel, and they are not touched.»

As for refugees and longtime expats leaving Japan, few will mourn their exodus. Their departure from Japanese shores serves only to remove destabilizing influences, and well-heeled «international departments» will quickly replenish the missing foreigners with new ones, better behaved and more manageable than the old. «What is in store for Japan?» asks Kamei Tatsuo, the former editor of the influential opinion journal Shincho 45, with an ironic smile. «We will go back to sakoku of the Edo period. We Japanese like it that way.»