Outcaste Politics and Organized Crime in Japan: The Effect of Terminating Ethnic Subsidies

• DOI: http://doi.org/10.1111/jels.12177
• Published date: 01 March 2018
• Date: 01 March 2018

Outcaste Politics and Organized Crime in

Japan: The Effect of Terminating

Ethnic Subsidies

J. Mark Ramseyer and Eric B. Rasmusen*

In 1969, Japan launched a massive subsidy program for the “burakumin” outcastes. The

subsidies attracted the mob, and the higher incomes now available through organized

crime attracted many burakumin. Thus, the subsidies gave new support to the tendency

many Japanese already had to equate the burakumin with the mob. The government ended

the subsidies in 2002. We explore the effect of the termination by merging 30 years of

municipality data with a long-suppressed 1936 census of burakumin neighborhoods. We

find that out-migration from municipalities with more burakumin increased after the end

of the program. Apparently, the subsidies restrained young burakumin from joining

mainstream society. We also find that despite the end of government-subsidized amenities,

once the subsidies neared their end, real estate prices rose in municipalities with

burakumin neighborhoods. With the subsidies gone and the mob in retreat, other Japanese

found the formerly burakumin communities increasingly attractive places to live.

I. Introduction

In 2002, the Japanese Diet ended a massive experiment in targeted ethnic subsidies.

The “burakumin” outcastes in Japan historically had faced discrimination. Under the

1969 “Special Measures Act” (SMA), the national and local governments began to pay

them massive benefits.

1

By 2002, the governments had spent 15 trillion yen ($125 billion

*Address correspondence to J. Mark Ramseyer, email: ramseyer@law.harvard.edu. Ramseyer is Mitsubishi

Professor of Japanese Legal Studies, Harvard University; Rasmusen is Dan R. and Catherine M. Dalton Professor,

Kelley School of Business, Indiana University.

We gratefully acknowledge the very helpful comments and suggestions of Tom Ginsburg, Masayoshi Hayashi,

Mathew McCubbins, Curtis Milhaupt, Yoshiro Miwa, Robert Mnookin, Gregory Noble, Alice Ramseyer, Jennifer

Ramseyer, Frances Rosenbluth, Richard Samuels, Rok Spruk, Frank Upham, Mark West, several anonymous

referees, and participants in presentations at the American Law & Economics Association, the Conference on

Empirical Legal Studies, the Harvard Law School, the Harvard University CFIA Japan Program, the N.B.E.R., the

UC Berkeley Law School, and the University of Chicago Law School, and the generous financial support of the

Harvard Law School.

1

“Burakumin” is the term most commonly used in English. It was used widely in Japan during the first half of the

20th century, but the currently favored term is “dowa.”

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Journal of Empirical Legal Studies

Volume 15, Issue 1, 192–238, March 2018

at the 2002 exchange rate), along with large amounts outside the program.

2

The

corruption, distorted hiring, extortion payments, and lost tax revenue tied to the pro-

gram pushed its social cost higher still.

Many of the burakumin were descendants of people who had worked in ritually

unclean jobs such as butchering and tanning. Some still worked in those jobs. Biologi-

cally indistinguishable from other Japanese, they were identifiable primarily by resi-

dence—by whether they or their family lived in a “buraku,” one of the 5,000 to 6,000

outcaste communities scattered across Japan. The largest of the buraku were famous.

Others were known only to long-time neighbors.

Through these targeted subsidies, the governments built community centers and

public housing. Although the buildings improved the housing stock, they unambigu-

ously identified the areas as burakumin neighborhoods. Worse, the large revenue at

stake attracted the organized crime syndicates, colloquially called the “yakuza.”

Burakumin in the criminal syndicates took prominent posts in the best known of their

self-styled civil rights organization, the Burakumin Liberation League (BLL). There,

they masterminded policy, intimidated officials, barred rival claimants to the funds, and

diverted money to their private accounts.

The result, largely acknowledged by the BLL itself,

3

was the diversion of substan-

tial government funds to selected burakumin leaders and the criminal syndicates. City

governments awarded construction contracts to favored companies. They bought the

land for the buildings at inflated prices from powerful burakumin. Local tax officials

promised not to audit tax returns of companies certified by the BLL. City halls agreed

to hire burakumin chosen by the BLL. Mainstream businesses paid money to avoid accu-

sations of discrimination. And the syndicates themselves fought each other bitterly over

control of the enormous revenue stream.

More poignantly, the program helped to divert burakumin men from the legal

sector. For young burakumin, the targeted subsidies shifted the relative returns to legal

and illegal careers. Given the newfound source of criminal income, many young men

chose illegal activity over the educational investments so essential to joining mainstream

Japan. As more burakumin joined the mob, mainstream Japanese avoided them out of

fear: the mob involvement itself now drove discrimination.

In this article, we examine the results of the government’s decision, made in

1996, to terminate the subsidies effective 2002. At roughly the same time, the govern-

ment decided to attack the mob leadership directly with aggressive police enforcement.

The government fought to halt the corruption and the key role of the mob in the bu-

raku. Toward that end, it both stopped the subsidies, and sent in the police. We mea-

sure the combined effect of those concurrent policies.

2

Fifteen trillion yen is the figure routinely cited by authors in the field---e.g., Kadooka (2012:38, 69); Ichinomiya

and Group K21 (2012:126); Mori (2009:78). We have not been able to determine the original source of this fig-

ure. In Naikaku (1995), however, the government reports that as of 1993 the municipal governments had spent

10.3 trillion yen and the prefectural governments another 3.56 trillion yen. See also note 12.

3

E.g., Kadooka (2004, 2005, 2009, 2012); Miyazaki (2004); Miyazaki and Otani (2000).

193Outcaste Politics and Organized Crime in Japan

Note that we do not study the government’s initial decision to launch the pro-

gram three decades earlier. Our analysis of the effect of its termination necessarily raises

parallel questions about the effect of its origination and about the partisan dynamics

behind its creation and cessation, but we limit our inquiry to the effects of the

program’s end.

For this study, we identify the 5,0001traditional burakumin communities using a

long-suppressed 1936 census. We combine the census with demographic and economic

data over 1980 to 2010 for the 1,7001municipalities in Japan. This includes rural areas,

since all of Japan is incorporated. With difference-in-differences regressions, we explore

the effect of the subsidy termination.

The logic is simple. Young burakumin men chose between careers in the mainstream

sector (legal) and the local sector (often criminal). The former required heavy investments

in education; the latter did not. The former lowered public animus toward the burakumin;

the latter exacerbated it. Prior to 2002, subsidies raised th e returns to criminal careers,

increased public hostility toward the burakumin, and lowered the relative returns to le aving

the buraku for careers in the Japanese mainstream. When the subsidies ended, the relative

returns switched. Ambitious burakumin now left the buraku for university and never

returned. The mob and the BLL hemorrhaged members. And other Japanese found the

formerly burakumin neighborhoods increasingly attractive places to live.

Our article is in two parts. We begin with a nonstatistical discussion of the

institutional structure and effect of the subsidy program. We describe the social context

(Section II): the burakumin (Section II.A), the organized crime syndicates (Section

II.B), and the changing ties between the two groups (Section II.C). We then discuss the

police crackdown (Section III), and the nature of the corruption involved (Section IV).

Second, we describe our data (Section V), and use difference-in-differences regressions

to examine the effect of subsidy termination on out-migration and real estate prices

(Section VI).

II. The Burakumin and the Criminal Syndicates

A. The Burakumin

1. Introduction

Writers routinely describe the burakumin as descended from people who worked in

ritually unclean or otherwise disreputable jobs: butchers, tanners, leather workers, and

itinerant peddlers (see Section II.A.5 for more detail).

4

As David Howell (1996:178) put

it, the forefathers of the burakumin “engaged in occupations that were considered to be

unclean, especially those that entailed the pollution of death.” The government placed

them below the four major classes of samurai, farmers, artisans, and merchants. In 1871,

4

The “paekjong” in Korea faced much the same situation. However, the massive dislocation and the destruction

of family registries during the Korean War seem to have erased them as an identifiable group (Anon. 2012). The

writers who claim that the discrimination against the Korean paekjong still exists seem mostly to be Japanese

scholars associated with the BLL (Kotek 2009).

194 Ramseyer and Rasmusen