allocation, substituting for the market mechanism. Furthermore, with regard to fairness
of income distribution, inadequate information may be provided to bureaucrats because
farmers’ subjective utility loss cannot be revealed in statistic data or any other officially
published information. On the other hand, the principle of farmer behavior depends
upon income distribution. Political pressure also derives mainly from unfairness of
income distribution. When bureaucrats face political pressures from some regions, they
may not be able to persuade protesters and may find it difficult to resist such claims.
If we judge this outcome from a viewpoint of political science, it may be
significant to some extent because top-down decision making was tempered by a
bottom-up process, incorporating farmers’ opinions into allocations among regions. In
addition to this, such opinions accurately represent the majority of rural society.
However, if looked at from an economic viewpoint, it can be said to be irrational. This
is because efficient low cost farming by full-time farmers are relatively strongly
restricted, while rich but inefficient part-time farmers are suffering less income loss and
are more supported by government policy.
The policy implication from this study is clear. In the past, Japanese bureaucrats
have been powerful and played a major role among political actors. This rice set-aside
program and discretionary allocation among prefectures might have been established
under this tradition. However, in a society where democracy has matured, such
top-down decision making might have become unacceptable, faced with grievances of
voters and political pressures. These political pressures may include helpful information
which contributes to improvement in the fairness of income distribution. However, on
the other hand, they may cause irrational resource allocation.
The lesson from the experience in the rice set-aside program suggests that
bureaucrats’ discretionary allocation could not efficiently replace the market mechanism.
The complementary political process may also be inadequate and make the allocation
more perverse. An alternative method is to incorporate the market mechanism, step by
step.
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