It may not seem possible in a nation whose people have become complacent in the knowledge that Japan's socialized economy is the most successful example of its kind in the postwar world. But this is a very promising market, and this is a good time to privatize it, now that Japan is in the process of making structural reforms to its socialized economy by stimulating market competition.

The Council for Regulatory Reform is endeavoring to devise ways to spend the social security budget allocation wisely, but has indicated the need to reform the management of social welfare programs run by national and local governments, and statutory agencies, to respond to the increasing demand for social services designed for these segments of the population.

Second, Article 89*2 of the Constitution is applied to existing social service agencies. "Charitable enterprises" is interpreted as "social services" and the "control of public authority" as "the oversight necessary to prevent the squandering or misuse of public funds." That is why funds from the national social welfare budget can be supplied only to governmental and statutory social service agencies. In other words, the conventional wisdom is that funding by subsidy of private social service agencies violates Article 89. However, this interpretation is erroneous. Social services are provided by the government to ensure an adequate standard of living, in accordance with the spirit of Article 25, not to comply with the rules governing "charitable enterprises," as stated in Article 89. The State is obliged by the Constitution to provide social services that "maintain the minimum standards of wholesome and cultured living." Article 89 has no relevance here. The charitable enterprises referred to therein owed their existence to freedoms granted to the people by modern law before their social rights were legally recognized. In other words, the right of private citizens to operate charitable, educational, and benevolent institutions without interference from the State is a freedom that exists independently of State law. The intent of Article 89 is to uphold fiscal democracy, which is inherent in this freedom, by preventing the squandering or misuse of public assets.

To summarize, allowing private (non-statutory) companies to operate social security and social welfare agencies (and to provide institutional and home care), is tantamount to introducing market principles into these expanding sectors. The funding and subsidy of these sectors is the obligation of the State and of local government, and are definitely not in violation of Article 89. Existing providers of social services (statutory and government agencies) are prone to abuses, and are slow to improve efficiency or to react to changes in demand. Reducing the number of these agencies or closing them down is the best way to respond to the outcry for fiscal reform.