TFP advocates corporate criminology based on Broken Windows Theory

Tuesday, May 24 2005 @ 04:07 AM JST

Contributed by: Y.Yamamoto

Since the launch of this blog, we have taken up a lot of corporate scandals and other forms of crime. We have also discussed many times issues with this system and polity, along with the underlying culture, under which these wrongdoings are proliferating. The mainstream media are doing more or less the same thing because after all, their primary mission is to act as the guardians of justice.

Nonetheless we've seen little signs that the proliferation of corporate crimes, juvenile crimes or any other form of crimes is going to subside anytime soon. Apparently neither the mainstream media nor we bloggers are making the slightest difference to the ever-deteriorating situation.

For the media's part, there are a variety of reasons, of course, for their inability to tackle the formidable task of fighting crimes wholeheartedly. They are too taboo-ridden to dig into the root problems. They are too conscious about ad revenues to reveal wrongdoings by advertisers. They are too cautious about alerting the general public to an early indication of a criminal act out of excessive, and often false, consideration for humanrights, and perhaps subscription revenues. They are capitalized in an infamously convoluted and often collusive cross-shareholding structure so much that they cannot act independently. Among other things they always prioritize their own interests over public interests whenever the behavior of their own organizations is challenged. As a result, all they can do in the face of an upsurge in crimes is just Monday morning quarterbacking. Talking about measures for crime prevention on Saturday nights is out of the question.

On the other hand, the overall achievement by us Web-based journalism isn't any better thus far despite, or because of, the fact that we are basically taboo-free, most of us have chosen not to get incorporated and we don't have any source of ad or subscription revenues.

Needless to say, everyone now knows that we can't count on law enforcement, either, to curb the soaring crimes. Public prosecutors offices, the National Police Agency or prefectural/municipal police departments are usually too slow and often reluctant to do their job, especially when their subject is a big figure, e.g., the chief of a yakuza syndicate, a lawmaker, the CEO of a big business, etc. More importantly they seem to think crime prevention is none of their business. Although they circulate flyers or put up posters to call for eradication of drug abuse, domestic violence, or any other form of crimes, they are doing nothing more than asking the thieves to refrain from stealing. Moreover, a good part of cops are corrupt themselves. I'm reasonably sure that if there was an analysis of crime rates by occupation of offenders, cops would be among the list of the top ten.

Propositions being made by bureaucrats in the Education Ministry, politicians and a bunch of education experts from every corner of the country have also proved next to useless. A good part of these people have advocated enhancing such curricula aimed at instilling in schoolkids "a sense of responsibility to the community," "respect for life and nature," "disposition toward cherishing one's homeland," "love of traditional culture," etc. This worn-out set of values all boils down to the worship of yaorozu-no kami, or eight million gods. And these self-proclaimed experts in education, with pathological lesions eating into their own souls, haven't noticed, or make believe they haven't, that the Japan's mythology, which dates back to the foundation of this country on "February 11, 2665 years ago," and further beyond, is one of the root causes of the ongoing moral erosion, not a solution to it.

I have nothing in particular against dogs and cats. But sometimes I find pet lovers a little disgusting just because of their excessive love of pets. By the same token, I have nothing against the Japanese mythology, as such. But I can't stand these fanatics who are so obsessed with it as to believe a mythology-based education is the most effective prescription to stem the ongoing moral erosion.

Against this irredeemable backdrop, the general public in this nation are now getting quite used to the situation while feeling totally helpless at the same time. The only people who are profiting from all this are those thieves who are, in the worst case, told to return their loot thanks to the excessive leniency inherent to this "culture of apology," and these professional second-guessers who are doing their TV station hopping every time yet another sensational crime is committed.

Now it seems we are in need of a completely different approach to the issue in order to prevent the overall security situation from being further undermined.

Back in March 1982, political scientist James Wilson and criminologist George Kelling co-authored the cover story for the Atlantic Monthly. The title of the article was "Broken Windows." Hence theirs has been termed "Broken Windows Theory." Japanese scholars have more or less played it down as something that doesn't deserve to be called a theory because BWT is too straightforward, prosaic and pragmatic - at least until former New York City Mayor Rudolph Giuliani did a splendid job based on this theory, and by the end of his tenure, could dramatically improve the overall security situation in the city. (See September 3 TFP story titled "Ishihara comparisons.")

If you aren't familiar with BWT, the following prosaic statement represents what it is all about: "If a window is broken and left unrepaired, people walking by will conclude that no one cares and no one is in charge." What a banality! But let's face the fact that BWT has sometimes worked miracles whereas our exotic and esoteric mythology has never.

Recently, some TV commentators, local criminologists, etc. have started talking about BWT when discussing the never-ending stream of weird and heinous crimes. But BWT is a theory which means absolutely nothing to those who are unwilling to do anything more than just frowning at, lamenting over, commenting on or criticizing these crimes.

Take Tokyo Governor Shintaro Ishihara for example. His disposition is such that he cracks down on anyone who doesn't act to his liking. Even school teachers and students in Tokyo who refuse to rise and sing the world'd most yawnful national anthem at an enrollment or graduation ceremony are punished. Nonetheless, crime rate-wise, the Japan's capital city is becoming more and more like the city of New York before Giuliani implemented his BWT-based "community policing strategy". And there are little signs that Tokyo will become once again the "world's safest city," that it was once upon a time, in the foreseeable future. The Governor with pathological fixation to the past is the champion spearheading all the backward move with a delusive conviction that teaching schoolkids this mythology about eight million gods is the only workable prescription for the social malaise. So you can never expect this Fuji-Sankei Media Group-favorite commentator to turn around the situation facing the capital now.

When compared to the Tokyo Governor, his counterpart in Nagano Prefecture, Yasuo Tanaka, is by far outperforming in his down-to-earth approach toward the wellbeing of his people, while keeping a low profile on the political scenes and on the media. Although Tanaka does not seem particularly interested in BWT, it seems fairly likely that Nagano Prefecture will be able to boast Japan's lowest crime rate by the end of his tenure. (See note below.)

Note: Setting aside for now the well-known fact that the official statistics on crime is grossly understated here, Japan's overall crime rate was 2.19% as of 2003 while crime rates for Tokyo and Nagano were 2.43% and 1.44%, respectively.

In our opinion the same BWT can be applied to the corporate world although we have to put it in a different perspective. Tom Pryor, president of ICMS (Integrated Cost Management Systems, Inc.) and expert in ABM (Activity Based Management) and ABC (Activity Based Costing,) has posted his take on BWT on ICMS.net. In this writing, he specifically identifies "Ten Broken Windows" in today's America which are badly in need of repair.

Among other things on his list, I find "Broken Standards" the most relevant to my argument here. Under Broken Standards, he writes: "Abandoned values lead to abandoned truth. According to the Barna Research Group, fiscal responsibility, respect, accountability, loyalty and absolute morality have been abandoned by Americans and replaced with convenience, instant gratification, image, happiness and tolerance. Broken standards lead to broken companies. For secrecy, the management of bankrupt energy trader Enron created over 600 partnerships in the Cayman Islands to escape accountability."

In Japan some (not most) business entities have demonstrated their learning ability, to varying degrees, since the burst of the bubble economy in early-1990s. They are now well-aware that they should pro-act, rather than react, if they want to keep in shape. But that's as far as their business is concerned.

The lesson of the burst of the bubble economy has still remained to be learned even in these respectable companies when it comes to corporate crimes. It's now even becoming a fad for big businesses to set up an in-house "compliance committee." But the most important problem inherent to these committees is the fact that most of them are acting like the conventional teams of internal auditors. In other words, they take it for granted that their primary mission is to dig into the past. In the worst case, they are diligently working on containing irregularities within the corporation before the law enforcement gets wise.

The only differences between today's compliance committees and conventional internal audit teams lie with the facts that compliance committees can sometimes avail themselves of the most modern forensic technologies and that their members sometimes include "independent" outsiders, or at least insiders disguised as outsiders. (They are only a little more independent-minded than "statutory auditors.") But that is far from enough. No matter how today's compliance committees look different from internal audit departments of the 20th century, they can only recommend the company management how to react to detected irregularities whereas what is really at issue in the post-bubble era is how swiftly the company management can pro-act. To paraphrase this, these in-house watchdogs should focus more on omission (of practicing such values as professional/personal integrity) than on commission (of a crime) in order to help the company management pro-act rather than react.

To that end, the single most important quality required from an in-house watchdog is a good eyesight and olfactory sense with which to identify the first broken window, or even the slightest crack in it.

As I argued in the April 30 TFP story titled "Real ordeal entailed in TokyoFreePress relocation," a corporate crime will never happen in a way in which a potential criminal wakes up one morning and just thinks about violating law. In this nation, where there are very few organizations equipped with a self-purification mechanism, nipping it in the bud, well before the entire organization gets immunized, is crucially important in fighting corporate crimes. And one last tip I want to give to an in-house watchdog: You should always bear in mind that Japan's white-collar criminals are not so stupid as to leave their fingerprints on the scene.

Still this is too sketchy. But for now I'll leave it here. If Corporate Japan really wants to stem its moral erosion, it has to implement a BWT-based system, or whatever it calls its crime prevention system, sooner rather than later. In a future TFP article I might be illustrating how to configure and implement a system, using a totally fictitious scenario for a case in point.

Footnote: Throughout this piece, I do not specifically mean a computer system when I use the word "system." Instead, I want to refer to the entire mechanism a business entity is equipped with. A computer system is only part of it. We tend to think we can automatically achieve our house-cleaning goal once an "enabling" computer system, along with procedural rules associated with it, is put in place. But especially in this nation, most organizations are extremely prone to corporate crimes. People are so inventive, as well as collusive among themselves, that outsmarting or circumventing a computer system is sometimes a piece of cake.

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