The Blot on Japan Inc.

It's quite difficult to exaggerate the influence of Japan's postal system on the nation. The latest example: Monday, a national election was called after parliament failed to privatize Japan Post, which is the world's largest financial institution.

Yes, ever since Japan emerged from the days of the samurai, its post offices have served as a secure savings bank for Japanese. Today, Japan Post controls nearly $3 trillion, or a quarter of all personal assets in Japan. Its money fueled a postwar recovery in a sort of financial socialism, backing the Toyotas and Toshibas to conquer foreign markets. Japan Post was the base for Japan Inc.

Unfortunately, it was also a giant piggy bank for the often-wasteful pork-barrel projects of the ruling Liberal Democratic Party (LDP), helping keep the party in power for decades. And the 280,000 postal employees and their families also have been the LDP's big vote-getters.

But for the world's second-largest economy, heavily in debt and caught in a decade-long stagnation, this great misallocation of financial assets has to be fixed. Privatization would also reduce the number of government workers by a third.

The LDP knows this must happen some day, but in a vote on Monday, its old guard couldn't shake off its old ways of power and patronage. To his credit, the dashing reformist prime minister, Junoichi Koizumi, dissolved the lower house and is taking the issue directly to the people in a Sept. 11 election. His bold action will split the LDP, and possibly force both him and it out of power. But that's a price he's willing to pay to wean Japan from its destructive money politics and planned economy. Many other necessary government reforms rely on privatizing Japan Post.

Mr. Koizumi's courage to reshape his country is rare for a Japanese politician. Voters should support him.