Why has the Japanese government tolerated the existence of the Yakuza?

This is very much an ongoing topic and as such we have to be wary of the 20 year rule to avoid delving into modern day stuff. But a side note, the government notably enacted major crackdowns in 2012 in both national law and police enforcement/surveillance of the major yakuza groups, curtailing many of their open operations and freedoms. There were also major crackdowns several times during the Cold War (notably in the 1970s and again during the 1990s), and of course, heavy crackdowns during the harsh wartime period.

So let's get down to it.

Why are the modern Yakuza so apparently tolerated by the Japanese government and people as opposed to other major crime syndicates in the world?

A major part of it is because of how deeply entrenched the Yakuza have been in both major business and politics in Japan, especially Cold War Politics.

Yakuza money almost goes hand in hand with Japanese politicians and major business in Japan. Corruption has been a serious problem in Japanese politics for a long time, really coming to a head in the 1970s, with the highest profile politician-Yakuza scandal probably being Prime Minister Tanaka Kakuei, who was one of the most influential PMs of Japan's long time ruling party, the Liberal Democratic Party (LDP).

While PM Tanaka Kakuei was involved in multiple scandals, prior to the 1970s, the biggest scandal was, of course, his participation in the Lockheed sale scandals. Accepting major bribes of millions of dollars, his participation was heavily linked to the Yakuza. This scandal in particular was one of the major turning points of Japanese public opinion against the deep Yakuza connections that seemingly every politician had.

But how did this relationship start anyway? REWIND

The Yakuza gained a tremendous amount of power in the post-war era, a tumultuous time but also a time with more freedom than wartime Japan. Japan, which was devastated by a terribly effective air campaign, was on the verge of mass starvation directly after the war. And of course, even basic goods could be hard to find, nevermind everything else. The Yakuza profitted handsomely in black market trade, smuggling, drugs, etc.

But very soon, with the Cold War looming, the Yakuza had a better option than the regular criminal enterprises. With American pressure to crush socialist/communist groups, labor unions, and organizations, as well as suppress anti-establishment publications, academics, protests, etc, government officials soon found the Yakuza more than willing to be hired muscle, though mostly to intimidate rather than actually commit severe violence, like assault or murder.The Yakuza have maintained this strong connection to the right wing, nationalist/ultranationalist groups to the present day.

Because of their position as political allies against the Communist threat, Yakuza crimes were tolerated in return for their favors and services, along with a healthy helping of bribes. From this relationship going forward, the Yakuza eventually dominated the construction industry, receiving exclusive, lucrative contracts from their government friends, sometimes going home with even more money if they purposely skimped on the job.

With all this money, many Yakuza groups invested heavily into legitimate businesses, integrating themselves even further with major businesses. It became hard to enter the upper echelons of business and politics without involving yourself with the Yakuza or those who were heavily connected to them.

As for actual crime, many police and politicians believe that the Yakuza do their part in keeping crime down. Or at least, that is the unofficial justification. Nearly every politician promises to crack down on Yakuza and general crime.

Many Yakuza groups are organizations that style themselves as legitimate organizations that are steeped in tradition and bound by codes. Most even have their own mon, which are the same type of crests that samurai clans often used.

Many of the major Yakuza groups strictly ban selling drugs, "excessive" violence toward 'civilians' (those not involved in the underworld), committing burglary, rape, or murder, and other "severe" crimes. Independent gangs and criminals, or indeed other Yakuza, that did these things on Yakuza territory were often subject to Yakuza justice. So in a way, some Yakuza acted as intimidating, thuggish-if-you-don't-give-me-what-I-want guardians of their neighborhoods. And Yakuza are famous for aiding communities in times of disaster.

But it's also important to remember that plenty of Yakuza did do these things. Rules and what activity at what level is totally up to the individual Yakuza groups and as a decentralized organization, it was not unheard of for a Yakuza faction within even the strictest groups to deal on the side in secret. And in lieu of these profitable crimes, Yakuza groups still make their money from very unsavory activities, such as intimidation, protection rackets, illegal gambling, money loaning, money laundering, fraud, prostitution, human trafficking, pyramid schemes, phishing scams, etc.

In general, it's particularly important that Yakuza groups prefer to deal with their problems using their money or connections, whether in the business or political world. Yakuza tend to avoid using overt acts of violence, and avoid murder whenever possible.

Gang wars like in Mexico, the US, China, etc are unheard of and essentially unthinkable in Japan. Any romantic ideas of Yakuza that Japanese people hold would evaporate the moment the scale of violence committed by Yakuza approached even a 10th of the gang violence in these other places. A lot of public acceptance of the Yakuza stems from the fact that they generally don't threaten the lives of people and don't overtly disturb the peace.

Lastly, Yakuza have been romanticized for decades

There are innumerable novels, movies, and publications that romanticize the Yakuza. And it's in a completely different way than other crime organizations are usually glamorized.

In their most favorable depictions in media, the 'ideal' Yakuza is never ostentatious, humble, loyal, compassionate, and just. They are always compared to the slimier Yakuza characters, who invariably flash lots of money, are greedy, easily bought, attack people needlessly, etc. Comparisons of honorable Yakuza to samurai are a constant thing from both regular citizens as well as the Yakuza themselves. Indeed, many Yakuza justify their collection of protection money by raising comparisons to the fuedal taxes that samurai would levy on those not of the exclusive warrior class.

This narrative of a modern day samurai combined with belonging to a close knit fraternity of brothers is very appealing to many Japanese people, even if this doesn't match up entirely with how the modern Yakuza acts.

This about wraps up all the general overview and lays down a lot of ground work.

If you have any follow up questions, feel free.