Some are carefully wrapped in cotton wool and handed back to their previous owners; most are simply dumped in the hospital incinerator and burnt with all the other medical rubbish.

But in its increasingly desperate-looking bid to build a world-class biotechnology industry, Japan now has an altogether different fate in mind for the wisdom tooth: it can be made to produce human stem cells.

Those with a passionate distaste for the harvesting of human embryos for stem cells have plenty to thank Japan for. Shinya Yamanaka, the Kyoto-based professor who pioneered the synthetic embryonic stem cell, has begun using the “ethical” cells in the course of medical research. So — in his labs at least — all the exciting disease-fighting possibilities offered by stem cells can be probed without any lingering doubts over their source or morality.

Hajime Ogushi, of Japan’s National Institute of Advanced Industrial Science and Technology, has limbered up with the knockout punch. His team of researchers is able to create an embryonic-style stem cell from a part of the body that is regularly removed anyway, and that only the tooth fairy will really miss.

As with Professor Yamanaka’s synthetic masterpiece, Mr Ogushi’s wisdom-tooth based stem cell is a boon to scientists everywhere, particularly those in countries that ban the use of human embryonic stem cells in research.

The curious twist, however, is that Japan is not one of those countries.

As things stand, arguably the greatest advances in the quest for an “ethical” human stem cell have taken place in an Asian jurisdiction where, on paper, scientists had legal access to the more controversial real thing.

The catch for medical researchers like Professor Yamanaka is that, while Japan does not outlaw the use of human embryos as a source of stem cells, the paperwork required for a lab to get its hands on one is prohibitive. Even when the three telephone directory-sized application forms have been filled out, the Health Ministry takes several months to process them. The whole exercise then only releases one cell for medical use.

Neither Professor Yamanaka nor Mr Ogushi are particular fans of harvesting human embryos but their work on a synthetic alternative was more about circumventing the onerous paper shuffle than an ethical crusade.

But their work offers a glimpse into a side of Japan that remains poorly grasped by investors: that officialdom is often an infinitely more potent and effective market force than the market itself.

When listed Japanese companies explain to investors why they do not return mountains of cash to their shareholders, one of the popular refrains is that they need a cache of “rainy day money”. It is a nuanced coffer. It is not there to protect the company against a downturn in the economy, an exodus of customers or even the emergence of an aggressive rival; it is there to protect them from the inevitable day when Japan’s bloated and largely redundant bureaucracy turns on their particular sector and makes life miserable.

If the promise of capitalism is that competition breeds improvement, then the synthetic stem cell has demonstrated the oddity of supposedly capitalist Japan — it is a place where the real mother of invention is not necessity, but bureaucracy.

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