The vote that changed Japan
Sep 3rd 2009
From The Economist print edition
The electorate has thrown out not just a party but a whole system
JAPAN is a decent, consensual and egalitarian country. Much of it is still prosperous, despite a dismal period for the economy. The beliefs of its two main political parties are often hard to tell apart. Both their leaders are grandsons of (rival) prime ministers. There were no loud celebrations when the results of the general election were announced on August 30th. It is tempting therefore to write it off as no earth-shattering event.
That would be a mistake. The vote, in which the Democratic Party of Japan (DPJ) broke the half-century lock of the Liberal Democratic Party (LDP) on power, marked the overdue destruction of Japan’s post-war political system. The question is what will now take its place.
There are three reasons to believe that this vote marks a big change. The first is the scale of the DPJ’s victory. When the LDP lost once before, in 1993, it remained easily the biggest party in the Diet, and within 11 months was back in power. Today, the LDP is devastated. It keeps just 119 out of 480 seats in the lower house of the Diet, down from 300. The DPJ has 308.
Second, the rejection of the LDP is the culmination of deep changes in Japan’s political culture. The LDP, a pro-American, pro-business consequence of the cold war, was undermined by two decades in which consumer interests and non-profit groups slowly mounted a challenge to its paternalism. Electoral reform in the mid-1990s introduced single-member districts, helping to create an opposition that could take on the LDP.
Third, by overthrowing the LDP, Japan’s voters have turfed out not just a party, but a whole system. After the LDP’s creation in 1955, Japan’s “iron triangle” of party, bureaucrats and business promoted breakneck growth, and distributed its fruits equitably: cheap finance for big business, contracts for construction companies, jobs for the masses, subsidies for farmers and re-election for the LDP machine.
But corruption flourished, as tax money went to the highest bidders. Growth slowed from the 1980s, and the system was too inflexible to adjust. Voters grew more demanding. Roads, dams and temporary, low-paid jobs were no longer enough. People wanted careers. They wanted doctors, nursing homes and decent schools that would keep young families from moving to the big cities, leaving only the old behind (see article). And they wanted confidence that the government would still be solvent when they drew down their pensions—not a sure bet in a country with a national debt approaching 200% of GDP.
Successive LDP administrations failed to respond to these demands because the government was often the weakest of the three sides of the triangle. Ministers’ best intentions were undermined by bureaucrats or party barons with their own networks of power. Hence the voters’ rejection of the old system in favour of something unfamiliar in Japan: an open and accountable government.
The huge task of creating it falls to Yukio Hatoyama, whom the Diet will appoint as prime minister on September 16th. It is not clear whether he, or his party, is up to the job; for alarmingly little is known—even by the voters—about the people who have taken power in the world’s second-biggest economy.
In opposition the DPJ tapped into the powerful, rather Nordic, vision of their society that many Japanese people cling to and fear they are losing. Accordingly, it rejected the free-market version of change championed by Junichiro Koizumi, a reforming LDP prime minister. This left-leaning, pro-union bias explains the party’s silence on liberalisation and deregulation of medical and other services that would boost productivity and help create the demand and jobs that Japan badly needs. The party has also made mild anti-American noises about military bases and the Japanese fleet. A market economy might be just about acceptable to the party, but an American market society, however defined, is not.
To Western ears, some of this sounds worrying. Yet the DPJ may be less frightening in office than in prospect. It has already begun to temper its foreign-policy rhetoric to calm American nerves. And its big economic idea, radical by Japan’s standards, is broadly welcome. Where the LDP looked after producers’ interests, the DPJ says it will put consumers first. It also says it will steer the economy away from export-led growth towards domestic demand. These assurances, coupled with a stronger social safety net and employment provisions (see article), may help lift some of the deflationary fog that has lain heavy over Japan for so long.
Bureaucrats and the budget
But all this depends on Mr Hatoyama’s first task: redesigning government. Here he starts with an advantage. Unlike the LDP, the DPJ government will not have to fight off a parallel party power structure when it makes policy. The cabinet will therefore be more powerful, and more accountable.
The test will be taking on the bureaucracy. Mr Hatoyama will have to strike a delicate balance. On the one hand the DPJ demands accountability, and promises to break bureaucrats’ backs to get it. On the other, it needs to harness bureaucrats’ talents if it is to formulate and carry out sound policy, particularly since so many new DPJ politicians are wet behind the ears.
How Mr Hatoyama both motivates bureaucrats and punishes them when they step out of line will make or break the DPJ. The crucial battle comes between now and December, in drawing up the budget for the 2010 fiscal year. Ministries have already submitted their spending plans, including pork for favoured groups, hoping for the usual lack of political oversight. The DPJ promises to rebuild the budget-making process from scratch, going through programmes line by line. That, too, is a chance for the new government to show that it is not as profligate as its opponents have claimed.
Japan has had other opportunities for reform, and has failed to take them. Mr Hatoyama, with no favours to return, has a chance both to revolutionise how Japan is governed and to revitalise the economy. He will need judgment for the first, and imagination for the second. Wish him plenty of both.