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Major parties both fall short

by Takamitsu Sawa

The Democratic Party of Japan, which was in power for three years and three months from September 2009 to December 2012, seemed to lack the sensitivity to listen to “silent voices” of the voters whose dissatisfaction had accumulated over a protracted economic stagnation.

Liberalism was the central theme of the party’s manifesto for the 2009 Lower House election. But its emphasis was placed disproportionately on measures to equalize the distribution of wealth, such as making public high school tuition free and granting allowances to parents of every child up to ninth graders. The party failed to pay sufficient attention to economic growth and employment — issues that would be the top priorities for a liberal administration in Western countries.

There were two main factors that led the DPJ, which won the 2009 election in a landslide, to suffer a crushing defeat in the 2012 Lower House election:

(1) The party had no coherent economic policies — staking the fate of its administration on raising the consumption tax rate while giving only secondary importance to employment and economic growth. In the United States and Europe, at least, conservative administrations would have given priority to fiscal discipline.

And during a prolonged period of stagnation, the priority for a liberal government would have been to raise taxes on the wealthy — rather than raise the consumption tax.

The DPJ’s version of growth strategy, published as “Strategies for Resuscitating Japan” in July 2012, was very close in its outline to the economic growth measures included in the economic policy of the administration of Prime Minister Shinzo Abe, known as “Abenomics.”

Perhaps there was no time for the DPJ to devise a growth strategy after staking the administration’s fate on a consumption tax increase.

(2) The liberal characteristics of the DPJ faded each time a new prime minister took office — from Yukio Hatoyama to Naoto Kan and finally to Yoshihiko Noda. This is evidenced by the results of the Tokyo Metropolitan Assembly election on June 23, in which many voters critical of Prime Minister Shinzo Abe’s government cast their ballots for the Japanese Communist Party, rather than for the DPJ. It seems to make sense that those Tokyo citizens who were against the LDP but had also been disappointed with the faded liberal agenda of the DPJ during its 39 months in power, either abstained from voting or bypassed the DPJ to vote for the JCP.

In contrast, the LDP was quick at seizing opportunities, and caught the DPJ off guard. In its platform for the 2012 Lower House election, the LDP pledged to “regain” the economy and sense of security.

A major portion of the platform dealt with economic growth, social welfare and employment, with emphasis placed on growth strategies aimed at overcoming deflation and the negative effects of the strong yen. The LDP took a cautious stance on energy issues to avoid alienating voters who want an end to nuclear power.

The party at least should be lauded for keenly sensing that many voters — especially swing voters — care the most about bread-and-butter issues. The party successfully waged a populist campaign, fanning popular dissatisfaction to drum up support for its own leader.

If Abenomics helps the Japanese economy sooner or later recover from the stagnation and deflation dating back from the early 1990s, Abe will likely make amending the Constitution his next target.

In all honesty, I am not sure how to position Abenomics in the framework of economics. Various schools of economics can be roughly classified into neoclassical and Keynesian. The differences among the various schools derive from their ideals.

Former Prime Minister Junichiro Koizumi, who boldly carried out “structural reform,” diligently followed the neoclassical economic teachings of market omnipotence. Structural reform aims to create a perfect — and therefore free and competitive — market.

In contrast, center-left governments of Europe and Democratic administrations of the U.S. side with Keynesian school teachings, on the assumption that a market cannot be restructured into perfection and that the notion of perfect market economy is a pie in the sky. Thus they think it is correct for a government to intervene in a market that is imperfect.

Abenomics may look Keynesian in that it calls for a strong government role in the economy, yet it is neoclassical in that it appears to promote deregulation. It seems to follow Keynesian policies with its disregard of fiscal discipline. But it is also neoclassical because it does not exempt social security from spending cuts for fiscal consolidation.

Indeed, Joseph Stiglitz and Paul Krugman, both American Keynesian economists, have applauded Abenomics while professor Martin Feldstein of Harvard, a heavyweight neoclassicist, has denounced it as a wrong policy.

So far, the Abe administration has focused on economic growth as its mission. From the populist viewpoint, which places importance on retaining a high approval rate among people, he is on the right track. It is not clear, however, what the prime minister thinks about modern Western values such as liberalism, democracy and individualism.

When Abenomics appeared to be rapidly driving up share prices and pushing down the yen’s value against the dollar in early May, Abe was hinting that he wanted to turn efforts to weaken Article 96 of the Constitution — a constitutional mechanism to prevent imprudent revisions — into a major campaign issue in the July Upper House election. But when the stock market tumbled and the yen started to climb on and after May 22, he decided to focus on the economy in the campaign for the July 21 poll.

As for constitutional revisions, the LDP says in its campaign promise that it hopes to propose to the Diet draft revisions of the Constitution unveiled in April 2012. It did not specifically mention that Article 96 should be changed as the first step for constitutional revisions.

At the moment, it is considered almost certain that the LDP will win an overwhelming victory in the Upper House election. While the LDP’s push for revising the war-renouncing Article 9 does not come as a surprise, some parts of the party’s draft revisions raise concern.

One is a proposal to change a clause in the current Constitution that “every citizen shall be respected as an individual” into “every citizen shall be respected as a human” — a change that could be interpreted as denying individualism.

Another part of the LDP’s draft says that although freedom of expression is generally guaranteed, it will be denied “if public interests and order are harmed.”

It is of great concern that the LDP draft includes revisions that run counter to the principles of freedom and democracy.

Takamitsu Sawa is president of Shiga University.