Can 'Special K' save Japan?

by Tom Plate

For all the attention given to the rise of China, it is still not the most important nation in Asia. Japan, with the world’s No. 2 economy and a growing list of problems, is.

What’s more, for Americans, this society is a virtual next-door neighbor — not some far-off Asian inscrutability. Its government buys U.S. bonds and financials in voracious quantities, thus helping to underwrite the U.S. budget; its multinationals, from Toyota to Sony, are household names; its undulating economic performance casts frightening shadows over other economies or helps light growth fires.

From this perspective, it’s not a stretch to say that, after the Republican and Democratic parties, the political party with the greatest impact on Americans — not to mention Asians — is Japan’s infamous Liberal Democratic Party, the country’s largest.

To be sure, the long-standing joke in Japan is that the LDP is not really Liberal or Democratic or even a true party. But few Japanese are laughing, for the joke’s increasingly on Japan. This ossified conglomerate of mainly narrow-bore politicians in the back pocket of vested interests is generally fingered as the lead weight dragging down Japan.

Even the LDP’s powerful secretary general, Taku Yamasaki, labels the ’90s Japan’s “lost decade” and agrees that the LDP has been part of the problem. He credits Prime Minister Junichiro Koizumi, a colleague for years, with helping Japan rediscover itself. In an hourlong interview in his LDP headquarters office, Yamasaki said Koizumi is truly committed to putting the Diet on a reduced-government-expenditure diet. Re-elected LDP president over the weekend, Koizumi will go to the country in a November national election seeking another mandate.

Retro LDP factions that stand in the way of economic reform, suggested Yamasaki, will be either marginalized or purged, even if the process fractures the LDP itself. “I won’t mind if I destroy the LDP,” Koizumi has famously said. Its pork-barrel constituencies are at the party’s rotten core and bloat the national debt: They are the targets of his fat-finding reform campaign.

To Yamasaki, Koizumi stands for no more highways that connect nothing of consequence yet are financed out of the national budget to pay off LDP campaign contributors; no more wasteful bridges crossed by 11 trucks a week; and no new taxes to give the LDP more money to throw at projects that do little except sate the appetite of greedy constituencies already filled-to-the-gills on yen pork.

The Koizumi structural reform campaign, explained Yamasaki, is like the much-applauded fat-trimming at Nissan Motors. Once in serious trouble, Nissan is back. But the company remained lifeless until the arrival of that “Carlos — an import,” in Yamasaki’s phrase. Brazilian-born, European-raised Carlos Ghosn — from Renault and Michelin — took over Nissan in 1999 when the board decided only an outsider could rock the corporate culture.

Koizumi, a career politician, is no Latin import, of course. But until recently he has been a black sheep in the LDP (it was only a few years ago that he was given a ministerial position). Many in the party loathe his arrogant flair, extravagant hair, maverick image and lack of party homage. But many voters (especially women) like “Special K” for exactly those reasons. His re-election would certainly be a vindication of his political style; it might even be a mandate for change.

Japan is more than capable when its people come together in a unified force. But gutsy leadership is required soon or the nation risks “catastrophe” (Yamasaki’s bold word, not mine) if government debt continues to soar and the old ways prevail. About one in five Japanese is 65 or older — the highest level among industrialized nations. Their needs will have to be met even as their productivity declines. Yamasaki and Koizumi admire their country’s tough, well-performing multinationals precisely because they are, well, rather un-Japanese. They trim, they revive, they grow. Why not Japan as country?

U.S. President George Bush, in next month’s expected visit, will offer warm praise for Koizumi, one of the few Asian leaders to have endorsed the Iraq adventure. The prime minister should luxuriate in the glow while he can. The Japanese people and their leader face tough decisions ahead. They’ve promised to send forces to help stabilize Iraq, but noticeably not one soldier has yet packed.

The six-party talks on Korea remain on track, but presumably North Korea’s nuclear-weapons and missile programs proceed apace — especially unnerving to the Japanese. And despite the strong rhetoric about “structural reform,” agricultural subsidies and bloated road budgets remain.

Recently, Koizumi reiterated Japan’s nation’s need to revise its claustrophobic Constitution to enable troops to participate in peacekeeping operations abroad, as Bush wishes. Should the Japanese as a people decide to move as fast as Koizumi and Yamasaki believe they should, few people in Asia would bet against Japan. But nothing so major has happened. The Koizumi diet is a big seller in Japan — but no one’s lost much weight yet.