HONG KONG – The “landslide” victory of Shinzo Abe and the Liberal Democratic Party was much less than it seemed. The party won only 43 percent of the popular vote in the constituencies and a mere 28 percent in the proportional representational seats.
Given the record low 59 percent turnout, the new government may be able to claim a core support of 30 percent of the Japanese people.
But victory is victory, and Abe has shown a determination to supply the leadership that evaded the dithering and squabbling Democratic Party of Japan and was part of their downfall. However, Abe and Japan must beware that the smack of firm government takes the country on the right, not the wrong, road, or it could lead to a bigger mess that Japan can ill afford. It is important that the media, academics, business and political leaders scrutinize Abe’s policies carefully and constructively to ask where his road is leading the country.
Abe comes burdened with potentially dangerous baggage. He has been labeled a “nationalist”. In a simple sense of wanting the best for the country, every politician should be a nationalist. Unfortunately the word has been hijacked by rightwing politicians who are urging Abe to stand up for Japan, which, in their view, means vigorously challenging China over who owns the Senkaku Islands (called Diaoyu in China), and rewriting the “American-imposed” Constitution to get rid of the tiresome Article 9, so that Japan can become a “normal” nation proud of its glorious past history.
Some of this is dangerous and other parts are nonsense. It is not in Japan’s interest or in China’s to heat up the argument over the disputed barren islands; both countries need more, not less, cooperation.
Rightists should be exposed for their canards on the Constitution, which was negotiated fiercely in the Japanese government and Diet.
In its fine sentiments, including renunciation of war and equal rights for women, it is a declaration of Japan as the new “normal” nation from people yearning for peace after the folly and misery of war.
Abe’s priority should be the economy. He already has a plan, nicknamed “Abenomics.” But there is nothing really new about it, a mixture of a massive public works and construction spending program along with pressure on the Bank of Japan vigorously to pursue monetary easing as a way out of the deflation and recession into which Japan has fallen.
Robert Feldman of Morgan Stanley called it a policy “to print and spend.” It is a gamble that will do nothing for Japan’s budget deficit or the country’s mounting debts, already 240 percent of gross domestic product, or twice those of Greece.
Japan does need to spend money on infrastructure, but it is on the tedious but important tasks of checking and repairing aging tunnels, roads and bridges that are bearing the strain of heavier traffic than they were built to withstand.
Politicians keen to show they are doing something prefer glamorous new projects such as new express railway lines to remote parts of the country, swanky town halls in the countryside, bridges connecting rural islands.
I remember many sessions at the ministry of finance in the early 1990s — when, remember, the Liberal Democrats enjoyed the power of 40 years in office — when officials rolled out massive public spending on a series of supplementary budgets to boost the faltering economy. The first time it happened it was exciting, wow trillions of yen to lift the economy. But on the fifth time in 18 months, it became hard to keep track of how many of what were obviously pork-barrel projects to please politicians were fresh and how many were recycled from previous laundry lists.
Big spending projects also kept the construction industry occupied and happy to bankroll politicians. Someone should do a Ph.D. examining how many kilograms of concrete and how many trillions of yen it takes to create a billion yen of corrupt money or lift GDP by 0.1 percent. Suffice to say that the once beautiful Japanese countryside is already despoiled by concrete, and most free-flowing rivers have been dammed to trickles.
Abenomics would mean small immediate gains at the loss of long-term reforms of the economy. The policy did not work in the 1990s and the economy is in a more parlous state today. Leading household name Japanese companies, including Sony, Panasonic and Sharp, battered by the high yen, are losing their way to nimbler competitors from South Korea, Taiwan and China.
For all the doom and gloom, Japan’s is still the world’s third largest economy and has the advantages of a well-educated hard-working literate and numerate population, a good hi-tech base and established companies with an international presence. Reforms are needed to restore Japan’s competitive edge and tackle the drains on the country’s finances.
Reform will not be easy because it means acting tough with powerful vested interests and ultimately breaking up the cozy club of leading bankers, bureaucrats, businessmen — and they are virtually all men — and politicians allied with key interests like construction and agriculture, which steadfastly do not want to change.
The IMF has suggested that giving Japanese women the same active role in the economy that women have in other rich countries would give a tremendous boost to the economy. The IMF underestimates the boost, but overestimates the political and institutional difficulties of achieving it.
Nippon Keidanren, the powerful club of leading business companies, reported last year that if career hiring for executive positions in member companies were gender blind, then 70 percent of the jobs would go to women; but only 12 percent of those hired are women.
Japan’s so-called “lifetime employment system” means just that — that someone joins fresh out after his undergraduate degree and remains for life, molded by the company practices, working 9 a.m. to 9 p.m. days or longer, perhaps taking the small holidays he gets with other company members. There is no time for paternity leave, let alone for maternity leave or a break to have a baby. Some critics have suggested that bringing women into the executive labor force is a matter of better childcare provision, but it goes beyond that. A government survey this year showed that 51 percent of Japanese believe that a wife’s place is in the home.
Lifetime employment is breaking down, but mainly for lower paid positions. Today 35 percent of Japan’s jobs are filled by contract or part-time workers, but this has added to the economic uncertainty of many people and contributed to deflation.
Japan’s economic reforms will also have to tackle the growing costs of the welfare system weighed down by a rapidly aging population. There is no sign that Abe or the LDP have the imagination, let alone the guts, to do this.
Nor is there any indication that the new government has plans to tackle entrenched protected interests. A key test will come over whether Tokyo joins the Trans-Pacific Partnership trade negotiations, which outgoing Prime Minister Yoshihiko Noda was edging toward over the opposition of many party members.
Typical of Japan’s political stagnation, TPP has been seen as an all or nothing deal, with farmers, unwilling to change their lucrative protected ways, protesting vigorously.
An imaginative government would use TPP as a way of releasing new energies into a needlessly moribund economy. But don’t hold your breath.
Kevin Rafferty was managing editor at the World Bank 1997-1999.
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