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The LDP’s tobacco addiction tells a much bigger story

Of all the fissures between Shinzo Abe and Yuriko Koike, cigarettes may be the most telling

by William Pesek

Of all the fissures between Shinzo Abe and a Tokyo governor who’s become the bane of his prime minstership, cigarettes may be the most telling.

Like U.S. governors defying U.S. President Donald Trump’s retrograde policies, Yuriko Koike plans to ignore the Liberal Democratic Party’s tobacco addiction. Days after Abe’s LDP killed a smoking ban in indoor public spaces, Koike said she’ll step up efforts to make Tokyo smoke-free. And good on her. Koike is exposing the cravenness of coddling a despicable industry at the expense of tens of millions of citizens who care about the alveoli in their lungs. What’s more, she’s exposing why Abenomics is going up in smoke.

Nonsmokers like me are forced to breath second-hand soot estimated to kill 15,000 Japanese every year. So, yes, this issue is personal. That doesn’t change the fact that the lost-business argument peddled by the tobacco-industrial complex, is bunk. As London, Madrid, New York, Paris, Shanghai and any host of global cities that showed backbone against Big Tobacco proved, people will drink, eat and be merry even if they can’t light up. They suck it up and move on.

Yes, yes, I know: Japan is different. Yet the idea that bars, cafes and restaurants would go bankrupt is a retread of the “unique” intestines and snow argument Japan Inc. used in the past to limit meat and ski imports. Let’s call this what it really is: the LDP, again, protecting its benefactors at the expense of the greater public good.

This remains a puffer’s paradise, in part, because the Finance Ministry owns one-third of Japan Tobacco. True, Tokyo’s tentacles are now less intertwined with the formerly state-owned monopoly. But the co-dependency between Tokyo and the world’s No. 4 cigarette peddler is still a problem. Tokyo is as hooked on the ¥2 trillion of tax revenues tobacco adds to state coffers annually as smokers are to nicotine. The LDP is so addicted to tobacco cash that 90 percent of members oppose an indoor smoking ban.

The LDP championing cigarettes is emblematic of Abe talking big about shaking up the establishment only to enable it. Abenomics, for example, has gotten kudos for joining the Trans-Pacific Partnership and agreeing to trade a deal with European Union. Below the surface, the list of prefectures and sectors lining up for compensation to withstand the ravages of free trade is growing. It means taxpayers will be subsidizing agricultural, dairy, livestock, forestry and other interests for being uncompetitive.

Koike, by stark contrast, has been a breath of fresh political air. In just one year in office, the governor has championed a level of transparency, accountability and forward-thinking Abe hasn’t mustered since 2012. As Koike raises questions about why the Tokyo 2020 budget has already doubled and the muskiness surrounding Tsukiji-gate, Abe is deflecting them on alleged cronyism from Osaka to Okayama.

The gulf in political courage fits a pattern. Koike isn’t just looking at two weeks of sporting events in 2020 that few will remember a year later — she’s eyeing where Tokyo wants to be in 2025 or even 2045. Abe, sadly, it preoccupied with 1945. His obsession with correcting what he perceives as the constitutional wrongs of that period, of rehabilitating the reputation of the generation of his grandfather Nobusuke Kishi, is as backward-looking as his economic-revival strategy.

Really, what is Abenomics, with its yen devaluations, corporate welfare and public-works spending, other than a futile attempt to reanimate an economy that existed in 1985? Koike is going the other way: calling for a “warts and all” appraisal of why Hong Kong and Singapore are destinations of choice for bankers, entrepreneurs and foreign investment. That means an honest and unfettered look at Tokyo’s bureaucracy, daunting language barrier, groupthink, antiquated corporate-governance norms, institutionalized sexism and even a bond market effectively controlled by the central bank.

While Abe travels the world to declare “Japan is back” and “buy my Abenomics,” Koike wants to internationalize a “Galapagos” economy she says suffers from “regulations and tax systems that are far from global standards.” Decisions in recent years by Citibank, HSBC, Merrill Lynch, RBS, Societe Generale, Standard Chartered and others to leave or scale back Japan operations proves Abenomics is more smoke than fire.

The biggest failure, other than glacial implementation, is a lack of imagination. There are no real plans to catalyze a startup boom or encourage risk taking. Nor is there room to break the most basic of fiscal orthodoxies. In 2019, for example, Abe plans to go ahead with a consumption tax hike from 8 percent to 10 percent. Sure, Japan’s fiscal health needs attention. But rather than hold another such increase over deflation-wracked consumers, why not find other revenue sources? One idea: triple or quadruple cigarette taxes, which are negligible relative to global standards.

If only Abe and his party were less beholden to vested interests, his efforts to defeat deflation would get more traction. Let’s hope Koike succeeds in kicking Tokyo’s cigarette habit, one of among many ways she’s working to clear the political air.

Tokyo-based journalist William Pesek is the author of “Japanization: What the World Can Learn from Japan’s Lost Decades.”