by Tobias Harris and Colum Murphy
Posted July 3, 2009
On a sweltering afternoon in June, the rice fields outside the small town of Omagari in Japan's northern Akita prefecture are eerily deserted. Only the voice of Kimiko Kyono belting out from the speakers atop her orange Nissan breaks the silence. "Konnichiwa!" she exclaims to the open fields. "This is Kimiko Kyono of the Democratic Party of Japan!" Finally she spots a farmer: "Over there!" A campaign aide drives the car through the field in hot pursuit of the lone voter.
Ms. Kyono, one of the DPJ's potential candidates in parliamentary elections likely to be called at the beginning of August, has an unenviable task. She is trying to win over risk-averse voters person by person to the opposition party formed in 1998. Yet this youthful looking mother of four is not fazed. "Last time I lost by 30,000 votes," she says. "This time I hope to win or at least close the gap."
The incumbent Liberal Democratic Party has been in power for almost six decades, apart from a 10-month period in the early 1990s, and discontent with its performance is at an all-time high. Chronic disillusionment with LDP's ineptitude and the increasingly severe economic conditions of recent years mean that, even here in the conservative heartland and LDP stronghold, more voters like Ms. Sasaki are contemplating giving the DPJ a shot at ruling the country.
The DPJ under current leader Yukio Hatoyama promises that it would use an election mandate to bring sweeping changes to Japan. The party has devised a set of policies aimed at cushioning citizens from harsh economic realities. Of greater long-term significance, the DPJ has ambitions to overhaul the country's governing structure, which under the LDP has rested on opaque internal party decision-making processes and underhanded cooperation between the party and the bureaucracy. Instead, the DPJ promises government that is more efficient, transparent and accountable. In short, policy making in Asia's oldest democracy would finally move out of the proverbial smoke-filled back rooms.
Political transformation is already underway. Japan now has, for the first time in decades, a viable opposition party in the DPJ, which earned the trust of the public when it became the largest party in the upper house in 2007. A strong mandate at the polls could bring an end to the political paralysis that has hampered the revitalization of Japan's economy and society.
Ms. Kyono's home prefecture, Akita, is in many ways at the front line of Japan's decline, a microcosm of many of the problems that bedevil the country. It is an appropriate laboratory for DPJ's policies related to demographic issues, including the elderly and farmers. Across a host of indicators, the prefecture—together with neighboring Aomori prefecture and the southern island prefecture of Okinawa—finds itself at the bottom of the rankings. Michael Lacktorin, professor of economics at Akita International University, says the No. 1 problem facing the prefecture is demographics. There are around 1.1 million people in Akita, but this is declining by 12,000 people, or around 1%, per year. Half of the decline is from death, half from "social movement" by job seekers.
Japan's aging society is on full display in Akita. On a recent morning in June, most customers at a large supermarket in Omagari were elderly. In October 2007, 28% of Akita's population was over the age of 65, close to six percentage points higher than the national average. Average per capita income in the prefecture for fiscal year 2005 was around 2.3 million yen ($24,100), well below the national level of 3 million yen. Agriculture plays an important role in the prefecture's economy, and here, as in other parts of Japan, farmers are struggling. The percentage of those engaged in full-time farming is dwindling, and more and more rural dwellers are relying on the government sector for employment.
Of course, the latest economic crisis has exacerbated these long-standing social problems. While there are some signs of a recovery, demand for Japanese exports fell sharply in late 2008 and in the first quarter of 2009, causing a sharp economic contraction—gdp fell 3.5% in the fiscal year that ended March 31, a record fall since records began in 1955. The contraction has put pressure on the Japanese workforce, as unemployment rose to 5.2% in May. There are few signs that foreign demand will recover quickly, reinforcing the need for measures to stimulate domestic demand, despite having already budgeted roughly 2% of Japan's gdp for economic stimulus since autumn 2008. Meanwhile, Japan's colossal national debt continues to grow and the goal of a balanced budget pushed back due to the Aso government's antirecession stimulus measures, while social-security spending is soaring as the population ages.
In short, the economic crisis has exposed just how illusory the Koizumi boom years were, based as they were on healthy demand for Japanese goods in the United States and China and on the growing use of temporary and other irregular workers by Japanese businesses. The challenge for Japan's government remains finding the right balance between public demands for social protection, and the need for structural reform and fiscal restraint. The DPJ believes it can strike that balance.
Exit LDP, Enter DPJ
The litany of problems facing Japan has given the DPJ plenty of fodder for devising policies with a clear appeal to the much suffering Japanese, and even given some of the most diehard supporters of the LDP cause to stop and reconsider. That said, it is hard to differentiate between the LDP and the DPJ on the basis of policies alone, especially since many measures seem to pander to the same constituencies, for example the farmers. Perhaps this should not surprise us— Mr. Hatoyama and former party leader and party founder Ichiro Ozawa are both former LDP members.
Even so, the DPJ has done a better job at shaping its policies into a somewhat coherent "manifesto." At the party's modest headquarters in Tokyo's Nagatacho district, former DPJ policy chief Yukio Edano explained that the most important goal of the party is to expand Japan's social-safety net, and many of these policies are specifically aimed at alleviating the two main problems facing the rural areas—the aging population and declining agriculture. That includes addressing Japan's faulty pensions system—antiquated in its management, Byzantine in its organization, and underfunded given growing liabilities—by creating a model based on Sweden's and supported by the whole of consumption-tax revenue at the current rate of 5%. Mr. Edano says the DPJ also plans to increase spending on health and nursing care. The party plans to introduce an individual household income-support system to make Japanese farmers feel more secure about engaging in agriculture. Another sweetener is the launch of a per capita child allowance of 26,000 yen per child per month.
This is an expensive shopping list, but can be financed partially by the DPJ's plan to eliminate wasteful government spending, says Mr. Edano. The party has identified savings of around $104 billion that it plans to redirect to other areas, including into the country's pension system. An increase in consumption tax from the current 5% will happen, but not for "another five or 10 years," says Mr. Edano.
When it comes to economic policies, however, details are vague. While there are references to revitalizing small- and medium-sized enterprises through a "SME Charter," the party falls short on specifics. It, like the LDP, has been unable to outline a plan to fix Japan's finances and it seems that it doesn't quite know how to revitalize regional economies such as Akita's. The DPJ's manifesto contains a lot of little ideas animated by the vision of a "secure society," but nothing terribly concrete on how to restore corporate Japan back to its former glory. By appealing to anxiety about the country's mismanaged pension schemes and inadequate health-care system for the elderly, especially in remote areas, the DPJ is hoping to expand its support base. But it could still botch the campaign. "If a golfer reaches the green, then he should be able to putt his shot," Mr. Edano says. "But the DPJ is still at the tee and is using a driver. At this stage, even top professionals can hit a shot out of bounds."
Should the DPJ manage to come to power, it will not be on the strength of its policies alone. The party's success so far is clearly due to the LDP's unpopularity. The ruling party has been on the decline ever since it won a historic victory in the 2005 general election. Under the leadership of then-Prime Minister Junichiro Koizumi, the LDP, with the help of Komeito, its coalition partner, secured an unprecedented supermajority in Japan's House of Representatives on the basis of Mr. Koizumi's personal popularity and his campaign to privatize Japan Post.
The 2005 election seemed like a turning point for Japanese politics, the apotheosis of Mr. Koizumi's crusade to destroy the "old" LDP, smash the bureaucracy and institute reforms to liberalize the economy. But within a year Mr. Koizumi was out of office and his successor, Shinzo Abe, was less interested in economic reform than pursuing his dream of making Japan a "normal" country through revision of the Constitution and reform of education curricula—issues that did not resonate with the public.
What followed is all too familiar: the readmission of ousted postal rebels to the LDP, the Abe government's mishandling of the 2007 pensions crisis followed by the DPJ's victory in that year's upper house elections, the substitution of Yasuo Fukuda for Mr. Abe, and then a year later, the substitution of the incumbent Prime Minister Taro Aso for Mr. Fukuda. It has been four years of scandals, of policy decisions avoided, of reforms watered down or scrapped entirely—and of persistently low public approval numbers. Add the failures of the past four years to the LDP's record over its nearly unbroken run of 55 years in power and it seems reasonable that the upcoming general election will result in a historic defeat for the LDP and the birth of a DPJ-led government.
Of course until the election is held it is possible that the LDP—with a history of pulling out miraculous victories—will survive. A scandal involving former DPJ leader Mr. Ozawa in the spring led to a slight uptick in the Aso government's approval ratings, but Mr. Ozawa's resignation halted the DPJ's decline and has effectively triggered a terminal crisis in the LDP.
As of early July, Mr. Aso continues to face plummeting poll results, open calls for his resignation, and demands that he move up the party leadership election scheduled for September to give the party a chance to choose a new leader in advance of the general election. Meanwhile, Mr. Ozawa is still a driving force in the DPJ. "If the election were held today, we would win," a party strategist said in an interview with the review in June. The polls, though frequently unreliable, point to DPJ carrying the day. "Barring some cataclysmic event" the DPJ should win a plurality in the coming election, says political analyst Jun Okumura.
Consolidating Power
Getting elected is only the beginning of the party's challenges. If it is going to deliver on its promises, the DPJ will need to redefine how government works in Japan. If a change of government is to have lasting significance, the DPJ must revolutionize Japanese democracy. If the DPJ merely replicates the LDP's bad practices, not only will it be ineffective as a ruling party but it will likely deepen the public's disillusionment with the political system. A DPJ government's task will be to transform what academic Aurelia George Mulgan has called Japan's "Un-Westminster" system into a proper Westminster parliamentary democracy, with power concentrated in the cabinet.
LDP rule has long been characterized by a sharp division between cabinet and ruling party, with the LDP's formal and informal policy-making organs having an established role in the policy-making process that enable LDP politicians outside government to wield a veto over the sitting government's agenda. At the same time, the bureaucracy has had an outsized role in policy making and as a whole wields political power unmatched among developed democracies. It has been a full-fledged player in a "triangular" struggle for power with the LDP and the cabinet.
The result of this ongoing struggle has been paralysis, particularly after the bursting of the economic "bubble" in the early 1990s, as politicians and bureaucrats struggled to defend their prerogatives and budget shares while various prime ministers attempted to use a newly empowered cabinet office to undermine both LDP and bureaucracy and impose a vision for governing. The Koizumi government was at once a high water mark for this struggle and for the strength of the prime minister and the cabinet in the conflict; the three years since Mr. Koizumi left office have witnessed a steady decline in the ability of the prime minister to corral party members and bureaucrats. Rather than building a Westminster system, Mr. Koizumi strengthened the position of the cabinet within the tripartite governing system without fundamentally transforming the system.
The DPJ seems aware that in order to implement policy it must transform the policy-making process. Naoto Kan, the DPJ's acting president, visited the United Kingdom in early June to study the relationships between cabinet and ruling party and cabinet and bureaucracy in the British system of government. After meeting with senior Labour and Conservative politicians, Mr. Kan returned to Japan impressed by how Britain has enforced the political neutrality of the bureaucracy, ensuring the supremacy of cabinet over ruling party and civil service. In an article in the July issue of the monthly Chuo Koron, Mr. Kan outlines a model for what the DPJ hopes to achieve in constructing a "parliamentary cabinet system" (in contrast to the LDP's "bureaucratic cabinet system").
Describing LDP rule, Mr. Kan argues that the LDP, due to the perpetual gap between cabinet and party, delegated far too much to the bureaucracy, and as a result the government has struggled to resolve the cluster of social and economic problems that have ensnared Japan. According to Mr. Kan, the DPJ will unify ruling party and government to avoid the acrimony that has often characterized the relationship between the LDP and LDP-supported cabinets. To prevent party leaders from being in a position to undermine the government, the DPJ plans to include the party's secretary-general and policy research council chair in the cabinet, with the former responsible for legislative affairs and the latter assuming the critical post of chief cabinet secretary. The DPJ will prevent backbenchers from sidestepping the cabinet to work with bureaucrats through the ruling party's policy research council to draft legislation, and will deny the party's senior leaders outside of government a veto over policy, a right currently possessed by the LDP's general council, which has the power to decide whether a policy will go to a cabinet vote. Indeed, the DPJ abandoned the model of a general council early in its existence and replaced it with a shadow cabinet.
Second, the DPJ aims to strip the bureaucracy of its budgeting authority. Mieko Nakabayashi, a DPJ candidate from Kanagawa prefecture, says Japan's current opaque budgeting process is "undemocratic." "You cannot hide Japan's budget and economic situation forever," says Ms. Nakabayashi, who worked for an extended period in the U.S. Senate Budget Committee. "Hiding things from people has reached saturation point." Here too, the DPJ will not be starting from scratch: A round of administrative reforms early in the decade created the Council for Economic and Fiscal Policy, an advisory council attached to the cabinet that has played an important role in macrobudgeting. But as with many reforms undertaken under LDP rule, the creation of the council was inadequate for shifting responsibility for budgeting from the finance ministry's budget bureau, and the requesting bureaus in the government's ministries and agencies, to elected cabinet officials.
In effect, the DPJ aspires to restore the Japanese Constitution, which designates the cabinet as the supreme executive body responsible for administering the law and preparing budgets, and the Diet as the "sole law-making organ." The goal of these proposals is to create a policy-making process that starts at the top, with the prime minister and the cabinet, and flows down to line bureaucrats. The government, supported by its parliamentary majority, will establish policy-making priorities and compile budgets, the Diet in cooperation with the cabinet will prepare and pass legislation, and the bureaucracy will implement the decisions of its political masters.
Staying in Power
This model is clearly an ideal type: The degree to which a DPJ-led government realizes it will depend on the political abilities of the prime minister and his cabinet ministers. Whether the DPJ's leaders are sufficiently capable remains to be seen.
One factor working in the party's favor is that it should have a mandate for political reform. A poll conducted in March by the Yomiuri Shimbun, Japan's largest daily, found that 74% of respondents did not trust bureaucrats in Tokyo, suggesting that the DPJ will have the public on its side in implementing its plans. At the same time, however, the DPJ must not allow populist, antibureaucrat enthusiasm lead it to promise more reform than it can deliver. Already some of its policies smack of populism. The party's policies for protecting farmer income, for example, will do nothing to promote competitiveness of the sector against foreign producers.
The DPJ will be operating in an environment shaped by an active news media, a public quick to voice its disapproval, an opposition party that will use every tool at its disposal to stymie the government and a bureaucracy reluctant to surrender its privileges. These obstacles do not mean reform is impossible, but they mean the DPJ must pick its battles carefully, seek allies wherever possible and moderate its rhetoric in order to maximize its freedom of action.
The DPJ may already be backing away from more extreme criticism of the bureaucracy, with Mr. Kan's acknowledging that there are many talented bureaucrats and that the party recognizes it will need their cooperation if it is to govern effectively. "The DPJ is unlikely to depart from dependence on the bureaucracy," Takao Toshikawa, editor-in-chief of the biweekly Tokyo Insideline, says, describing the party's plan to appoint 100 political appointees as "unrealistic." "The DPJ has no such manpower." Given these constraints, the DPJ is right to focus on how to concentrate power in the cabinet. Such reforms will require less in the way of legislation and allow more effective use of power by the DPJ's leaders.
More challenging will be the DPJ's desire to redistribute power from Tokyo to prefectures and localities. In his article, Mr. Kan lists decentralizing Japan as the complement to consolidating power in the cabinet, but it is unclear what decentralization means to the DPJ and how it will go about achieving it. There is more than an echo of former British Prime Minister Tony Blair's push for devolution to Scotland and Wales during his first term. Whatever form devolution Japanese-style takes, expect a protracted fight among prefectural and local governments, the ruling and opposition parties in Tokyo, the bureaucracy (which is the target of decentralization), interest groups, and at some level the public at large. In an interview, Aomori governor Shingo Mimura told the review that, in his view, any decentralization of political power must be accompanied with decentralization of budgeting power.
Considering that any sort of radical decentralization can only proceed after the DPJ has effectively concentrated power in the cabinet, stressing decentralization offers more than any government could achieve for the foreseeable future. And given the policy challenges that will face the new government, it is questionable that the first thing that it should do upon realizing administrative centralization is transfer power and money to local governments.
If the DPJ can implement its plans for administrative reform—and it's a big if—it could succeed in regime change. It will have created a "normal" parliamentary system, having transformed Japanese governance from what political scientist Jun Iio has called the LDP's "purposeless" government to a government that can set clear policy goals and be judged by its success in achieving those goals. But regime change will have little meaning for the Japanese people until the government uses its new authority to fix economic and social problems. And that will ultimately depend on the ability of the leaders of the DPJ to make hard decisions about how to fix the budget while putting society and economy on sounder footing, decisions that the LDP has been unable to make. If the new government fails to deliver despite administrative reform, it will have no excuses for inaction-and will risk falling from power.
Another element influencing the longevity of a DPJ-led government is the degree of unity the party exhibits. Critics say the party is deeply divided in many policy areas, for example foreign policy, causing some to predict the DPJ eventually will crumble. In its place, a new party that combines elements of DPJ and LDP could form. "In four or five years, you could get a reconstituted one-party system," says Malcolm Cook, program director for East Asia at the Lowy Institute for International Policy in Sydney. In the meantime, Mr. Cook expects to see even more "political paralysis" in Japan. "It's not an optimistic view."
As Japan's general election approaches, it is increasingly clear that the public is willing to take a chance on the DPJ. Shigeji Sasaki, a 58-year-old hotel worker in Omagari, Akita, says he plans to change his vote to the DPJ from the LDP so that power can be transferred over smoothly "like the American system." He says he has many demands he would like to see the DPJ government fulfill. "But in general," he said, "I want a party that can lead Japan."
The LDP has progressively lost the ability to govern its own members, has made far too little progress addressing public-policy concerns, and has failed to provide even an outline of a policy vision. If the 2009 election is a referendum on LDP rule, the LDP will be toppled. Even if the LDP wins, however, it will still be a monumental election, because an LDP government would be even more ineffective than before the election, as it would likely be deprived of the supermajority in the lower house that is its trump card in battle with the DPJ-controlled upper house. A LDP victory would likely lead to a grand coalition or a political realignment, significant outcomes in their own right.
The long-term importance of the 2009 general election will be whether a DPJ victory marks the beginning of a new parliamentary democracy in Japan and whether DPJ politicians such as Ms. Kyono and Ms. Nakabayashi—if elected—can build a new system of power that lays the foundations for future prosperity.
This article is the cover story of the REVIEW's upcoming July/August issue.
Tobias Harris is a doctoral candidate in political science at the Massachusetts Institute of Technology. He is the author of Observing Japan (www.observingjapan.com), a blog on Japanese politics. Colum Murphy is deputy editor of the REVIEW.
