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Abe calls snap elections in Japan as recession returns

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Barely hours after the news that Japan is entering a recession, with an annualized GDP drop of 7.3% in the second quarter and 1.6% in the third quarter, prime minister Shinzō Abe (安倍 晋三)  has announced snap elections that will be held sometime in mid-December.Japan

Ostensibly, Abe’s rationale is his determination to postpone the next installment of Japan’s consumption tax increase, which jumped from 5% to 8% in April and is set to rise further to 10% in 2015.

But that’s an obvious fig leaf — the consumption tax is the legacy of the opposition government that Abe defeated in his landslide victory in December 2012.

Instead, Abe hopes to maximize his government’s relative popularity and to take advantage of a scattered opposition to win a rapid mandate next month and extend the LDP’s control for another four years instead of waiting to face voters in 2015 or 2016, when the opposition could be stronger and when Abe’s policies might be even less popular. Abe also faces an internal LDP presidential election next year — it will be hard for rivals to attack Abe so soon after a successful election victory.

Ultimately, however, the election is also a referendum on ‘Abenomics,’ the most audacious experiment in neo-Keynesian economic policy today. Continue reading Abe calls snap elections in Japan as recession returns →

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Who is Yoichi Masuzoe?

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yoichiTokyo certainly seems to have a fondness for electing colorful characters as its governors — and its newly elected governor appears like he will be no exception.Japantokyo

Yōichi Masuzoe (舛添 要), who easily won the Tokyo gubernatorial election on Sunday, first became well-known in the 1990s as a television commentator.  In 1998, he wrote a book, When I Put a Diaper on My Mother, which detailed the process of caring for his elderly mother and gave Masuzoe a platform to discuss health and aging in Japan.  That’s particularly relevant for Japan, which has the world’s second-highest median age (44.6, just 0.3 years higher than Italy), and where the population peaked at just over 128 million in 2010 in what demographers believe will be a massive depopulation over the coming decades.

Masuzoe (pictured above) first ran for the Japanese governorship in 1999, though he placed third with just 15.3% of the vote.  Elected to the House of Councillors, the upper house of the Diet (国会), Japan’s parliament, in 2001, Masuzoe rose through the LDP ranks.  He chaired a constitutional panel in 2006 that advocated amending Japan’s Article 9, thereby allowing the Japanese Self-Defese Forces to become a full army.  Shinzō Abe (安倍 晋三), who was then in his first stint as Japan’s prime minister, appointed Masuzoe as Japan’s minister for health, labor and welfare, a position he held between 2007 and 2009, when the LDP suffered its most severe postwar electoral defeat.

He left the LDP in 2010 to form the New Renaissance Party (新党改革) at a time when his national profile seemed to be rising.  But by the time a national election came along in December 2012, the LDP was set to win a landslide victory under Abe and his economic program, popularly dubbed ‘Abenomics.’  Eclipsed by the Japan Restoration Party (日本維新の会), a merger of the two new parties of Tokyo’s governor at the time, Shintaro Ishihara (石原 慎太郎), and Osaka’s young mayor, Tōru Hashimoto (橋下 徹), the New Renaissance Party failed to win a single seat.

Today, the Japan Restoration Party is setting its sights somewhat lower after a disappointing result in the July 2013 elections to the House of Councillors and a series of bad publicity for Hashimoto, who defended the use of ‘comfort women‘ by Japanese soldiers in World War II in May 2013, has called snap elections in Osaka, where he’ll stand for reelection after proposing the merger of Osaka’s city and prefectural governments.

But Masuzoe is today riding high — running as an independent with the support of the LDP and its conservative Buddhist ally, New Kōmeitō (公明党, Shin Kōmeitō), Masuzoe won the election in a near-landslide, garnering more than double the support of his nearest challenger, Kenji Utsunomiya (宇都宮 健児), a Japanese attorney and anti-nuclear activist, and the runner-up in Tokyo’s December 2012 gubernatorial election.   

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In third place was the man who once threatened to knock Masuzoe from his frontrunner perch — Morihiro Hosokawa (細川 護煕), who served as prime minister between August 1993 and April 1994, leading the first non-LDP government since 1955.  Though he resigned over accusations of bribery, and thereupon left politics, the DPJ recruited him for the 2014 Tokyo race.

Though Hosokawa had the formal support of the DPJ and Masuzoe the formal support of the LDP, several top Democratic Party figures backed Masuzoe.  Junichiro Koizumi (小泉 純一郎), the LDP architect of economic reform in the 2000s, backed Hosokawa, in large part due to his anti-nuclear stance.

In contrast to Utsunomiya and Hosokawa, who pledged to limit spending on the 2020 Olympics and opposed a return to nuclear energy, Masuzoe supported return to nuclear energy and now stands a good chance of ushering Tokyo through to the 2020 Olympics with plenty of LDP patronage, though Masuzoe will face reelection in 2018.  Earlier Monday, Abe’s government appeared to push with renewed vigor to restore Japan’s nuclear power capability just three years after the Fukushima nuclear meltdown, and at times, the Tokyo gubernatorial race felt like a showdown between Abe and Koizumi, arguably the two most successful political figures in Japanese history of the past two decades.

The truth is that Tokyo voters weren’t thinking about the contest as a referendum on nuclear power, but competent city governance.  Abe, still basking in the success of his economic program (though that success may be somewhat less impressive than it was half a year ago), was always going to cast a large penumbra in the race.

Moreover, Utsunomiya and Hosokawa split the mostly anti-Masuzoe vote — had they united, they would have stood a strong chance at overtaking him, thereby denting the political invincibility that Abe and the LDP have enjoyed since December 2012.   The fourth-place candidate, Toshio Tamogami, a former general in the Self-Defense Forces, waged a largely nationalist, militaristic campaign, enough to win 12.4% of the vote that might have otherwise gone to Masuzoe.

Masuzoe expressed other odd views during the campaign — he indicated, rather bizarrely, that he didn’t believe women were capable of leading the country, inspiring an equally ‘sex boycott‘ among Tokyo women.

Back in Tokyo, Masuzoe is in good company historically though, given that the Tokyo governorship has attracted some of Japan’s most colorful politicians on the left and the right.

Continue reading Who is Yoichi Masuzoe? →

Japan

Japan pushes forward with consumption tax hike

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Earlier this month, Japanese prime minister Shinzō Abe (安倍 晋三) moved forward with plans to increase the top rate of Japan’s consumption tax from 5% to 8%, effective as of April 2014 — and he is expected to allow the rate to rise further to 10% in autumn 2015. Japan

It was the first major policy decision since Abe led his party, the long-dominant Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō) to a landslide victory in the July vote that elected one-half of the seats (121) in the House of Councillors, the upper house of Japan’s parliament, the Diet (国会).  That vote was essentially a referendum on Abe’s big-spending economic stimulus program — widely called ‘Abenomics’ — following Abe’s equally impressive victory in December 2012 in the elections for the House of Representatives, the Diet’s lower house.

It’s notable for three reasons. Continue reading Japan pushes forward with consumption tax hike →

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Quivering for the fourth arrow of Abenomics (and other Japanese policy matters)

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As widely expected, Japan’s Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō) surged to an overwhelming victory in Sunday’s national elections in Japan to determine half of the seats (121) in the House of Councillors, the upper house of the Diet (国会).  While the victory wasn’t enough to give the LDP a two-thirds supermajority in both houses of the Diet, it was enough to usher in a new era of continuity, with the government of prime minister Shinzō Abe (安倍 晋三) set to consolidate power after winning election in the lower house, the House of Representatives, last December.Japan

The result leaves the LDP, together with its ally, the Buddhist conservative New Kōmeitō (公明党, Shin Kōmeitō) with a majority in the upper house, and that will give the LDP the ability to push through legislation without needing to compromise in the House of Councillors and it makes Abe the strongest Japanese prime minister since Junichiro Koizumi (小泉 純一郎) in the early 2000s and ends a seven-month period of a ‘twisted Diet,’ with control of the upper house still in the hands of the Democratic Party of Japan (DPJ, or 民主党, Minshutō).

But the LDP looked set to fall just below an absolute majority in its own right:

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In contrast, the LDP holds 294 seats in the 480-seat House of Representatives, and together with the 31 seats of New Kōmeitō, holds a two-thirds majority.  That the LDP doesn’t hold an equally impressive advantage in the upper house is due to the fact that only half of the seats in the House of Councillors were up for election yesterday and, among those 121 seats, the LDP’s dominance is clear:

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That also means that the Democratic Party doesn’t face an immediate wipeout, and it will remain the chief opposition party — in fact, their 59 seats in the House of Councillors is actually more than the 57 seats they currently hold in the House of Representatives.  That will give the DPJ a legislative base from which it can attempt to rebuild itself as a political force and to position itself for 2016, when Japan’s next elections are likely to come.  Banri Kaieda, a fiscal hawk who assumed the party’s leadership after its December 2012 defeat, will stay on for now as leader.

But the Democrats weren’t the only losers on Saturday.  It was perhaps an even more difficult election for the Japan Restoration Party (日本維新の会, Nippon Ishin no Kai).  A merger between the two smaller parties of Osaka mayor Tōru Hashimoto (橋下徹) and right-wing, nationalist former Tokyo governor Shintaro Ishihara (石原慎太郎), it emerged with 54 seats in the House of Representatives in December to become as the third-largest party.  But it won just eight seats on Saturday, and the party now seems likely to split up.  That’s largely due to Hashimoto’s awkward comments suggesting U.S. soldiers in Okinawa should be permitted to use prostitutes and controversial comments that largely defended the ‘comfort women’ system, whereby Japanese soldiers forced women in enemy countries to serve as sexual slaves.  But it’s also due to the fact that nationalist tensions stemming from a standoff with the People’s Republic of China over the Senkaku Islands (Diaoyu Islands in Chinese) have calmed somewhat since last December.

One success story was the Japanese Communist Party (JCP, or 日本共産党, Nihon Kyōsan-tō), which won eight seats on Saturday, bringing its total to 11. Founded in 1922, the JCP has not been a strong force in recent years.  Though it has left its Marxist roots in the past, it has gained a modest amount of strength since the 2008 global financial crisis and it supports ending Japan’s military alliance with the United States.

But beyond the horse-race dynamics of Saturday’s result, what can we expect from Japanese policy in the next three years?  Here’s a look at eight key issues that are likely to dominate the LDP’s agenda, at least in the near future.  Continue reading Quivering for the fourth arrow of Abenomics (and other Japanese policy matters) →

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Will the real Japanese opposition please stand up? (Hint: It’s all about the factions.)

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Four years ago, Japan looked like it had finally moved toward a truly competitive party system after years of virtual one-party rule by the dominant Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō).Japan

But after a landslide LDP victory last December ushered former prime minister Shinzō Abe (安倍 晋三) back into office, the LDP once again controls over two-thirds of the seats in the House of Representatives, the lower house of Japan’s Diet (国会).  After Sunday’s House of Councillors elections, the LDP is overwhelmingly expected to re-take control of the upper house from the Democratic Party of Japan (DPJ, or 民主党, Minshutō), giving Abe a much easier time in implementing policy, likely for the next three years.  The LDP might well even find that it controls over two-thirds of the upper house as well.

Abe (pictured above) swept into power, nearly decimating the DPJ that had governed Japan from 2009 through last December, on a platform of massive monetary and fiscal intervention to boost the Japanese economy in what’s become known as ‘Abenomics.’  With approval ratings over 70%, Abe seems to have succeeded, at least in the short-term, in boosting confidence in his party and his ability to stimulate Japan’s economy after over two decades of deflation and low growth.

Critics fear, however, that if Abe controls a two-thirds majority in the House of Councillors as well, he’ll be in a position to push through amendments to Japan’s constitution, potentially paving the way for a controversial push for a more militarized Japan in the future.

Things are looking decidedly bleak for the Democratic Party.  Although only half of the seats in the House of Councillors are up for reelection, the DPJ’s grasp on power there is extremely narrow — it holds 106 seats to 83 seats for the LDP and 19 seats for the LDP’s more conservative, Buddhist ally, New Kōmeitō (公明党, Shin Kōmeitō).  Moreover, the Democratic Party would have been playing defense in this year’s elections regardless of its dwindling popularity — it will be defending 44 seats and other opposition parties will be defending 26 seats, while the LDP will be defending just 34 seats and New Kōmeitō will be defending just 10.

None of Japan’s other third parties seem capable of breaking through either.  The one party that seemed to have some momentum in December’s elections was the Japan Restoration Party (日本維新の会, Nippon Ishin no Kai), a merger between Osaka mayor Tōru Hashimoto (橋下徹) and right-wing, nationalist former Tokyo governor Shintaro Ishihara (石原慎太郎).  In particular, it was the youthful Hashimoto’s charisma that seemed to propel the party to win 54 seats in the House of Representatives last December, giving it nearly as many seats as the DPJ (which fell back to just 57 seats).  But the party’s fortunes have collapsed over Hashimoto’s comments indicating that U.S. soldiers in Okinawa should be allowed to use prostitutes and that ‘comfort women’ — civilians that Japanese soldiers forced into sexual slavery during World War II — were a necessary evil at the time.

Polls indicate that virtually no party can stop the LDP’s projected sweep — one representative poll earlier this week indicated that the LDP would win 43% and New Kōmeitō would win 8%, while the Democratic Party, the Japan Restoration Party and two other third parties, the liberal reformist Your Party and the Japanese Communist Party would each win just 6%.  That result would essentially thrust Japan back to its norm of one-party rule, leaving the Democratic Party potentially permanently shattered and permitting Abe to push forward with a pro-nuclear energy policy (still controversial after the 2011 Fukushima meltdown) and otherwise implementing a more nationalist Japan.

Or would it? Continue reading Will the real Japanese opposition please stand up? (Hint: It’s all about the factions.) →

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Twelve considerations upon the DPJ wipeout in Japan’s legislative elections

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Well, that was quite a blowout.  Just a little more than three years after winning power for the first time in Japan, the Democratic Party of Japan (DPJ, or 民主党, Minshutō) was reduced to just 57 seats in a stunning rebuke in Sunday’s Japanese parliamentary elections.

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Shinzō Abe (安倍 晋三), former prime minister from 2006 to 2007, will return as prime minister of Japan, and the  Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō), which controlled the House of Representatives, the lower house of Japan’s parliament, the Diet, for 54 years until the DPJ’s win in 2009, has seen its best election result since the early 1990s, with 294 seats.  Among the 300 seats determined in direct local constituency votes, the LDP won fully 237 to just 27 for the DPJ.  An additional 180 seats were determined by a proportional representation block-voting system, and the LDP won that vote as well:

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In contrast, the DPJ has fallen from 230 seats to 57 seats — by the far the worst result since it was created nearly two decades ago.  Its previous worst result was after the 2005 elections, when the popular reformist LDP prime minister Junichiro Koizumi (小泉 純一郎) won an overwhelming victory in his quest for a mandate to reorganize and privatize the bloated Japanese post office (a large public-sector behemoth that served as Japan’s largest employer and largest savings bank).

Outgoing prime minister Yoshihiko Noda (野田 佳彦) has already resigned as the DPJ leader, and a new leader is expected to be selected before the new government appears set to take office on December 26.

The result leaves Abe with the largest LDP majority in over two decades — together with its ally, the Buddhist, conservative New Kōmeitō (公明党, Shin Kōmeitō), led by Natsuo Yamaguchi (山口 那津男), which increased its number of seats by 10 to 31, Abe will command over two-thirds of the House of Representatives, thereby allowing him to push through legislation, notwithstanding the veto of the Diet’s upper chamber, the House of Councillors.

It’s a sea change for Japan’s government, and we’ll all be watching the consequences of Sunday’s election for weeks, months and probably years to come.  Just a full working day after the election, events in Japan’s politics are moving at breakneck speed.

For now, however, here are 12 of the top takeaway points from Sunday’s election: Continue reading Twelve considerations upon the DPJ wipeout in Japan’s legislative elections →

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Can Shinzō Abe boost Japan’s economy?

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Over at Slate, Matthew Yglesias made the argument last week that the likely victory of former prime minister Shinzō Abe (安倍 晋三) and the return of the Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō) to government after a three-year hiatus means that Japan might finally embark on a path of more expansionary monetary policy — namely, more quantitative easing and a higher inflation target. Japan

With Japan apparently headed back into a recession — its fifth in 15 years — that strategy could be the surest way to boost the Japanese economy, but it’s a little naive to believe Abe can command enough political support, even with a landslide victory in Sunday’s election, to dictate monetary policy to the Bank of Japan.

Earlier in the campaign, Abe pledged to force the Bank of Japan to purchase construction bonds directly from the Japanese government (although, as Yglesias notes, Abe has already backed down from that pledge during the campaign).  Abe needs the BOJ to buy those bonds in order to finance additional infrastructure spending, with the LDP calling for up to ¥200 trillion ($2.4 trillion) in public works over the next decade.  Public spending is an old LDP favorite, but that staggering amount of spending could well pull Japan’s economy out of recession and deflation.

Abe has also pledged to appoint a new bank governor — the term of the current Bank of Japan governor Masaaki Shirakawa (白川 方明) ends in April 2013 after five years heading the BOJ — who agrees to set an annual inflation target of 2% or even 3%.

Abe’s push for expansionary fiscal and monetary policy comes as a bit of a 180-degree turn, given that the third and final government of the Democratic Party of Japan (DPJ, or 民主党, Minshutō) under prime minister Yoshihiko Noda (野田 佳彦) recently expended its last gasp of governing willpower to double Japan’s consumption tax from 5% to 10%, which is scheduled to begin in 2014.

It seems much likelier that Abe could implement a new round of fiscal expansion than strong-arm the Bank of Japan, which has an extraordinary amount of central bank independence — derived in part from the memory of hyperinflation that resulted after World War II when politicians controlled monetary policy decisions.

Noda (pictured above, right, with Abe) has attacked Abe’s platform as a dangerous intrusion on central bank independence and he has attacked the LDP plan for additional debt-financed spending as the same old LDP  ‘baramaki’ (pork barrel) politics, especially given Japan’s debt-to-GDP ratio is already, by far, the world’s largest, at around 230%.  Greece, by the way, has only a 160% ratio.

Japan has traditionally been able to carry such a high ratio because much of that debt is held by its citizens, who collective have one of the top savings rates in the industrialized world, but with $13.64 trillion in debt already on its public books, it’s not clear whether Japan could sustain public spending that would boost its debt-to-GDP ratio to nearly 300%.

As Yglesias notes, the Bank of Japan has been criticized for nearly two decades for its policy to keep Japan’s inflation target at zero:

Back in 1999, Ben Bernanke condemned the self-induced paralysis of Japanese monetary policy made by flailing officials who claimed it was beyond their power to fix this. He called for “Rooseveltian resolve” on the part of Japan’s leaders to shake the bank out of its torpor.  Paul Krugman, too, spent the late ’90s urging Japan to aim for more inflation, arguing that mucking around with the banking system was inadequate and weird delusions of respectability were holding policymakers back.

As Yglesias also notes, Europeans and Americans promptly forgot that advice when the 2008 financial crisis exploded budget deficits:

Suddenly, criticizing the Bank of Japan went out of style. America became Japan and simultaneously forgot what America used to think about Japan.

But perhaps the lesson that Yglesias is forgetting — and the lesson that the 2008 crisis taught Europeans and Americans — is that politics matters, and that politics can intrude on what might otherwise be a clear policy path, whether it’s ‘fiscal cliff’ negotiations in the United States or the ‘kick-the-can’ politics of eurozone bailouts.

Yglesias is also forgetting that Japan has politics, too. Continue reading Can Shinzō Abe boost Japan’s economy? →

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Hashimoto’s once-rising Japan Restoration Party falling short as third force in Japanese politics

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Osaka mayor Tōru Hashimoto (橋下徹) is probably the most charismatic politician that Japan has seen since Junichiro Koizumi (小泉 純一郎), the wavy-haired reformist prime minister from 2001 to 2006. Japan

Shintaro Ishihara (石原慎太郎) has spent the past 13 years as governor of Tokyo and is one of Japan’s most outspokenly nationalist right-wing politicians.

So it was odd, to say the least, to see Hashimoto (pictured above, right) and Ishihara (pictured above, left) merge their two new parties, with Ishihara folding his more stridently right-wing Sunrise Party (太陽の党, Taiyō no Tō) into the Osaka-based, free-market liberal Japan Restoration Party (日本維新の会, Nippon Ishin no Kai).  Ishihara became the new leader of the merged Japan Restoration Party, with Hashimoto taking on the deputy leadership.

But given the now-schizophrenic nature of the party’s platform, it seems as if the party — once expected to become a major third party force in elections for Japan’s lower house of the Diet, the House of Representatives — may have turned out to be less than the sum of its parts.

After the Japanese turned out the long-ruling (since 1955!) Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō) and are now disillusioned with the opposition Democratic Party of Japan (DPJ, or 民主党, Minshutō), it seemed as if there were an opening for a new politician to ride the same wave to power that the DPJ rode in 2009 — especially for a young politician with Koizumi-level charisma.

But the party seems to be falling short — whereas, even in November, the party was polling in the mid-teens (ahead or even with the DPJ, and the LDP polling between 20% and 25%), it’s now fallen well below 10%, to just 4% in some polls.  Notably, most Japanese polls include a wide undecided vote (around 40% to 50%), so it’s important to take those trends with an even bigger grain of salt than we would take polls in the United States.

What that means is instead of fashioning a new opposition, Japan will instead opt for a doubling down on LDP policies under Shinzō Abe (安倍 晋三), who served as prime minister from 2006 to 2007.

If the Japan Restoration Party comes up short on Sunday, it could well frustrate Hashimoto’s career before it has even had a chance to peak.  Continue reading Hashimoto’s once-rising Japan Restoration Party falling short as third force in Japanese politics →

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Abe returns to lead Japan’s Liberal Democrats in advance of 2013 Diet elections

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Former Japanese prime minister Shinzō Abe has returned to the leadership of the once-dominant Liberal Democratic Party of Japan (LDP, or 自由民主党, Jiyū-Minshutō) after an internal party election Wednesday, paving the way for a rare second act in Japanese politics for the nationalist Abe. 

Abe will likely now lead the LDP into elections in 2013 against the ruling Democratic Party of Japan (DPJ, or 民主党, Minshutō).  Although the LDP remains unpopular, polls show that the LDP appear likely defeat the even more unpopular DPJ — that means Abe is now the hands-on favorite to become Japan’s next prime minister.

Abe, who succeeded the wildly popular reform-minded Junichiro Koizumi as prime minister in 2006, was the first of a string of six prime ministers from both the LDP and the DPJ who have followed in the ensuing six years.  He served exactly one year before resigning, ostensibly for poor health, but Abe had become increasingly unpopular throughout 2007 following LDP misappropriation scandals (which resulted in the suicide of his agriculture minister) and tumult over Japan’s role in the military action in Afghanistan.  Under Article 9 of Japan’s constitution, Japan is prohibited from any act of war, making even a supporting role in the Afghanistan action controversial.

As prime minister, Abe was known for his nationalist stance vis-a-vis China, North Korea and South Korea.  That posture has taken on greater significance, with China and Japan now facing off in an increasingly tense standoff over the status of the Senkaku islands (known as the Diaoyu islands in Chinese).  The showdown has already led to a massive anti-Japanese sentiment on the Chinese mainland and threatens to destabilize not only East Asian trade and commerce, but also peace throughout the region at a time when both countries are looking to leadership transitions.

Japan’s current DPJ prime minister Yoshihiko Noda is forecast to lose the next general election, which must be held before August 30, 2013.  Chinese leaders are likewise focused on a transfer of power within the Politburo Standing Committee of the Communist Party — outgoing general secretary Hu Jintao is set to be succeeded by Xi Jinping, but higher-than-normal turnover is also expected among the nine-member standing committee as well.

Abe is relatively pro-American — the DPJ came into office on a promise (unfulfilled) to close a U.S. military base in Okinawa, a promise (fulfilled) to end Japan’s refueling mission in Afghanistan, and to orient Japan’s foreign policy more toward Asia than to the United States.  In addition, Abe has expressed interest in revising Article 9 of Japan’s pacifist constitution in order to allow Japan to have some kind of military force in the future.

Continue reading Abe returns to lead Japan’s Liberal Democrats in advance of 2013 Diet elections →