The Japanese election

The legislature

The Japanese legislature consists of two houses, upper (councillors)and lower (representatives), which function pretty much like the Senate and House of Representatives in the US.

The parties

Although there are many different political parties in Japan, they have formed coalitions around two centers of political thought:

the left-of-center Socialist Party, an urban-based group which grew from the ashes of Hiroshima and Nagasaki on an anti-war, anti-nuclear weapons platform; and

the right-of-center Liberal Democratic Party, formed from a disparate collection of rural interests by, some contend, the CIA as a pro-American counterweight to the Socialists.

The election

Until yesterday, when it was defeated soundly by the intellectual successor to the Socialists, the LDP had held control of the lower house since the mid-Fifties.

Is the third time the charm?

There have been two previous attempts to break the LDP stranglehold on power.

In 1989, the Socialists, renamed Social Democrats, won control of the Tokyo city government and the upper house of the Diet, under the leadership of the charismatic Takako Doi.  Ms. Doi, an advocate of womens’ rights, also tried to break the somewhat odd (to me, anyway) connection between the Socialists and North Korea by refusing to travel to Pyongyang to receive congratulations on her victory (she did eventually go, though).

Unfortunately, the Social Democrats spent most of their time bickering about who should take credit for their electoral victory rather than enacting legislation, and were voted out of power in the next set of elections.

The second try came from within the LDP earlier in this decade, when another charismatic figure, Junichiro Koizumi, became prime minister in 2001.   Mr. Koizumi ended the decade-long banking crisis and began the process of removing a major source of porkbarrel project funding by privatizing the National Postal Service.  He also tried, mostly unsuccessfully, to redirect the LDP away from its traditional rural and agricultural power base to concentrate more on urban constituents and service industries, which he (correctly) regarded as the future of Japan.  Since Mr. Koizumi’s withdrawal from politics in 2006, contol of the LDP has passed to older and more conservative elements, and the party’s popularity has plunged.

What appears to be different in this election is that large numbers of the legislators who opposed the Koizumi reforms have been swept out of office.

What needs to be fixed

The Japanese economy has stagnated over the past twenty years for two main reasons:

1.  demographics:  the working population has begun to shrink, so that productivity gains are necessary just to keep the economy from contracting;

2.  government action:  with the notable exception of exporters like the automakers, electronics firms like Canon and mavericks like Nintendo, the typical Japanese company strikes me as frozen in time, almost hoping that the salad days of the Eighties will return.  Today’s Japanese executives seem to find it culturally very difficult to effect the “creative destruction” that typically characterizes industrial progress, even though the generation of leaders immediately after WWII were relentless practitioners of continuous improvement.

In some cases Japanese entrepreneurs, but mostly foreigners, have tried to take control of grossly inefficient firms in order to improve their operations.  But they have been thwarted at virtually every turn, either by legislation that makes foreign ownership virtually impossible, or by tacit approval of actions by customers or suppliers to “rescue” target firms from the possibility of increased profits and expansion in size.

What is the Democratic Party’s economic platform?

At this point, we don’t know.  There’s a huge investment opportunity if the Democrats will allow change to happen in Japanese industry.  But just as the watchword of previous generation was to sacrifice their economic well-being to make this generation better off, the thrust of the present generation has been to sacrifice their children’s inheritance to preserve the status quo.  It will take time, and a careful watch at legislation, to see if this attitude is likely to change.

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