Sunday, December 28, 2008

The lessons of 2008

I have already written one retrospective essay on 2008 in Japanese politics, but I wanted to look back in more detail at this year's events and crystallize the year into a handful of lessons.

As 2008 enters its final days, what have we learned about the state of the Japanese political system?

First, and most importantly, the LDP cannot govern itself, let alone Japan. The dominant theme in Japanese politics since the 2007 upper house election was been Japan's "twisted" Diet, with the LDP-Komeito coalition's controlling the lower house (and therefore the government) and the opposition DPJ's controlling the upper house. The DPJ has not hesitated in using its control of the upper chamber to stymie, delay, or complicate the coalition government's agenda — the signature battle being the fight over Fukui Toshihiko's successor as president of the Bank of Japan during the 2008 ordinary session of the Diet — but Prime Ministers Fukuda Yasuo and Aso Taro may have been more hampered by divisions within the LDP and between the LDP and Komeito. Thanks to the government's supermajority in the lower house, the government has the ability to get its way on any issue but for matters like appointments requiring the approval of both houses (hence the BOJ fight). While the coalition government has been reluctant to use the supermajority for fear of public disapproval, would the government have to fear public backlash if the DPJ stood in the way of a government proposal that had broad public approval?

The problem has been that the governing parties have been unable to draft proposals that have broad public approval.

Not for want of good intentions: at least under Mr. Fukuda, Japan had a prime minister who was acutely aware of the colossal challenge facing his country — and that was before the global financial crisis consumed Japan. (See this post on Mr. Fukuda's speech opening the ordinary session.) Mr. Fukuda, however, sat at the head of a party at war with itself, bitterly divided over its identity. Selected as LDP leader on the basis of a "grand coalition" of factions, throughout his tenure Mr. Fukuda resorted to a balancing act among the party's factions and ideological tendencies, which resulted in Mr. Fukuda's gaining a reputation for having no policy agenda to speak of — and in plummeting public approval figures throughout 2008 until Mr. Fukuda resigned the premiership in September.

And when Mr. Fukuda did decide to take a stand on an issue, he suffered for it. Central to the 2008 ordinary session of the Diet were the related questions of the extension of the "temporary" gasoline tax and the dedicated use of gasoline tax revenue for road construction. The DPJ refused to approve the extension in the first half of the Diet session, meaning that in April 2008, the start of the new fiscal year, the Japanese public received a gasoline tax cut (I didn't hear too many complaints about that). Certain members of the LDP did not want to see the special account for road construction take a hit, so they fought hard for the reinstatement of the tax via the lower house supermajority. With petrol prices high, the Fukuda government courted a public backlash if it were to reinstate the tax. Therefore, to make the case for an extension, the government decided to argue that the tax revenue was needed, but not necessarily for road construction; Mr. Fukuda instead decided that he would push a plan to shift gasoline tax revenue earmarked for road construction into the general budget. This plan, floated as the prime minister was trying to win the DPJ's support for extending the temporary gasoline tax, immediately threw the LDP into chaos, pitting young reformers, who backed Mr. Fukuda, against the LDP's "road tribe," which fought against a clear and present danger to their privileges and had broad sympathy within the LDP. Mr. Fukuda had to struggle against the party establishment, and arguably lost the battle — the road construction budget was passed as presented, and the question of the special fund postponed to the extraordinary session, at which time Mr. Fukuda was no longer even premier.

Mr. Fukuda's preferred issues fared little better. Remember that Mr. Fukuda began the year talking about the importance of consumer affairs and "listening to the voices of the people?" 2008 in consumer affairs will be remembered mostly for further instances of tainted products. And as for listening to the public? As 2008 ends, the 2007 pensions scandal remains unresolved and the LDP has created a new mess after rolling out a controversial health care system for citizens over 75 that involves automatic deductions from pensions.

The situation has, if anything, worsened under Mr. Aso's stewardship. In part Mr. Aso has been hindered by what he and his advisers have repeatedly called a once in a century financial crisis, as if that somehow relieves the LDP of culpability for the disastrous turn for the worse in Japan's economic fortunes. The government is no closer to solving Japan's fiscal crisis; the LDP is still mired in a debate over whether and when to raise the consumption tax. And as Nakagawa Shoichi, Mr. Aso's finance minister, recently told the Financial Times, fiscal consolidation is on hold as long as Japan's economy falters.

As the year comes to a close, it is difficult to recall what the LDP was actually able to agree on and implement. Even a new fiscal stimulus package has proven controversial within the LDP and the coalition government, and as a result has been postponed until the new year.

As 2008 ends, divisions within the LDP are more pronounced, the party's ability to govern more questionable, and, as a result, Japan's future grows ever darker.

Accordingly, the Koizumi revolution is a distant memory. It is hard to believe that little over two years ago the foreign press could write of a confident new Japan under the leadership of its youngest postwar prime minister, booming thanks to the efforts of outgoing Prime Minister Koizumi Junichiro.

What changed?

What became clear over the course of 2008 is that Mr. Koizumi achieved less than it seemed at the time. Corporate Japan boomed, but all too little progress was made in strengthening stagnant regions (despite the "Trinity" reforms), wages failed to rise along with economic growth, and the government made little headway in figuring out how to pay for the social safety net desired by the bulk of the aging Japanese public. Mr. Koizumi was much more effective in destroying the old LDP — see above — than in remaking the Japanese economy. As has become clear in midst of the global financial crisis, Japan remained all too dependent on trade with the US and China. Far from revolutionizing the Japanese economy, under Mr. Koizumi Japan's economy may have become even more of a "dual" economy, divided between efficient, global exporters and stagnant domestic sectors still dependent on government protection. At the same time, microeconomic reforms led to more use of temporary and part-time workers who do not receive the same benefits as regular workers — saving money in good times and, as we're seeing today, provided a stock of laborers who can be laid off in bad times.

Whether or not this makes for good economics is one question; whether it makes for good politics (for the LDP) is another. The LDP has been tarred with neglecting the wellbeing of the Japanese people: of the elderly, who fear for their economic security in retirement; of the young, many of whom are now relegated to the pool of irregular laborers, perhaps for life; and of rural citizens, who wonder how they will make their livings. At the same time, the LDP has also been criticized for abandoning Koizumi-ism. Its young reformists, concentrated largely in urban districts, fear that they will pay the price for the party's having shuffled off the legacy of Mr. Koizumi.

The former prime minister's followers are now a marginalized group within the LDP, and their continued future within the party is increasingly in doubt. In 2008 it became clear just how powerless the Koizumians are. They failed in their battle against the "road tribe," succeeded in passing some form of administrative reform over the objections of LDP reactionaries thanks only to a compromise with the DPJ and the work of crusading adminstrative reform minister Watanabe Yoshimi. Little wonder that by the end of 2008 Mr. Watanabe was speaking openly about overthrowing the Aso government, going so far as to vote with the DPJ when it proposed a resolution calling for an immediate dissolution of the lower house and general election.

Mr. Koizumi's legacy, it seems, was reducing the LDP to warring camps, bringing the party to the verge of collapse.

At the same time, the DPJ, while still a relatively unknown quantity, is far from being the rabble the LDP insists it is.

2008 showed that a DPJ-led government is increasingly conceivable, a finding confirmed in recent public opinion polls. For example, a Yomiuri poll taken in early December found that sixty-five percent of respondents are willing to give the DPJ a chance to govern. Despite the LDP's efforts to paint the DPJ as dangerously irresponsible, too divided, and led by the too dictatorial Ozawa Ichiro, the public is increasingly receptive to the leading opposition party and its mercurial leader.

The DPJ has been remarkably disciplined over the course of 2008. In part the DPJ's task has been simple. The party has had to stay reasonably united while the LDP struggled to find a consensus on issue after issue. On policy questions, it has been opportunistic, but what opposition party in a democracy isn't opportunistic? It largely succeeded in being trapped by the government on any given policy issue, adjusting its tactics as the political situation changed.

In the meantime, the party bolstered its policy credentials — see Mr. Ozawa's rebuttal to Mr. Aso's maiden policy address — and continued its work at the grassroots level, the pet project of Mr. Ozawa.

In fact, the unreported political story of 2008 may be how remarkably competent the DPJ was. It could have gone differently: the party came under fire from the LDP and big media for the uncontested reelection of Mr. Ozawa as party leader in September, and in the months leading up to the election, Mr. Ozawa's leadership was criticized by various DPJ young turks, but Mr. Ozawa emerged unscathed from the leadership fight and is now amazingly polling higher than Mr. Aso. If the LDP hoped to run the next general election campaign as a personal campaign against Mr. Ozawa as opposed to a campaign against the DPJ's ideas, that option may now be futile (if it ever stood a chance of success in the first place). Meanwhile, the DPJ set the policy agenda for 2008. From the beginning of the year, the LDP has been forced to battle the DPJ on the opposition party's terms, the issues that won the DPJ the 2007 upper house election. The discussion has focused on pensions, health care, budgetary waste, the gasoline tax and road construction, and administrative reform, issues which for the most part the public sees as DPJ strengths (see this recent Yomiuri poll). While at times DPJ members have grumbled about Mr. Ozawa's tactics, he has ably kept the DPJ's ideological divisions from undermining the party at critical moments in its battles with the LDP.

In short, while the party has certainly benefited from the LDP's disarray, Mr. Ozawa and the other DPJ leaders deserve credit for their grace under pressure and the deftness with which they have checked the DPJ's tendency towards disarray of its own.

None of this is to say that a DPJ government would be a panacea for an ailing country. If the DPJ manages to win the 2009 general election and form a government, it will be no less hampered by events than its LDP-Komeito predecessors. It will still have to balance reforms that ease the insecurities of citizens left behind by Mr. Koizumi's reforms, while forging ahead with the structural transformation of the Japanese economy and solving the fiscal crisis — all in the midst of an economic crisis that shows no signs of abating in the coming year. Nevertheless, a DPJ-led government would be a welcome change from the decrepit LDP-led governments that have ruled in recent years. Regime change would contain the possibility of a genuine break with the recent past; whether the DPJ fulfills the potential of regime change would depend on the abilities of its leaders and the response of the public to the new government.

Finally, 2008 had lessons for Japanese foreign policy, namely the US and Japan cannot live with or without each other. As Japan prepares for the Obama administration, it is clear that the US-Japan alliance is not healthy. The biggest change in 2008 was that the Bush administration provided Japanese elites with a new reason to be unhappy with Washington when it removed North Korea from the state sponsors of terrorism list. The Japanese establishment reacted with "shock" when the decision to delist was announced in June. Combined with the impact of the global financial crisis, as 2008 ends Japanese leaders are left wondering whether they can continue to rely on the US as an ally. They will be watching the Obama administration's every move for clues.

At the same time, however, Japan has little choice but to continue to work as a loyal ally of the US. Japan will grumble about Washington — and grumble louder if the DPJ takes power — but it is not prepared to break with the US in any significant way. Japan has no alternative in the near term to the alliance. Japan may have inched closer to China over the course of 2008, sending an MSDF vessel on a port visit, holding an upbeat summit when Hu Jintao visited Japan in May, and concluding a minor agreement concerning the East China Sea EEZ, Japan's leaders still face a tightrope walk in Japan's relations with China. In my first post of 2008, I insisted that the China hawks are "bankrupt," and I remain no less convinced today that this is the case. Developments in 2008 illustrated that there is little public support for a more belligerent approach to China. What we learned in 2008, however, is that the Japanese people want their government to be more assertive in negotiations with China (see this post). But a desire for greater assertiveness does not translate a support for remilitarization, constitution revision, and the rest of the conservative agenda.

The public is not ready to break with the US and is not prepared to bandwagon with China. The government is left trying to find a middle path between the region's two superpowers, not unlike other countries in East Asia.

All of which suggests that Japan's global presence is diminishing. Despite presiding over the G8 in 2008, despite launching a successful bid for one of the rotating Security Council seats, despite the ambitions of its prime ministers, Japan's voice is fading internationally. Given Japan's economic woes, this trend is unlikely to reverse itself in 2009. While Japan's leaders had plenty to say about their country's role in 2009 — for my part I was impressed with Mr. Fukuda's foreign policy vision — they had fewer ideas about how to act on their ideas. Japan still does not know how it can act as a regional and global leader in the coming decades as its power wanes relative to China (provided China weathers the economic crisis with minimal domestic disorder). Its economy faltering, its people insecure, its armed forces constrained by law, budgets, and values, it is unclear what basis Japan will have for claiming a leadership role in the region. Mr. Aso has tried to make the case for a soft power basis for Japanese leadership, but Mr. Aso and other advocates of soft power have failed to explain how the popularity of manga, anime, and J-Pop will translate into political affinity for Japan and will enable the Japanese government to achieve its goals.

In short, 2008 was a hard year for Japan, a year of uncertainty for its leaders and hardship for many of its people. Japan's ancien regime is exhausted — we clearly are witnessing a second bakumatsu — but it is unclear whether a restoration waits in the wings, or whether this will be a bakumatsu without end.

Thursday, December 25, 2008

Mr. Watanabe's rebellion

On Wednesday the House of Representatives voted on a DPJ-backed resolution calling for an immediate dissolution of the lower house followed by a general election.

Watanabe Yoshimi broke with the LDP and voted for the resolution, backing his words with action. He stated that he was prepared for whatever punishment the LDP intends to mete out for his rebellion.

The LDP did opt to censure him. According to Asahi, the LDP has "admonished" Mr. Watanabe, admonishment being the second lightest of the LDP's punishments for disobedient party members. Nikai Toshihiro, head of the LDP's general affairs council, argued that Mr. Watanabe should be expelled from the party, but his proposal was rejected.

In a press conference after the vote, Mr. Watanabe made clear that his vote is not a prelude to a break with the LDP and the formation of a new party. He claimed that he acted alone, not bothering to consult with his fellows. Later in the press conference, he spelled out his credo: "...Party before faction, state and people before party. This is the starting point for a member of the Diet." It seems that Mr. Watanabe was acting in defense of Japanese democracy; he views a general election at this juncture as essential to making progress in solving the problems that plague the Japanese polity. A simple act, but considering that none of his colleagues joined him, an act that may have taken more courage than meets the eye. Despite the bold talk from other reformists, not one did anything more than offer tepid "understanding" of Mr. Watanabe's vote. Naturally his vote garnered praise from the DPJ — Hatoyama Yukio made a congratulatory phone call — which hopes to draw LDP rebels away from the party before a general election. Ozawa Ichiro suggested that if Mr. Watanabe is willing to leave the party, he will discuss electoral cooperation with him. (Not a particularly meaningful offer, I think: there is a reason that the DPJ has yet to pick a candidate to run against Mr. Watanabe in Tochigi-3, namely that Mr. Watanabe has been quite successful in past elections.)

This will not be last we hear of Mr. Watanabe. By giving him a light slap on the wrist, the LDP has ensured that Mr. Watanabe will defy the government again at his next opportunity. Mr. Watanabe dared the party to expel him, but it refused, perhaps out of fear that booting the rebel reformist could finally open the eyes of his colleagues that the party has no place for them. Of course, that may be too much to expect. The LDP, terrified that Mr. Watanabe will encourage others to follow him, acted quickly and softly in the hope of quieting talk of rebellion and not making Mr. Watanabe out to be a martyr. Time will tell whether the party's response will succeed. Mr. Watanabe said in an appearance on TV Asahi Thursday that there is the possibility of further defiance of the government when the second stimulus package comes to a vote next year.

Journalist Uesugi Takashi suggests that there is little danger of the bill's being rejected because the controversial portion — a fixed income and residential tax cut included to assuage Komeito — is not a separate bill but simply part of the larger supplemental budget bill (hence the DPJ's calling for the controversial portion to be submitted as a separate bill). Uesugi instead sees another battle over the plan to move highway funds to the general fund as the critical point when LDP reformists may decide to break with the party.

For now it is simply impossible to predict whether Mr. Watanabe will be able to gather enough rebels to deprive the government of its supermajority. It appears that Nakagawa Hidenao's argument that there shall be no moves towards realignment before a general election has won the day in reformist circles.

Nevertheless, I give Mr. Watanabe tremendous credit for standing up against the government. In what was, to paraphrase W.H. Auden, a low, dishonest year, Mr. Watanabe has provided a glimmer of hope that there might be a leader in either party capable of rising above the pusillanimity that has characterized the behavior of all too many leading Japanese politicians over the past year.

Monday, December 22, 2008


As 2008 enters its final week, the LDP and Aso Taro, its beleaguered head, are being written off as doomed in the year to come.

No one, it seems, is willing to offer an explanation for how the LDP can save itself in a general election. The LDP may yet win the general election, but its fate is out of its hands.

Some are starting to measure the LDP's coffin, so to speak. AERA, a weekly magazine, notes that Yamada Shinya, an elections forecaster, has predicted that the DPJ will win 230 seats to the LDP's 191 seats. Mr. Yamada foresees sluggish turnout and notes the importance of the change in the Communist Party's election strategy — nothing too different from my own assumptions about the next election. (I have started — and hope to finish — my own analysis and predictions for the 300 single-member districts.)

In the meantime, Mr. Aso's situation continues to worsen. The latest blow to his government is a dispute with Komeito. Last week Koga Makoto, the LDP's chief elections strategist, noted that it was strange that the LDP would tell supporters to vote for the LDP in single-member districts and Komeito for proportional representation seats, a statement interpreted as a hint that the LDP is reconsidering the terms of its electoral partnership with Komeito. Mr. Koga was quick to reassure Komeito that the LDP remains committed to working with Komeito to win a majority for the coalition — the LDP can hardly afford to do otherwise, given the support Komeito is said to provide for LDP candidates. Komeito head Ota Akihiro was dissatisfied enough with Mr. Koga to call for an apology. The question now is whether LDP candidates will receive the support from Komeito that they have received in the past. Will Komeito voters continue to be loyal to their party or will they stay home or vote against LDP candidates in a general election? Along with the JCP question, the Komeito vote is of course an important variable in determining whether the LDP will be returned to power.

Of course, events may render all of these factors irrelevant in a general election. If the bottom continues to fall out of the Japanese economy — Japan Economy Watch and Ken Worsley's Japanese Economy News are essential sources for the bad news — it may simply be impossible for the LDP to reverse itself in time for a general election. The latest news is that in its monthly assessment of the Japanese economy, the government has determined that the economy has worsened (as opposed to weakened) for the first time since February 2002. There appears to be no end to the bad news. Little surprise that the prime minister's approval ratings may be headed into the single digits, having fallen to 16% in a recent Mainichi poll.

The most pressing question now is how long the government will wait before calling an election. Abe Shinzo, quickly becoming a younger version of Mori Yoshiro, has called for the election to be delayed until May at the earliest, until after the passage of the 2009 budget. I expect that Mr. Aso will wait until he has a budget in hand before going to the voters, although I do not expect the budget to make much of a difference. The Aso government and the LDP have simply been overwhelmed by problems: sluggish domestic demand, a shift to reliance on temporary and part-time workers, growing pensions and health care liabilities, an intolerable debt burden, stagnant regions, and so on. The economic crisis is only exacerbating these problems. The result is that the LDP is on the brink of collapse. The party has simply overwhelmed by a cascade of systemic failures. As Thomas Homer-Dixon, a political scientist at the University of Toronto wrote in The Upside of Down, "When a society has to confront a bunch of critical problems at the same time, it can't easily focus its resources on one and then move on to the others."

The LDP, trapped by previous decisions that created or exacerbated these problems, is unable to take a definitive step in any direction. This is the essence of the LDP's ongoing debate over tax reform and a consumption tax increase. The government needs more revenue to meet current and future liabilities without increasing the national debt; for a number of LDP members, most notably Yosano Kaoru, the economy minister, a consumption tax increase appears to be the answer to the government's problems. But passing a consumption tax — or even committing to a timeline for phasing in a consumption tax — is a thorny political problem that has involved tortuous negotiations within the LDP and between the LDP and Komeito. Facing an election and an economic crisis, Mr. Aso has been understandably reluctant to make a firm commitment to the timing of a consumption tax increase. A consumption tax increase may solve one problem, but it may exacerbate others (sluggish domestic demand, low growth, and perhaps growing social inequality, as a consumption tax increase would presumably hurt low-income Japanese most). Japan is ensnared in a web from which there is no easy escape.

Not surprisingly, a recent Yomiuri-Waseda poll found that the public more disappointed in the LDP than hopeful about the DPJ. Regime change alone will not cut Japan's Gordian knot. It is entirely plausible that a DPJ-led government will be equally stymied. But the public is at least willing to give the DPJ a chance, an entirely reasonable proposition given the LDP's record.

It may be, however, that Japan's problems are insoluble, and Japan still has a long way to fall. The greatest reason for pessimism may ultimately be that despite having experienced nearly two decades of stagnation, the establishment has yet to come up with any better ideas for organizing Japanese society. As a result, the global financial crisis, rather than providing an opportunity for Japan to take a leadership role, has paralyzed Japan. To return to Thomas Homer-Dixon, he argues that an essential quality for dealing with crises is a "prospective mind."

"We can't possibly flourish," he writes, "in a future filled with sharp nonlinearities and threshold effects — and, somewhat paradoxically, we can't hope to preserve at least some of what we hold dear — unless we're comfortable with change, surprise, and the essential transience of things, and unless we're open to radically new ways of thinking about our world and about the way we should lead our lives. We need to exercise our imaginations so that we can challenge the unchallengeable and conceive the inconceivable. Hunkering down, denying what's happening around us, and refusing to countenance anything more than incremental adjustments to our course are just about the worst things we can do."

Despite the best efforts of Koizumi Junichiro, I fear that this is precisely how the Japanese establishment has responded to the lost decade. Public debates are stale. Even minor change is watered down. Or as Yeats wrote, "The best lack all conviction, while the worst / Are full of passionate intensity." Watching the irresolution of the LDP's reformists, and the strength with which the LDP's old guard resisted any attempt to redirect gasoline tax revenue away from road construction earlier this year, I cannot help but think that Japan simply lacks the ability to adjust, that despite a history of making radical changes in the face of crises, the current crop of leaders is simply not up to the task. Perhaps as bad as things look today, they aren't nearly bad enough to force radical change — the decay of an economic system hardly compares to the threat of colonization and the blow of defeat and occupation. After all, despite the lost decade, Japan remained the world's second-largest economy, its companies respected globally. Perhaps Japan is more capable of responding to short, sharp shocks than to prolonged, barely visible social problems.

Of course, Japan is hardly alone. I was reading Thomas Homer-Dixon Sunday while waiting in Boston's Logan Airport, where the TV was tuned to CNN's Late Edition. Wolf Blitzer was struggling to moderate a discussion between Democratic Congressman Barney Frank and Republican Congressman Eric Cantor on the financial crisis. Congressman Cantor insisted that when apportioning blame for the crisis, Congress must bear much of it for encouraging risky lending, which is to say that it is not necessarily the market but the government that failed.

I can think of no better illustration of what Homer-Dixon calls "hunkering down, denying what's happening around us, and refusing to countenance anything more than incremental adjustments."

Sunday, December 21, 2008

Alliance addenda

After seeing the response to my recent post on the US-Japan alliance, I find it necessary to develop a few ideas further.

First, MTC rightly points out that an alliance based on the partnership of Japanese conservatives and their counterparts in Washington is by no means doomed, because the organizations pushing this line "deal death as a matter of course. They will not be deterred by mere logic, economic constraints or human feeling." I fully grant this point. Just because history (or perhaps, History) does not favor their argument does not mean that the conservative grip on the alliance will weaken. The advocates of an alternative vision of the alliance — a vision of the alliance that does more than prepare for a worst case scenario with China that may never come (or that may be hastened by the decisions of the alliance) — must push back, fighting back in the halls of academia and think tanks and in the pages of journals.

Second, I must correct myself: technically speaking the 1996 alliance is not rooted in an alliance between Japanese and American conservatives. It is rooted in an alliance between Japanese conservatives and the American foreign policy establishment (FPE). There is sadly a dearth in creative thinking on the alliance in Democratic corners of the FPE, the think tankers and academics who will likely fill important Asia policy positions. In particular, Joseph Nye, who as assistant secretary of defense for international security affairs in the mid-1990s gave his name to the initiative that produced the 1996 bilateral security declaration and with it the 1996 alliance, and Kurt Campbell, who worked deputy assistant secretary of defense for East Asia during the late 1990s, are the Democratic Party's senior Asia hands and both view the alliance along similar lines as Richard Armitage and Michael Green, their Republican counterparts. Campbell has in fact praised the work of his Republican successors in strengthening the alliance.

Jun Okumura captures precisely this reality on this post regarding a meeting between senior DPJ officials and the "U.S. Democratic Party," as reported in the Yomiuri Shimbun. On a visit to Tokyo, Nye and John Hamre, president of CSIS (home to Michael Green) and an undersecretary of defense in the Clinton adminstration, as well as Green and James Kelly, assistant secretary of state for East Asia and the Pacific in the Bush administration, met with Hatoyama Yukio, Kan Naoto, and other DPJ officials. The point of the meeting, as Jun notes, was to deliver the message to the DPJ that the bipartisan consensus on the alliance is intact — the DPJ should not expect that it will get much traction in its desire to redefine the terms of the 2006 realignment agreement.

The reality, however, might be more complicated. As Jun notes, none of the aforementioned mandarins is in President-elect Obama's inner circle. Is this a message from Mr. Obama? From the Democratic Party? From the FPE? Perhaps we should read this meeting and its message as a message from the guardians of the 1996 alliance, nothing more, nothing less. Confident that they remain responsible for the alliance in Washington, they are apparently planning for the possibility that their conservative partners are forced to cede power to the DPJ. While the media is reporting this as the beginning of an exchange of opinions between the US and Japanese Democratic parties, the presence of Messrs. Green and Kelly suggest that it was nothing of the sort: the alliance mandarinate was issuing a warning.

Finally, I want to respond to comments to my previous post.

First, one anonymous commentator argues that the idea that China has any influence over Washington as a result of its debt holdings is "ridiculous." A second commentator argues that the fundamental arrangement of the alliance — bases for protection — is unchanged, and that not too much has changed with the decline of the 1996 alliance. I will address these comments together because they're linked.

The alliance today is about China. The 1996 alliance was one way of thinking about China. While the alliance managers vary in the extent to which they support engagement with China, they uniformly support strengthening the security relationship, extending the alliance to distant conflicts, improving alliance interoperability, and broadening the alliance to include cooperation with other US allies in East Asia. They are in agreement about the importance of dismantling domestic constraints on Japanese security policy, although naturally they respect the Japanese democratic process. It is an approach to the alliance that sees the alliance as "the core of the United States’ Asia strategy." (For an outline of the consensus on the alliance, see the second Armitage-Nye report — discussed at length in these posts.) They believe that the alliance is important as an end in and of itself, because of shared interests and shared values, which is another way of saying that no matter how much it appears that the US and China have common interests regionally and globally, the Sino-US relationship can never replace the US-Japan relationship because of shared values.

I think the "shared values" approach to the alliance is mistaken. It seeks to create distance between the US and Japan on the one hand and China on the other when what the three countries must be do is find a way to bridge the wide differences that separate them. As the current economic crisis is illustrating, the fates of the US, China, and Japan are linked. The US-Japan-China strategic triangle is a non-zero sum relationship. America's loss is Japan's loss is China's loss; and the impact of the economic crisis within China will likely be felt in Japan and the US.

None of this is to say that the nineteenth-century liberal argument that free markets will lead to perpetual peace is right. What the liberals failed to appreciate is that while global commerce may transform national interests, those interests are not translated into policy without concerted effort on the part of national elites. Elites have to recognize that economic links have transformed their nations' interests and then act to protect those interests. Both Japanese and American conservatives — especially Japanese conservatives — have chosen to minimize the significance of their countries' dependence on the Chinese economy. Accordingly their vision of the alliance emphasizes the security hedge against China rather than efforts to diminish the need for a hedge against China.

I am not arguing that the US-Japan security relationship is dead. Nor am I arguing that it should be dissolved. The alliane is an important aspect of US Asia policy, but for too long the US FPE has failed to asked why. If it is important only because Japan gives the US bases, then frankly the alliance is a necessary but insufficient guarantor of the future stability of the region. The value of the alliance must be measured by how it contributes to regional stability, namely the incorporation of China into a leadership position in East Asia with as little friction as possible. The 1996 alliance has strengthened those actors in Japan most averse to cooperation with China, which has the ironic consequence of diminishing Japan's importance to the US as an ally.

What is needed now is a new alliance that seeks more than just a hedge against a violent turn in China's rise. Accordingly, the alliance needs to be more than just a partnership of national security elites in the US and Japan. Japan and the US ought to be talking about more than just the proper arrangement of US forces in Japan or how Japan can make its token contributions to missions abroad; the focus of every US-Japan bilateral meeting of any significance should be finding new ways to build a trilateral relationship with China. An alliance that's simply a matter of bases for forward-deployed US forces and some tactical and operational cooperation between US and Japanese armed forces is an alliance that increasingly irrelevant to the future of East Asia.

Thursday, December 18, 2008

The alliance is dead, long live the alliance

Barack Obama's inauguration is just about a month away. His transition team is gradually filling in cabinet-level positions. His Asia and Japan policy teams are as of yet unknown, however, leaving Japanese elites to continue to fret about Japan's place on the Obama administration's agenda.

They have good reason to worry.

The reasons to worry have nothing to do with the myth of the Democratic Party's hostility to Japan and predisposition to China. After all, Richard Nixon, the pioneer of Japan passing, was a Republican, and Bill Clinton inherited his trade agenda from George H.W. Bush. No, the reasons for concern are far greater than the Japanese establishment's irrational fear of Democrats.

The post-cold war US-Japan alliance, born in 1996, is dead. It is far from certain what will take its place.

The 1996 alliance — born out of the 1996 reaffirmation of the alliance signed by President Clinton and the late Hashimoto Ryutaro — sought to restore security to its position of prominence in the alliance and rebuild the Chinese wall that had separated security and economics in US-Japan relations until the 1980s. Japan's economic slump made it a less worrisome partner, and China's bullying of Taiwan appeared to provide a target for greater security cooperation, with North Korea's playing a supporting role.

The process of bolstering the alliance stalled after the conclusion of the new guidelines for security cooperation in 1997, but the Clinton administration bequeathed to the Bush administration a framework for deeper security cooperation with Japan. Specifically, it was bequeathed to the group of alliance hawks, led by Richard Armitage, who assumed important positions in the new administration in 2001. Mr. Armitage and his colleagues took the baton passed from their predecessors and developed a particular form of security cooperation following 9/11. As the US prepared for the global war on terror, the US would treat Japan as a first-rank ally, akin to the United Kingdom; learning the lesson of the Gulf War, the US would not issue marching orders to Tokyo but would appeal to Japan's conscience as a major world power to do the right thing by supporting US efforts in some form. The material value of Japan's contribution was inconsequential; what mattered was Japan's showing the flag, not how much oil it was pumping in the Indian Ocean. In exchange, Japan under Koizumi Junichiro became a trusted ally of the Bush administration, which after 2003 needed all the friends it could get. Of course, the US wouldn't be perpetually satisfied with refueling missions and unarmed humanitarian relief missions, but by encouraging Japan with high praise (the frequent refrain during the first half of this decade about the alliance being "the best ever") the US could gradually push Japan in the direction of a more active security role.

This new partnership was cemented not in the Middle East but in Northeast Asia, as the US and Japan moved in lockstep in the six-party talks after 2002, taking a hardline against North Korea on nuclear weapons, missiles, and Japan's abductees, a pact sealed by Ambassador J. Thomas Schieffer's March 2006 visit to Niigata — to the beach from which North Korea abducted Yokota Megumi — and President George W. Bush's meeting with Megumi's mother Sakie in April 2006. In the background loomed China, resulting in the inclusion of the peaceful resolution of the Taiwan Straits crisis as a common strategic objective for the first time in the February 2005 Security Consultative Committee (2+2) statement. It was also cemented via ever deeper cooperation on missile defense in Japan and broader cooperation between US Forces in Japan (USFJ) and the Japanese Self-Defense Forces (JSDF).

This partnership was not nearly as durable as it appeared. First, it was more a partnership of elites than a partnership of nations. Alliance hawks in the US forged a strong relationship with their resurgent Japanese counterparts to promote an alliance agenda that served both their interests. As William Overholt wrote in Asia, America, and The Transformation of Geopolitics (reviewed here):
As the 21st century began, the United States decided to bet its entire position in Asia on the alliance with Japan. In effect, it has bet not just on the Japanese nation but in particular on a newly assertive national-security elite that represents a rather narrow and unrepresentative slice of Japanese society. In all of American history, the United States has never before made such a bet anywhere in the world, with the arguable exception of the bet on Britain in World War II. The current bet is not on the Japan of 1945 or 1975 or 1989 (the year before the bubble burst) or 2000, but on a rearming Japan with an economy, a polity, a foreign policy, and a military evolving faster and more unpredictably than those of any other advanced country, under a new and increasingly right-wing leadership that wants to rebuild national morale by reengineering a failed vision of the first half of the 20th century rather than through an inspiring new vision of the future. Rarely in world history has such a power made such a consequential bet.
Abe Shinzo was the symbol of the US bet on the Japan's neo-conservatives. As Sunohara Tsuyoshi, a Nikkei reporter, documented in the introduction to his book Japan Hand, Michael Green, then National Security director for Japan, Korea, Australia, and New Zealand, saw potential in Mr. Abe, who was deputy chief cabinet secretary at the start of the Koizumi government. Mr. Green effectively made Mr. Abe a project, working to give the future prime minister a direct pipeline to the top of the US government. While serving as LDP secretary-general, he visited Washington in April 2004, where he delivered a speech at the American Enterprise Institute hailing the alliance's new golden era and making the case for constitution revision. On that visit he also met with Mr. Green, Mr. Armitage, Donald Rumsfeld, then-National Security Adviser Condoleeza Rice, and Republican congressional leaders, at which time he was effectively branded a future prime minister of Japan. Mr. Abe had to still be selected by the LDP, of course, but the backing of the US administration surely helped propel Mr. Abe to the premiership despite having no ministerial experience aside from serving as chief cabinet secretary. Mr. Abe, in short, was a direct product of this alliance between US conservatives and Japan's "newly assertive national-security elite."

The death of the 1996 alliance began with the decline and fall of Mr. Abe. The conservative partnership did not expect the Japanese people to deal so harsh a blow to Mr. Abe in the 2007 upper house elections. They failed to appreciate that the Japanese public would have little interest in a debate on constitution revision while Japan's regions stagnated, while the pensions system collapsed, while the national debt prompted questions about how the government would meet its liabilities. (See this post for a discussion of the binational conservative establishment's shock at Mr. Abe's defeat.) They also didn't expect that the DPJ would have considerable success in undermining the illusion of the robust security alliance by forcing a debate on the MSDF refueling mission. The DPJ ultimately lost the battle to block the mission's extension, but in their opposition they exposed how farcical the whole thing was: the lack of accountability in how the mission was conducted and the mismatch between the rhetoric and the reality of the mission (i.e. the contrast between rhetoric that focused on Japan's responsibilities to the international community and the reality of heavy-handed US pressure on Japan to extend the mission, spearheaded by Ambassador Schieffer). By forcing a debate on the refueling mission, the DPJ punctured the image of a golden era. Far from being a sign of how far the alliance had come, the refueling mission became a sordid affair, marked by the whiff of corruption on the part of Japan's defense trading companies and the newly formed ministry of defense and the cowardice of the Japanese establishment, which despite bold rhetoric about contributing to the war on terror was actually not prepared to make real sacrifices to help the coalition in Afghanistan.

But the 1996 alliance was doomed for reasons beyond Japanese domestic politics. The post-1996 security partnership was designed for a unipolar world. Naturally it flourished after 9/11, in the heady days of "shock and awe," as the Bush administration swaggered and flexed the US military's muscles. Accordingly, in some sense the 1996 alliance was a casualty of the Iraq war.

First, US difficulties in Iraq altered the US calculus globally. Would the Bush administration have made such a drastic about-face on North Korea had Iraq gone successfully? If the US could still credibly threaten regime change in North Korea, would Christopher Hill have been given the freedom to negotiate a new agreement? The shift on North Korea, occurring in the immediate aftermath of both North Korea's presumed nuclear test and the aforementioned US-Japan "pact" on North Korea by which the US signaled that the abductees were a priority for the US, has had profound consequences on the alliance, not least of all on the neo-conservatives who now wonder whether they can rely on the US security guarantee.

The shift on North Korea coincided with a pronounced softening in Sino-US relations. The US increasingly needed China as a "responsible stakeholder." With the US bogged down in the Middle East, it needed calm in East Asia — and found that China was the key to maintaining the status quo in North Korea and the Taiwan Straits, the two greatest flashpoints. Accordingly, US North Korea policy increasingly amounted to beseeching China to intervene with Pyongyang to keep North Korea committed to the six-party talks and leaning on Taiwan not to provoke China. At the same time, the US became increasingly indebted to China, thanks in part to the Bush adminstration's decision to finance the Iraq and Afghanistan wars via deficit spending, creating what Niall Ferguson has called "Chimerica." As Admiral William Fallon, formerly head of US Pacific Command, noted in an interview with the Boston Globe last month, China's position as the number one creditor for the US alters the Sino-US agenda. As Fallon said, "The size of the country and its influence is staggering. So we've got to figure this out. There were people who warned me that you'd better get ready for the shoot 'em up here because sooner or later we're going be at war with China. I don't think that's where we want to go."

With both the US and Japan economically interdependent with China, the 1996 alliance's vision of a security partnership that would essentially be preparing for the big war with China has become increasingly unrealistic. Indeed, the global economic crisis may completely transform the strategic landscape by making it clear just how much the three corners of the East Asian triangle need each other. How can the 1996 alliance possibly survive a new system in which China plays "the role of a vigilant creditor" vis-a-vis the US? Negotiations on trade imbalances and the relative values of the dollar, renminbi, and yen will be thorny, but next to these issues the security agenda pales in significance.

And so the 1996 security-centered alliance is dead.

The shell of the alliance will continue to exist, barring the outbreak of war in Northeast Asia. (I don't think the alliance would survive a shooting war.) But will the Obama administration and the Japanese government — whoever is at its head — be able to find a way to build a new alliance?

There are a variety of opinions on how the allies should proceed. Japan's conservatives may be the most confused about the future of the alliance. They had invested their energy in using the alliance as a vehicle for promoting their desire for an independent Japan — greater security cooperation with the US would lead to constitution revision, collective self-defense, and normalization — and a de facto cold war with China, but with the US shift in its relations with North Korea and China the US appears to be as less reliable ally for the Japanese right. Under the Obama administration, conservatives will likely shift to a position on the alliance akin to General Tamogami Toshio's, arguing for a more independent Japanese defense posture and more vocal disagreement with the US, particularly on issues like North Korea. Indeed, General Tamogami may literally become the posterchild of this line of argument. As he argued in his APA contest essay, while "good relations between Japan and the United States are essential to the stability of the Asian region," Japan needs its own preventive strike capabilities and greater diplomatic clout. It is difficult to imagine what the alliance would look like were this scenario to come to pass, but I can imagine that one consequence of Japan's developing independent deterrent capabilities (conventional or nuclear) would be to push the US closer to China, in effect balancing between the two.

If the Obama administration decides to press Japan on history questions — which Sakurai Yoshiko believes is in the offing — it will give the Japanese right a convenient excuse for pressing for a more independent defense posture, but the seeds of that shift were planted in the Bush administration's about-face on North Korea.

It may take years before we learn the extent to which the Bush administration's shift on North Korea affected Japan's hawks, who were "shocked" by the US decision earlier this year to remove North Korea from the list of state sponsors of terrorism. But judging by their initial reactions, the impact has been profound. The impact has also been felt at the popular level. The Cabinet office's annual foreign policy attitudes survey, released earlier this month, recorded a new low in respondents who view US-Japan relations favorably: 68.9% said they see the relationship favorably, compared with 76.3% who answered favorably last year, and 28.1% who see the relationship unfavorably (an increase of eight points from 2007). Mainichi claims that the US government attributes the drop to the US shift on North Korea, hardly surprising considering that the greatest source of concern for the Japanese public in Japan's relations with Noth Korea remains the abductions issue (among respondents, 88.1% see this as an object of concern, compared with only 69.9% who see the nuclear issue as a cause for a concern, a five-point drop from 2007). A recent Yomiuri poll on the US-Japan relationship recorded a similar slip in Japanese public trust in the US, with North Korea explicitly cited as a reason for lower trust in the US.

In the short term, however, it is difficult to say what impact any of this discontent will have on the relationship. Aso Taro is handicapped by the crumbling economic situation and is in no position to devote considerable effort to reimagining the alliance. The LDP is working to build ties with the new administration, but it seems to be driven more by the need to build links where none exist than any particular policy agenda. The DPJ, anticipating that it will have the opportunity to work with Mr. Obama, is working on deepening its links with the incoming administration; Okada Katsuya, possibly Ozawa Ichiro's successor as DPJ president, visited Washington earlier this month for meetings with people in Democratic foreign policy circles.

The Obama administration and a DPJ administration might cooperate well in building a new alliance less focused on purely security matters. The challenge is calibrating the right level of security cooperation so the allies can focus on other, more pressing matters. Security cooperation must be downgraded to but one conversation among several in the alliance. Getting Okinawa and Guam right will help — I'm encouraged by reports that Mr. Obama's Japan team is open to renegotiating the 2006 realignment agreement. Seeing as how the 2006 agreement is already delayed, the US and Japan might as well get it right. This point will undoubtedly be debated at length in the debate over the 2009 budget, which will include a request from the ministry of defense for 100 billion yen for realignment. I expect that DPJ will strenuously resist this request, perhaps using the economic crisis as an additional pretext for opposing it.

But there is still the need to develop a bilateral agenda that encompasses more than security. With the 1996 alliance dead, what will take its place?

My problem with the new AEI report from Michael Auslin and Christopher Griffin is that the answer they provide to this question is basically to deny that the 1996 framework is dead. While acknowledging that the alliance is in a new era, their answer is more of the same: ever greater security cooperation whether in East Asia or globally. Rather than seeing the golden age of the 1996 alliance as having passed, never to return as the result of structural changes, they maintain that the problem is the Japanese domestic political situation, which has halted the process of reforming Japanese national security policy and the national security establishment. The task is to press forward with more and closer security cooperation, creating what they call a "normal alliance." This normal alliance would be a vehicle for the promotion of liberty in East Asia, in cooperation with other democratic alliances in the region (reminiscent of Mr. Abe's arc). As they write, "...The U.S.-Japanese alliance should reorient itself to become an active promoter of political, social, and economic liberalization. Tokyo and Washington should seek to enhance and promote the goal of making democracy, free markets, and transparent security policies the norm in Asia."

This statement is wholly at odds with Asia as it exists today. I'm not certain that the alliance is capable of promoting democracy in Thailand, let alone in Burma, North Korea, or China. And China, as the region's leading trader is a more critical partner as far as free markets for goods and investment are concerned. Of course, Auslin and Griffin are largely concerned with China. In their words, "China is also the only legitimate military threat to long-term stability in the Asia Pacific." They cite China's plans to build a blue-water navy, a distant prospect at best and something that does not necessarily threaten the US or Japan. They acknowledge economic interdependence, but are much more interested in preparing for the worst-case scenarios with China than with getting the trilateral relationship with China right so to stave off the worst-case scenarios. They are trying to resurrect the partnership between conservatives in Tokyo and Washington that produced the "golden age," only it is unclear who is still willing to sign on to this agenda in either Washington or Tokyo. Having been burned in North Korea, I suspect Japan's neo-conservatives will be less enthusiastic about ever deeper security cooperation that has proven to be one-sided in favor of the US. Moreover, I'm not clear whether there is public support in Japan for the kind of alliance they envision. The Japanese people may view East Asia as a frightening neighborhood — see the aforementioned Cabinet Office poll — but that doesn't mean that they're ready to support remilitarization and more vigorous security relationships regionally and globally.

In Washington, the pendulum appears to have shifted away from the China hawks, particularly with Secretary of Defense Robert Gates slated to stay on in the Obama administration. The emphasis appears to be increasingly on stability and order in Asia, instead of the "freedom" agenda desired by Auslin and Griffin. Of course, the greater the emphasis on stability, the greater the need to cooperate with China.

It is still unclear to me what the US-Japan alliance will become, but I'm convinced that what it won't become is the normal alliance outlined by Auslin and Griffin. It may ultimately be the case that the alliance is destined to be limited to ensuring the defense of Japan but little more, with Japan providing token contributions internationally and playing a slightly greater role in providing for its own defense, but little more. As long as Japan is hamstrung by structural problems — its demographics, its shambolic economy, its public finances — it will be unable to be the vigorous partner that, as Sheila Smith argues, Washington needs in the midst of the crisis. But if Japan cannot find a way to overcome its problems, it will not be the partner Washington (and Beijing) need in Asia as they try to build a new, stable regional order.

Wednesday, December 17, 2008

2008 in review

I have contributed a review of 2008 in Japanese politics to Néojaponisme. Check it out here.

I'll be writing a more comprehensive review — like last year's — soon.

Monday, December 15, 2008

Political Japan awaits a black swan

"SOCIAL ENTROPY: A measure of the natural decay of the structure or of the disappearance of distinctions within a social system. Much of the energy consumed by a social organization is spent to maintain its structure, counteracting social entropy, e.g., through legal institutions, education, the normative consequences or television." – Krippendorff's Dictionary of Cybernetics
The LDP is in an advanced state of decay. Not surprisingly, as its death throes worsen, as the chaos within its ranks grow, more energy is being expended simply to preserve the fiction that the LDP remains a coherent party capable of governing its own members, let alone Japan. As entropy grows, so too does the energy dedicated to preserving the structure.

The signs of decay are everywhere.

At present the leading example is the developing Watanabe mutiny, which shows no signs of abating. Watanabe Yoshimi appealed to Prime Minister Aso for cooperation in a speech in Fukushima prefecture Saturday, but only on Mr. Watanabe's terms. Mr. Watanabe criticized Mr. Aso's new stimulus package as doing little to shift power from the bureaucracy to the politicians. "Change for this country," he said, "is truly desired." Behind Mr. Watanabe stands what AERA suggests is a group of forty-eight young reformists who share Mr. Watanabe's desire for wide-reaching reform and fear for their political lives. These forty-eight, including Shiozaki Yasuhisa, chief cabinet secretary under Abe Shinzo, are more than sufficient to overthrow the government by depriving the government of its supermajority. The question is whether they are willing to do so. The article makes a good point in suggesting that the reformists may have nowhere to go: with the DPJ running candidates in nearly 250 of 300 single-member districts, many of the Koizumians — particularly those in their first or second terms — face uphill battles for reelection and are hardly in a position to run to the DPJ. In Albert Hirschman's terms, their exit option is limited, so they are left trying to exercise voice within the LDP by forming study groups and publicly criticizing the prime minister. (And the DPJ will do everything it can to encourage the exercise of voice by LDP members — just as LDP officials have cheered for DPJ members opposing Ozawa Ichiro and criticized the lack of voice within the DPJ.)

Perhaps this explains Kan Naoto's inclusion in what is now being referred to as the YKKK. Growing out of the LDP's liberal dynamic duo of Yamasaki Taku and Kato Koichi, the final two letters are for Kan Naoto, DPJ executive, and Kamei Shizuka, founder of the People's New Party. Messrs. Yamasaki and Kato are apparently in touch with the latter two regarding the possibility of a post-election realignment. Asahi reports that Mr. Kato is open to leaving the LDP before an election — as are the other two (naturally) — but Mr. Yamasaki is reluctant, saying only that his goal is ending the divided Diet. Accordingly, Mr. Yamasaki joined the six other faction leaders to voice their support of the Aso government.

Based on the combination of names, the YKKK looks to me more like a way for a potential DPJ-led coalition government to pry away some LDP members than the basis for a comprehensive political realignment. The liberals are even more alienated within the LDP than the Koizumian neo-liberals, and have little to lose from leaving the LDP. It's little wonder that Mr. Kan would want to pry the liberals into the DPJ; not only would the bolster the party's numbers, but they would strengthen Mr. Kan's group within the DPJ. Not surprisingly, Mr. Kan has rejected the notion of a realignment before a general election. (I should add that this must be precisely what Ozawa Ichiro wants: all talk of a realignment is focused on LDP members defecting, as opposed to the dissolution of both the LDP and the DPJ during a realignment. The YKKK resembles less a multi-partisan alliance than the opposition parties looking to pluck low-hanging fruit from the LDP.)

The LDP's leadership, consistent with the notion of social entropy, is taking all of these threats seriously — these manifestations of entropy within the LDP. The party elders have closed ranks around the prime minister. Mori Yoshiro, don of the Machimura faction and a former prime minister who knows something about low approval ratings, most recently lashed out at Messrs. Yamasaki and Kato, as well as Nakagawa Hidenao. "Deplorable," he said. "Nothing but carefree, thoughtless politicians who have profaned all who have done the hard work of building Japan's politics." Ibuki Bunmei, Mr. Abe's education minister and LDP secretary-general under Fukuda Yasuo, has also spoken up on the prime minister's behalf, first by arguing that the party has no choice but to stick with Mr. Aso, because the public would be outraged if the LDP picked a fourth leader without a general election (how is four any less bad than three?) and then by warning that the YKKK could be like the KKK, "assassinating" young LDP members who follow them. It's hard to describe just how offensive this is, although MTC tries. But lame attempt at a joke aside, Mr. Ibuki couldn't be more wrong. Staying loyal to the Aso LDP — Mr. Aso's name has been inserted before the party's name in recent promotional material — at the same time that the party has moved ever further from the platform that got so many of the young LDP members elected in the first place seems like a terrible career move. Mr. Ibuki forgets that the party has systematically alienated its young Koizumians in the two years since Mr. Koizumi left office. How could the YKKK, or whatever alternative emerges, possibly be worse?

The LDP leadership's goal is to both close off exit options and stifle the exercise of voice.

None of this is to say that any one scenario is inevitable. There are number of possibilities for the coming year: a pre-election realignment that involves defection of the liberals and/or the neo-liberals; the creation of a neo-liberal third party before or after the next election; no change before a general election, in which the Koizumians are defeated; a fierce leadership struggle in the DPJ should Mr. Ozawa be forced to step down due to ill health. No one can say with any certainty which scenario will come to pass. The actors themselves don't know. The Japanese political system is waiting for a black swan of one form or another, the next jump in the history of Japanese politics. "History and societies," Nassim Nicholas Taleb wrote, "do not crawl. They make jumps. They go from fracture to fracture, with a few vibrations in between."

What is certain is that the LDP establishment is losing its grip over the LDP and its constituent parts. They cannot silence mutinous backbenchers. They cannot stop backbenchers from forming study groups working at cross purposes with the government. When the right opportunity comes, they will most likely be unable to stop discontented members from leaving.

And they cannot stop voters and interest groups who have long supported the LDP from breaking with the LDP to support the DPJ.

Saturday, December 13, 2008

Slouching towards irrelevance?

Prime Minister Aso Taro, faced with dismal poll numbers, a potential rebellion within the LDP, and an economy galloping into recession, sought to stem the tide against him by announcing a second stimulus package at a press conference on Friday.

The government's purpose is to ease the insecurities of the Japanese people, but also to make Japan "the fastest among the developed countries to escape the current recession." To that end, Mr. Aso promised ten trillion yen (around $109.7 billion) in countermeasures for employment and business finances, including one trillion yen in residence and capital investment taxes. He promised thirteen trillion yen (around $142.7 billion) for shorimg up the financial system.

On employment, he focused particular attention on the plight of irregular and part-time employees, promising to create employment opportunities in rural areas. He pledged that the forthcoming budget will offer assistance to these workers in finding new employment, and will increase subsidies to local governments by one trillion yen in order to promote job creation.

The new plan's assistance for financial institutions adds an additional ten trillion yen to the two trillion included in the assistance bill that just passed the Diet, with an eye toward encouraging banks — particularly banks in rural areas — to resume lending to firms, especially small- and medium-sized enterprises.

But the impression one gets is that Mr. Aso's latest plan is lots of trees, no forest. Coverage has focused on the sheer scale of the package, although it's not clear just how much the second stimulus package will total, because the prime minister was unclear which figures are totaled in other figures and which constitute separate categories of spending. If other governments are improvising their responses to their respective economic crises (as argued by John Gapper in the Financial Times), Mr. Aso's approach seems to amount mostly to throwing ideas against the wall in the hope that something sticks. For all the pieces of the new plan, it amounts mostly to hope: hope that the government's subsidies for local governments will create more jobs, hope that banks will start lending upon being shored up by government funds, hope that tax cuts can get businesses and homeowners investing again. It is unclear how the government plans to stimulate consumer demand to replace slack demand from abroad — demand that is unlikely to return anytime soon if the yen stays as strong as it is for any considerable length of time.

It's all well and good that Mr. Aso appreciates the importance of saving rural Japan and preventing the emergence of yet another lost decade, but perhaps the time to do that was in the "longest postwar expansion." Now, in the midst of what government officials repeatedly call "the worst crisis in a century," it is uncertain whether fiscal policy will have any effect whatsoever. It certainly won't in time to reverse the downturn before the LDP has to face the voters. The government faces the monumental task of solving Keynes's paradox of thrift, getting the public to spend at the same time that it is bombarded with bad economic news that has the effect of discouraging consumption.

There's also the question of how the government will pay for its new commitments. The prime minister insisted that the government will not depend on bonds to cover the new stimulus, turning instead to the unemployment insurance special account and the Fiscal Investment and Loan program (FILP). But the tax question will not go away. This is hardly the time for the LDP to increase taxes, and it's understandable that Mr. Aso is reluctant to commit to a date for comprehensive tax reform and a consumption tax increase. Doing so can only worsen his political prospects. Why should he commit to a tax increase in 2011 when he may not even be prime minister, considering that he could suffer political consequences in 2009 as a result of his pledge? (Yosano Kaoru, his economy minister, is reportedly outraged at the prime minister's inability to commit.)

The government has little choice but to throw caution to the wind in the hope that somehow, miracuously, the economy recovers. Not to reopen the debate about whether Japan or the US is in worse straits, but Japan truly appears to be teetering on the brink of disaster. I don't mean merely another lost decade or a depression. I mean slouching to irrelevance. Another prolonged downturn could mean another lost generation, with questionable job prospects and correspondingly low ambition. Another lost generation will only compound Japan's demographic crisis. Fewer steady jobs presumably means fewer Japanese getting married and having children. Hokkaido University's Yamaguchi Jiro, writing about the employment crisis, argues that it's essential for Japanese to reconsider the meaning of work. True, but will that reconsideration happen in time to rescue Japan?

This is the great failure of the Aso government. Faced with a widespread and deepening crisis, the government has offered a cobbled-together plan that may only entail suffering firms to limp on until the next crisis. Mr. Aso has not, however, offered a compelling intellectual framework for a post-crisis Japanese economy. Rural Japan is in desperate need for some scheme to ensure future prosperity — public works and agriculture will no longer suffice. Perhaps it's too difficult a question to ask of the government when it is simply trying to stanch the bleeding, but at some point the government (or a government) will have to answer it.

This is an ex-faction!

Speaking of predictions, the destruction of the Machimura faction is proceeding apace.

Before the LDP's September election, I asked whether anyone thinks that "the Machimura faction, that 89-member monster of a faction that sits at the intersection of the LDP's divisions between 'neo-liberal' reformers, party leaders, and ideological conservatives, will survive this party election."

Events appear to confirm that the Machimura faction is on its last legs, if it is not already dead.

Yomiuri reports that in connection with Nakagawa Hidenao's perceived "anti-Aso" efforts, the rift between Mr. Nakagawa and party and faction elders Mori Yoshiro and Machimura Nobutaka — already pronounced before Aso Taro's ascendance — has widened. Mr. Machimura, along with fellow faction member Abe Shinzo, has emerged as a prominent critic of the prime minister's critics, including Mr. Nakagawa.

Is it reasonable to speak of the Machimura faction as a single faction? Is membership in the faction the most meaningful affiliation for its members, as opposed to membership in study groups and other organizations?

How long before the faction officially splinters? And if the Machimura faction cannot hold, can the LDP, of which the Machimura faction is a microcosm, endure?

Can the LDP save itself?

In a vitriolic post at Shisaku, MTC goes after those who insist that despite the LDP's current crisis — which has only gotten worse since back in January when Fukuda Yasuo called it the worst since the LDP's founding — the LDP will recover as it has done before.

I have encountered this argument all too frequently, and share MTC's frustration.

Rarely have I encountered someone who offers a causal mechanism to explain how the LDP will escape the reaper this time. The argument is usually presented as the simple assertion that the LDP has survived to the present day, so it will continue to survive. This argument is logically flawed. The LDP's survival in the past, despite defections and internal divisions, tells us nothing about whether the LDP will survive in the future. Arguably the LDP has never faced the possibility of defections while facing a major opposition party that was a plausible contender for power (indeed, an opposition party that was the largest party in the upper house). More importantly, the LDP has never contended with a major opposition party that was a plausible home for LDP defectors. While it is common to complain that the LDP and the DPJ are too similar, on the plus side the ideological overlap — if their similarities can be attributed to ideology — means that the DPJ is better prepared to welcome LDP malcontents than the Socialist Party ever was. The DPJ might be less attractive to LDP defectors by virtue of Ozawa Ichiro's being the party president, but it's not inconceivable that Mr. Ozawa could cut a deal regarding the premiership in order to bring in LDP members.

That said, it is far from certain what will happen. The next six-twelve months in Japanese politics will depend on contingencies and accidents, on the decisions taken or not taken by key individuals. But I'm still willing to predict that the LDP will fail to win a majority in the next general election, that the DPJ will, if it doesn't win an absolute majority, will still win enough seats with which to form a government. I'm less certain about whether the LDP will splinter. I'm certainly convinced that the LDP divided among seemingly irreconcilable ideological tendencies, but I'm willing to admit the possibiliy that the party's leaders will find a way to keep the party together, despite being unclear about the tools LDP leaders have at their disposal to keep dissatisfied members in the fold.

Various LDP bosses have publicly chastized Watanabe Yoshimi and other young turks for their "anti-Aso" activities, but I don't know what pressure is being applied in private. I'm guessing that there is little the party can do to stop Mr. Watanabe, a second-generation politician who has won his four terms in Tochigi's third district by sizeable margins and enjoys a certain prominence. But what the LDP can do is lean on the other young turks who might otherwise follow Mr. Watanabe in opposing and possibly leaving the LDP (Yamauchi Koichi, a first-term member from Kanagawa-9, is desperate in this post to make clear that Nakagawa Hidenao's new study group is not aimed as undermining Mr. Aso). It is unclear whether Mr. Nakagawa is willing to cut his ties with the LDP. Sankei suggests that the Machimura faction is working to contain Mr. Nakagawa; Abe Shinzo's participation in Mr. Nakagawa's study group on social policy is conspicuous in this regard. The group had fifty-seven members attend its inaugural meeting, but it is far from clear how many of those members are contemplating rebellion or whether their leader is prepared to support an effort to overthrow the government. He is still criticizing Mr. Aso — he criticized the prime minister's handling of the tax reform debate on a radio program Friday — and desires an election sooner rather than later, but he is giving few hints as to whether he'd be willing to back a break with the LDP.

It may take an election to break the LDP. Depending on the balance of power within the LDP post-election, certain blocs could be convinced to split should the LDP fall short of the majority while a certain bloc strengthens its hold. I imagine that Mr. Nakagawa hopes that his group of reformists will be left standing after an election, giving them the upper hand in a power struggle.

Given the LDP's divisions, can the LDP possibly save itself at the ballot box?

History is not in the LDP's favor. The LDP has failed to win majorities in every election under the new single-member district/proportional representation system but for the idiosyncratic 2005 election. It is nearly universally acknowledged that the LDP and Komeito will lose the supermajority they won in 2005. The question, then, is how far the LDP will fall. It is reasonable to surmise that the LDP will win no more than what it won in 2000 (233 seats) or 2003 (237 seats). It could conceivably do worse, as a result of widespread dissatisfaction throughout Japan over how the LDP has governed since the 2005 election.

As far as I'm concerned, the important question is whether the DPJ will come close enough to an absolute majority that it will have no trouble forming a government.

It's possible that I'm wrong. Like a good social scientist, I'm willing to accept the possibility that I'm mistaken, that my assumptions are faulty. In fact, my theory can be easily falsified: if the LDP remains in power after the next election and (presumably) remains united, I've clearly missed something, at which point it will be necessary to figure out precisely what was missing. In the meantime, as I — along with others, like MTC — have postulated, all signs point to the LDP's facing a reckoning at the next general election.

I'm waiting for someone who believes that the LDP will recover to tell me, in advance, what I'm missing. What will serve to keep the LDP in power? Will rural voters ultimately be unable to vote for the DPJ in a general election? Will the LDP's reformist candidates survive in urban districts that are trending back in the DPJ's favor? Will Mr. Ozawa repel a sufficient number of voters to save the LDP (as the LDP hopes)? Is there anyone out there who is convinced that the LDP will survive who can venture a causal explanation for how it will save itself, other than "it has done so in the past, and it will do so again?"

I'm not even convinced that the LDP has saved itself in the past so much as it has been lucky in its opponents. Its luck may have run out. It's amazing how that as the Aso government's support has plummeted, there are fewer stories about the divisions within the DPJ in the media. Nothing like the prospect of success to quiet discontent in the ranks.

Wednesday, December 10, 2008

Importing the construction state?

Amity Shlaes, a fellow at the Council on Foreign Relations and author of a recent attempt to discredit the New Deal, has an op-ed in the Washington Post in which she looks at President-elect Barack Obama's newly announced public works plan.

Seeing the phrase "public works," she naturally thought Japan, and wrote a piece about Japan's construction state.

During the 1990s, in the midst of the lost decade (which appears to be turning into lost decades), Ms. Shlaes maintains that "Japan traded its export complex for an edifice complex." She argues that Japan became a construction state while trying to revive its faltering economy during the 1990s. The economy didn't recover, so naturally the construction state is the direct cause.

Her story of Japan's transformation to a construction state in the 1990s is a complete fairytale.

The following is from Jacob Schlesinger's Shadow Shoguns, in a chapter entitled "The Public Works State:"
In the headlong rush to rebuild after the war, construction became the main pillar of the economy. Beginning in the early 1960s, construction spending equaled about one fifth of Japan's gross national product, and by the 1980s, it created nearly one tenth of the country's jobs. So much of the business — from 30 percent to 40 percent a year — was underwritten by the government that many Japanese referred to their country as the "public works state." Indeed, Japan's public works spending as a percentage of GNP was by far the largest in the industrialized world, exceeding America's by a magnitude of four.
But of course, it doesn't help Ms. Shlaes argue against a Keynesian stimulus package focused on public works projects if she writes that the glory days of the construction state were well before the bubble burst. Indeed, Shadow Shoguns is largely the story of Tanaka Kakuei (see MTC's post on Tanakaism), who without question was the father of the construction state — whose glory days largely mirrored his time at the apex of Japanese politics, first as prime minister (1972-1974) and then as the LDP's kingmaker until the mid-1980s when he suffered a stroke. Japan had both an export complex and an edifice complex.

In short, Ms. Shlaes is egregiously dishonest in this piece. Even during the 1990s the construction state had less to do with Keynesianism pump priming — although it was a convenient front, and so much the better if it actually stimulated the economy — than with out-of-control clientelism and corruption.

So in the end Ms. Shlaes is comparing apples and oranges. Simply pointing to Japan's post-bubble construction projects is insufficient to prove that both Japan's 1990s public works and Mr. Obama's emerging public works program are both rotten apples.

The U.S. might even benefit from a sustained effort to improve its infrastructure.

Tuesday, December 9, 2008

The liberals step into the breach

Watanabe Yoshimi is not relenting in threatening rebellion against the Aso government.

Speaking at a fundraising party on Monday evening, Mr. Watanabe speculated openly about scenarios for political realignment. Edano Yukio, a DPJ reformist, was in attendance and stated that if Mr. Watanbe decides to leave the LDP for the DPJ, he should be welcomed with open arms.

Mr. Watanabe's three scenarios for realignment include (1) a franchise model, the creation of a new party bearing the LDP label (the Tokyo LDP, for example); (2) the amicable divorce model, freeing Mr. Watanabe to bargain with all possible partners; and (3) the "without means" model, jumping from the LDP without any guarantee of a successful landing.

It is unclear which scenario will come to pass, if any. Mr. Watanabe may be able to rely on the support of other young reformers, but it's by no means a sure thing. The Koizumi children and their fifty-something older brothers and sisters have shown themselves to be remarkably timid. The lot of them have been waiting virtually since Koizumi Junichiro's term as prime minister ended for someone to challenge the drift within the LDP. But even now, with Mr. Watanabe talking openly about challenging the government and leaving if the LDP they cannot make up their minds. Yamamoto Ichita has, for example, argued at his blog that Mr. Watanabe speaks only for himself — he does not speak for the reformists en masse. It may be that even Mr. Watanbe does not know what he wants to do. Sankei suggests that he may be driven as much by resentment at having been bounced from the second Fukuda cabinet at then-LDP secretary general Aso's urging as by policy disagreements with Mr. Aso. As such, it remains an open question whether he has the courage to act. He may yet tell himself that he has too much to lose from breaking with the LDP (although if he keeps talking he may lose more reputationally from speaking openly about challenging the government only to back down).

In the meantime, an older generation is also speaking of realignment, namely those old allies of Mr. Koizumi, Kato Koichi and Yamasaki Taku. The self-styled liberals have little to lose from publicly challenging the Aso government and threatening to leave the party. Both are their own men, insofar as LDP members are capable of being independent. Mr. Kato, having left politics for several years after being accused of corruption, is not affiliated with any faction and is something of an outsider within the LDP. Mr. Yamasaki is a faction chief, but as a liberal (and an advocate of normalization with North Korea), he is increasingly out of place within the LDP. Little surprise then that both men have been active in discussing a possible realignment. The latest is that Mr. Yamasaki appeared on TV Monday to argue for a new party drawing members from both the LDP and the DPJ that will be able to govern following the next general election.

I would argue that neither Mr. Kato nor Mr. Yamasaki is in a position to be the catalyst for a realignment. The problem with being independent is that there are few guarantees that anyone would follow them out of the LDP. Such is the paradox facing the LDP's malcontents today. A rebellion by Mr. Watanabe is meaningfuly precisely because as a promising future leader, a former cabinet minister, and an LDP princeling he has something to lose by rebelling against Mr. Aso and the party establishment. But for those same reasons he might ultimately decided not to rebel, especially if he is unable to rely on his fellow reformists for support.

Sunday, December 7, 2008

The fall

The Aso cabinet is in free fall.

The Yomiuri Shimbun has released its December public opinion poll, which found that not only has the Aso cabinet's approval rating fallen by half since the beginning of November (from 40.5% to 20.9%), but the cabinet's disapproval rating rose by twenty-five points to 66.7% during the same span of time. The poll contains bad news for the LDP on every front. The DPJ has edged ahead of the LDP in baseline approval rating (28.2% to 27.2%) and opened a commanding lead in support in the next general election (40%, a ten-point increase, to 24%, an eight-point drop) — and, moreover, Ozawa Ichiro scored higher than Prime Minister Aso when respondents were asked who is the most appropriate choice as prime minister (Mr. Ozawa's support rose to 36%, a fourteen-point increase, while Mr. Aso's fell twenty-one points to 29%). This last figure is a critical indicator for the next general election, because voters have not only abandoned Mr. Aso, they also appear to be warming to Mr. Ozawa, depriving the LDP of the argument that no matter how unpopular the LDP is, the public still does not trust Mr. Ozawa.

(For the record, Asahi's monthly tracking poll recorded similar numbers. Twenty-two percent approval rating compared to a sixty-four percent disapproval rating and a dramatic fall and rise in support for Mr. Aso versus Mr. Ozawa for prime minister.)

The only heartening news — if one can call it that — is that more respondents preferred a political realignment over a DPJ-centered or LDP-centered government, or a grand coalition, the second-most preferred option.

Of course, a political realignment is not good news at all for the LDP, seeing as how for the moment the realignment could consume the LDP while leaving the DPJ comparatively unscathed. While Nakagawa Hidenao has spoken of uniting reformers from both parties, it appears for the moment that there is no better cure for the DPJ's internal disputes than the belief that the party is poised to seize power.

But the LDP's reform movement continues apace. Appearing on Fuji TV Sunday, Watanabe Yoshimi doubled down on his challenge to Mr. Aso, suggesting that he is steeling his resolve to overturn the cabinet and arguing that an election at the close of the extraordinary Diet session is essential if Japan's government is to be capable of formulating policy. As MTC argued recently, Mr. Watanabe may be poised to do what his father was unable to do — deliver the death blow to the LDP. It is yet unclear whether he will be able to muster the support to overturn the cabinet, perhaps by voting against the government when one of the bills requiring a second vote by the House of Representatives comes before the lower chamber. He may have some help from Kato Koichi, who could be prepared to make a second bid to overturn an unpopular LDP prime minister and has been in talks with the DPJ and the PNP about electoral cooperation and the formation of a new party. Nakagawa Hidenao, undoubtedly an indispensable player in any rebellion by LDP reformists against Mr. Aso, is reportedly skeptical about leaving the LDP before a general election, presumably because to do so would be to diminish his bloc's bargaining power. At this point the plan seems to be close ranks, prepare to contest a general election under the LDP's banner but in opposition to the standard-bearer, and then see the post-election balance of power. If neither the DPJ nor the LDP achieves a majority, the LDP reformists may make all the difference in determining who controls the government. (Koike Yuriko, one of his lieutenants and another player in the fight between reformists and the LDP establishment, is reportedly "tired" of forming new parties, given that she spent the 1990s jumping from new party to new party. Her attitude may simply be a means of reinforcing Mr. Nakagawa's efforts to proceed deliberately.)

Mr. Aso's allies appear to be closing ranks, with both Abe Shinzo — representing the conservative bloc — and Machimura Nobutaka — representing the party elders — criticizing Mr. Watanabe and the other reformist opponents of the Aso government. Yamamoto Ichita, a natural leader of the reformists, has also been hesitant to echo Mr. Watanabe's full-throated opposition to Mr. Aso. In a post at his blog, he relates what he sees as the honne of the young reformers. Mr. Yamamoto dismisses the idea of replacing Mr. Aso before an election, arguing that the public would be gravely insulted, even if an election were held immediately after the formation of the new cabinet. Furthermore, he suggests that it is unreasonable to think that the LDP will be able to fix its problem simply by finding a new, more dynamic leader (he dismisses this as the Kimu Taku option, referring to Kimura Takuya's teledrama Change). This sounds like another version of Mr. Nakagawa's argument. Hold steady and prepare for the next election, but be ready to act following the election.

In considering the rapid decay of the Aso government, it bears mentioning that the reformist rebellion is not primarily an opportunistic response to the government's falling popularity. As I have argued previously, the rift between the LDP's reformists and the rest of the party has been building for years. Mr. Aso may have forced the rift open by making it clear upon taking office that his government would move away from Koizumi-ism and consolidate the LDP's counter-reformation, making it clear to reformers that the party no longer had a place for them, but he did not create the conflict between the LDP's ideological tendencies. The poll numbers may have provided the reformists with an opportunity to launch their attack, thanks to the combination of public sympathy for their efforts to trigger a realignment and a government powerless to stop their machinations, but this conflict has been a long time coming.

With even the LDP executive beginning to contemplate holding an election in January instead of convening the regular session of the Diet immediately following the New Year holiday to pass a second supplementary budget, the conflict may reach its climax sooner rather than later.

It appears increasingly likely that Mr. Aso will go down in history as having presided over the destruction of the party whose creation his grandfather so vociferously opposed. There is a certain rhythm to history, isn't there?