Friday, February 27, 2009

Ozawa holds his ground

Earlier this week, I discussed the furor that greeted Ozawa Ichiro's remarks about the reduction of US forces in Japan.

The LDP, unable to resist the urge to go on the offensive for a change, immediately jumped to condemn Ozawa's remarks as dangerously naive.

"It's unrealistic," said Kawamura Takeo, chief cabinet secretary.

"Nothing but irrational," said Machimura Nobutaka, former chief cabinet secretary and foreign minister and head of the Machimura faction.

Aso Taro weighed in too: "A person who has some knowledge of defense affairs would by no means say such things."

Ozawa answered this criticism with a degree of perplexity, saying that it was a "natural" matter for discussion, that "if Japan carries out as a great a role as it can, the US burden can shrink, as can the US presence in Japan." He also said that he was not saying that Japan should commit to intervention in crises in the Korean Peninsula or the Taiwan Straits.

This whole debate has a farcical quality to it, as so much in Japanese politics does today. The LDP, a party whose founding statement calls for the restoration of Japan's independence, whose list of basic policies describes itself as committed to Japan's defending itself, a party whose leader two years ago was committed to revising Japan's constitution in order to guarantee its independence, is in little position to criticize Ozawa without ignoring the efforts of a good portion of its members over the past fifty years to achieve greater autonomy from the US (within the confines of the alliance, of course). I wonder what Kishi Nobusuke, leader of the faction from which the Machimura faction is directly descended, would say to his successor's calling the idea of Japan's playing a greater role in its own defense with a smaller US presence "irrational." Or for that matter what Yoshida Shigeru, the prime minister's grandfather, would say, seeing as how he did not view the idea of Japan's being dependent on the US for its defense as a permanent arrangement.

There are reasons to question Ozawa's statements. I offered some myself in my initial post. Nevertheless, why shouldn't his ideas be seriously engaged by LDP leaders, instead of dismissed as ignorant or irrational? Are US forces meant to be stationed in Japan permanently? Is it sensible to count on that being the case? What is the appropriate level of forward-deployed US forces on Japanese soil? This is precisely the kind of debate Japan needs to be having as the Marines prepare to relocate from Okinawa to Guam. Ozawa may not be acting in good faith, but Nakagawa Hidenao has it exactly right: this is the kind of thing that should be debated in question time on the floor of the Diet and other public settings by Japan's leaders. Even if Ozawa is wrong, the subject shouldn't be dismissed as so controversial as to be beyond discussion.

Why shouldn't Japanese politicians debate whether some day, sooner or later, it might want to or need to play a greater role in defending itself, and if so, how it will go about paying for it, what contingencies it will prepare for, what capabilities it will require, whether it will have to revise the constitution, what role the alliance should play in the region, what role Japan should play in the alliance, etc.? And why should it wait for something drastic to happen before having this debate? Even if for the foreseeable future it is unlikely that there will be drastic changes to the status quo, it bears having this debate. It will not be settled conclusively now or in an election campaign or even under a DPJ government (should one form), but Japan must have a debate on the questions raised by Ozawa. His remark was more or less designed to raise debate, seeing as how he offered nothing specific about how or when Japanese capabilities should replace US conventional forces in Japan.

But the LDP, facing death, cannot bring itself to engage in this debate. Instead its leaders condemn Ozawa in the hopes of getting some political traction out of this issue, hoping to paint Ozawa and the DPJ as untrustworthy and anti-American. In the process, Aso, Machimura, and others have illustrated the cognitive dissonance undoubtedly felt by Japanese conservatives, who are now wedded to a vision of the US-Japan alliance grounded in ever closer cooperation even as their first principles lead them to desire greater autonomy and remilitarization.

Building on Ozawa's argument, Sasayama Tatsuo — a onetime Diet member who followed Ozawa out of the LDP and remained with him until 2000 when he lost as a Liberal Party candidate — argues that with the economic crisis clouding the future, it is only sensible that Japan consider what it would do in the absence of US military power. This is a future that may not come to pass, especially seeing as how Japan may find itself even more constrained militarily than the US, but I see little harm in Ozawa's broaching the subject.

Thursday, February 26, 2009

The beginning of benign neglect?

Aso Taro has returned from his meeting with Barack Obama, the first such meeting between Obama and a foreign leader at the White House, as the Japanese media has repeatedly emphasized. The LDP website invokes this phrase like a mantra in its summary of the prime minister's visit, as if citing the name of the US president could save the party from ruin: "Prime Minister Aso Taro — the first among the world's leaders to meet with President Obama at the White House." (I feel like the phrase needs an exclamation point.)

Others have been less effusive.

The Sankei Shimbun, a leading cheerleader for a more active security alliance, is perhaps foremost among media outlets in voicing its doubts about the visit. Far from celebrating the visit, Sankei notes that Aso's visit was overshadowed by media coverage of Obama's Tuesday evening address to Congress, an address that shortened Aso's visit. The paper also notes that unlike Murayama Tomiichi's 1995 visit to Washington, another short, informal visit by a Japanese prime minister, Aso stayed at a hotel away from downtown Washington instead of at Blair House.

But behind these questions lurks a greater concern: that far from being indicative of the new administration's interest in a stronger alliance, Hillary Clinton's making her first stop in Tokyo and Aso's being Obama's first foreign guest are signs that the new administration will be devoting little attention to Japan from now. Uesugi Takashi calls this Japan's "unrequited love" foreign policy and questions the notion that the US will be devoting all that much attention to Japan. (At the same time, Uesugi provides a useful corrective to the "sky-is-falling" school of conservatism that says that the US is itching to abandon Japan for China. "The US," he says, "will not simply discard Japan for China.") Uesugi instead takes a similar position to that in an article I wrote with Douglas Turner last year: "In short, in the US-Japan alliance both excessive hopes and affinities, and excessive disappointments are useless." It pays, in other words, to correct unreasonable expectations in the relationship, especially on the Japanese side.

Richard Lloyd Parry of the Times captures Japan's "unrequited love" well in this post. As he suggests, almost by process of elimination Japan was the perfect country for Obama and Clinton to deal with first: "Where better to start than Japan, where there are no serious bilateral problems, no danger of demonstrations, and where the press never asks aggressive or embarrassing questions?" Japan, in other words, is diplomatic low-handing fruit. For all the fretting during the late Bush administration about the alliance drift, the headaches are comparatively small compared to other items on the foreign policy agenda — and most of Japan's leaders are unable to consider an alternative to the present relationship with the US, Ozawa Ichiro, of course, being an exception. The Obama administration, in other words, may have just checked the "Japan" box on the agenda and can now turn to more serious matters. Considering that nominees for a number of working-level positions and the ambassadors to Tokyo and Beijing remain unconfirmed, it may be months before the Obama administration even looks in Japan's direction.

All of which goes to suggest that the administration may be prepared to follow through on an unstated policy of benign neglect: having given Japan its assignments (civilian reconstruction in Afghanistan, progress on realignment, etc.), the administration will now turn its attention elsewhere.

Little wonder that Ozawa and the DPJ want a bit more distance from the US. An alliance based on unrequited love is an unhealthy alliance. As such, Aso's twenty-four-hour visit, as wasteful as it was (anyone find it a bit hypocritical for the prime minister to fly halfway across the world for a day to discuss, among other things, climate change?), was still useful. A new relationship is being born, even as US officials remain sensitive to the symbolic politics of the US-Japan alliance.

Wednesday, February 25, 2009

Japan loves risk (Noah Smith)

In the past year, Japan's exports fell 45.7%. Exports to all regions were hit - down 52% to America, 45% to China, and 46.7% to Asia as a whole. Japan's mighty national champions, its automakers, have been hit the worst: Toyota's exports are off 56.2%, Honda's 46.3%, Nissan's 62.1%.

That's absolutely stunning. It is catastrophic. Words fail.

What this should demonstrate conclusively is that world economies are much more tightly linked than many economists had thought. The "decoupling" hypothesis — the idea that booming Asia could keep chugging along while America and Europe fell — has been decisively smashed (subscription required), at least in the short run.

(As an aside for the more technically minded, the "decoupling" idea rested on the same faulty assumption as the bubble in American mortgage-backed assets, namely the assumption of constant correlation. When times are good, they are unevenly good, so correlations are low and economies appear to be decoupled, but as soon as things turn bad everyone falls together and correlations shoot up.)

In any case, what does this mean for Japan? It means that being a "surplus" country has proven to be just as risky, if not more so, than being a "deficit" country. Relying on exports exposes you to big shock and wild swings. The myth that Japan, as a nation or as a people, is more risk averse than other countries should thus be exposed as the outdated stereotype that it is. Over-reliance on exports, as it turns out, is similar to playing roulette. For the LDP, it may very well have been Russian roulette.

The last time the dice came up snake-eyes for exporters was a very long time ago — the 70s, in fact. But Japan was still a fast-growing country then, still playing catch-up to the West in technology and capital. Japan responded to the world recessions of the 70s by moving up the value chain, developing global brands and launching headlong into high-tech industries like autos, electronics, and machine tools. The recession was sharp but brief, the party quickly resumed, and the LDP lived on.

Today, that scenario is more likely to befall China than Japan. The record of the last two decades should decisively show that Japan is a fully developed country — it has hit the frontiers of technology and capital. There is no more low-hanging fruit. And that means that recessions are much more likely now to expose the structural flaws in the Japanese economy...of which there are, sadly, still many.

After the LDP goes, the DPJ will have two basic choices: fix structural flaws (the Bill Clinton approach), or encourage bubbles (the George W. Bush approach). I'd advise leaning heavily on the first approach, of course, but the problem is that structural flaws are often politically motivated. Powerful construction, agriculture, and small- and medium-sized business lobbies will use recessions as an excuse to delay reform, and booms as an excuse to ignore the need for reform. Without electoral reform that decreases the clout of these lobbies, the DPJ may find itself forced to turn to more dubious strategies of economic revival.

Whatever happens, though, let no one in Japan now doubt that export dependence is a very high-risk strategy for any nation.

— Noah Smith

What is Ozawa's angle?

Ozawa Ichiro, a week after his meeting with Secretary of State Hillary Clinton, has focused attention once again on the DPJ's approach to the US-Japan alliance, a day after two prominent DPJ members gave their own perspectives on the future of the alliance (mentioned in this post).

Speaking with reporters Wednesday, Ozawa indicated that under a DPJ government Japan would seek to build an equal partnership with the US, which he said would entail reducing the US military presence in Japan to the Seventh Fleet, based at Yokosuka in Kanagawa prefecture. It would also mean Japan's taking greater responsibility for its own defense, while the US military focused on providing stability in East Asia.

MTC wonders whether Ozawa, in calling for this drastic reduction in the US forward presence, is bargaining with China, with a drastic reduction of US forces in Japan a means of taking Japan out of China's line of sight. In this sense one should pair these remarks with Ozawa's remarks earlier this week about China-centered foreign policy.

But there are a number of other perspectives from which to consider these comments. Indeed, knowing Ozawa, invariably he is sending different messages to different actors.

First, given Ozawa's emphasis on winning the next election, it bears asking what political significance these remarks have. Perhaps this is simply Ozawa's way of signaling that despite his meeting with Clinton last week, his government, should it ever exist, will not be a US dependency. What I wonder is just how salient this position is. Not having talked to voters in the regions where Ozawa has been traveling, I cannot say for certain, but I cannot but wonder what Ozawa is hearing from the voters with whom he has been interacting for the past several years. Is he consistently hearing abiding skepticism of the alliance as it has been managed under the LDP? Does this message play in the chiho? Will taking this position actually improve the DPJ's performance in the next general election? If so, that simply makes Ozawa no different than any other democratic politician. And if it's the case, then the US has a bigger problem than Ozawa's "independent" line. A long-term US presence in Japan is unsustainable if a broad swath of the public — and not just in the communities hosting the bases — does not see a reason for it. The Obama administration better get an ambassador to Tokyo quick to start repairing the damage, if the president means what he says about the alliance.

Second, it bears asking how this enhances Ozawa's position within the DPJ and the opposition more broadly. As numerous commentators have noted and concluded that the DPJ is doomed to collapse, Ozawa, now and should he become prime minister, has to balance between vastly divergent views on Japan's national security. The DPJ has effectively internalized the cold-war era political cleavage structure within its ranks. With these remarks, Ozawa has said nothing that members of the more hawkish sections of the party haven't already said. Go back and read this speech by Nagashima Akihisa, one of the most prominent DPJ hawks, given in the Diet in March 2007. Nagashima stresses the importance of Japan's regaining its independence by becoming less dependent on the US for its own defense, while recognizing the importance of the US foreign presence in providing regional public goods (for which the naval forward presence is critical). In his formulation, in wartime the US bears the risks, while in peacetime Japan bears the costs; his desire is to correct this imbalance. I'm not sure whether this formula is quite accurate — the US bears plenty of the alliance's peacetime costs simply by virtue of its military expenditures, while Japan would bear wartime risks by virtue of hosting US troops — but it does capture the thinking of the DPJ's hawks.

Naturally Ozawa has to give the occasional nod in their direction, for the sake of party unity. The reaction of Social Democrats, to say nothing of the JCP, shows that Ozawa cannot go too far in this direction, because should the DPJ form a government, it will need the SDPJ's votes in the upper house even if it can govern independently in the lower house. Emphasizing Japan's independence from the US while stressing the need for taking a greater responsibility for Japan's defense may be Ozawa's attempt to split the difference.

But this need for balance shows that no matter what Ozawa says, radical change in the US-Japan security relationship and Japanese foreign policy will not occur under his watch, not least because foreign policy remains an extremely low priority for the Japanese public. Any radical step in any direction will likely be met with opposition from within the party — turmoil that an LDP in opposition could exploit — and so Ozawa will likely take care to proceed deliberately and gingerly on security policy. A further reason to believe that the DPJ will make few drastic changes in security policy is the defense budget. With a number of expensive promises of far greater importance to Japanese voters, would a DPJ government truly be willing to reverse the decade-long decline in the defense budget and commit the resources to the JSDF that would be necessary were Ozawa's vision to come to fruition?

In sum, under the DPJ, the status quo on security will remain. With the Obama administration's willingness to develop non-security dimensions of the relationship, that may do just fine.

That being said, Ozawa's remarks may simply be a way of negotiating with the US over Okinawa. Why should we being quibbling over this location or that location in Okinawa, Ozawa implies, when we could be discussing about the US military presence holistically? I am certain that as unpleasant as US officials have found negotiations with Tokyo over Okinawa, they would dread a discussion over a drastic reduction of the US military presence in mainland Japan, especially given US investments in realignment at Yokota, Zama, and elsewhere. By threatening to escalate the discussion, Ozawa may be trying to get a major concession from the US, namely the Futenma Replacement Facility that is a major obstacle to concluding the 2006 realignment agreement (I guess now I should say the 2009 realignment agreement), and with it the presence of US Marines in Okinawa. I doubt this tactic will work, largely for the aforementioned reasons about why the US could easily call Ozawa's bluff, but it bears mentioning as a possible explanation for Ozawa's remarks.

Finally, it bears mentioning that Ozawa has been consistent over time in his belief in the importance of an independent defense posture and the ability of Japan to defend itself. Ozawa is not a pacifist and he is not philo-American, although that does not make him anti-American. Ozawa is first and foremost concerned with Japan and its national interests. At heart he believes in the importance of Japan's being able to defend itself and, moreover, not cooperating with the US in areas that he believes are not in Japan's interests. He has consistently emphasized the importance of formulating policy on the basis of the national interest and has criticized the LDP for neglecting the same. Some might disagree with his assessment of Japan's national interests, but he is clearly thinking along these lines.

Monday, February 23, 2009

The birth of the post-1996 alliance

Prime Minister Aso Taro has arrived in Washington in advance of his meeting with President Barack Obama Tuesday.

Despite Obama's welcoming Aso as the first foreign leader to meet with him in Washington, and despite Secretary of State Hillary Clinton's visit to Tokyo last week, the Japanese establishment continues to fret about the new administration's approach to Japan. Sankei, for example, notes the "exceptionally warm welcome" being bestowed on Aso by Obama — especially considering that the president is due to give a State of the Union address Tuesday evening — but wonders whether the Obama administration is as committed to Japan as appearances would suggest.

I have been somewhat irritated with the lengths to which the Obama administration has gone to demonstrate its commitment to the alliance (I still think this visit to Washington by Aso is a mistake). But looking at the agenda for the meeting between Obama and Aso, it appears that the new administration is preparing to embark on a new course for the alliance even as it preserves the old forms of alliance reassurance.

Obama is preparing to make winning in Afghanistan a top priority for his administration, making the war in Afghanistan, in Stephen Walt's words, "Obama's war."

The expectation is that Japan will be a part of that effort. But unlike the previous administration, the Obama administration looks unwilling to praise Japan for marginal, symbolic contributions to the effort. While respecting Japan's constraints on the use of force abroad, the adminstration appears ready to take Japan at its word. Japanese leaders talk of the need to contribute abroad even as they are reluctant to commit the Self-Defense Forces? Fine, then make a meaningful civilian contribution, the new administration has signaled. As Walt wrote in regard to NATO in Afghanistan, "Is Obama able to persuade our NATO allies to increase their own efforts there, or will they mostly free-ride on Uncle Sam? (And watch out for token deployments intended to signal that the rest of NATO is with us on this one, but that have no real effect on the ground)." The same applies to Japan, with a substantial civilian reconstruction contribution in place of military efforts.

The new administration will surely be watching, and it will surely not accept political instability at home as an excuse.

But beyond the Afghanistan question, reports suggest that the Obama-Aso meeting will address more than the usual bundle of security questions: the security relationship will be on the agenda, but it will share pride of place with the global economic crisis and climate change (although Yomiuri reports that Aso plans to keep the abductees on the agenda and will give the president a blue ribbon, the symbol of the abductee rescue movement). The Japanese government will get a closer look at a president who wants to solve global problems, and will not be content with symbolic and rhetorical nods in the direction of these problems. As MTC suggests, Aso could be in for a rude surprise Tuesday. This administration will most likely not share the Bush administration's seemingly endless patience with Japan, patience that faltered in the final years of the administration as it struggled to implement the 2006 realignment agreement and keep Japan committed to the six-party talks.

The Obama administration has work to do, and it will cooperate with any government in the region ready to come along. This is the message that came out of Clinton's Asia trip, especially her final stop in China.

I hope that the DPJ is paying attention. In the Obama administration the DPJ has a potential partner in building a new, more equal partnership, if not the perfectly equal partnership desired by Ozawa Ichiro. (It is arguable whether it is possible for any US ally to enjoy a perfectly equal partnership with the US given the inevitable gap in capabilities.)

Some in the party clearly understand the possibilities should the DPJ form a government this year. Okada Katsuya, once and possibly future DPJ leader, spoke at a Mainichi forum on Monday at which he stated, "[The US-Japan alliance] should be a framework to deal with global warming and poverty; it is wholly unnecessary to limit it to military affairs." That's not to say that he fails to appreciate the military importance of the alliance — in the same speech he acknowledged the importance of US bases in Japan not just for the defense of Japan, but for activities in the broader Asia-Pacific region — but like the Obama administration, Okada seems prepared to take the alliance in a different direction, acknowledging that with Japan's constraints unlikely to be lowered anytime soon, it is a waste of the alliance to continue to insist on more security cooperation.

The question is whether enough DPJ members, not least Ozawa, share Okada's assessment.

Hatoyama Yukio, DPJ secretary-general, also delivered a speech Monday, in English, to a meeting of foreign businesspeople, in which he said that a DPJ government would shift from "foreign policy subservient to the United States to an emphasis on international cooperation." Japan, he said, would speak frankly to the US in the event of foolhardy military activities if the DPJ gets the opportunity to form a government. This kind of comment may look anti-American — and is certainly red meat for a skeptical public — but it does not appear inconsistent with the Obama administration's approach. It matters less under what auspices Japan's global contributions occur than that they occur. Similarly, I do not think the Obama administration would find much to reject in Ozawa's statement Monday that foreign policy under his watch would stress the Sino-Japanese relationship, a development that would clearly help the US work more closely with China and serve to stabilize the region further.

I remain convinced that reports of the DPJ's "anti-Americanism" are overblown, that the DPJ is anti-alliance only if one takes the alliance to have one ideal form, that articulated under the Bush administration in cooperation with Prime Ministers Koizumi and Abe.

Hence the title of this post. The Obama administration is clearly interested in making something of the alliance, but it appears disinclined to continue down the path of the security-above-all-else alliance that emerged out of the 1996 Clinton-Hashimoto joint security declaration and was pushed hard by the Bush administration. Why should it, when to do so means continuing to slam into the wall of Japan's reluctance to untie its hands on security policy?

The DPJ, at least rhetorically, may be a more suitable partner for the Obama administration, but ultimately it will make little difference who is prime minister and what party is in power. Japan's constraints are here to stay, at least for the time being, and the Obama administration is prepared to get more out of the alliance even while respecting Japan's limitations. Japan has a US president willing to respect Japan's limitations and perhaps even listen to the Japanese people; I hope Japan's leaders recognize that and act accordingly.

Sunday, February 22, 2009

Aso's missed opportunity

As Aso Taro's poll numbers continue to plummet — in addition to reaching 11% approval in the Mainichi and Sankei Shimbun polls, his disapproval rating in the Sankei poll is at 80.2% — and as the likelihood of an LDP defeat in this year's general election rises, it is worth asking whether there was anything Aso could have done differently.

Looking back, Aso's downfall may be presented as inevitable, the result of the economic crisis and the missteps of his predecessors over which Aso had little control.

But to render that judgment would be letting the prime minister off too easily. While Aso has faced tough conditions, he has done remarkably little to help himself.

Waiting until Nakagawa Shoichi's blowup in Rome to appoint Yosano Kaoru as finance minister may prove to be one of his greatest errors.

In a party full of spoiled second-, third-, and fourth-generation politicians, weary old guardsmen desperate to keep the old system together, and conservative ideologues who have little to say about the problems facing the public, Yosano is uniquely earnest in his desire to get things right. (I cannot top MTC's praise of Yosano in this post from when he was appointed Abe Shinzo's second chief cabinet secretary.) As I noted last week, Yosano stressed the importance of decency in his book, and it shows how he conducts himself in public life.

In an appearance on NHK Sunday, Yosano, discussing a new round of economic stimulus, said that he wants to include input from all of society — including the opposition parties — in the new package. This desire for harmony is, as I've mentioned, the essence of Yosano's political philosophy, and I have no reason to doubt his sincerity when he says he wants to consult with others outside the governing coalition in responding to a national crisis.

Compare this with what Aso tried to do with the second stimulus package, a package that was at least in part rooted in the LDP's political needs. The unpopular payment portion of the stimulus was, as has been widely reported, the product of Komeito pressure, and the prime minister reasoned that Komeito support was more important for the LDP than public support.

We know how that turned out.

But it's more than just bowing to Komeito. Aso has made it easy for the DPJ to take a more confrontational stance with the government. Treat the DPJ like an irrelevant, noisy opposition party and it will act like an irrelevant, noisy opposition party. The LDP continues to treat DPJ control of the upper house as an irritant, instead of revising the policymaking process to acknowledge that the DPJ has a veto over policy and incorporating the opposition in policy discussions at a much earlier point in the process.

The prime minister should have been doing everything he could to get DPJ input and participation in drafting the government's response to the crisis, not just because it would smooth the passage of the government's agenda but because it would signal the government's recognition that a national crisis demands a national response.

What's the worst that could have happened? If the DPJ and the other opposition parties reacted to the government's olive branch like the Republican Party has responded to President Obama's efforts to forge a bipartisan stimulus package, the DPJ would likely have suffered in public opinion polls. The government would still have to deliver effective policies — easier said than done — but at least it would have made a good faith effort to build a working coalition to formulate an effective response to the economic crisis.

Instead, from the moment he took office, the prime minister has attacked the DPJ. Anyone remember his speech to open last year's extraordinary session? Meanwhile on Sunday, the same day that his chief economic adviser was emphasizing the importance of working with the opposition in drafting new economic stimulus plans, Aso was in Aomori questioning whether the DPJ can be trusted to deliver change. (Not a question to be asking, Mr. Prime Minister, not when it is all too easy to substitute "LDP" for DPJ in that question. It would behoove you not to emphasize "change" as a campaign theme.)

The government has made it easy for DPJ leader Ozawa Ichiro to be focused on campaigning in the countryside. Had the government made a sustained effort to include Ozawa and his lieutenants in policy consultations, he would have had a harder time escaping Tokyo, not without being punished for it.

As such, it is amazing looking back over the past five months how little Aso has learned from the mistakes of his predecessors and how easily he has allowed himself to be trapped by the same dynamic that destroyed their governments, with an assist from the global economy this time around.

Thursday, February 19, 2009

Anything goes

As Prime Minister Aso Taro prepares to travel to Washington to meet with President Barack Obama, he leaves behind a political situation that is nothing short of chaos.

Asahi has published a snap poll that found that 71% of respondents — and 76% of self-described independents among the respondents — believe that Aso should resign immediately, while a growing number of respondents favors an election being called quickly. Meanwhile, DPJ leader Ozawa Ichiro's edge over Aso in category of who ought to be prime minister continues to grow, as Ozawa gained six points and now is favored by 45% of respondents compared to Aso's 19%. The cabinet's approval rating dipped only slightly, falling one point to 13%, but that's surely cold comfort for the prime minister.

More important than public opinion polls, however, is the mounting dissent within the LDP from all corners. Perhaps the most significant development is Koizumi Junichiro's announcement that he will absent himself from a lower house revote on the bill that provides funding for the government's stimulus payment plan. Yamamoto Ichita, a reformist who nevertheless intends to vote for the bill, argues that Koizumi's act is primarily a protest against Aso's comments on postal reform. Whatever the former prime minister's reasoning, however, it has prompted a wave of criticism from cabinet members, who have called Koizumi irresponsible, even though — as MTC noted — a Koizumi abstention would actually lower the threshhold for the bill's passage as it would take one more rebel to defeat it. And yet the LDP is considering punishing Koizumi for his insubordination, which presumably is a sign of how much the party fears the still-popular Koizumi, as party leaders apparently feel the need to punish him so that his example does not inspire young reformists to rebel.

In the process the LDP has reached a nadir of sorts, threatening to punish the man largely responsible for the government's supermajority that will ensure the passage of a bill opposed by a vast majority of the public and, at some level, a not inconsequential number of LDP members.

Is there anybody in charge here?

Surely the bad publicity resulting from punishing Koizumi in one form or another will have more severe consequences for the LDP than letting Koizumi abstain unmolested. Surely potential rebels may give some more thought to defecting now that the party has threatened the former prime minister. If the LDP punishes Koizumi it will naturally be a slap on the wrist, but considering the target it is a slap that will resonate.

At the same time, there may be a movement gathering steam against the prime minister, but then again, maybe not. The biggest handicap is that the movement has no standard bearer. Ishiba Shigeru and Noda Seiko, members of the Aso cabinet who have been mentioned as possible successors, have both denied that they are interested in the premiership, which may or may not be true, but as long as they're unwilling to do anything to overthrow the prime minister they will most likely not get the chance no matter how interested they are in the role. It is unlikely that the motley assortment of nine first and second term Diet members led by Matsunami Kenta — the "third generation club to reform the LDP" — will be the author of Aso's downfall.

The opposition of Nakagawa Hidenao, who warns that Aso is rapidly losing the confidence of LDP backbenchers, and, increasingly, Mori Yoshiro, is more serious. For the moment, Mori is not prepared to act against the prime minister as doing so would jeopardize the passage of the budget, but his opposition to Aso's leading the LDP into the next general election is out in the open.

At the same time, however, it is unclear what Aso's opponents can do to oust him. Back in the waning days of the Fukuda cabinet I speculated about Fukuda Yasuo's nuclear option, calling an election should the party move against him. As events transpired, the situation did not reach that level of desperation, as Fukuda yielded without a fight. Something tells me, however, that Aso won't be nearly as reluctant as his predecessor.

I think Aso has a greater sense of mission, a feeling that he is the man for the job and that if he can't do it, no one can. Not having Abe's weak constitution and Fukuda's lack of fighting spirit, it is difficult to see Aso leave office willing, public and party opposition not withstanding. Indeed, he seems almost impervious to the criticism buffeting his government — at a press conference Thursday he said that the criticism is healthy. At the same press conference, however, he also sent a signal to the LDP leadership that I am certain that no one missed. Asked about calling a general election, Aso said that of course the budget and economic stimulus come first, but he also said that he would call an election by himself, i.e. without consulting with the party, whose leaders undoubtedly share Yamasaki Taku's assessment that the party cannot contest an election as long as its support is as weak as it is today. Aso, it seems, will use the nuclear option should he face a rebellion within the party. (Precisely the scenario hoped for by the DPJ.)

In short, things are falling apart. Even as the ship of state sinks due to the storm roaring through the Japanese economy, the prime minister is at war with his own party, which is at war with itself, at odds with the opposition, and abandoned by the public.

There is no reason to expect this situation to change before a general election, even if the LDP somehow manages to nudge Aso out without his calling an election.

How can Japan be saved?

With the sudden departure of Nakagawa Shoichi from twin posts of finance minister and state minister responsible for the financial services agency (FSA), Yosano Kaoru has been elevated from state minister for economic and fiscal policy and now holds all three positions simultaneously, making him, to borrow a term from American politics, the Aso government's economy czar.

It is most likely a temporary arrangement; the government has indicated that he will stay in place until the budget is enacted, but thereafter the posts will be divided, either with Yosano being bumped back down to his state minister's post or with Yosano's becoming a "permanent" (insofar as anything about the Aso government can be described as permanent) replacement for Nakagawa.

Nevertheless, until that happens, Yosano bears a heavy burden — it is not for nothing that Ozawa Ichiro wished his go partner good luck, not least because Ozawa and his party will do all they can to make his life more difficult.

While he has a fairly straightforward task for the first month of his tenure, it is worth considering Yosano's views and speculate as to what might have been. Arguably, if Aso was sensible and chose his ministers — or at the very least his finance minister — on the basis of merit, Yosano would have been a fine first choice for the post he now occupies. While Yosano was perhaps denied the post due to his long advocacy of a consumption tax increase as the means to set Japan's finances right (and to Aso's need to reward Nakagawa for his loyalty), he has been nothing if not pragmatic, as he stressed at his inaugural press conference Tuesday. He has also, unlike the prime minister, been unflinchingly realistic.

While Aso has done everything in his power to play down the severity of the crisis and the responsibility of LDP governments for its severity, while repeatedly making the fanciful promise to make Japan the first country out of recession even as its economy declines faster than other developed countries, Yosano has served as the bearer of bad news. His speech at the start of the current Diet session is a good illustration of his thinking. The underlying idea is that if the government is going to ask for the people's forbearance, it must be straight with them. It must be forthright about crisis and the broader structural changes underway in the global economy, and must have a clear vision about how Japan should change over the long term in response to the crisis and broader trends.

This is consistent with his approach to politics as outlined in his 2008 book Dodotaru seiji / 堂々たる政治, which can be translated as Open Politics, in the sense of straightforwardness. It is telling that Yosano says, in the closing pages of the book, that his favorite word is "decency" (he uses the English), arguing that decency is a "weapon sustaining Japan" as it struggles to adapt. Yosano's vision of politics is not unlike Barack Obama's, in that he wants to deescalate conflict within the political system — he is a uniter, not a divider. He is opposed to "market fundamentalism," although not, he notes, opening Japan's economy more to the global economy. He wants to ensure, however, that the weak are protected. He also does what few in Japanese politics seem willing to do today: he defends the bureaucracy, suggesting that the failings of some should not condemn the good work done by most. Yosano stresses that there needs to be a clearer division of labor between bureaucrats and politicians, with the latter taking clear responsibility for big decisions about the direction of the state. (I heard Furukawa Motohisa, a finance ministry bureaucrat-turned-DPJ member, make the same argument in Tokyo last month.) It does no good for governance to demonize the bureaucrats and shift the blame for Japan's problems on their shoulders. He takes a nuanced view to the common reformist theme of "cutting waste," suggesting that while there are some wasteful expenditures that can be easily cut, other expenditures require more careful consideration as they can have tremendous impact on the life of citizens in forgotten corners of Japan. Similarly, he does not dismiss Nakagawa Hidenao's "Rising Tide" school offhand, but rather suggests that it is unrealistic to expect the automatic reconstruction of Japan's finances that Nakagawa believes will result if Japan simply gets its economy growing fast enough. With Japan's sinking deeper into recession, Yosano may not see his desired consumption tax increase any time soon, but the recession suggests that it might be a long time before Japan sees the kind of growth needed for a rising tide to lift all boats.

Yosano's thinking is strongly reminiscent of the LDP's old mainstream, a view that could be called "politics as administration." In another era, he might have been a successful prime minister governing in the "low posture" style, abjuring ideology while solving national problems.

The question, however, is whether Yosano's politics are appropriate for an era of faltering institutions, mounting economic insecurity, and the need for drastic change.

More than the debate over economic policy, this is the major difference between Yosano and Nakagawa Hidenao. Nakagawa's political vision is rooted in conflict. Arguably he subscribes to Carl Schmitt's view of the political, in which the political sphere is separated from other spheres of life by its divisions of the world into friends and enemies. As Schmitt wrote, "The political is the most intense and extreme antagonism becomes that much more political the closer it approaches the most extreme point, that of the friend-enemy grouping." [NB: I am not citing the controversial Schmitt to discredit Nakagawa.

Reading Nakagawa's Kanryo kokka no hokai 官僚国家の崩壊 (The destruction of the bureaucratic state), which was published around the same time as Yosano's book, I got the impression of Nakagawa as a politician in search of monsters to destroy. His bete noire, introduced in the introduction, is what he calls the "stealth complex:" a network comprised of the universities, the bureaucracy, the Bank of Japan, the financial world, and the media that works to retard reform and protect their vested interests. (He explicitly cites Eisenhower's military-industrial complex as his model.) He explores the way in which bureaucrats undercut political rivals by leaking information, how they dominate the policymaking process as "Japan's biggest think tank," and how through government by informal networks they have hollowed out the policymaking process so that no one is accountable. Japan, he argues, is ruled by a void. And in order to transform Japan, this stealth complex must be destroyed and politicians given firm control of policymaking, to which end he more or less endorses the Watanabe Yoshimi-Takahashi Yoichi-Eda Kenji administrative reform agenda, based on the notion that in hard times, bureaucratic rule must give way to political rule (a theme with deep roots in Japanese politics). The remainder of the book contains Nakagawa's countless ideas for Japan: a kinder, gentler market capitalism in which the Japanese people help each other without the government's intervention, a decentralized government and a bureaucracy reined in and accountable to the people, and a full embrace of the IT and green technology revolutions to revitalize the economy.

But running through it all — and through his writing at his blog — is the need for someone to blame for Japan's problems; someone other than the LDP, that is. His politics clearly require an enemy against which to direct political efforts, much like Koizumi Junichiro's emphasis on the "opposition forces" within the LDP who stood in the way of reform.

In short, between Yosano and Nakagawa there are two very different approaches to politics, two very different ways of tackling the problems facing Japan. With the implosion of the conservatives, it may in fact be these two men who are left fighting over the wreakage of the LDP after the next general election. MTC wonders what exactly Nakagawa is planning (i.e., whether he intends to bolt the party at an opportune time), but it may be the case that he is prepared to fight it out within the ranks of the LDP, that he's convinced that Japan's system is a two-party system and since one party is unacceptable to him — if his writings about the DPJ are to be believed — he has no choice but to fight on to remake the LDP.

And while Yosano himself is an unlikely prime minister, his worldview could provide the right mix of concern for Japan's downtrodden and an emphasis on (as Ozawa says) change so that things can stay the same.

The question, however, is which approach to politics is most likely to get things done. That, after all, is what the public has been waiting for for years: a government that will move deliberately to tackle the problems that both Yosano and Nakagawa believe ail Japan. I think Koizumi's enduring popularity has less to do with the content of his policies than that for the first time the public saw a government in action. Perhaps at times it was only the appearance of action, but it was a significant enough departure that I think voters still appreciate the former prime minister, much to the chagrin of writers like Morita Minoru. Which suggests that Nakagawa may be right that a confrontational approach is the only way to break the establishment and set Japan on a new course. Yosano's "softly, softly" approach simply expects too much goodwill from all actors, probably more goodwill than is possible in the midst of economic collapse.

But at the same time Nakagawa is far too forgiving of the LDP: the bureaucracy is as powerful as it is because it has governed hand in hand with the help of an LDP unable to govern itself. And I'm not convinced that the LDP can reform itself to become the party Nakagawa envisions without a cataclysmic defeat that forces the party into opposition.

Ultimately the picture that emerges from both books, however, is that the range of policy ideas in Japanese politics today is fairly limited. There is a general consensus that some form of decentralization is necessary, with varying degrees of scope. There is a general consensus in a broad swath of the political class of the need to reform the bureaucracy drastically and forge a new relationship in which the bureaucracy is an instrument of the cabinet. There is a growing sense of the need to develop and draw upon the skills and expertise of Japanese outside the bureaucracy. There is an acknowledgment of the need to fix the government's finances, with the debate focusing on the extent to which trimming waste from the budget will solve the problem. (and it is unclear where exactly the DPJ falls in this debate, seeing as how they've done everything they can to avoid talking about a consumption tax increase).

(Of course, what's missing from this consensus is the most pressing problem of all: how to replace foreign demand for Japanese goods with domestic demand for Japanese and foreign goods as the basis for Japanese economic growth.)

Given that an agenda has more or less coalesced, the overriding question in Japanese politics then is who can get the government moving. After watching three consecutive LDP prime ministers crash and burn, the public seems unconvinced that LDP is up to the task, no matter how passionately Nakagawa fulminates against the bureaucracy and castigates the DPJ as an enemy of reform. Nakagawa's diagnosis may be right, to an extent, but his cure has been tried, and it has failed. The LDP is too dependent on the bureaucracy for policymaking and its members too free to manipulate policy and undermine the prime minister to make the policies both Nakagawa and Yosano see as necessary.

It is entirely possible that the DPJ, should it form a government, will be no more successful — Japan may languish for years to come. If it does, it won't be for lack of recognition of what's wrong with Japan but rather due to an inability to reshape the system of government wholesale.

Good luck, Mr. Yosano (and Mr. Nakagawa).

Wednesday, February 18, 2009

Shop for Japan? (Noah Smith)

It has often been said, by this writer and others that Japan needs to "raise domestic consumption" in light of the current economic crisis. In actuality, this is a murky concept. There are a number of different reasons for this, and a number of ways it can be done.

Reason 1: Correcting international imbalances. "Surplus" countries (Japan, Germany, and especially China) produce more than they consume, "deficit" countries (the US and UK) consume more than they produce. This is unsustainable (obviously), and fuels dangerous bubbles. If Japan and the Surplus Gang consume more, the US can safely consume less without wrecking the world economy. Of course, it's too late to save the world economy this year, but if the imbalances persist, this will all just happen again.

So raising consumption is considered the safest way for Japan to help fix the international financial system.

Reason 2: Avoiding a steep drop in output. If Japan sells less to the world — as is now inevitable — it can either make less or consume more. Making less means Japanese companies must either go out of business, lay off workers, or cut wages; or, more likely, all three. It means Japan will be a less wealthy place.

So raising consumption is considered the least painful way to weather the global recession.

Reason 3: Reducing export dependence. Exports are dependent on external demand, and therefore subject to big, abrupt swings. It is difficult for the government to either predict or prevent these swings. Consumption in Japan represents only 55% of GDP, compared to almost 70% in the U.S. If Japanese people are really as risk averse as they are rumored to be, they would naturally like an economy that is less vulnerable to the wild storms of global demand.

So raising consumption as a percentage of output is considered a way to reduce future risk for Japan's economy.

There are other reasons, but these are the big three. Now the question becomes: How does Japan accomplish this feat? I am guessing that telling people to "get out there and shop," as Bush did after 9/11, will go over like a lead balloon.

The classic way of boosting consumption is to lower interest rates, which discourages saving. However, Japan's interest rates have been at or near zero for a long time, so there is no more ammo in that gun.

As I and others have noted, Japan's aging and shrinking population bodes ill for future consumption. It also makes it harder to strengthen the social safety net (since young workers are needed to pay for the pensions of old retirees). Immigration will not increase enough to compensate for this decline. Even the U.S., with over a million new immigrants a year, is aging. That leaves the much-discussed fertility rate.

Finally, there is trade. Increasing imports doesn't seem like it will raise Japanese output, but as I noted in an earlier post, it does. Output is measured in real terms. If you lower import barriers, you can get 20,000 apples per Prius instead of 7,000. That means you are richer, even if some domestic apple-growers go out of business. And it also helps reduce global financial imbalances and bias the economy toward consumption, as well. Of course, this is tricky. If you open up your country to trade with protectionist countries, as the US did with China, you can find yourself on the receiving end of a disruptive flood of cheap money. But free trade with relatively open, rich countries like the US and Europe, as well as with poorer countries like Southeast Asia and Latin America would be a great idea.

And then there's my own idea: harness wealth effects. Most Americans are homeowners. Far fewer Japanese people are. Changing regulations, especially taxes and land-use regulations, could increase that rate. The economic security afforded by homeownership could conceivably raise consumption rates, and the extra living space might encourage larger families.

In any case, "Shop for Japan" is not nearly as foolish a motto as "Shop for America" proved to be in the earliest part of this decade. Balance, in economics as in so many things, is the goal. And a more comfortable lifestyle for the hard-working, long-suffering people of Japan would not exactly hurt the electoral prospects of the party that could deliver it.

- Noah Smith

Tuesday, February 17, 2009

Aso follows Mori's path

"President Bush will welcome Prime Minister Yoshiro Mori to Washington for a working visit March 19. In addition to their important shared security objectives in the Asia-Pacific region, the United States and Japan have common interests on a broad range of global issues. The President looks forward to exchanging views with Prime Minister Mori on regional and global issues and to discussing ways to strengthen the alliance and overall bilateral cooperation." — 12 March 2001

"President Obama will meet with Prime Minister Taro Aso of Japan at the White House on Tuesday, February 24, 2009. Japan is a close friend and a key ally of the United States and the President looks forward to discussing ways in which the two countries can strengthen cooperation on regional and global challenges. The two leaders will consult on effective measures to respond to the Global Financial Crisis and will discuss North Korea and other issues." — 17 February 2009

In a surprise move, Secretary of State Hillary Clinton extended an invitation to Prime Minister Aso Taro to visit Washington next Tuesday, which the prime minister gladly accepted, which will make him the first foreign leader to visit President Barack Obama.

But upon seeing the news of Mr. Aso's forthcoming trip, I immediately thought back to March 2001, when Mori Yoshiro visited George W. Bush. Former President Bush was then barely two months into his administration. Mr. Mori had been prime minister less than a year, and a little more than a month after his visit, he was replaced by Koizumi Junichiro. And the rest is, as they say, history. In June, Messrs. Koizumi and Bush played catch at Camp David, in September Mr. Koizumi acted quickly in supporting the US following the 9/11 attacks, and from then on the alliance was remade (from the perspective of 2009, perhaps only momentarily).

Why was it so urgent that Mr. Bush meet with Mr. Mori? By the time Mr. Mori went to Washington he had already faced Kato Koichi's attempt to overturn his government in November 2000. In February, the bottom virtually fell out of the Mori government. On February 9, Mr. Mori came under fire for continuing to play golf after learning that the USS Greeneville had collided with the Ehime Maru. On February 19, Asahi published the figure that will forever be attached to Mr. Mori's name: 9% public approval. The poll prompted Mr. Koizumi, whose popularity was beginning to grow as he traveled the country, to call for the prime minister to give up. (Incidentally, Mr. Mori is only the second least popular prime minister in the postwar period: Takeshita Noboru bottomed out at 7%.) The rest of the month was spent in debate on when Mr. Mori would resign and how the LDP would choose his successor, before Mr. Mori finally indicated on March 11 — note the date — that he would resign once the 2001 budget passed. In other words, the day after Mr. Mori indicated that he would resign, the White House announced that he would be coming for a visit the following week. Naturally the planning for the meeting occurred before, but was no one in the administration aware that Mr. Mori was fighting for his political life? Did no one ask whether it would be better off waiting for a new prime minister?

What was Mr. Mori doing in Washington?

The joint statement released following the Bush-Mori summit has the answer: not much at all. The two leaders affirmed that they were committed to continuing to improve the US-Japan relationship in all its facets, bringing the agenda forward from the latter years of the Clinton administration. All well and good, but nothing that merited sending an outgoing prime minister to Washington to perform a task that could just as easily have waited for a new prime minister. One of the benefits of face-to-face meetings, after all, is in the working relationships that emerge between leaders that last over time and provide some support for the working-level officials laboring on alliance management. This importance of relationships between leaders can be overstated — and was overstated in the case of the Bush-Koizumi relationship — but it should be a consideration when leaders, particularly of allied countries, meet.

And so we come to February 2009. While not as embarrassing as the Bush administration's announcing Mr. Mori's visit the day after he announced that he would resign, the Obama administration's invitation overlapped with the embarrassing resignation of Nakagawa Shoichi, Mr. Aso's finance minister, following accusations of drunkenness at the G7 meeting in Rome. In the latest Asahi Shimbun poll, the poll in which Mr. Mori reached 9% back in 2001, Mr. Aso's approval rating is at 14%, and is trending downward. (Mr. Nakagawa's resignation may be enough to push Mr. Aso into single digits in the Asahi poll.) Mr. Aso has already broken the 10% barrier in at least one poll, and will likely do so in other polls soon. But unlike in 2001, not only is the prime minister deeply unpopular, but his party has been surpassed in the polls by the DPJ, as the voting public looks increasingly willing to give the DPJ an opportunity to govern, possibly within the year, as an election must be held by September.

The result is that beyond the public opinion figures, Mr. Aso has lost the ability to govern. Mr. Aso has entered a vicious cycle in which the failure to act in response to the economic crisis has damaged his popularity, which has undermined his authority, which makes it that much more difficulty to respond to the crisis, which lowers his popularity further, and so on until he steps down or calls an election. As the Financial Times put it in an editorial today, "At this moment, it is dangerous for an administration to continue in office when it has already lost power." What will a meeting between President Obama and Prime Minister Aso accomplish that has not already been accomplished by Hillary Clinton's visit to Tokyo? By sending Mrs. Clinton to Tokyo as her first foreign destination, surely the Obama administration has made an appropriate symbolic gesture to show that it is still committed to the US-Japan alliance. (As Mrs. Clinton said, repeating the standard line, "The alliance between the United States and Japan is a cornerstone of our foreign policy.") Doesn't Mr. Obama have bigger things to worry about at this point? What is so important that Mr. Aso has to hurry to Washington instead of waiting for a meeting on the sidelines of the G20 summit in London in April? This trip — which Mr. Aso is clearly desperate to take, as foreign travel is the last resort for an unpopular prime minister — is nothing more than a photo opportunity for the prime minister, an attempt to bask in the glow of a leader who enjoys the confidence of his people (and the Japanese people) in the hope that he might enjoy an Obama bump. (Cf., Colbert, Stephen.)

At some level, the US government should be blind to political conditions within Japan, but given the turmoil within Japan, wouldn't it be sensible to wait and see first whether Mr. Aso survives long enough to pass the 2009 budget and govern into the new fiscal year? The start of the fiscal year conveniently coincides with the G20 meeting. After Mr. Nakagawa's resignation, however, Mr. Aso's survival is even less certain than before. It would have been better to see whether Mr. Aso will survive the next few weeks — during which his government could conceivably be toppled when the bills related to the second stimulus package come before the lower house a second time — and then meet with Mr. Aso in London instead of agreeing to a meeting that will be held largely for reasons of Mr. Aso's domestic standing. Not that it will make much difference. At this point I don't think the Japanese public will be particularly impressed by images of Mr. Aso conferring with Mr. Obama.

Interestingly, when Mr. Mori traveled to Washington in March 2001, who do you suppose was traveling with him? None other than Aso Taro, then the minister of state for economic and fiscal policy.

The long and short of it (Noah Smith)

Gerald Curtis's article in the Financial Times deserves a response from me as well. The short version of my response is that I agree with Tobias: the fact that the DPJ will not be able to avert a depression is not sufficient reason to write them off.

The longer version is this: Curtis is right when he says that "whatever the political goings-on, there is no optimistic short-term scenario for Japan." But he is wrong to blame that fact on Japan's current political mess. With international demand collapsing and public debt at well over 100% of GDP, Japan's government is essentially unarmed. Were Japan led by a triumvirate of FDR, the Meiji emperor, and Yoda, there would still be next to nothing the government could do to stave off a steep drop in exports, and thus investment, and thus GDP.

This does not mean, however, government action is unimportant. Keynes may have said that "In the long run, we are all dead," but we should be thankful that leaders in his day did not take that to heart. I may be a short-run pessimist on Japan, but I'm a long-run optimist and a medium-run agnostic. In the medium and long run, government will be the key to Japan's performance.

What can be done to boost Japan's performance three or four years from now? By my count, at least two big things. The first is free trade. As soon as worldwide demand begins to recover, Japan could get the jump on rivals like South Korea and Taiwan by signing real — not cosmetic — free trade agreements with Asia, Europe, and the US. And a lowering of food prices would instantly boost Japan's real per-capita GDP without Toyota having to sell one more Prius.

The second is to get more women into the workforce - and fast. Ken Worsley notes that women, who make up half of the labor force in the West, comprise only 40% in Japan. This means that Japan's labor force participation rate is much lower than America's. Although not measured in the low official unemployment rate — stay-at-home women are more likely to say they "don't want to work" than that they "can't find a job" — Japanese women's de facto status as a quiet economic underclass represents a huge loss in national output. A big push by METI to encourage companies to hire more women, coupled with an expansion of day care, could work wonders when the depresion runs out of steam.

Will the DPJ do these things if it is elected? Your guess is as good as mine. But then there is the long run.

Economists believe that national crises — wars and depressions — represent opportunities in disguise, for it is only during these fluid times that nations can change their basic institutions. This is evident when we look at America in the Great Depression. FDR's stimulus spending may or may not have made things better — the debate continues to this day — but few would deny the long-term importance of Social Security and the FDIC. Japan's next group of leaders will be offered a similar chance.

The three institutions that must urgently need changing are, of course, the bureaucracy, corporate governance, and fiscal mechanisms. The DPJ proposes to shake up the cozy, stifling relationship that has turned all three of these institutions into pipelines for waste, pork, protection and inefficiency.

Imagine if this had been done a decade ago. If Japan had not thrown trillions upon trillions of yen at constuction companies, it might have the fiscal ammunition to fight today's slump. If inefficient companies had not been sheltered from harm, Japan might not have built up the overcapacity that is making its current depression even deeper. Women would be working more and labor markets would be more flexible. Yet nothing was done, two decades passed, and, pace Keynes, most of us are still alive to face the consequences.

This is why I agree with Tobias. If the DPJ did nothing except reform Japan's central institutions — if it utterly ignored the medium-term — that would still lead to an incalculable improvement ten or fifteen years down the road. To throw up one's hands, as Gerald Curtis does, is to encourage a false sense of helplessness. Which, in a sense, is the only thing we have to fear.

- Noah Smith

And there you have it

Nakagawa Shoichi has indicated that he will resign following the passage of the 2009 budget and budget-related bills.

As MTC notes, "Provided that the Asō Cabinet is still existence then, I would have to add."

I would add that with Nakagawa Shoichi's self-destruction, the power of the LDP's ideological conservatives appears to be in freefall.

Consider the HANA club, the group of ideological conservatives named for Hiranuma Takeo, Abe Shinzo, Nakagawa Shoichi, and Aso Taro that formed in the early days of the Fukuda government to rally the LDP's conservatives after the premature departure of Mr. Abe from the Kantei. Aso Taro is venturing into the Mori Yoshiro range of public support and increasingly looks to be the gravedigger for the LDP as we know it. Abe Shinzo is taking baby steps back into public life and has lost some of his ideological bravado in the process. Mr. Hiranuma continues to tilt at the windmill of a conservative party that could serve as a third major party (mentioned in this post). And now Mr. Nakagawa, who I once thought might be next in line to lead the conservatives, appears to have been consumed by his demons and will likely end up as a footnote when the post-Koizumi history of the LDP is written. Beyond those four are an assortment of second-tier figures, including a couple in the Aso cabinet, none of whom look capable of competing for the leadership of a broken LDP.

After nearly fifteen years of ascendance, it appears that the conservatives might once again be anti-mainstream, frustrated in their efforts to achieve remilitarization, constitution revision, and national greatness (as they see it) — with the difference being that they will have footholds in both major parties, while lacking the numbers to be a force in their own right. To a certain extent this was already the case, but Mr. Nakagawa's fall makes it all the more clear.

Monday, February 16, 2009

A pox on both their houses?

Writing in the Financial Times, Columbia's Gerald Curtis laments the impotence of politicians from both the LDP and the DPJ in the midst of a historic economic crisis.

The LDP, he writes, is "like the proverbial deer staring into the headlights...paralysed by fear rather than energized by it." But the DPJ is little better, as he argues, "the stark reality is that the party has no clue about what to do either in its first 100 days or thereafter."

There is much truth in what Curtis writes, but I think he takes his criticism of the opposition party too far.

The problem is this line: "The DPJ talks about replacing bureaucrats with politicians in key ministerial positions but says virtually nothing about what policies these newly empowered politicians would implement."

Curtis argues that because the DPJ has no plan for dealing with an economic crisis that may ultimately join the ranks of the most significant economic crises to hit Japan, it is to be condemned for having no ideas. If the DPJ is to be condemned for being dumbstruck by the crisis ravaging the Japanese economy today, it should be condemned alongside not just the LDP, but the entire Japanese establishment, which seems to have little idea of how to respond but with textbook economic stimulus measures. The extent of the crisis is the result of the LDP's postponing the day of reckoning for the export-led model; as Noah Smith has argued at this blog, the costs of the government's failure to transform Japan's economic model so that the "Japanese more of the stuff, or make less of it" are dire. Having failed to induce the Japanese people to do the former, the whole country is now suffering the consequences of the latter.

There is little the LDP or the DPJ can do to reverse this, aside from easing the pain in the short term, while setting to work on the overdue task of remaking the Japanese economy over the medium and long term. Pump priming at this point is nothing more than a stopgap. Japanese officials need to find a way to replace foreign demand with domestic demand, a change that will not occur overnight.

Which is where administrative reform comes in. Curtis is mistaken to minimize the value of the administrative reform plans developed by the DPJ. As politicians in both parties recognize, administrative reform is an indispensable first step to remaking Japan, because bureaucratic-cabinet rule — as the LDP system of government has been called — has been a major source of paralysis, preventing the government from establishing clear priorities and adjusting policy in response to structural shifts (demographic change, the intensification of the dual economy and the hollowing out of industry, the decay of the countryside, etc.). Without the creation of cabinet rule, the avowed goal of the DPJ's administrative reform plans, the Japanese government will continue to dither in the face of outright collapse regardless of which party is in charge.

The DPJ, in short, aspires to do what Koizumi Junichiro tried and failed to do: centralize both authority and accountability in the prime minister. DPJ reformists have studied the pathologies of LDP rule closely — in particular the failure to subordinate the party to the cabinet and the failure to unify cabinet ministers around the government's agenda — and have devised remedies to ensure that DPJ rule is cabinet rule. These plans are contained in the DPJ's transition plan, which outlines how a DPJ government will proceed in reforming governance during its first 300 days in power.

Of course, having a plan is different from implementing a plan, as plans never survive first contact with the enemy, in this case the bureaucracy. Should Ozawa Ichiro become prime minister, it will take the whole of his political acumen to inspire, bully, or bribe bureaucrats into accepting the DPJ's reform plans, and clearly the party will not get everything on its wishlist. But that doesn't mean that administrative reform shouldn't be a top priority for a DPJ government. In some sense, administrative reform can have a multiplier effect, freeing the government to establish clear priorities — based on its electoral manifesto — and then proceed with other reforms (and be held accountable for failures in meeting their avowed goals).

Returning to the question of how the DPJ would respond to the economic crisis were it to form a government later this year, like Curtis I too have recently talked with a DPJ member with expertise in fiscal and economic policy, having started his career in the ministry of finance. This member, having seen the Obuchi government's attempts to stimulate the faltering Japanese economy in the late 1990s, was skeptical about the Aso government's stimulus measures, but insisted that the response to the crisis must involve thinking about the structure of the Japanese economy and directing funds to support R & D in sunrise industries. This member also looked back at New Labor's 1997 victory and stressed that the DPJ, like Tony Blair, must stress "education, education, education." (Ikeda Nobuo, the neo-liberal economist, argues that the government is incapable of identifying and supporting growth industries in the manner suggested by this DPJ member, and that the key to promoting growth industries is opening Japan's economy to the world.)

In short, Curtis is wrong to chide the DPJ for not having the answer to the economy's falling off a cliff, with, as suggested by Edward Hugh, the worst still to come. Hugh, like Noah Smith, sees that the answer is not in short-term stimulus but in long-term reform of what he calls the "national mindset," with Japan's fixing its fertility problem and becoming more welcoming of immigrants. Similarly, Smith concludes, "After this crash — the recession Japan should have had in the 90s — Japan will have nowhere to go but up. Leaner, more profit-driven companies will start looking for hires — hopefully something between the full-time and part-time positions of today. Women will find themselves on a more level playing field. There will be room for new industries, new entrepreneurs who are not the first sons of old entrepreneurs."

They key going forward, therefore, is not having the perfect stimulus plan, because, as Yosano Kaoru argued, Japan will not escape the global recession alone. The key is for the government to be ready when the economy begins to recovery, ready with a refurbished social safety net that encourages more risk-taking by Japanese, a reformed education system that prepares Japanese citizens for life in a new economy, higher levels of immigration, and work-life reforms that enable Japanese women to balance having a career and having a family and thus enabling more women to contribute to the economy for longer periods of time. None of these changes will be realized without transforming how Japan is governed.

If the DPJ can make some progress in creating a new relationship between cabinet and bureaucracy while restarting Japan down the road to structural reform (although perhaps not structural reform of the Koizumian kind), it will have gone a long way towards making a brigther future for Japan.

Curtis may be right that there is "no optimistic short-term scenario for Japan," but the likely change from LDP to DPJ should not be viewed as pessimistically as Curtis sees it. Should the DPJ win, it will have a mandate to govern and it will be in control of both houses (although its control of the upper house will be contingent on partners). The party would of course be occupied initially with simply easing the pain of economic adjustment, but it will also be in a position to begin the hard work of administrative reform, for which it already has plans in hand.

Nakagawa will not survive

Nakagawa Shoichi's behavior at the G7 meeting in Rome — the slurred speech heard around the world — has quickly become a full-blown scandal.

With the rallying cry of "exposing disgraceful behavior," the DPJ, the SDPJ, the JCP, and the PNP are preparing to submit a (non-binding) censure motion in the upper house.

Mr. Nakagawa will go because his transgressions occurred on the world stage, in full view of the foreign media. While I do not expect it, if Mr. Nakagawa's conservative comrades were consistent, they would call for his immediate resignation for having defamed the Japanese nation abroad. Indeed, if Mr. Nakagawa was as serious about national pride as his past rhetoric suggests, he would willingly step down. But in lieu of such behavior from Mr. Nakagawa, the DPJ appears more than willing to take up the cudgel of nationalist rhetoric — more often used to criticize leaders "guilty" of traitorous negotiations or apologies — and pressure Mr. Nakagawa and the government. (Yet another reminder that the DPJ, far from being a progressive party, is comfortable with the language of the nationalist mainstream.)

But it appears that Mr. Nakagawa and Prime Minister Aso are digging in; Mr. Aso has asked Mr. Nakagawa to stay on, and Mr. Nakagawa continues to insist that his unusual behavior was the result of taking too much cold medicine combined with pain killers for back pain. The government will, not surprisingly, ignore any censure motion passed by the upper house. It will continue to insist on the "cold medicine" story — Mr. Nakagawa visited a doctor who certified that he has cold symptoms — in the hope that the scandal will go away quickly. Members of the team that traveled with Mr. Nakagawa have been called before the lower house's fiscal and monetary affairs committee to attest that they do not recall seeing the minister drink during lunch at the G7.

But despite these gestures, it is unlikely that the government will succeed in protecting Mr. Nakagawa for long.

More significant than the opposition calls for Mr. Nakagawa's head, Yomiuri reports that members of the LDP and Komeito want the finance minister to go. Some fear that a prolonged struggle with the opposition over Mr. Nakagawa's fate will stall the debate on the 2008 second supplementary budget related bills and the 2009 budget, and are ready to toss the finance minister overboard if it means that debate can resume. Of course, removing the finance minister in the midst of debate over the government's response to the economic crisis could be equally detrimental to pushing legislation forward, and would no doubt be accompanied by calls for an election from the opposition.

The question of the cause of Mr. Nakagawa's behavior, however, seems tangential to the debate over Mr. Nakagawa's future. Whether he was drunk or not, his alcoholism is no longer an open secret — it's simply open. Following closely on the heels of Mr. Nakagawa's mistake-prone performance in late January when he gave his policy speech to a joint session of the Diet, when he made a number of errors in presenting his remarks, it is hard to avoid the impression of the finance minister as, in MTC's word, a "broken" man. Should he be punished for overdosing on cold medicine? No, of course not. But if Mr. Nakagawa's addiction has become a problem, it is a matter of national concern. For that reason, Mr. Nakagawa's doctor's note will not be enough to dispel questions about his behavior. The Japanese people have a right to know the state of Mr. Nakagawa's health, beyond whether he has the sniffles.

But ultimately it will come down to where Mr. Nakagawa's indiscretion occurred. By appearing drunk when representing Japan in one of the world's most exclusive club — membership in which is a point of pride for Japanese elites — Mr. Nakagawa has disgraced his government and his country, an impression that will be reinforced the more video of his performance circulates around the internet and in foreign media. Japanese leaders, always sensitive to how Japan is perceived abroad, may ultimately feel compelled to approve Mr. Nakagawa's resignation, whatever the consequences for the Aso government.

This scandal reinforces the impression that the Aso government is completely bereft of authority and legitimacy. If it has not become a laughingstock home and abroad already, the Aso government is rapidly becoming one. And yet in the midst of this scandal and his plummeting popularity, Mr. Aso insisted that he is throwing his whole being into fixing Japan's economy.

Like Beaumarchais's Figaro, I laugh so as not to cry.

A future for values diplomacy?

Daniel Twining, currently a senior fellow at the German Marshall Fund and formerly an Asia policy staffer at the State Department's policy planning staff and an adviser to John McCain, offers his recommendations to Secretary of State Hillary Clinton at Shadow Government, a new blog at Foreign Policy featuring the writing of conservative and Republican foreign policy analysts.

Twining is a dedicated believer in the idea of "values diplomacy," that catch phrase of the Abe government — with Aso Taro as foreign minister — that placed "universal values," at the center of Japan's foreign policy, at least rhetorically.

The US, Japan, and other democracies of East Asia, according to this view (common in neoconservative circles in Washington, see this post for example), must cooperate to promote the spread of democracy in the region. Accordingly, for Twining the first two goals for US strategy in Asia must be "Accelerate the rise of democratic great powers in Asia that are increasingly willing to help police the region" and "Encourage strategic cooperation among Asia-Pacific democracies." Democracy reappears in point eight, "Promote democracy." The contrast with Secretary Clinton's vision of US East Asia strategy could not be more pronounced. Recall that in her first statement on Asia policy, Mrs. Clinton barely mentioned cooperation among democracies and democracy promotion as important US goals in the region.

And yet Twining thinks that no goal is more important than binding the region's democracies closer together. Twining celebrates what he sees as a "trend" of "Asian nations...leading the effort to form democratic security concerts, a trend Washington should enthusiastically nurture."

There are several problems with Twining's proposal.

First, it is not clear that the trend he sees is actually a trend. He cites the "quad," the strategic partnership among the US, Australia, Japan, and India, as a leading example of this trend. Except that it appears that the quad barely survived the Abe government that spearheaded its creation. Similarly, while the Australia-Japan and India-Japan security agreements are unprecedented in Japanese foreign policy, it is still unclear what substance lies behind the agreements. The democracies may be talking to each other more, but it is too early to declare that Asian democracies have deepened their strategic cooperation in any substantial way to the point of promoting "regional peace and prosperity."

However, if we grant that Twining's assessment of the state of cooperation among Asian democracies is correct, he still makes what I think is an overly optimistic assessment of the gains from said cooperation. Twining concludes that strong, democratic states on the Asian littoral — the same democratic states who he believes are deepening cooperation amongst themselves — "could deter Chinese adventurism and help ensure its peaceful rise."

Does Twining really believe that, that China will somehow be so impressed by the strength of its neighbors that it will simply accept what is tantamount to encirclement, cease enhancing its military power, and trust the US and the other democracies on its periphery to keep the sea lines carrying vital resources to China open at all times? If China is, in Twining's words, "a prickly, insecure giant," why would it feel any less insecure in these circumstances? It does not take a considerable leap of imagination to wonder whether this view might be a bit fanciful. Why is Twining so sure that deepening security ties among democracies (and non- or semi-democracies, in the case of Vietnam and Singapore) arrayed around China's borders while trigger such a benign response from China? This isn't simply a matter of Chinese paranoia. Is there a country in the world that would respond benignly to the formation of ever closer security ties among surrounding countries that also stress the illegitimacy of the surrounded country's government?

In short, the policy proposed by Twining here and by US and Japanese officials at various points in time would amount to encirclement, whether intentionally or not. As Joseph Nye has said, "If we treat China as an enemy now, we’re guaranteeing an enemy for the future."

But it is unlikely that this scenario will come to pass, for another reason ignored by Twining. Even if the Asian democracies are talking more with each other, they are also talking more with China, because, much like the US, none of them can afford to let relations with China deteriorate. South Korea, a strong Asian democracy that barely figures in the flurry of strategic cooperation mentioned by Twining except in regard to NATO-South Korea ties, is often written off as destined for the Chinese sphere of influence if and when reunification occurs. Australia has worked to avoid giving the impression that new security talks with Japan are aimed at China. India certainly looks warily across the Himalayas and now out into the Indian Ocean at China, but that does not make India a reliable junior partner for the US in a league of Asian democracies.

As I've argued before, to understand the future of East Asia it is essential to look at the role of middle powers, the powers forced to maneuver between China and the US, working to minimize antagonism while preventing the two from reaching agreements prejudicial to their interests. The firm ties rooted in shared values envisioned by Twining make it more difficult to pursue the flexible diplomacy required by life as a middle power, and I do not expect we'll see substantial progress in security cooperation among the democracies qua democracies. Twining comes close to recognizing this: "They are less likely to fall under the sway of their giant neighbors when they have options for partnership with a benign, distant partner. America's staying power at a time of dramatic strategic change gives smaller Asian countries geopolitical options they would not otherwise have." But while small (and not-so-small) Asian countries are in no hurry to see the US leave Asia, they also do not want the kind of universal relationships envisioned by Twining. They want the US as an option: a hedge against Chinese expansionism, a market for their goods, and perhaps as a source for investment. But that does not mean that they support active containment of China or making democracy a top priority for the region. The desire of middle powers for an active US presence in the region is an asset for the US only insofar as the US doesn't overreach in its zeal to promote democracy and bend regional institutions to its ends.

Twining further calls for fostering a "pluralistic regional order" in East Asia but the reality is that East Asia is already pluralistic, checkered with a growing array of bilateral, mini-lateral, regional, and trans-Pacific organizations, in addition to the network of US bilateral alliances. These organizations are based not on shared values, as they feature ties between democracies and non-democracies, but shared interests, and one interest in particular: stability in East Asia. The US should be engaged as much as possible in these organizations, but it should also be willing to accept that there is not a seat for the US at every table, at least not if the US wants to dominate the discussion and, as Mrs. Clinton said Friday referring to past US governments, act "reflexively before considering available facts and evidence, or hearing the perspectives of others." While he recognizes the importance of "talking economics," it seems for the most part US engagement in the region would involve more talking — about democracy and security — than listening.

Meanwhile, given the existence of a pluralistic regional order, the US should not fear the creation of what Michael Green calls institutions based on "preserving Asian exceptionalism." Asian exceptionalism sounds like another way of saying, Asian countries working together to solve Asian problems without the US at the table. Is that such a terrible thing? If there are, as Twining says, so many burgeoning and established democracies in the region, why should the US fear organizations from which it is absent?

Finally, on the very question of democracy promotion, Twining includes it as a goal but does nothing to explain how to go about it except to say that democracy is on the march in the region and China is on the wrong side of history. (Sounds awfully Marxist, doesn't it?) How does Twining propose to make China (or Vietnam or Burma or North Korea) democratic? How does Twining propose for the US and other regional democracies to keep existing democracies from lapsing, as in the case of Thailand?

Meanwhile, there is also a bit of irony in Twining's enthusiasm for democracy promotion, in that the more developed the democracy, the greater the popular ambivalence regarding the country's ties with the US. For example, while Japan's leaders talk of the strength of the alliance — perhaps for want of anything else to say — the Japanese public is increasingly doubtful about the alliance after years of an approach to the alliance that dovetailed with Twining's vision. Skepticism regarding ties with the US in countries like Japan and Australia does not necessarily mean that the Japanese and Australian peoples are more trusting of China, it means they are moving in the direction of a middle-power foreign policy that looks at both regional powers with a certain degree of distrust, wary of Chinese intentions while concerned about US overzealousness that would entrap their countries in wars not of their choosing.

In sum, the emphasis on democracy is misguided, not just because there is little the US can do — and little US allies want to do — to promote democracy in the region, but because it assumes that the region can be neatly divided into democracies and non-democracies, which in turn risks alienating China and sending it down a more assertive and unilateralist path, the very future Twining says he wants to prevent.