The Japanese public's enduring anxiety about social security

Even as the Japanese people confronted slow growth and considered whether the longstanding institutions of Japanese capitalism would be able to guarantee prosperity in the future, they faced the prospect of an aging, shrinking population and worried about the stability of Japan's social security system. As baby boomers retire, Japanese society, like other developed societies, has become increasingly worried about whether the government would be able to meet its obligations to provide social insurance, pensions, welfare and poverty relief, and eldercare.

One has to wonder about the extent to which anxiety about Japan's social safety net has influenced household decisions about consumption, savings, and investment and their appetite for higher risk, higher yield assets during the "lost decades." The question is whether public anxiety about Japan's social safety net has depressed aggregate demand beyond the basic effects of too few Japanese chasing too many goods as argued by Edward Hugh. Arguably, the DPJ's program while in government (at least for the first year or two) was implicitly based on the notion that reducing insecurity about the safety net could yield macroeconomic benefits.

In this post, I will document the persistence of public fears about the social security system during the lost decades. Since at least the late 1990s, anxiety about the stability of the future of social security has regularly ranked at or near the top of the public's priorities in economic policy, which remains the case today. Any discussion of the impact of Abenomics on the economic behavior of Japanese households has to weigh Japanese attitudes about the social safety net. If Abe is unable to ease fears about the government's ability to provide for retirees, any gains to Japan's economic performance could prove short lived.

We can see these fears about the safety net as early as 1997. A March 1997 Asahi poll asked respondents whether they felt some anxiety about their future livelihoods. 69% said they said, versus 29% who said they did not. When those 69% were asked to explain what they were anxious about, the most common response was pensions and social security (30%). Only one other reply — "my personal health" — was in the double digits (11%). The same poll asked respondents to state the degree to which they felt confident in the future of public pensions systems. 42% expressed either great (5%) or some (37%) confidence, while 55% expressed either little (44%) or no (11%) confidence.

The next year an Asahi poll found that more respondents were most uneasy about pensions and social security (30%) than about Japan's economic outlook (28%), their incomes (20%), or their jobs (13%). 

Perhaps the clearest picture of public insecurity in the late 1990s can be found in an extensive July 1999 poll on questions related to Japan's aging society. The poll was based on face-to-face interviews with 2122 respondents nationwide, marginally more than Asahi's monthly telephone polls, which usually have between 1500 and 2000 respondents.

The survey paints a portrait of wide and growing anxiety among the Japanese public about life after retirement. Asked if there is anything in particular they feel uneasy about for their retirement, 28% of respondents said they were most uneasy about living expenses and other economic concerns, the most popular choice and an increase of six points over a 1994 poll on aging issues. Even more dramatic was the finding that 85% of respondents did not believe that contemporary Japan provided for a secure retirement. The survey found the public was concerned about the "fairness" of the social security system (23% thought it fair, 68% did not); was nearly evenly divided over who should bear the burden of higher medical costs as a result of aging (25% said to make the generations currently working pay more in premiums, 32% said the elderly should pay more in premiums and fees, and 28% said that all should pay more through a consumption tax hike); and believed that most attention should be paid to pensions as opposed to health insurance or nursing care insurance. The same poll found that when asked whether they expect the state pension system to provide for them, roughly two out of three respondents either greatly (33%) or to some extent (32%) said they counted on their state pensions. 

As Japan's stagnation deepened, the public focused more on economic policy than on the safety net, and public opinion polls reflected shifting priorities. Polls during the Koizumi years simply did not ask questions about welfare, social security, or pensions. It was almost as if through his frenetic activity in other policy areas Koizumi Junichirō made the Japanese public (and the Japanese media) forget about Japan's aging society and safety net anxieties.

However, when polls did ask the public to assess the Koizumi government's social security policies, the response was not favorable. For example, in an April 2004 poll concerning Koizumi's first three years in office, 67% of respondents said they did not approve of Koizumi's pension reforms. 

By fall 2004, anxiety about the social safety net had returned to the top of the public's concerns. Asked in September what they would like the recently reshuffled Koizumi cabinet to make its top priority, 52% said pensions and welfare, topping all other choices by a considerable margin, including jobs and growth (28%). By December, dissatisfaction with the Koizumi government's handling of pensions grew, with 76% disapproval (and only 13% approval).

Of course, postal privatization dominated public discourse for the bulk of 2005, but public concerns about the pension system did not vanish: a poll taken in November 2005, after Koizumi's landslide victory in September and another cabinet reshuffle, found that 56% wanted the government to make pensions and welfare its top priority, with jobs and growth policy in second place with only 17%.

Koizumi effectively bequeathed to his successors a public hungry for the government to fix the social safety net. Polling in advance of the 2006 LDP leadership election repeatedly showed that voters wanted the election to focus on social security. For example, in January 2006, 45% of respondents said the campaign should center on "how pensions and health care ought to be," followed by 28% of respondents who wanted it to center on fiscal reconstruction and taxation. In September, after Abe Shinzō became prime minister for the first time, 43% of respondents said Abe should make pensions and welfare reform his top priority, with growth and jobs in second place with 17%. (And only 2% wanted Abe to focus on revising the constitution.) Abe, of course, suffered a crippling blow with the emergence of the "vanishing pension records" scandal, in which it was discovered that due to carelessness on the part of the Social Insurance Agency the pensions records of up to 50 million people may have been missing data. The scandal served only to heighten preexisting public fears that the social security system was not in fact secure, and ensured that it would remain a critical issue for the government to address.

The global financial crisis changed the public's priorities — but not as much as one might expect. A poll published on September 12, 2008, three days before Lehman Brothers went bankrupt, found that 40% of respondents wanted the government to focus on the economy and government finances, while 37% wanted the government to make pensions and social security its top priority. Despite the latest downturn, reforming the social security system remained high on the public agenda, especially after the DPJ took power in 2009 and appointed Nagatsuma Akira, the parliamentarian who challenged Abe on the missing pensions scandal, minister of health, labor, and welfare. Under the Kan government, social security reform became tied up with the consumption tax issue, as Kan Naoto fought to tie consumption tax revenue to social security funding, which Noda Yoshihiko ultimately succeeded at doing in 2012. A February 2011 poll actually found public support for this version of the consumption tax increase: 53% agreed with a consumption tax increase in order to secure social security funding, with only 35% opposed. (The same poll found that if asked if they support a consumption tax increase with no tie to social security, 46% were in favor and 45% opposed.)

Noda obviously struggled to make his case to the Japanese people but it was not for a lack of concern on the part of the public. In late August 2012, after the tax increase had passed both houses of the Diet, an Asahi poll found when asked how confident they were in the social security system, 64% of respondents expressed not much (47%) or no (17%) confidence in the system, compared with 35% who had full (3%) or some (32%) confidence in the system. The same poll found the public evenly divided (43% in favor versus 43% opposed) over the idea of shifting resources from spending on the elderly to spending on child care and strongly opposed (60% opposed versus 31% in favor) to charging citizens over 70 more in fees for health care.

For the moment the social safety net is once again second to economic policy in the priorities of the Japanese public. But if the Japanese people have had a constant concern over the past fifteen-twenty years, that concern is the viability of Japan's social safety net. As Koizumi discovered, if and when the economy improves, concerns over social security are bound to grow — and as Abe learned during his first government, those fears can prove fatal to a government. It is not entirely clear what the Japanese public expects their government to do to strengthen the social safety net, since support for tax increases to bolster social spending has proven so fragile. There may ultimately be nothing the government can do to reduce anxiety about the strength of the social security system. In an aging society public anxiety about the soundness of the safety net — particularly in an age of high budget deficits — may simply be an enduring fact of politics. Abe may have bought himself a temporary reprieve, but sooner or later public attention will turn back to the social security question.

The next post and the last in this series will look at public opinion polling on attitudes towards saving and investment, an important indicator of 1) how much risk Japanese households will tolerate, 2) how eager Japanese households are to participate in new-style shareholder capitalism, 3) how much households are benefiting from the Abenomics boom, and 4) the degree to which Japanese depend on the social safety net for their retirement living expenses.

Kan tries again on trade

When the DPJ was campaigning to unseat the LDP in 2009, its manifesto included a pledge to "conclude" a free-trade agreement with the United States. The agricultural lobby flexed its muscles, and shortly after releasing its manifesto the DPJ issued several "clarifications," changing its pledge to reach an FTA with US to a pledge to "begin negotiations." Kan Naoto insisted that it would not conclude any agreement that harmed Japan's farmers. While the party claimed otherwise, the issue was effectively dropped for the duration of the campaign and the DPJ's first year in power.

After his victory over Ozawa, Kan, now prime minister, brought the issue of trade openness back onto the agenda in the form of Japanese participation in the Trans-Pacific Partnership. Simply put, Kan's initial attempt to clear the way for Japanese involvement in TPP was stymied by the agricultural sector — with help from members of the DPJ. The lobby argued that participation would devastate Japanese agriculture, and forced the government to make a weak commitment to "study" participation, a climb down considering the soaring rhetoric with which the PM announced that his government would study participation in his policy speech at the start of the autumn Diet session.

However, with the start of a new year and a new Diet session, Kan, far from being chastened by the earlier defeat at the hands of the agricultural lobby, is positioning his government to begin the campaign anew. As Corey Wallace notes, the "themes" of this reshuffle were tax and pensions reforms and TPP. Regarding TPP, the most significant change was the appointment of Kaieda Banri as minister of economy, trade, and industry. Moreover, Hachiro Yoshio, a former farmer, was replaced as Diet affairs chairman by Azumi Jun. Combined with Maehara Seiji's staying on at the foreign ministry — Maehara has repeatedly called attention to the importance of economic openness for Japanese foreign policy — Kan managed to put into place a team that will be committed to the fight for free trade. His cabinet quickly agreed to TPP participation as a basic policy of the latest Kan government.

The question is whether Kan will be able to translate this ambition into reality. At the very least, the Kan government (and the DPJ) appear to have found their purpose. After fumbling around in search of a major issue or two to devote its energies to, the DPJ-led government has decided to tackle two rather pressing issues, which, combined with the challenges in Japan's bilateral relationships, passing the budget and budget-related bills, and managing life as a de facto minority government will be more than enough to keep the Kan government occupied. 

But in pursuing an open Japan — Kan's New Year's message was devoted to his goal of a third opening, a "Heisei opening" that would mean not just a Japan open to more imports but open to cultural, intellectual, and social exchanges across borders  — the Kan government arguably faces an even steeper battle than Koizumi faced when he took on the postal system, meaning the postal workers and their allies in the LDP. Between the rural bias in parliamentary representation (which, given the size of the DPJ's parliamentary caucus, inevitably means that there will be battles within the DPJ), the opposition of local governments in rural areas throughout Japan, and the outsized power of Nokyo, the Kan government faces formidable and perhaps insurmountable obstacles to bringing Japan into TPP. 

A basic understanding of international political economy is that free trade falters because its costs are concentrated while its benefits are diffuse. Plenty of states have joined free-trade agreements, suggesting that this fundamental tenet may not be all that fundamental. But what can the Kan government do to overcome the determined resistance of the agricultural lobby and its allies? For starters, the government needs to build a coalition of its own to rival the anti-TPP coalition. Business peak organizations like Keidanren will be indispensable partners for the Kan government if it is as serious about TPP as it says it is. Given the frosty relations between the DPJ and big business, the "anti-business" planks of the DPJ's manifesto, and the party's ties with organized labor (and big business's traditional ties with LDP), building this coalition will take some work, although this meeting between Kaieda and Keidanren's Yonekura Hiromasa is an encouraging start.

But it will take more than the help of friendly interest groups for the government to succeed. Ultimately, TPP may be the first big test for the DPJ's parliamentary-cabinet system. On paper, the DPJ's new policymaking process ought to (1) enable the government to coordinate its strategy on TPP across the relevant ministries (METI, MAFF, MOFA, etc.), (2) keep all cabinet ministers on board with the policy, (3) silence opposition within the ruling party, and (4) make strong, direct appeals to the general public about the necessity of the government's program. It is not a perfect analogue, since the upper house, now controlled by the opposition parties, gives the opposition parties procedural weapons they lack in the UK. However, the Kan government still has considerable tools at its disposal. The question is whether it uses them. As Andy Sharp argues at The Diplomat, it may well take a Koizumi-style PR blitz for the Kan government to win on this issue. It needs to hammer home why TPP — and greater openness more generally — are good and necessary for Japan. The idea that trade policy is an arena where groups with "objective" interests derived from their position in the global economy is overstated. Even among urban residents, thought to be the natural constituency for free trade, support cannot be taken for granted. The policy will not sell itself; an pro-TPP interest coalition needs to be constructed. The government's plan to convene town halls across Japan in February and March to explain the benefits of the policy are a good first step. But more talk will be needed. And side payments in one form or another will be unavoidable.

There is considerable risk in taking on TPP at the same time that the government will be debating a consumption tax increase linked to pensions payments, which, if not handled properly, could produce public opposition that could overwhelm the patient work of building a consensus on TPP. Nevertheless, as the Kan government and the DPJ begin a new year in power, they seem to be finding their bearings on policy. This government may yet leave a positive legacy.

After the showdown

Japanese Prime Minister Kan Naoto and Wen Jiabao, his Chinese counterpart, have met briefly in Brussels on the sideline of the ASEM summit, marking an end to the bilateral standoff following the collision between a Chinese trawler and Japanese Coast Guard vessels in the vicinity of the disputed Senkakus.

As expected, Japan and China reiterated the importance of the strategic, reciprocal partnership initiative. High-level talks and cultural exchanges will resume. All in all, it is difficult to say what has changed strategically as a result of the dispute. That China will fiercely resist any perceived change to the status quo in its maritime disputes? That China has greater leverage at its disposal? That countries — not just China — don't like having their nationals held by other countries, particularly when, Sourabh Gupta argues, there may have been little basis for Japan's holding the Chinese fishermen in the first place? 

Meanwhile, the conventional wisdom that the US is the biggest winner from the dispute is probably overstated. The allies will not find it any easier to resolve the Okinawa dispute, which continues to loom over the alliance. More importantly, however, the dispute appears to have merely reinforced the DPJ government's basic approach to China: having little choice but to forge a working political relationship with its neighbor, Japan will redouble its commitment to building constructive relations with China. In short, the dispute, rather than signaling that Japan must change course entirely, may simply lead the Kan government to try harder. 

The basic idea that has animated foreign policy under the DPJ from the day it took office — that Japan, living in a region dominated by a rising China and a declining but still powerful US, needs to find a way to navigate between and live with both power — remains intact.

That being said, the dispute with China has obviously had consequences within Japan, not least for the Kan government's public approval ratings. Despite having received a remarkable bump in his support after defeating Ozawa — nearly twenty percent in some polls — Kan's numbers are back to around fifty percent thanks to his government's perceived mishandling of the dispute. Peter Ennis makes a strong case that the Kan government actually handled the issue well, getting the assurances it needed out of the US while resisting Chinese pressure long enough for the government to claim that the captain's release was the result of a decision by the prosecutor's office in Naha and not the central government. But the Japanese people apparently do not see it the same way. In Yomiuri's poll, for example, eighty-three percent of respondents were not convinced by the prime minister's claim that there was not political intervention. The same poll found a ten-percent increase in the number of respondents who said foreign and security policy should be a top priority for the Kan government; in early August only four percent said it should be a top priority. Whether this change in the public mood is more than temporary remains to be seen, but the drop in the government's approval ratings give Kan that much less room to maneuver as the prime minister tries to coax the opposition parties to cooperate with the government.

Indeed, the LDP has rushed this issue to the top of the agenda as the autumn extraordinary session of the Diet begins. The party has declared that the "abrupt" release of the captain was the worst foreign policy failure in postwar history. The LDP is sure to build its response to the Kan government around this issue, together with the latest Ozawa indictment, meaning that the largest opposition party has two tangential issues with which to attack the government — with the sanction of the public, thanks to the public opinion polls showing that these issues matter — and put off talk of cooperation on an economic agenda. The LDP will of course get an assist from the Japanese media, particularly its more conservative precincts, which appear to have found their voice again after a dismal couple of years during which their issues vanished from the agenda as the global financial crisis unfolded and then the LDP was unseated by the DPJ.

The dispute with China not only has given ammunition to an LDP desperate to obstruct the Kan government and force an early election — it has also provided an opening for dissent within the DPJ, stirrings of which could be found in the petition signed by forty-three DPJ members, including Nagashima Akihisa, and submitted to Sengoku. The petition goes out of its way to soften its criticism of the government, but it does suggest that China policy could create some space between the government and the ruling party. However, since Kan's cabinet has been united on the issue, grumbling within the DPJ can be safely ignored for now.

So did Kan lose? I cannot agree with Ennis entirely that the government handled the dispute well. The government's biggest mistake was stressing that it was a matter for the Japanese legal system to handle. This stance may well have contributed to China's raising the stakes on the issue (because it could not accept this stance without tacitly acknowledging Japanese sovereignty) but it also ensured that the rule of law would be tarnished in the event of a Japanese climb down. If the Japanese government was indeed prepared to allow the legal process to run its course I suppose this position would have been acceptable, but I doubt that Tokyo really was prepared to wait that long (unless the Kan government was actually caught off guard by Beijing's response). The Kan government should have treated the issue like the diplomatic dispute it was from the very beginning instead of staking the credibility of Japanese institutions on the outcome. That it did so at least partially explains the public's opposition to the government's handling of the issue.

By holding out for as long as it did Japan may well have forced China to think twice about how hard it will push Japan in the future, perhaps won Japan more support from other countries locked in disputes with China, and provided an opportunity for Japan and other countries to take steps to mitigate China's economic leverage (as in the case of rare earth elements), but these gains may have come at the expense of Kan's credibility at home. Without public support, the prime minister, already the head of a de facto minority government, will find it that much more difficult to move an agenda centered on fixing Japan's economy, which in turn is critical to maintaining Japan's influence in the region (as argued by Maehara Seiji, Kan's foreign minister, at the Foreign Correspondents' Club of Japan Tuesday). Whatever the medium-term benefits to Japan from the dispute, it may not have been worth the short-term costs for Kan.

Kan presses the reset button

Having successfully fended off Ozawa Ichirō's challenge to his leadership of the ruling Democratic Party of Japan — indeed, having defeated Ozawa by an unexpectedly large margin, not only winning the vote among Diet members but also receiving the support of 249 of 300 district-level party chapters and sixty percent of the vote among local representatives — Prime Minister Kan Naoto finally has an opportunity to govern. After all, since succeeding Hatoyama Yukio in June Kan has spent much of his time focused on elections, first with the House of Councillors election in July and then the showdown with Ozawa.

Perhaps it should come as no surprise that within days of his victory Kan reshuffled his cabinet and the DPJ leadership. I am generally skeptical of the efficacy of cabinet reshuffles. Doling out cabinet and sub-cabinet posts is, of course, one of the more important tools in a party leader's toolbox as he tries to induce good behavior on the part of backbenchers. But too much turnover at the head of ministries can stymie policy change. Every change of minister comes with a period of inactivity as the minister learns the job; reshuffle too frequently and by the time the minister is ready to lead, he will be on the way out. This problem was characteristic of LDP rule in particular.

During its first year in power, the DPJ avoided a wholesale reshuffle, despite its declining popularity (the usual time for a reshuffle) — even Kan held off when he took over from Hatoyama. However, having secured his control of the DPJ, giving him a two-year term as party leader during which the government will not have to face the electorate if it doesn't want to, I suppose it is only natural that Kan would want to appoint a cabinet of his own making. And the DPJ certainly benefits from more party members getting experience in government, giving that virtually none had any experience of power before the DPJ won last year.

The new cabinet is being billed as a "non-Ozawa" cabinet. No member of Ozawa's group received a cabinet post, although Kaieda Banri, who, while not being a longtime Ozawa associate, supported Ozawa's challenge, was appointed as economy minister. There will be little turnover in the cabinet's most important positions. Sengoku Yoshito stays on as chief cabinet secretary and Noda Yoshihiko will continue to serve as finance minister. With Okada Katsuya's becoming DPJ secretary-general, Maehara Seiji, formerly responsible for transport and Okinawan affairs, will move over to the foreign ministry. Kitazawa Toshimi stays on as defense minister, ensuring a degree of continuity as far as Futenma is concerned. Renhō and Genba Koichirō will stay on the cabinet's administrative reform posts. The cabinet also includes former Shimane governor (and non-MP) Katayama Yoshiro as minister of internal affairs and communications, with an additional portfolio for regional revitalization and Kano Michihiko as agriculture minister (a post he held in 1989 in the Kaifu government).

Kan has presented his new cabinet as a cabinet that will "make good on its promises." That remains to be seen, as the prime minister has a difficult road ahead.

Kan spent his time on the campaign trail talking about "jobs, jobs, jobs." But talking about employment is one thing — doing something about it is a different matter entirely. The rising yen has triggered more hollowing out in the manufacturing sector, as businesses relocate to cheaper countries within the region. A recent METI survey found, for example, that forty percent of manufacturing sector respondents would move factories overseas were the yen to continue to rise. In the immediate aftermath of the DPJ election the Bank of Japan did intervene in foreign exchange markets, which has at least temporarily halted the yen's rise (although Felix Salmon suggests that since the BoJ did not sterilize its intervention this time, it could have anti-deflationary effects).

But as Richard Katz argues in the Financial Times, intervention to weaken the yen is little more than a temporary fix. He notes that a weak yen does nothing to help wean Japan off export-dependent growth, and cannot reverse the long-term trend towards a stronger yen. (And if Japan's is but the first in a series of competitive devaluations with its trading rivals in the Eurozone, it is hard to see what Japan will gain from intervention.)

The problem for Kan is that the path from short term to long term is perilous. In the short term, economic success will depend on the traditional export-led model, meaning that when a survey reveals that Japan's manufacturers will accelerate offshoring if the yen continues to strengthen, a government focused on economic recovery has little choice but to pressure the BoJ to intervene. But over the longer term, Japan needs to revitalize the service sector to produce a more balanced growth model (while trying to put the government's finances on a healthier trajectory).

This objective, easily the overriding purpose of the Kan government and its successors, would be difficult enough in the best of political circumstances. These are not the best of political circumstances.

First, although Kan has a new mandate as DPJ president, he still has work to do consolidating his control of the party. Whether Okada will be able to help him in the post as secretary-general remains to be seen — as Michael Cucek notes, Okada may not be the ideal man for the job, seeing as how his appointment to the post was not uncontested. The main problem within the party may still be Ozawa. While Kan's margin of victory may silence Ozawa for the moment, it remains to be seen how Ozawa will react to Kan's decision to exclude Ozawa's lieutenants from the cabinet and party leadership. I do not expect Ozawa to leave the party, not least because it is far from certain that he would get many to follow him out, especially now that the Kan government has a bit more buoyancy in the polls. Having failed to unseat Kan, Ozawa may recede into the kind of role I thought he might take earlier, that of an elder statesman, periodically declaiming on or critiquing the government's decisions but not actively organizing an intra-party opposition.

But while Ozawa may be less of a problem, Kan will still have to contend with backbenchers unhappy with the direction taken by the government, as Kan implicitly acknowledged by suggesting that he will have a "cabinet of 412" (referring to the number of DPJ legislators). The inclusion of DPJ MPs in policy deliberations is unavoidable as the Kan government tries to revise or scale back the party's promises in the 2009 manifesto, but it need not be cumbersome if the prime minister is able to take control of the policy agenda.

Whether he is able to will depend on the opposition. Kan still has to find a way to coax the opposition parties to support his proposals, without which they will die in parliamentary proceedings. That the Kan's approval ratings have shot up to the same level as when he took over should help him — if he does not squander public support through indecision or inaction. Arguably the only way Kan can succeed is by doing what Koizumi did: appealing to the public directly in order to break the resistance of opposition parties and opponents within his own party. But to bring the public along Kan has to offer something in the first place. The challenge for Kan, then, is to develop an economic program that includes macro- and microeconomic policies, that attacks wasteful spending, includes deregulation and tax reform, and promises something better for the public. If the government is incapable of developing this program internally, Kan should take a page from the playbook of prime ministers past and convene a blue-ribbon advisory council headed by Kan and composed of prominent figures from business, labor, academia, the bureaucracy, and the political opposition. The commission would have to be as much a public relations exercise as a policymaking exercise, regularly issuing statements and drafts that reveal the emerging program and allowing the process to dominate public discussion.

The turn to advisory-group policymaking would be at odds with the DPJ's professed desire for cabinet-led policymaking, but at this point I'm not sure that the Kan government has much choice. I've lost count of the number of "growth strategies" the DPJ-led government has issued over the past year, but whatever the number, it's too many. The public is willing to give Kan and the DPJ another chance, but it is clear that what they have been doing isn't working. 

If Kan is unable to bring the public along with him, the outcome will be easy enough to predict: low public support, opposition obstructionism, and unrest within the DPJ, the same cycle that has brought low every prime minister since Koizumi.

Previewing the DPJ election

I was on CNBC Asia again today to preview the Kan-Ozawa showdown.


In case you're wondering why I've been silent during this campaign, the reason is simple. The DPJ scheduled its election the same week as my doctoral exams (how rude! - ed.) and so I have not been able to follow this electoral campaign to anywhere near the degree I would have liked. Apparently appearing on TV to talk about Japanese politics is how I unwind after a day spent writing.

Ozawa's last stand?

"All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs." — Enoch Powell

Returning to his familiar role as Ozawa Ichirō's trusty factotum, former Prime Minister Hatoyama Yukio announced Thursday that he will be supporting Ozawa in a bid to unseat Prime Minister Kan Naoto in next month's DPJ party leadership election. Ozawa himself has yet to make an official announcement, but much like when Hatoyama was DPJ secretary-general under Ozawa, Ozawa conveyed his intentions to Hatoyama, and Hatoyama revealed them to the public. Naturally Hatoyama's backing Ozawa after earlier indicating his support for Kan is an insult to the prime minister.

I have held off from commenting on the possibility of an Ozawa run at the party leadership and premiership because the idea struck me as patently absurd (for reasons that Michael Cucek captured well here and here).

And yet here we are, with Ozawa on the brink of entering the ring once more. I suppose on the plus side, at least he's competing for a public post, one that would force Ozawa to assume public responsibility instead of hiding out of sight.

There is no shortage of speculation about Ozawa's motives for running, having to do with his tenuous legal position, his desire to reinsert himself into the policymaking process by running, losing, and then bargaining for an important post, or his genuine desire to, in Hatoyama's words, "to risk his life on behalf of the country." I have long since given up trying to read Ozawa's mind and am willing to believe that any, or all, or none of these reasons is the real reason for Ozawa's decision.

Whatever his reasoning, the consequences could be dramatic. The best-case scenario would be that Ozawa is simply unable to muster enough support and goes down to an embarrassing defeat that is a prelude to his departure from politics. It is unclear just how much support from the party's parliamentary caucus Ozawa can count on — for my part, I have always thought that the media has exaggerated the extent to which Ozawa can rely on an "army" of young MPs indebted to him for his assistance. Even more unknowable is the extent of Ozawa's support among the party's rank-and-file members, who will also be voting in the party election. Given the near-universal public disapproval (including DPJ supporters) of Ozawa, it is worth asking whether there are still enough pockets of support for the former party leader to make his candidacy viable.

And if he were, somehow, to defeat Kan and take the premiership? Many seem to think that Ozawa's becoming DPJ leader would be the catalyst for the long-awaited political realignment (although Your Party's Watanabe Yoshimi insists that the DPJ will break regardless of what Ozawa does). It is easy enough to see how Ozawa could trigger the realignment. Remember the "purge" of Ozawa loyalists that marked the transition from Hatoyama to Kan? Presumably the "magistrates" who opposed Ozawa and have occupied important positions under Kan would have little to look forward to under Ozawa, and would have two options outside of the cabinet: build anti-mainstream "factions" within the DPJ to challenge Ozawa, thereby completing the LDP-ization of the DPJ, or leave the party altogether to join with Watanabe or form yet another new political party. 

The reality is that while at another point in his career Ozawa might have been able to deliver a miracle, untwisting the Diet by encouraging members of other parties to defect or hammering out a new governing coalition, there is good reason to believe that Ozawa is out of miracles. As Kan has found as he has tried to coax the opposition parties to cooperate, with the DPJ reeling the opposition parties have the upper hand. The DPJ will pay a steeper price than the opposition parties for inaction, particularly as the economy worsens. Add Ozawa's unpopularity and his notoriety as a living symbol of the bad, old politics and the opposition's advantage grows. And if a Prime Minister Ozawa were the head of a nominally united but fractured DPJ his bargaining power would be undermined even further. Whoever wins the party election will still face a miserable political situation. Having Ozawa as prime minister would only make the DPJ's situation even more difficult.

It is ultimately for that reason that I suspect that Ozawa will provide another demonstration of Enoch Powell's maxim, adding a final defeat to a lengthy political career that has seen its share of defeats along with extraordinary victories, arguably none more extraordinary the DPJ's victory a year ago next Monday. Ozawa simply does not have a compelling case for why he should take charge of the government at this juncture — and I think that the party's voters know it.

The politics of Kan's apology

"I would like to face history with sincerity," said Japanese Prime Minister Kan Naoto in a statement issued on 10 August, the 100th anniversary of Japan's annexation of Korea. "I would like to have courage to squarely confront the facts of history and humility to accept them, as well as to be honest to reflect upon the errors of our own."

In what is now being referred to as the Kan Statement, the prime minister acknowledged the suffering caused by Japan's "colonial rule" and apologized to the Republic of Korea, and also pledged to return the remains of Koreans as well as cultural artifacts removed to Japan during the annexation.

Cynics will undoubtedly be quick to note that this is only the latest in a lengthy list of apologies issued by Japanese leaders for Imperial Japan's behavior — and one need not be a cynic to ask what value one more apology will have for Japan's relationship with South Korea or its standing in the region more generally. Japan's conservative ideologues, never shy in their opposition to what they see as "masochistic" behavior on the part of Japan's leaders, have vociferously opposed the statement. In a lengthy editorial published the day after the statement, the Sankei Shimbun, a revisionist right-wing daily, criticized the government for "imposing" a "one-sided view of history," denigrating the achievements of Meiji Japan in the process. The paper stressed that it is necessary to balance the "shadow" of Japanese rule with the "light," which came in the form of education and railroads.

In its coverage, Sankei also raised questions about the procedure by which Kan secured cabinet approval for his statement, claiming that Kan foisted the statement on his cabinet and the ruling DPJ, over the objections of party members.

Two days after the statement an "emergency citizens' meeting" met in central Tokyo to demand the withdrawal of the apology. Headed by Odamura Shirō, a leading conservative figure who was involved in opposition to the infamous "comfort women" resolution passed by the US House of Representatives in 2007, the meeting passed a resolution calling for a bilateral relationship based not on feelings of moral superiority for one party and guilt for the other and questioning the legitimacy of prime ministerial apologies. (Of course, the resolution also called attention to the role played by Japan in triggering Korea's economic development.)

The revisionist right's reaction to Kan's statement has less to do with South Korea, however, and more to do with the right's program for Japan. Its reaction is, above all, narcissistic: what does Japan lose by apologizing to those harmed by Japanese imperialism? As Kan himself noted, there is nothing cowardly about frankly acknowledging one's transgressions without hedging or equivocating. And while the list of apologies to Japan's neighbors is lengthy, it is precisely because conservatives question the legitimacy of those apologies — most notably the Murayama statement — that prime ministers are compelled to keep issuing new ones. The revisionist right believes that a "proper" and "truthful" historical perspective are critical for national pride, which it believes to have been corroded by the left-wing academics and media personalities and pusillanimous politicians. While they claim to be interested only in historical fact, their selective reading of history belies a blatantly opportunistic approach to Japan's imperial past that belittles the claims of Japan's victims and presents a blatantly self-serving (and at least in this telling contradictory) narrative in which Japan was not a colonizer, and even if it was, it was a benevolent one that hastened the demise of those wicked European empires.

Japan's revisionist right, of course, is not the only political group that propagates a self-serving account of its past that explains away inconvenient enormities (cf. the United States and Hiroshima, among other examples). But the revisionist right's attitude has persistently placed a stumbling block in the path of better relations with South Korea and China. As Kan makes clear in his statement, a good relationship with South Korea is critical in the years to come. While I do not doubt that Kan's apology is sincere, it also comes with strategic benefits, as President Lee Myung-bak appears no less interested in building a close relationship with Japan. Since taking power last year, the DPJ has steadfastly worked to build closer bilateral relationships throughout the region. This latest apology is but another step in that program.

And so the battle over Kan's apology pits two very different world views against each other. For Kan and members of his cabinet, Japan's future is in Asia, which means maintaining partnerships with important countries in the region. If apologizing to South Korea again strengthens Japan's position and clears the way to closer and deeper exchanges not just with Koreans but other Asian peoples, it is an exceedingly small price to pay. For Japan's revisionists, any unambiguous admission of Japan's guilt is evidence of "masochism" and an indication that Japan's leaders are simply not up to the challenge of competing with China for predominance in Asia. If Kan's view is strategic (although, again, not only strategic), the revisionist right is absolutist, and were it embraced by those in power it would result in an ignoble and ultimately self-defeating isolation for Japan in the region.

Of course, there is actually little risk of the revisionist agenda being implemented. Even Abe Shinzō, the most unabashedly revisionist conservative prime minister Japan has had in recent years, recognized the value of strong relationships with both South Korea and China and was willing to make concessions on the history issue, whatever his personal beliefs. Since Abe's downfall in 2007 the revisionists have been increasingly marginalized in Japanese politics, their influence virtually non-existent under the DPJ despite having sympathizers within the party. Indeed, their influence may be inversely proportional to the amount of noise they are capable of generating through various media outlets.

As Jun Okumura suggests, it is now up to South Korea to accept Kan's apology in good faith. That, of course, points to the central problem with apologies between nations: no matter how sincere the apology (and the acceptance of the apology), it is difficult for one leader to bind the hands of his successors. Nevertheless, by building a closer bilateral relationship, Kan and Lee can do their part to minimize the harm that can be done by political actors in both countries who wish to exploit history for political gain.

Is Ozawa back?

If there is one lesson that this upper house campaign has taught us, it is a lesson that we all should have already learned: there is no stopping Ozawa Ichirō. Despite what looked like a marvelous coup by Hatoyama Yukio in getting Ozawa to step down as DPJ secretary-general, Ozawa has been a public critic of the Kan government throughout the campaign.

However, is Ozawa's criticism of the government — he's been particularly harsh about the Kan government's comments about raising the consumption tax to 10%, which he argues with plenty of justification that the government has made life more difficult for DPJ candidates — the prelude to Ozawa's being a thorn in Kan's side after the election (as Yuka Hayashi suggests in this post at the Wall Street Journal's Japan Realtime)?

It is tempting to see Ozawa's remarks as the beginning of an Ozawa-led anti-mainstream within the DPJ that will force the Kan government to make further concessions to party backbenchers when it comes to policymaking, particular if the DPJ falls short of a majority on Sunday.

Working in Kan's favor, however, is that he has government and party leadership united behind him. United in their opposition to Ozawa's influence, Kan's leadership team already looks more effective than the Hatoyama-Ozawa team, missteps regarding the consumption tax notwithstanding. More importantly, Kan has already made concessions to the party's backbenchers, giving them a vehicle for having their voices heard by the cabinet. Ozawa's concerns about the government's abandoning last year's manifesto would carry more weight if the Kan government had not already begun working on a mechanism for incorporating the concerns of backbenchers into government decision making. Furthermore, there are few signs that Ozawa is any less unpopular now than he was before resigning as secretary-general — or that MPs are keen on preserving every piece of the 2009 manifesto. While there are still concerns that Ozawa stands at the head of a proto-faction that could number more than 100 members, I wonder how many members Ozawa can actually count on to back him. How many backbenchers would be willing to buck the new party regime to stand with Ozawa? It is worth noting that few senior party members have echoed Ozawa's critique of the Kan government.

That's not to say that party members are happy with how the government has handled the consumption tax issue over the past month. The understandable desire to give the voters a chance to render judgment on the Kan government's new approach to the consumption tax likely forced the government to roll out the proposal before properly vetting it with party members, which in turn led the government to back away from its initial position, ironically damaging the position of the government and the DPJ even further.

But backbencher dissatisfaction does not automatically translate into support for Ozawa. Far from signaling the beginning of an Ozawa-led anti-mainstream, Ozawa's behavior during the campaign could signal a new role for Ozawa as an internal critic, concerned less with vying for control of the party than with keeping the party on what he sees as the right path. It seems to me that the Kan government could live with Ozawa's moving into this role.

Facing constraints in the alliance

Prime Minister Kan Naoto had his debut on the world stage at the G20 meeting in Toronto this week. While in Toronto he had his first meeting with US President Barack Obama.

As Reuters notes, Kan met with Obama for a half-hour, considerably more time than Hatoyama got when he visited Washington in April (when Hatoyama was infamously described as "loopy"). The two leaders apparently discussed their shared love of matcha ice cream, and the Japanese media looked for signs that the two were becoming pals, looking for evidence that the relationship between the US and Japan was back on track after the Hatoyama government "strained" the bilateral relationship.

Meanwhile at gatherings in Washington to commemorate the "fiftieth anniversary" of the alliance (depending on when one chooses the date the birth of the alliance), the mood, according to Peter Ennis, was relatively upbeat following Hatoyama's decision to embrace a version of the status quo regarding Futenma and his subsequent resignation. Ennis says that the theme was "emphasize the positive."

All well and good, but as far as I can tell the alliance is right back to where it was 2007-2009, with the only difference being that the Japanese government is openly confronting the problems surrounding the implementation of the 2006 roadmap.

As I've argued before, the collapse of the Abe government in 2007 was more than just a spectacular reversal for the LDP — it marked the end of the bilateral "project" that grew out of the Nye Initiative in the mid-1990s to build a stronger, closer US-Japan alliance. After rewriting the guidelines on defense cooperation, securing (token) Japanese contributions to the Afghanistan and Iraq conflicts, and develop a new "shared values" rationale for the alliance, the project ran squarely into the wall of political realities in Japan and in the region.

Regarding the former, when faced with a government that was dead set on constitution revision, it turned out that the Japanese public was not all that interested in it, no matter what years of Yomiuri Shimbun polls said (although revisionist politicians apparently missed the polls that showed that very few felt that constitution revision was an issue deserving of the attention of national leaders). More than that, there are few signs that the Japanese public is interested in anything but the status quo as far as security policy is concerned. In other words, the status quo in which Japan spends less and less each year on defense while playing host to forward-deployed US forces. While public opinion polls are at best ambiguous regarding Japan's former refueling mission in the Indian Ocean or its ongoing anti-piracy mission off the Horn of Africa, the public isn't exactly clamoring for a more expansive role abroad for the SDF. Nor does there seem to be much support for collective self-defense, another remaining piece of the project.

Now, of course, it's the job of the government to lead — indeed, dating back at least to the early 1990s the idea behind the administrative reforms at the heart of the DPJ's program was that it would produce more decisive leadership, especially in foreign and security affairs. But realistically speaking, it is unlikely that a government committed to a controversial fiscal retrenchment agenda will simultaneously pursue a foreign policy agenda that would if anything be more controversial, especially in light of the domestic agenda.

The result is an unusual parallel to the Yoshida Doctrine, which, incidentally, Ambassador Katō Ryozō, who before serving as ambassador to the US for the whole of the Bush administration was deeply involved in the project to strengthen the alliance, recently declared had "completed its mission." Today Japan finds itself in a position where it needs an alliance with the US based on the forward deployment of troops not to free up resources for re-industrialization but so that it can weather its demographic plight and economic decline. The resulting arrangement looks the same, but the underlying logic is strikingly different — and remarkably fragile, resting as it does on the strength of the US commitment to Asia, the willingness of the Japanese taxpayer to provide host-nation support (and Okinawan and other communities to host US forces), and the restraint of the People's Republic of China.

In fairness, policymakers in both countries seem to recognize that this arrangement is less than ideal. For example, two years before he became known within US-Japan circles for issuing a warning to the Hatoyama government not to challenge the 2006 agreement, US Secretary of Defense Robert Gates delivered a speech in Tokyo calling for a review of the alliance that would seek to answer basic questions about its raison d'etre. 

But no one has taken up Gates's call, perhaps in large part because there are no easy answers to the challenges that face the alliance. Japan's domestic political environment shows no signs of changing (at least as far as the alliance is concerned), and the political environment could even worsen if the ruling parties fall short of a majority in the upper house. While China occasionally acts in ways that could trigger a shift in Japanese public opinion, on the whole China has been restrained, meaning that Japan will continue to seek a constructive partnership with China. There are no signs that the US commitment to regional security is wavering, but given the state of the US economy it is impossible to rule out an isolationist turn (fears of which naturally lead Japan and other countries in the region to consider their options).

In other words, the new project for the alliance is learning to accept and make the best of these constraints. As leaders of both countries say, the alliance continues to play an important role in providing peace and security in the region, but the idea that the alliance could be something more than a "passive" or negative force for peace (what, after all, could be more passive than oxygen, Joseph Nye's commonly used metaphor for the US presence in Asia), that it could play a creative role in promoting US values or reshaping the regional security environment appears to be increasingly fanciful. The alliance may well survive for decades to come, but its survival — and the form it takes — may depend less on decisions made in Washington and Tokyo than on decisions made in Beijing.

The meaning of the Upper House election

On Thursday campaigning for the House of Councillors election scheduled for 11 July begins, as 440 candidates vie for 121 seats. (Michael Cucek has the breakdown here.)

The significance of this election has been thrown into clear relief since Kan Naoto took over from Hatoyama Yukio as prime minister and head of the DPJ. What once looked to be a referendum on the leadership of Hatoyama and DPJ secretary-general Ozawa Ichirō — a referendum that polls suggested that the DPJ would not win — is now an election on the future of Japan, perhaps to an even greater extent than last summer's historic House of Representatives election. If the DPJ can retain control of the upper chamber, it will have three years before it will have to face the voters again in an election, provided that no snap election is called in the meantime. Those are three years that the government can use to make tough political decisions that a government with a shorter time horizon might be less inclined to make, like, say, a consumption tax increase.

And so this election is critical for Japan's future. For the Japanese people, there's not much of a choice. Under the DPJ Japan now has a prime minister who is everything that his predecessor was not: Kan is clearly willing to take a position, stick to it, and make his government follow along. He is devoted to clean politics and dynamic political leadership, and under his watch the DPJ once again looks like a party capable of bringing substantial change to how Japan is governed.

Much of the discussion during the campaign will focus on the government's plans related to the consumption tax and deficit reduction more broadly. But once again this election is less about the competing policies offered by the DPJ, the LDP, and the smaller parties than about how Japan is governed. The choice is between unified DPJ government that will face few institutional checks as it attempts to introduce sustainable growth, sustainable government finances, and sustainable social security and a divided system in which the government will have to cobble together working coalitions in order to pass legislation in the upper house (or use its lower house majority to pass legislation over the upper house's objections).

In other words, voters have to decide whether they're willing to tolerate an "elective dictatorship" for the next three years as the Kan government sets to work implementing the DPJ's modified but still ambitious political program or whether they would prefer that the LDP, Your Party, Komeitō, and the other parties retain a perch from which to challenge the government and retard its progress.

Mr. Kan's Third Way

The Third Way has, belatedly, arrived in Japan.

The style of politics popular in advanced industrial democracies during the 1990s among center-left leaders keen to reconcile their left-wing parties to the rise of neo-liberalism and the onset of austerity after the 1970s had heretofore failed to surface in Tokyo. But with the ascendancy of Kan Naoto, Third Way politics may get another lease on life in Japan.

In his maiden policy speech as prime minister on 11 June, Kan explicitly spoke of a "third way" to the reconstruction of the Japanese economy. Rejecting the first way, what he identifies as the ideology of the construction state (shared prosperity through public works), and the second way, "extreme market fundamentalism" focused on supply side reform at the expense of public welfare, Kan proposed a third way that would target the budget deficits that he says have produced ongoing stagnation and eroded confidence in the social security system. In short, he is trying to break what I've described elsewhere as an impossible trinity of deficit reduction, renewed, balanced, and low-carbon-emitting growth, and robust welfare provision.

What follows is a set of policies intended to create a "Strong Economy," "Strong Government Finances," and "Strong Social Security." 

His proposals on the first point are a reiteration of the DPJ's prevailing position on the economy: the need to balance external and domestic demand, to be realized through a combination of intra-Asian trade, tourism, Green technology, and support for families and the elderly.

On the second point, Kan alluded to the specter of Greece — an allusion that will be repeated in other times and places in the coming years — to make the case for aggressively attacking Japan's bloated national debt with efforts to cut wasteful spending and fundamental tax reform, which would undoubtedly include a consumption tax increase. Naturally he appealed to the LDP to cooperate with the government on this issue.

Finally he turned to social security, identifying a secure social security system as critical for economic growth. Effectively he argued that a shaky social security system in an aging society triggers hoarding on the part of middle-aged and senior citizens concerned about their well-being in retirement.

The similarities with the Third Way politics of Blair and Clinton are not accidental. Kan, a veteran of Japan's reformist, pragmatic left, is at once trying to unleash and humanize Japanese capitalism. He praises Koizumi's supply-side reforms for promoting the restructuring of Japanese businesses, but despairs of their impact upon Japanese society in the form of unemployment and persistent deflation.

While Kan arguably speaks more fluently about economic policy than any prime minister since Koizumi — his speech was largely free of the airy fairy rhetoric that characterized Hatoyama's pronouncements — it is difficult to see Kan's Third Way having any more success than the Anglo-American Third Way, which in retrospect seemed to do little more than promote the Casino Capitalism that produced the financial crisis that has arguably wiped out whatever gains were made to the state's role in welfare provision and plunged both countries ever deeper into debt. The point is not that Kan is foolish for trying to reconcile what appear to me at least as irreconcilable political goals: the political environment demands that the government addresses all three, not least the problems in the social security system. Instead, it seems likely that over time Kan will be forced to focus on one goal at the expense of the others — and that the privileged goal will be deficit reduction.

Even without Kan's embrace, it is likely that deficit reduction would become the government's primary goal with Greece serving as "focusing event," with Kan's government full of deficit hawks, and with the finance ministry still a potent force in policymaking. But with Kan himself having embraced the issue in strong terms, there appears to be little doubt that his government will prioritize deficit reduction above all else, to the point of the DPJ's including a pledge to increase the consumption tax in its manifesto for next month's upper house election (perhaps not a bad move politically with a Yomiuri poll showing sixty-six percent support for a consumption tax increase). Kan has also stated that within the month his government will establish 2020 as a goal for restoring the government's primary balance to surplus.

The question, however, is whether deficit reduction will lead to sustainable growth and secure social security spending. For example, I find it difficult to believe that the government will able to promote greater domestic demand, let alone sustain existing domestic demand while taxing consumption at higher levels. Deficit reduction is undoubtedly valuable in its own right, it's just difficult to see how the Kan government will be able to make good on the totality of its economic program. Can the government really cut enough waste and raise enough tax revenue to shrink its deficits while expanding programs to promote economic growth?

I think that the pursuit of deficit reduction will have implications for Japan's foreign and security policies. The first challenge, however, is figuring out exactly what has changed: Yomuiri sees a new realism in the DPJ's latest manifesto (discussed here at Twisting Flowers), but the reality is that apart from the new government's emphasis on rebuilding relations with the US and the call for defense transparency in China, the DPJ is putting in words what it has already been doing since taking power, especially in its focus on stronger bilateral ties with South Korea, Australia, and India. And really, the Hatoyama government was not nearly as soft on China — or as opposed to the US-Japan alliance — as the contemporary wisdom in Washington held.

Moreover, the Kan government's overtures to the US can be overstated: even the formulation of support for the alliance voiced in Kan's address last week was more like former LDP Prime Minister Fukuda Yasuo's, in which the alliance is viewed largely in terms of its role in providing stability in Asia, than the vision of the alliance as resting on a foundation of shared values and dedicated to the promotion of democracy in the region. Like Fukuda, Kan recognizes that stable, constructive relations with Japan's neighbors, China most of all, are essential, and that the US-Japan alliance is valuable insofar as it contributes to Japan's Asia policy aims.

But in the Kan government's unflinching support for last month's agreement on Futenma, the new government is clearly interested in bolstering the US pillar of Japan's foreign policy. What I wonder is whether the DPJ's renewed interest in the security relationship is a function of its focus on deficit reduction. As the government looks to reduce spending, DPJ officials may increasingly be coming to the realization that austerity combined with regional uncertainty means that for the foreseeable future Japan will be dependent on US deterrent power. While the new government is quietly hedging against the possibility that the US commitment to Asia might weaken through its focus on bilateral cooperation with regional powers and its growing acceptance of the need to loosen restrictions on arms exports (which would lower the cost of bolstering Japanese's own conventional capabilities), the DPJ clearly accepts that for the foreseeable future it will be necessary to maintain a constructive security partnership with the US, even if the party continues to hope for an "equal" partnership.

It is open to debate whether austerity is leading the Kan government into a more enthusiastic embrace of the US (or even whether the embrace is more or less enthusiastic than the Hatoyama government's or any LDP government's for that matter). The DPJ may simply be free or cheap riding irrespective of concerns about austerity in the future. Or it may sincerely believe that the status quo is more or less the best option for Japan when it comes to coping with the rise of China.

However, I think the proposal to relax the three arms-exporting principles is a sign that the DPJ is sensitive to the costs of defending Japan and, therefore, that while the alliance may provide the most cost-effective means of national defense (provided measures are introduced to lessen the domestic political costs of US bases on Japanese soil), the government should look for ways to reduce the costs of Japan's providing its own defense in due time.

In short, at home and abroad the DPJ is performing balancing acts, pursuing multiple and at times conflicting goals that require flexibility on the part of the government — precisely the reason why Ozawa and other politicians have called for a stronger Westminster-style executive over the past two decades. Whether the government will be up to these challenges even with reform remains to be seen.

The Kan system

The Kan government has formed, having retained eleven ministers from the Hatoyama government (as expected). Among the new faces in Kan's cabinet of "irregular forces" are Noda Yoshihko (finance), Yamada Masahiko (agriculture), Arai Satoshi (national strategy), Genba Kōichirō (administrative reform), and, perhaps most prominently, Renhō (government revitalization).

Looking at the transition from the Hatoyama-Ozawa regime to the new DPJ cabinet, Michael Cucek reviews the history of the DPJ's coming to power and the nature of the Ozawa's strategy and concludes that under Kan, "the DPJ, the classical DPJ, is back."

It is hard to disagree. Indeed, the haste with which Kan Naoto and his "Seven Magistrate" deputies have tried to break with Ozawa — Kan's telling the former secretary-general to keep quiet, new DPJ election chief Azumi Jun's decision to review Ozawa's strategy of running two candidates in three-seat districts — are surely just the beginning of what will be weeks and months of distancing the party from Ozawa. More than that, Kan's emphasis on grassroots politics, the basis for Kan's calling his cabinet a "cabinet of irregulars" (or commandos), stands in marked contrast to Ozawa's courtship of the same interest groups that had long sustained the LDP in power.

What does this "classic" approach mean for the DPJ's plans to build a top-down policymaking process?

Perhaps the biggest change is that under Kan and DPJ secretary-general Edano Yukio the party will undo the concentration of power in the office of the secretary-general that occurred under Ozawa. Most notably the party has accepted the restoration of the policy research council, the primary demand of the reform movement that emerged earlier this year.

The new PRC, however, will look nothing like the LDP's PRC, not least because there is no indication that Kan will roll back the restrictions on contact between backbenchers and bureaucrats that the Hatoyama government promulgated upon taking power. Genba, the minister for public service reform, will serve simultaneously in the cabinet and as the PRC chair. Genba himself said in his first press conference that the "former PRC" is not being restored, that the new PRC will not pose a threat to the government's plans to unify policymaking in the cabinet. Instead it appears, at least based on Genba's remarks, that the PRC will serve as a forum for two-way communication between cabinet and party. As a member of the cabinet, Genba's responsibilities will include explaining the government's policies to backbenchers in addition to facilitating debates about new policies among MPs. The principle of collective responsibility ought to restrain Genba from using his post to challenge the government: as a cabinet minister he is obligated to defend the government's decisions once they have been made.

The new PRC will enable backbenchers, especially first-term backbenchers, to participate in policy debates and perhaps generate new policy ideas — but there is no sense that it marks a return to bottom-up policymaking in which party members wield a veto over every government decision.

In addition to creating a new PRC that is directly linked to the cabinet, the Kan government will keep the new secretary-general closer to the government — literally. Edano may occupy an office within the Kantei. The result would be that the secretary-general would act more like a political adviser to the prime minister than the autonomous strategist that Ozawa had become, and, as Edano said in his initial remarks, would be responsible for defending the government's decision before the voting public. (The Kan-Edano relationship will invariably differ than the Hatoyama-Ozawa relationship not least because Kan will not be overshadowed by his secretary-general in the public's eye.)

The result is that under Kan the DPJ will try to replace a government in which the ruling party had fewer veto players but in which the party's one veto player was at least as powerful as the prime minister with a government in which the party may have more veto player but in which the prime minister is more powerful, more visible to the public, and more capable of controlling party officials. There will be more players involved in policy debates, but my sense is that Kan, with the help of Sengoku Yoshito, the new chief cabinet secretary, will not be reluctant to remind his subordinates of who is in charge of the government.

Of course, the question hanging over this new "un-Ozawa" system is whether Ozawa himself will accept it. Freed of formal responsibilities, Ozawa will now have the time to forge his political loyalists into an Ozawa faction should he want to, which would of course make life difficult for the Kan government. Inevitably the new regime will have to make its peace with Ozawa — or Ozawa will have to restrain himself from intervening in policymaking and political strategy.

Nevertheless, under Kan the DPJ has a prime minister who may be even more devoted to building a Westminster-style system than his predecessor. The DPJ may  have made some necessary concessions to the party's MPs, but the goal remains strengthening the role of the prime minister and the cabinet at the expense of bureaucrats and backbenchers.

It's Kan!

Kan Naoto has been elected head of the DPJ and is line to become Japan's ninety-fourth prime minister this afternoon. He received 291 votes to Tarutoko Shinji's 129.

(Image by Kenji-Baptiste OIKAWA and used under a Creative Commons license)

Talking about Kan on CNBC

The virtues of Kan

Kan Naoto, Hatoyama Yukio's second finance minister, was the first DPJ member to declare his intention to run in the party election scheduled for Friday — and it seems unlikely, for reasons outlined by Michael Cucek here, that he will be denied the job.

What would be the significance of Kan's replacing Hatoyama?

I think that what I wrote when Kan became finance minister is even more apropos for Kan's becoming prime minister: "While it is common to point to DPJ politicians like Hatoyama and Ozawa and conclude that the DPJ is a pale imitation of the LDP, Kan's career shows that the DPJ's victory has brought new politicians with different backgrounds and different concerns from LDP politicians to the fore." Should Kan become prime minister, he will be the first prime minister since Koizumi not directly related (son or grandson) to another prime minister, and the first non-hereditary politician since Mori. He began his career toiling on the margins of Japan's reformist left, a follower of Eda Saburō, who tried and failed to modernize the JSP, and lost three elections before finally winning a seat as a representative of the Social Democratic Federation (SDF) in 1980.

Indeed, the political origins of Hatoyama and Kan could not be more different. Not only is Hatoyama the scion of a political dynasty, he seemingly entered politics on a whim — the family thought his brother Kunio would be the politician while Yukio would pursue his academic career. Kan, however, became involved in politics purely out of his convictions, starting as a student activist. Had Kan been interested in pursuing personal ambitions, he could have found better ways to do it than by following a marginal center-left politician.

Accordingly, unlike Hatoyama, he has a core set of beliefs that may in fact be best called social democratic or liberal in the American sense. He is egalitarian, a believer in transparent, clean, and accountable government. He became famous as minister of health during the mid-1990s for taking on his ministry's bureaucrats over an AIDS-tainted blood scandal, which may be an easy position for a politician to take (especially during the "bureaucrat-bashing" 1990s), but nevertheless conformed with the focus of Kan's career in politics. During the months leading up to the election, he became the DPJ's point man on administrative reform, a role he continued to play when the Hatoyama government formed. 

Perhaps it would not be inappropriate to say that his beliefs are something like Eda's, who in 1962 stressed that he wanted Japan to have "the American standard of living, Soviet levels of social protection, British parliamentary democracy, and Japanese pacifism." While these days one would not think to look to the Soviet Union as a model for social protection — Scandinavia would probably be the model today — this mix of policies might best capture Kan's politics, perhaps with the exception of Japanese-style pacifism (more on this momentarily). He certainly made clear last summer that he believes strongly in the necessity of Westminster-style parliamentary democracy in Japan, and as finance minister

Kan has said fairly little over the years about foreign policy and Japan's relations with the US and its neighbors. To the extent that he has talked about foreign policy, for instance on previous occasions that he led the DPJ, his views have been virtually at the center in terms of the spectrum of opinion within the DPJ. He as acknowledged the importance of the alliance and the US forward presence on multiple occasions, but when Koizumi was prime minister, he criticized the government for its slavish subservience to the US and for not balancing the US-Japan relationship with the other "pillars" of Japanese foreign policy, multilateral cooperation at the UN and bilateral and multilateral relations within Asia. He isn't exactly dovish, but he's no hawk either. Accordingly, I would not be surprised if Okada Katsuya either stays on as foreign minister or continues to play an important foreign policy role in another capacity.

However, the details of Kan's policy beliefs may be less important at this juncture than his biography. Given that he is a conviction politician, given his ministerial experience (something that Hatoyama lacked), and given his emphasis on open politics, Kan may be the right man to restore public trust in the DPJ-led government and lead his party to a respectable showing in next month's upper house election. The central task for the Hatoyama government was the restore public faith in government after years of LDP misrule. The central task for a Kan government would be to restore public faith in government after years of LDP misrule — and nine months of Hatoyama misrule. If the public does not trust the government, it is difficult to see how Japan will escape its economic stagnation. As I've said before, if the public cannot trust the government to be honest about its intentions and forthright about how public money is spent, no government will be in a position to ask for something like a consumption tax increase.

Kan certainly has the right biography for this purpose — and having been a cabinet minister before, he should be more capable of managing the cabinet than Hatoyama was, avoiding the self-inflicted wounds that ultimately destroyed the Hatoyama government.

What about that other task facing the new government, the Futenma problem? Kan has said little about it, refusing, it seems, to stray beyond his brief as finance minister. However, it seems unlikely that Kan — or any other DPJ politician — will rush to embrace a plan that is now being written off as unimplementable. Perhaps he will have the backbone to scrap the thing entirely. One way or another, the demise of Hatoyama following his shift on Futenma and the collapse of the coalition with the SDPJ has undoubtedly poisoned the issue. If the Obama administration were smart, it might learn from the mistakes it made last year when the Hatoyama government took office and give the new government time to find its bearings and plan a course of action, whether that course of action is trying to soften up public opinion on some relocation option within Okinawa or searching again for an option outside of Okinawa. If the US is actually serious about resolving the problem, it is not enough to say that Japanese public opinion is simply a problem for the Japanese government to deal with: to insist once again on a plan that cannot win the support of the Japanese public and expect another prime minister to fall on his sword for it would be sheer folly.

Ultimately if Kan is the next prime minister and if the Ozawa regime is truly uprooted, the DPJ will have an opportunity to reclaim some of the goodwill that has been squandered since September.

(Image courtesy of Curzon from Mutantfrog/The Coming Anarchy, based on a whimsical Facebook status update of mine from earlier today)